Fritz Demopoulos Qunar Interview

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How I Got Here - episode 19 - Fritz Demopoulos of Qunar - fullshow

Kevin May [00:00:01] Hello there. Welcome to another episode of “How I got here”. This is Mozio’s Group and Phocus Wire’s  weekly podcast where we get the inside stories on travel and transportation. We have done over a dozen of these now, so a regular listeners will know the format and and we're looking forward to this week's guest who is none other than Fritz Demopoulos.

Some people don’t need an intro. We recently interviewed Steve Kaufer and we didn’t do an intro for him, but we are gonna do a short one for Frtiz here because some people may not know him. He is a regular on the conference circuit, but we will do a little bit of an intro.

So, Fritz Demopoulos, most recently has been the founder of Queens Road Capital, an investor in many of businesses,  over the last eight and a half years or so. But prior to that, and I guess one of the intriguing things, that we are looking forward to hearing from Fritz about, he was the CEO and one of the cofounders of Qunar.com, which is the largest travel internet portal in China, had lots of backers and  was eventually subsided into other businesses.

So that's where we are coming at things today. So,  first of all, a very warm welcome to you, Fritz.  Thanks for joining us on “How I got here”.

Fritz Demopoulos [00:01:19] Hey, thanks Kevin and thanks David. It's great to be here and I'm a big fan of both companies.

Kevin May [00:01:29] Okay, great. Thanks so much. So the regular listeners will know, as always we start with, what we hope is a very simple question, but can you tell us how you got here?

Fritz Demopoulos [00:02:06]  Yeah, sure.  I think,  without rambling too much, I'm an American, but I've been living in the Asian region for 22 years. I set up my first company in 1999 that was in the sports business, so it wasn't even in travel, but SoftBank was a big investor in that business and we did fairly well and Hutchison Whampoa acquired us and all that. So that was my first taste of the entrepreneurial lifestyle. Me and my co founders of that sports website, including CC Zhuang and Douglas Khoo and, and obviously you guys know CC because he's spoken at Phocus Wire as well,  were thinking about  what's our next startup,  we gotta do another show, right? Like, you need a second act. We started thinking about and wracking our brains one of our big inspirations was: “Hey,  what's Google's biggest revenue vertical? And this was back in, mid 2004 and low and behold, we realized that travel was a big revenue vertical for Google. And so we thought “Hey, if Google is such a big company and travelers are their biggest revenue vertical, could we create a better mouse trap and really take on the likes of Google? And of course, you could argue that the largest or the second largest market in the world is China. So we put our minds together and put our own capital down, and that's how we set up Qunar. And for those listeners who don't know,  “Qunar” means “where are you going” in Mandarin Chinese. So it was like the perfect name, five letters, couple of vowels, made total sense. And, we started out, we were a bit slower, the uptake wasn’t as great but then that business eventually help took off and we were able to control a huge part of the Chinese travel market. Fortunately,  we had some success, our investors made some money, employees did very well and it was great for all of us.

Kevin May [00:03:49]  Okay, thank you very much for it. So there's lots of elements there that we can dive in over the course of this week's show, but I actually want to go back prior to 1999, which was the first business that you co-founded.

I mean, you were a media guy for what of a better phrase. You kind of came from my world, you worked at News Corp. What did you learn in the kind of the media world that you later applied perhaps to Qunar? Because Qunar was essentially a media company in terms of the business model, arguably. So, I mean, is there anything that you learned from that period of the couple of years that you were at News Corp that you thought “okay,  that's going to be useful for how we set things up”? Or was it because geographically is very different or the industry was very different that there aren't any learnings from that?

