Reflection from Genki Forest founder: Choices that determine our path to success

 

Chinese beverage firm, Genki Forest (元气森林 Yuanqi Senlin ) was founded in 2016. This year, it has become one of the top beverage brand in China, and making strong inroads into Singapore and Malaysia. It’s valued at US$6bil, competes with the likes of Coca-cola and Nongfu water – and is popular with consumers – both online and offline. No small feat for a 5 year old company. 

One key success is the vision of the founder, serial entrepreneur Tang Binsen. We covered his notes on Seven major pitfalls of startup founders in the past. He recently shared more musings on key lessons for entrepreneurs, corporate innovators and rebels. 

4 key lessons to become successful 

1. Remember the rules of probability: Ride the right tide, and position to win
2. Fight the resource curse: Hunger is powerful
3. Be careful of cognitive bias a.k.a empiricism: Don’t assume needs and problems of customers
4. Avoid losing the big picture – it’s a costly mistake: Prioritize strategic direction above all else

Below is my interpretation and some clarification of Tang’s lessons, and I believe this is applicable to anyone starting out to be an entrepreneur, a corporate innovator, or a rebel at heart. 

1. Remember the rules of probability: Ride the right tide, and position to win

• No matter how awesome you are, if you choose to join an industry that’s not doing well, the odds are stacked against you – and you are ultimately – “foolish”.  (Note: actually, Tang used a different description that I am not allowed to republish in English).
  
• Take a look at the macro environment of the industry you’re interested in. What’s the general trend? Is it a growing industry, a red/ blue ocean, or is it a sunset industry? If you are in an industry where no one is making money, or if even the largest player is struggling to break even – it’s a fool hardy mission to think that you – a budding entrepreneur, can turnaround the industry and make 10x of the industry revenue. 
• On the contrary, in a good industry, you could be ranked 100th and still be better than being the first in a bad industry. It makes a very significant difference.  

Are you on the New York subway trying to look for well-off clients? That’s foolish! Get yourself to the airport as soon as possible.

2. Fight the resource curse: Hunger is powerful

• Countries with resources such as Russia, Brazil, and Saudi Arabia often do not develop well in high-tech industries. They make money too easily. Whereas countries that are doing well in high-tech are Finland, Japan, Israel, and South Korea –  countries that do not have the best resources. 
• Similar to an executive of a large company, if they need traffic to hit a KPI, they inject money on Baidu advertisements (or Google Ads in SEA context) and get massive traffic right away. For resource-constrained companies, given US$15k, the team will have to milk the most out of their creativity to make things work. Hunger is the mother of all inventions. 

Creativity is best inspired when resources are in short supply. With no money, they will start thinking about how to solve problems without using money. 

 

3. Be careful of cognitive bias a.k.a empiricism: Don’t assume needs and problems of customers

• Humans are obsessed with drawing conclusions based on every unrelated circumstance or personal experience. Many founders spend a lot of time researching needs, problems, and then linking it to their solutions. Once you make the mistake of drawing a conclusion this way, you are going down the route of empiricism instead of getting real data points. 
• To avoid this pitfall, you must figure out what are the actual “basic laws” vs your “laws”. A basic law is like the sun rises from the east and sets in the west. But if you set up a different law (i.e. the run rises from the west), and your results are not aligned to your law, then you have to really think clearly : Is there a problem with your law? Is there a problem with the basis of your startup ? If you can’t get this fundamental thinking sorted out, you’ll always be crawling in the pit. 
• One example was our product development journey on building an anti-virus software product. We were the first to make this kind of product. And our “law” or “hypothesis” then was that users cared about cloud engines, cloud scannings and killing viruses speedily and quietly behind the scenes. We forgot to communicate face to face with our users and we thought we knew what users wanted. But you know what? Our “law” was wrong.
  
• When we eventually went to speak to a few users, we asked them – “Why do you prefer anti-virus Software B over our antivirus software?” His answer “ Wow- everytime I use Software B to scan for virus, it always shows me a new virus that popped up! It must be good!” Users’ needs (i.e the basic law) are often very simple, but the most difficult thing for an entrepreneur to master.

Don’t assume you are the average user. Communicate more with users so you truly understand their needs. Otherwise you will always be solving the wrong problem.

4. Avoid losing the big picture – it’s a costly mistake: Prioritize strategic direction above all else

• This is closely tied to learning above on cognitive bias.
  
• In the first 3 years, you will waste 50% of your time on details: Cutting down wages with employees, negotiating for rent, agonizing over office design etc. 
• Similarly when developing a product with a diverse team, it’s very common for us to dive into some details – be it color scheme, layout, choice for the customer etc . There were so many opinions on what is the best because all of us come from different backgrounds and have different experiences. Most of the time, we spend so much time justifying our own best practices that we forget to focus on what product was best for our customers. This is one of the nightmares for a product development team. 
• When we first started our business, we didn’t have a lot of money. We spent a lot of energy and time entangled in many operating details, and spent too little on thinking about strategy and timing. This is the biggest cost and risk to any entrepreneur. Find the big picture by identifying the basic laws. And just do it. Sprint by sprint. 

Don’t use tactical diligence to cover up strategic laziness. Spend more time thinking about your direction, pay less for mistakes, take less detours. Life can be straight-forward. 

 

I hope you enjoyed the simple but powerful lessons above. As I write this, I am learning that many musings from Chinese founders are practical and inspirational for entrepreneurs, corporate innovators and rebels across the world. 

 

All the best to you.