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Our reporter Yan Qi reports from Beijing

In 2019, Yang Dong retired from the venture capital industry in which he had worked for 20 years and started a business in children's financial education.

Yang Dong is one of the earliest investors in my country to engage in venture capital. He joined SoftBank China in March 2000. Four years later, he and Yan Yan and other management teams achieved independence by raising a second fund based on the original SoftBank Asia Information Infrastructure Fund. SoftBank Asia was then replaced by SAIF Partners, and Yang Dong became a partner of SAIF.

During Yang Dong's career as an investor, he discovered and led projects including Perfect World, 58.com, Zhihu, MetaApp, BlogChina, Fan Deng Reading Club, Tianjin Auto Mould, Whale Cloud, Turing Robotics, and Jiuzhang Cloud. Many of these companies were listed on NASDAQ, NYSE, Hong Kong and A-shares, and all achieved excellent returns on investment.

According to reports, his children's business enlightenment picture book "Economics Storytelling" has sold more than 80,000 sets of 1.6 million copies, and has become the number one in the category of financial picture books. Recently, Yang Dong and "21 Finance" had an in-depth exchange on investment and entrepreneurship.

LPs’ expectations of return on investment risks need to mature

21 Finance:As one of the earliest venture capitalists in China, you have witnessed the entire process of the development of China's venture capital industry. How do you feel about the changes in this industry?

Yang Dong:More than 20 years ago, when I first started investing, VC was still a very small industry. I thought it was just a way to quietly make some money. There were not many investors in the market at the time, and the competition was not very fierce. It can be said that there were low-hanging fruits everywhere. As the industry flourished, many excellent entrepreneurs and investors poured into the process. But later it gradually evolved into a national entrepreneurship and national investment, which was not very reasonable. The industry was indeed a bit overheated. Maybe at a certain point in the development of the Internet, there were indeed many opportunities, and anyone could try it, but this would not be the norm after all.

21 Finance:The aftereffects of the nationwide investment boom have gradually emerged in recent years. How do you view the difficulty of exiting as a pain point in the industry?

Yang Dong:Over the past few decades, China's fund managers have gradually matured, but the maturity of the LP group still lags behind that of the GP. An obvious phenomenon is that LPs always have immature and high expectations for venture capital, such as excessively high expectations for returns, requirements for capital preservation, and the existence of such phenomena as disguised debt and equity, which are very unreasonable for the venture capital industry. Among various asset categories, venture capital has the highest rate of return, but it also has the highest liquidity and risk. In China's venture capital industry, not only GPs, but also LPs need to mature.

21 Finance:After working in the venture capital industry for so many years, what were your considerations for starting to fade out in 2019?

Yang Dong:At that time, there were not many investment opportunities in the mobile Internet. Although the return rate was very high once successful, the probability of success was very low. In the following years, only a few companies such as ByteDance and Pinduoduo emerged in the mobile Internet field. For investors, if they invested in these companies, they would get super high returns, but if they didn't, it would be very difficult.

I have been in the investment industry for a long time, and I have seized some opportunities for excess returns, which is a good result for me as an investor. The reason why I can invest in some good projects is that I work hard and have ideas, but I think it is more of a bonus of the times. Later, I didn’t feel that much dopamine secretion when investing, so I started to think about whether I could do something with more social significance.

Having good financial intelligence can help entrepreneurs avoid many detours

21 Finance:What is the connection between choosing financial education as your starting point and your previous career as an investor?

Yang Dong:When I first met entrepreneurs, I found that many of them lacked financial intelligence, which made it very difficult for them to communicate with investors. It's like building a building and finding a very good plot of land, but you don't understand the principles of architecture. If you don't build a good building, at least you can keep the land, but if you don't succeed in starting a business on this land, someone else will take your place and you will end up with nothing.

In the past few decades, many of the most powerful entrepreneurs in China have technical backgrounds. Overall, the overall success rate of entrepreneurship is not high. In fact, most of them fail. Chinese entrepreneurs have never lacked the spirit of struggle, and even to a certain extent, they have struggled too much, but a big reason why the failure rate is still high is that they lack financial intelligence. This is not a problem of the ability of entrepreneurs. They are all very smart, but because they have not been exposed to this knowledge, they have never thought about it before. Many entrepreneurs succeeded in their second or third entrepreneurial ventures. They gradually established their understanding of business through the first one or two failures. Entrepreneurship itself actually consumes a lot of resources, not only the founder's time, experience, and funds, but also investors or various other social resources. Having a good financial intelligence can help entrepreneurs avoid many detours and greatly increase the probability of success in entrepreneurship.