Fritz Demopoulos [00:05:08] Oh, no, certainly there's some learnings and I was very fortunate to meet Mr Murdoch and he told me a couple of things which are stuck in my mind today. And one of those was “Hey Fritz, don't you think we should push the envelope a little bit?  Why are we so conservative?”. And I was like “God, that's amazing that a titan of the media industry was just focused on pushing the envelope and being aggressive and to know that I think was a real and genuine motivation to really  take control of my life. And by the way, CC was working for the company too.So we were both at the NewsCorp at the time. One of the funny stories was how I met CC, my co-founder. Well, this is a company now, so obviously in a company, people don't work hard, it's only had startups that they work hard. It was late at night and there were only two guys in the office, me and CC. So of course I go to the other side of the office “Hey, so what are you doing here?”. And he's going  “what are you doing here?”. And we started talking and then we started brainstorming and of course, we were like “We've got to do something more than this”. But, I'll be honest,  I think that was one of the things that I really learned from Mr Murdock and the News Corp Empire is, you have to take risks, you have to be entrepreneurial. Now, I think I would throw out that one of the things that maybe I had to unlearn was: in the media industry there's this Chinese wall, no pun intended, between publishing and editorial. And when we set up Qunar, we had that Chinese wall: publishing - how do we make money and editorial -  what's good for the consumer. And what we've discovered over the years is, there's a little bit of a blending between those two sides. It's not as clear cut as maybe I thought it was. And that was probably one of the things that I had to unlearn and you know, just to give you a couple of examples: we have listings and many of those were paid for, some of those were free. I was just kind of finding that right balance between free versus paid. I mean, obviously the guys at Kayak and Steve Kaufer, he's now obviously like a well respected executive and entrepreneur, his view at the time, and of course he communicated that to us was,  verything's paid for. And that’s our whole view. Everything is publishing.  And we had talked to some other entrepreneurs and they were like “Are you kidding? Everything's gotta be editorial and you got to think about the consumer”. I think we kind of struck a balance between those two. So it was a little bit, it was kind of a gray area, but it worked for us.

Kevin May [00:08:06] Before David comes in, just a quick follow up on that. How quickly  into the history of Qunar, did it take for you to decide that you needed to kind of, as you say, unlearn some of those Chinese walls as you put it?.

Fritz Demopoulos [00:08:24] I think the first three or four years of Qunar we bubbled along. We didn't know the industry that well, in fact, both CC and I and another co-founder, we didn't know anything about the travel industry. We didn't know what those acronyms meant. So we were learning and we're making some big mistakes.  One funny story was,  we talked about Steve Kaufer earlier, I remember sitting next to him at a conference and then he said, “Hey” and I told him “Hey, I work for this company called Qunar, I am the founder” and he said “Yeah. I'm a TripAdvisor” and I asked him “ So what does TripAdvisor do?” And of course he looked at me like “You can't be serious?!”.

But I mean, I think that's just reflective of,  we were new, young, but motivated to change an industry, and along the way, those first few years, we made some silly mistakes, but not just mistakes, but we were also trying to understand what would work and what was the nature of a genuine marketplace, which is what we ended up becoming. And that meant things like how we priced our product, this differentiation between publishing and editorial and  just a range of other factors.

David Litwak [00:09:20] Hey Fritz, it's David here. So thanks for joining us. I'm going to address the elephant in the room here. You're a westerner who decided to start multiple companies in China and I remember when we first met that was obviously one of the first things that stood out to me, is that you've had a lot of success in a way that most Western companies that definitely not, Uber being the most recent example of someone who retreated and not been able to kind of crack the cultural code. Two part question: why did you decide to move to China and try and two: how did you kind of think about balancing being a Western in Chinese culture?

Fritz Demopoulos [00:10:02]  Yeah, I guess I didn't think about it too much. I suppose if I did, I never would've done it, right? Seemed like that joke in entrepreneurship, right? If you analyze the risk too much, then you probably don't do it.  I'll be honest with you, I didn't think I'd be 15 years in mainland China. I thought it'd be a couple of years, and then I go back to the States, or, I don't know, do something else, do something silly like work for a company, right? But then what I think I realized was “Hey, you can't select the time or the location of your startup. And I was wanting to set up a business, and if the stars aligned then you have to do it kind of regardless of where you live. So basically in 1999 I started my first company, the stars were aligned, I knew some people, I think I was probably 70% of the way there. Meaning, in order to set up a company you need some resources, people, some insights, whatever it was. And I felt that we were 70% of the way there, which is probably the key point. I think if you're 100% of the way there, it's probably too late. There's probably going to be a bunch of other people doing it, so you're going to get slaughtered. And maybe if you're only 20% of the way there, then you're probably gonna get slaughtered because you just don't know anything. And so I think I was probably 60-70% of the way there and then that was probably the right choice.  But what I would add is,  I really believe and you have to believe this if you're me. So think about it, right? I was sitting in China, I'm not Chinese, and I believed  and I thought about this a lot, that to achieve let’s say, top 1% of success, it doesn't really matter where you are in the world. I could be in Milan, Italy, or Berlin, Germany or New York or Orange County, where I'm from. Achieving 1% of success, the probability is going to be the same. And if you believe the probability is the same and you might as well pick a place that's really interesting. And in the late nineties, early to mid two thousands China was one of the most interesting places in the world. So why not do business there?

David Litwak [00:12:25] Very cool. Well, so how did you think about delegating to, correct me if I am wrong, to local Chinese co-founders? How did you think about what you delegate to them and what you took on as your own responsibilities?

Fritz Demopoulos [00:13:11] Yeah, that's a great question. So they say that an amazing entrepreneur has to be self-aware. We have to know our limitations. And in fact, I think studies were done at Stanford or - some reason Stanford is the benchmark for all things entrepreneurship, right -  but anyways, I think there was a study at Stanford that somehow indicated that like the top trait of an entrepreneur was to be self aware. And it was pretty easy for me to be self-aware because I'm not Chinese, I'm not a tech guy and I'm not a travel guy. So it was pretty easy to understand what my limitations were, which was everything.  And so it was pretty easy to delegate. I just delegated everything. And luckily my co-founders, one was  an excellent advertising guy, and another - CC - was a great technologist as well as a great leader and  we kind of divided it that way. I was a CEO because the CEO gets to delegate everything and not do much. And then CC was looking at technology, Doug had  sales and advertising. And then of course, we had some key early employees that were at the sports site, by the way. They were also at a sports site and they came in and one eventually became the COO of the company and did very well for us. It was just basically that, I mean, it doesn't mean that I did nothing. Well, I like the view that the CEO's role in many ways to extract resources from the external environment. Meaning: you have to get the money, you have to get the high key hires, government relations, some industry PR, managing your board, building a board of advisors and other experts, maybe bring in some key technologies - ie - pulling in resources from the external environment. Those are all resources. And I kind of felt: Hey, that was my role as the CEO, to do that, bring it to the table and then have everyone else work with that to build an amazing business, which is what they did.

David Litwak [00:14:55] Very cool. So I want to set away a little bit and say what were the differences between China, when you started in China. I was in Shanghai a few weeks ago, and I remember one of our partners said they work nine-six. I thought they met nine to six and when he meant was nine hours a day, six days a week. And I think there's a huge cultural change in China and it's become a lot harder to start a business. And so do you think you'd go about it the same way today that you did almost 20 years ago?

Fritz Demopoulos [00:15:22] Oh, I don’t know, you're right. I mean, environments change, I mean, there's more office buildings in China, there's more capable people, so we have to adapt and our angle might be different, what we contribute might be different. Like it used to be, I wouldn't say it was easy, but like Woody Allen said “80% of success is showing up” and I think in the 90ties it was probably that way: Look, I'm Woody Allen, look at me, right? Maybe nowadays it's probably 40% of success is showing up and 6% is hard work and being smart and all that. But yeah, sure, things have changed, it's more competitive. So yeah, I would probably have to do things differently. I mean, keep in mind that nine-nine-six thing is true, people work hard. I don’t know if they work efficiently but they certainly work hard.

My friends who have managed teams in China and San Diego and Silicon Valley and New York have said, yes, it's true. Maybe we don't have the nine-nine-six culture in the United States, but there are some other redeeming factors, like people who tend to be a little bit more efficient, maybe a little bit more rules-based. And China is a relationship based society, whereas the United States is a rules based society. Usually rules-based systems can scale a little bit better. They can handle complexity a little bit better. Whereas a relationship based model sometimes breaks down or things get more complicated. Although a relationship based model is exceptional when things are highly dynamic, and so maybe, the nine-nine-six because people are all focused on all this relationship stuff.  And  what I would add is, I mean, as we all know,  and obviously David - you've run businesses and I know you have another startup in New York right now and I mean every entrepreneur works a lot, but I think the reason why it's such an exhilarating experience, at least if you're the business owner, is the wide variety of things we do, right? You're talking to a publicist, a journalist, you're hiring someone and you're dealing with your team, we are rarely just in the office, right? We're doing all this other stuff, which is like so many interesting touch points and if you happen to be a social animal, it's just amazing, right? That variety. So it doesn't seem like work at all to me.