Even if a person does not intend to start a great enterprise, but just runs a small business or even finds a job, business thinking is very important. In today's society, most scenes are inseparable from business. The practicality of financial education for a person will accompany him throughout his life and is a vital general education.

21 Finance:Why don't you directly provide training, lectures and other activities to entrepreneurs, but instead make reading materials for children? How did you decide on this product form?

Yang Dong:In fact, for most entrepreneurs, many of their thinking is relatively fixed, so the impact on this group is always limited. Children are different. Although children have not yet developed their abstract ability and it is difficult for them to learn mathematics, physics and chemistry, it is easy for them to learn some business principles. Moreover, these things need a period of time to settle down. Only by constantly reflecting on the actual situation in life can we have more in-depth thinking, so that when we start a business, we will have a more profound business thinking.

As for why I chose to present it in the form of a book, I think books must be the easiest way to spread knowledge, not limited by time and space, and at the same time, the cost is also very low for consumers. Regarding the cultivation of financial intelligence, there are also huge differences in the cultivation of children by families with different conditions and different regions. Books are a process of equalizing knowledge, which allows most people to obtain this knowledge at the lowest cost.

My vision is to influence the financial intelligence of a generation of Chinese people through this product. The business environment of a society is not only composed of entrepreneurs, but also includes the government, public institutions, and many other participants from different aspects. If the financial intelligence thinking standards of all participants continue to improve, then the corresponding business environment will also get better and better.

The core of an enterprise is to create a good product and sell it

21 Finance:Based on your past investment and current entrepreneurial experience, what advice do you have for entrepreneurs?

Yang Dong:According to Drucker's definition, a company actually has two basic functions: one is to make products, and the other is to sell products. Making products is a process of innovation. In today's highly developed commodity world, many products in the market are actually highly involuted. I have seen many companies that make products. No matter how big the company is, the core people in the company will never let go of the product. For example, for a company as big as Apple, Steve Jobs would personally work on the details of the mobile phone and even the decoration of the store.

There is another very important concept in entrepreneurship, called Product Market Fit (PMF). Is there a market for this product? Can we find a point where the product fits the market? When I was choosing reading materials for my children, I found that Chinese children lacked good stories. They were all stories that seemed nonsensical to children, such as "The Man Who Covered His Ears and Stealed the Bell", "Calling a Deer a Horse", "Looking for the Sword on the Boat", and "The Emperor's New Clothes". Therefore, the demand for stories was very urgent. When I wrote this series of books, I put a lot of effort into polishing the stories. The plot was full of twists and turns, contradictions and setbacks.

When it comes to selling products, Chinese companies tend to prefer to do a lot of work on sales, but are unwilling to work hard on publicity. Sales is a very good way to sell a large number of products in a short period of time. For example, live e-commerce now gives you a very high discount to make people impulse buy, but if you think about it carefully, the cost behind it is very high. A good product should be a long-term business. Through market publicity, the groups that need it will understand and recognize it, and then generate a continuous and stable sales process, rather than a product that is sold once and then ends.

21 Finance:If you switch to your investor's perspective, would you invest in your current project?

Yang Dong:The business model of best-selling authors has good economic returns from the perspective of investors. The cost of publishing a book is mainly our mental labor, so from the perspective of investment, it does not require a particularly large amount of capital investment. From the perspective of returns, selling books is a business with a very large scale effect. Once the number of books sold reaches a certain scale and covers the initial investment cost, the subsequent income is basically pure profit.

Compared with the economic return, I value the satisfaction of realizing social value in the process of entrepreneurship more. "The Economics of Storytelling" has sold 80,000 copies so far, and it may have influenced about 100,000 children. In the long run, the business thinking of these 100,000 children will definitely be much better than that of children who have not read this book. Now my country's annual GDP is more than 10 trillion yuan. I think if children receive good financial education, it will be easy for them to increase the country's GDP by 1% when they grow up, which means an increase of more than 1 trillion yuan.