Kevin May [00:18:18]  Tell us, Fritz,  when you created the company, how were you received, given that the concept was fairly new? How were you received within the wider travel community there in China. Was it warmly?

Fritz Demopoulos [00:18:43] No, it was more like people thought I wasn't much smart. I have to admit and I think it's a similar experience you get in the States, but you get people make three comments to you every time you take a risk in life, whether it's starting a business and travel or whatever. So the first thing people tell you is “You know Fritz, you're a nice guy” - that's the first thing they tell you  “You're a nice guy”. Now what they really mean is “I don't think you're capable”. That's what they say, right? So basically you tell your friends and family “I want to take a risk, I can't wait” and then like your uncle or your cousin says “Well, Fritz, you're a nice guy, you know  that, but I don't think you are capable”,  which is what they really mean. And then you go along with it and you ignore that stupid comment and you start doing your business. And then they tell you the second comment, which is “Well, that's a really interesting idea you have”. So they can see you are capable, but they think your idea is interesting. And obviously when someone says something's interesting what they really mean is that stupid idea. That's what they mean, right? “That's interesting. Oh, that's an interesting dish you've created”. It means it sucks, right? And that's the second thing that they tell you and that’s what they told me in China too “ interesting hmm”..  And then the third thing your friends and family tell you: so they agree that you're capable and they agree that your company and an idea isn't stupid, but then they say “Wow, you're lucky. Oh my God, you're successful, you must be lucky”. And so maybe deep down, in spite of what they thought about your capability and in spite of what they thought about the idea, for some reason, you're lucky now, right? I mean, basically those are the three things that you are likely to hear every time you take a risk in anything in life: you are a nice guy, that's interesting and in the end, you are lucky. And I felt that's what I had experienced in China.

Kevin May [00:20:45] That's interesting, yeah.

David Litwak [00:20:52]  Yeah. So I want to ask, you guys at some point are closing major investments from Baidu and took the general public on NASDAQ. Could you kinda tell us how you kind of landed the exit and how you manage that whole transition?

Fritz Demopoulos [00:21:08]  Yeah. So, since obviously Baidu was a tent pole decision for the company we were able to extract a lot of capital of the key resource. And then Baidu also helped the company in many ways. Obviously,  the Qunar culture was a very engineering driven culture, just like Baidu was. That Chinese wall that I mentioned probably doesn't exist at Baidu at all, so they just promoted us like crazy.  And then those two things continue to accelerate the business.  As I recall, at that time I was the co-founder, CC became the CEO,  about a year and a half of being in the public. I think at that time,  we weren't expecting to go public. We thought it would be four or five years. But it was just really quick because the market's favored money losing Chinese companies for some reason. We had to be very opportunistic and luckily, even after the IPO, our story resonated with the markets. It was a great opportunity. I mean, at that time we were eight years old, so that's the average age of the company or  like a tech company that goes public, right? They're usually between seven and 10 years old, right? So we're kind of right in the middle there. And it was good for our investors, good for employees. We had a currency now that we can buy other companies. And so I thought overall it was pretty good, but transitioning from a private company to a public company, I mean, now we have a bigger obligation to the markets, right? So we just have an extra layer of expectation, administration, but also discipline. So yeah it’s a good thing.

Kevin May [00:23:22] And that transition is often a hard one in many respects. And I've spoken to people over the years that have gone from being a private company to a public company, and they've kind of lamented the fact almost, that it does become almost more than a numbers game. You're constantly meeting with investors, and that's the byproduct of going public. Did you kind of think: okay, so we've become a public company, but I do miss not only the privacy of being a private company, but also the workload that has changed and it's a bit of a drag almost?

Fritz Demopoulos [00:24:01] Yeah, that's right. I mean, I wouldn't say that we experienced that entirely, but obviously a private company, like you don't have that extra layer of administration, I guess you could say. And also as we all recognize the late stage private capital markets are very deep. DST, SoftBank, Tiger, all these companies are willing to provide capital, which once was only reserved for public market investors. But now as companies go public later we have these deep goals that you could say late stage growth capital.  And probably DST was probably the first to recognize this, and then Tiger jumped on it. SoftBank is obviously a big player in this area. And of course, there's a few other institutions too. Like CoTu I guess would the other one. lt becomes less and less important to go public. But the thing is, you still have small investors, you still have employees and all that sort of stuff. And so I think the way I describe it is, a later stage private company, which historically may have gone public, doesn't need to because they have other choices. And having said that, I mean, there are some other benefits to going public besides just having a liquidity event. And having your employees under,  and,  maybe there's some reputational advantages as well, being a public institution, but the public markets do provide some disciplines. Like you have to sell your story and it isn't just smoke and mirrors. Yes, it's true that there are some retail investors in the market who, you could argue, maybe aren't as sophisticated, but most players in the market are actually large institutions. And these are full time people. They read the reports, they read PhocusWire, they hang out with David in the lobby of the hotel, try to get secret insights on what's going on. You have to kind of like, sell it to them. And so I think that discipline isn't bad. Some people like Jack Ma or Zuckerberg  say “Well, we need to buy shares because public markets and public market investors are short term like oriented, right? I hear that a lot. The market is  too short term oriented and therefore we're living quarter to quarter, right? What I think is funny is those same companies say that, that the markets are short term oriented, but they have a high multiple, right? And they're happy to take a high multiple from public market investors, which by definition implies that they think that the returns of the company are far away. So if a company has a low multiple, it's actually implicit in that loan multiple that most of the value is going to be realized in the short term. And if you have a high multiple, that means the value is going to be realized in the long term. And so by definition, having a high multiple, all these investors are already saying “Hey, I think Alibaba or Facebook or all these companies, their value is going to be created many, many years out. And so I'm giving you credit for that”. And so they want to have it, they're taking in, basically that’s what I'm saying.

Kevin May [00:27:27] Do you think, Fritz, that there were any mistakes made along the way with Qunar? I mean, every startup makes mistakes, but are there any kind of massive strategic ones that you kind of almost kick yourself over now?

Fritz Demopoulos [00:28:08] Yeah, I think there was a couple of things. There was, I think some people we hired that we should've gotten rid of sooner rather than later. And either they couldn't grow with the organization or maybe it was the wrong decision in the first place. And although some of those people are amazing and super capable within our structure, maybe they weren't as amazing, capable, and maybe we should've made a decision earlier rather than later, or at least allow them to have a graceful exit. That was probably one thing that maybe we should have acted faster. I think secondly, in the early days, we thought human resources, we just gonna stick it under finance. Your CFO runs HR and we never had an appreciation for, you could say, strategic human resources and how important that was and in fact maybe the most important function in the company.

Kevin May [00:29:23] Yeah, that's an interesting one. That's came up on a couple of our interviews that we've done with people, that perhaps, it's a power phrase, it’s  the lack of appreciation for the human resources department. I mean, the last one from me for a little bit:, during that period, the mid two thousands and into the turn of the next decade, there were Western companies that were trying to make inroads into China. I mean, sitting where you were and the success of how Qunar was operating at that time, I mean, how did you view them - for one of a better word - kind of coming in and trying to seize a piece of the pie? Or did you always sense that it would be the domestic companies, the local born companies that would eventually rise to the top?

Fritz Demopoulos [00:30:12] I always had kind of feeling that local the local guys would do it and by the way you can argue I’m not local too, I just happen to look like more, but the key thing is what do foreign companies add to the Chinese market? Is it money? It isn’t money. Is it technology? Well, we live in an open-source world...

/Fritz was disconnected, David and Kevin chatting/

Fritz Demopoulos [00:32:10] What value do foreign companies add in China? And it's certainly not money, right? Because China's flush with cash. It is certainly not technology because we live in an open source world and the textbooks in China are in English, like every computer engineer reads English. You can get a PhD in China today,  I mean, you don’t have to have to speak Chinese, right? Is it management know-how? Maybe a little bit, but obviously after the financial crisis, right?  Like Hank Paulson and Robert Rubin and Bernanki and Greenspan used to be viewed as gods in China, and now the Chinese think, well, maybe these guys are a bunch of charlatans, right? And rightly so, by the way. Is it market expertise? Well, I mean, Chinese are on the market very well. So we have to ask ourselves, what value do the foreign companies bring? Genuine value, right? Do they have better teams? Well, if it's mostly about execution.  You have to recruit and build those local teams. To hire an amazing team you'd probably have to spend 10 hours with each individual person to know if they're any good. Because the traditional, keep in mind, one of the big changes we're seeing in the world is how we assess people is just thrown out the window. Meaning the traditional ways to evaluate if someone's good or not don't work anymore. So it used to be you went to an Ivy league, you worked for a top tier consulting firm, therefore that's a good predictor of your ability to  kind of achieved things in life.But what we've discovered is that it doesn't apply at all in China. And when we look at all the great success stories, none of you guys, none of these guys graduated from a prestigious university, nor do they work for like an elite bank or consulting firm, right? And in some ways, building teams is a totally local art and these tools and approaches that we're accustomed to in the West just don't work at all in China.

David Litwak [00:34:27] Quick follow up question on that. How did you evaluate that? Because I feel like there's always this need to spend many years in Silicon Valley. What I always thought was funny was that everyone would poopoo those Ivy leagues and then they would all go apply to Y Combinator and didn't realize they had just basically exchanged one validation for another. Is there another way you evaluated and hired?

Fritz Demopoulos [00:34:56] Yeah. It partly is like we need to spend time with people and so people on the ground, like, if you're born in China and you grew up in China with the college entire in China, you're probably around a few hundred people that you've spent at least 20 hours with, right? So you have a pretty good sense. So you probably know 20 people who are amazing just through that process. I think in China there are more practical, you could say, ways to assess people. One is super angel endorsements maybe, there are very accomplished  investors and they are local like Lay John from Xiaomi. And If he invest in your company or knows you in some ways, he endorses your capability. I think it's a very practical way versus an institutional way. I think that's another way. Luckily in China, things have changed a bit in China, but it used to be you can just hire people and get rid of them quickly. So sometimes there's just like A-B testing people too. I mean, that was another way, I suppose. And it's just a really rapid fire way of doing that. I think that those are some very practical ways that we were able to achieve it in China.

David Litwak  [00:36:33] So we're running out of time here. So I want to quickly move to and ask how you guys ended up to as part of Ctrip?

Fritz Demopoulos [00:36:40] Yeah. So Baidu they were a large shareholder and then they continued to buy shares, so they were like the most prominent shareholder in the company,  even after we had gone public. And then in parallel, we had a nice, big fat price war with Ctrip.  Because, luckily for us, the public markets kind of award you to burn money to, I guess, gain market share. And obviously we were very disciplined about it.

David Litwak [00:37:17] I mean, you work in China, apparently. Sorry.

Fritz Demopoulos [00:37:23] Yeah, I mean, we had 200 million app downloads, people using engage in the app and so, I mean, the marketing worked in some ways, right?  But it meant there was a short term cost kind with it, with the expectation of long term profitability.  And I think you can make this argument that there became a realization across the board that maybe some consolidation made sense and it didn't start with us. So DD merged with a Qualidy, so basically DD was a 10 cent fact ride sharing business and then Quite he was the Alibaba back one and then they marched together cause they realized that was a smart thing to do. TT happened with MEI, Twan and Dan Ping. So their food delivery, restaurant guide businesses, and then they merged, so it seemed to be happening across the board. And James Long at Ctrip really believed that that was the right strategy and he convinced Baidu to  go along with it basically.

Kevin May [00:38:42] Okay. As David says, we're running out of time, and I was hoping that we'd get into a bunch of stuff about Queens Roads, Queens Roads capital, which is the investment house that you now kind of run. Give us a sense if you can, Fritz, maybe you have become poacher turned gatekeeper or something like that, but you look at the things in a different way now obviously because you are investor. When you're talking to the companies that you're thinking of investing in, what kind of questions are you now asking them?I know this is kind of an obvious thing to ask, but you often get different answers from different types of investors. So given that you've come through a travel startup with the successful exit and all the various things that have happened with Qunar, now that you've got your new hat on, what are you kind of knowledge are you imparting to your companies that you invest in? And again, as I said, what kind of questions you're asking of them?

Fritz Demopoulos [00:39:42]  Okay. I guess that's two parts. So like how do I make a decision and secondly, what value do I add maybe with these companies? Yeah, so to me, first and foremost, it's really the team, the founders. I mean, I really spend time trying to understand what makes them think, how did they make their key decisions in life. I really need to understand their psychology. It’s like the joke, I like to say, which is true by the way,  that I think that my founders should listen to me about a third of the time and ignore me two thirds of the time. Meaning I want someone who pushes back a bit. who's punchy, who's an original thinker, who's super educated, who actually likes to self educate themselves.  I remember the first time I met Brian Chesky he had a notebook. He was just taking notes from everyone like the bar made at Starbucks, he was taking notes ordering his coffee,  just taking notes from everyone, just a sponge learning from everyone. And to me like, I like that.  So people who are learning like Johannes Reck the founder of the Get Your Guide and an early investor in this company,  just constantly learning. So I really want to understand deep down who are these founders and to me that's the most important thing. And it's because I'm an early stage investor. And sure, we got to think about how big the market is and all that sort of analysis stuff,  and sure I do a bit of that as well but I'm just really thinking,  are these guys and girls really good? Do they have it?  Do they have the magic touch?  Do they have it in them to go on this journey for 10 years and fight it out? Do they have the internal intestinal fortitude and strength and willingness to learn and push back? And it's kind of like,, it's a bit of a checklist, but these are things that I look for and  I'm willing to take my time and I will throw out. I'm willing to lose a deal because I haven't spent enough time with the founder yet, which is fine with me.  But that's my process. So to me, first and foremost, that's at the top of the pyramid, and I think all the other stuff is like ancillary. And I've been very lucky with Johannes and  Hets Your Guide then like David Sherwood and  Tom Horace at Big Blue and London and  just a number of interesting founders I have been lucky to have, I had the chance to invest in work with. The second question is, well, how do I add value? Well, very simply, I have a bag of tricks, I guess you could say, as an entrepreneur we have a bag of tricks and stories, and there's a lot of great stories I can share with entrepreneurs. I guess that's what meaning about, I have experience, right?  But frankly, I have my own personal KPIs, I feel I can help founders with resource extraction. That means how can they manage their boards, advisors, partnerships, government relations, how can they think about the external environment, how can they manipulate the media after their advantage. It's kind of all that external stuff. And then secondly,  I come from a very, you could say, financial driven background. And so  one of the other things that I can partner with founders is how can we think about our KPI systems and OKR systems and  kind of that discipline that's needed at certain stages in the company,  not too much early on but then as we grow, we have to kind of build up and add those pieces of discipline, so it's kind of a bitter in science. It's the one thing that I think I can share with founders and I think thirdly, and this is a bit, I don't know if it's causation versus correlation, but I feel by building up influence with founders, I'm able to nudge them sometimes. Not all the time but  help them think outside the box. How can Alibaba eat your lunch? How can Google hurt you or how can Google help you?  In ways that your competitors haven't figured out yet. And I'm always thinking about, these founders are running the business every single day. They're super smart because I've spent time with them, right? And so I wouldn't invest if I didn't think they were smart. They're capable, they're focused and so sometimes the things I can do as well, I can help brainstorm, think outside the box a bit, and it really be that mentor  and a trusted advisor to help them get over the finish line.

David Litwak [00:44:48] Okay. Very cool. So I wanted to have one of our last questions, be it a little bit more of a macro question here. So, I think there's a bit of a debate about will China overtake America, and you at one point mentioned the differences between relationship-based and rule-based society, and I think one train of thought is that demographics are destiny and China has three times as many people, so it's only a matter of time. But another is, with the Hong Kong protests and a society that censors and restricts free expression, can you inevitably compete for international talent and the most innovative people that are all going to drive a future economy. And I feel like you have a very unique standpoint here,  being kind of in the innovation economy and straddling both worlds. What is your opinion?  I would love to hear your thoughts.

Fritz Demopoulos [00:45:34] I think broadly speaking rules-based systems, which started with the ancient Greeks and then the Magna Carta came along and all this sort of stuff, and Thomas Paine and John Locke and whatever, right?  All that stuff cobbled together, that's a very deep Western tradition and that seems to scale, it seems to handle complexity, which is why we have an amazing financial markets in the West, right? Because the allocation of capital is one of the most complicated things you can do. And all that seems to work quite well. I think that's going to be one of China's challenges now, can they scale their society and their economic system if it continues to be relationship based. Will China overtake the United States? I don't know what that means, but I think that on a nominal level they probably overtaken the United States already in terms of  GDP probably. GDP per capita? Well that's a totally different animal, right? That's going to take a long time. Is it technical superiority? That's what this whole trade war is about, right? It's about technology. I'm not sure it's about soybeans and selling trinkets in Walmart, right? And I think it's all about technology, Huawei and ZTE and maybe 20 other AI companies.  I think some academic research would suggest that some of the key areas of deep tech, including AI, but I suppose other areas, Chinese researchers publish a majority of the papers already. Tons of startups. So maybe you can argue that they are in some ways slightly ahead already. Other researchers and academics point out that a lot of that leadership is in, you could say,  applications as opposed to theory and basic research, so I think the jury is out, but at the end of the day,   there is some leadership in China already and I would throw out that I think China has at least 20 nuclear power plants in the queue. What I mean is the government has approved that the production of at least the manufacture of at least 20 power plants in China, like nuclear power plants. High speed rail is what, 20,000 kilometers of track had been laid already. These two key strategic industries are all built by Chinese supply chain and Chinese engineers. And maybe the first one isn't any good, but you go down a learning curve, and the fifth is going to be world-beating and lightning, andI can't imagine Westinghouse and GE building one nuclear power plant a year, is ever going to be able to compete long term. And so some of the key strategic industries, I think China is probably going to surpass the United States very soon, if not already. And like high speed rail is another one. Airplanes, I think that's still kind of in the United States and Europe, I suppose but, the Chinese want to build their own jet planes too, right? I mean, they're not stupid And they want to build their own  microprocessors and supercomputers and all that sort of stuff. So there's a lot in it. Evan Osnos wrote a great book called “Age of ambition”. And we're in an age where China has a lot of ambition and it’s the one ona macro level. It's probably going to mean that nine-nine- six has to apply to people in the States too, in spite of what Elizabeth Warren wants all of us to do,  and Bernie Sanders.It's probably going to have to be the other way around.  I'll have to work a bit harder and save a more and I think to compete.

Kevin May [00:50:08] A nice segue into a final question, and a very brief one, if you can.  Fritz, you talked about ambition there. What is your ambition from now? You've done the startup, you're in an investment house. What's your own kind of personal ambition?

Fritz Demopoulos [00:50:27] On one hand, I definitely want to leave the world a better place for my kids. It’s super important to me. I do have a foundation. We're involved in all sorts of interesting activities to  help society in various ways and I’m focused a lot on math and science, it seems to be a big area, so we offer a lot of interesting scholarships for that and we want to continue to do that. So it's serene my ambition is “Hey,  like I'm a global citizen”  Well, I think,  Noam Chomsky said I heard this today actually in some other podcasts. He said something like “You have to create your legacy, it isn’t handed it to you,  you have to create it”. It really affected me as it's a great quote. So we have to create it and it isn't just about making money, it's making a contribution and hopefully with entrepreneurial and creative skills, you can have some network effects by doing that. And so I'm excited about doing that and I would love to continue to work with entrepreneurs. And it is interesting, every time you work with a company, you open the door and you enter a new world because there's new relationships, new personalities,  new types of people in every single company, there's like probably 20 or 30 new people you've met and you get to know and share experiences and go on ski trips with and all that sort of stuff. And that's just pretty cool, I think really interesting. And because I live in Asia, I get to do that constantly because in different place whether it's Korea or Burma or Asia or China or even in Western Europe, I think it's  super exciting.

Kevin May [00:52:26] Well,  that's a great way to end, actually. Certainly one of the most profound ways that we've ended the podcast, with some kind of future gazing things from,  what you got up there, what you're giving back to it all. That was great. Thank you so much Fritz Democritus for joining us on “How I got here”. So just to wrap up then,  thank you very much everybody for tuning into another episode of “How I got here”. As I said, our guest was Fritz Dimopoulos. We hope that you will join us again soon. Thank you very much and goodbye everyone.

Fritz Demopoulos [00:52:26] Thanks David. Thanks Kevin.

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