How to Build Relationships With People You Can’t Normally Reach | O.D. Kobo - Entrepreneur & Asset Manager

0:00 In this lessons episode, discover why recognizing personal strengths matters more than chasing every opportunity. Understand how local partnerships and unconventional distribution unlock growth in unfamiliar markets. Explore how adapting proven models creates opportunity and uncover why market knowledge matters before committing resources. So what were you raising for at that point? People were telling me, can you invest it for me? That was pretty much how they came to me. So it wasn't formal, like you didn't start a fund? I did not, though. I had a company, I called it Sinoshin. It was a shelf company that I took from the guy in Hong Kong that was ready off the shelf with an existing bank account where I can have the funds coming in.

0:50 Basic structure, you guys put in the money, anything above, we're 50-50. Yeah. No management fees, no none of that stuff, you know. No deal fees, you know. I didn't know about those things. And with this kind of people, you don't really think, I'm going to take a salary or anything like that, you know. You're comfortable. Yeah, I'm good. I went to Hong Kong and, you know, the Internet thing in Hong Kong started slow in Asia and China started slowly, you know, coming up. Right. So, yeah, like these big companies, Sina, Sohu, later on Tencent, you know, WeChat, we know Baidu, of course, the great Jack Ma, you know, and Beijing at the time.

1:38 It was a real small town. So... I was... You knew Jack Ma before? I knew all those guys before because it was like a small town, you know? And, you know, not too many... And I was the only foreigner in Beijing, you know, doing this kind of... There was nobody else there, okay? There was no Sequoia or Excel. There was nobody there. It was just me. And the community was small. And my lawyer at the time, Rocky Lee, who was awesome, he was very, you know, we were all the same age. And, you know, we kind of just all became friends.

2:18 So when I raised the capital, I became, I had loose heads. So, half a million here, a million here, you know, started throwing it around. Reason is because I'm a foreigner at the end of the day, no matter how much I'm from China, I'm from Hong Kong, I'm Chinese. I really, you know, I just don't look it, but I'm Chinese. My loyalty, my country, you know, I feel very at home in Hong Kong. But still, because I don't look Chinese, you know, my strategy was always, how am I going to get access to deals, right?

2:59 So I got to be the guy that's throwing cash out. If they hear there's this crazy guy that's throwing a lot of cash out, then all of a sudden people start coming, right? You know, there's a guy hanging out, you know, you just go to his hotel, you know, he's at this hotel and, you know, if everything is okay, he's just going to give you a million dollars. And I built that sort of thing for me, you know, a long time ago. A lot of the people I work with today remember me from back then as this guy that started throwing cash around. But I knew I was building my, you know, building my network. That's a very interesting way to build a network, though, because obviously there could be a massive amount of risk in just throwing capital around. It's not like you had like an investment thesis.

3:40 It's not all that stuff, no. No, that stuff. No investment thesis, no nothing. Started throwing cash around, but we did about a 16X about a year and a half even later. It was crazy. A lot of these companies, a lot of the bankers started coming, you know, a lot of the... Credit Suisse, the JP Wall, all these guys started coming and picking up all these Chinese assets and dumping them on the NASDAQ, you know, taking a 2% to 3% investment banking fees. And then they let them, you know, swim for themselves on the NASDAQ, which is pretty tough because in the NASDAQ you had, you know... Microsoft, this, you know, Oracle, this, and who the hell knows what Sino, so who or this is, right?

4:21 So they had to fend off. But the bankers took all their fees, made billions, upped the valuations. I mean, at that time, there was no more than like 40 million people online in China. Nobody was profitable. Nobody was making money. You know, sepia, click rates, all this, they were pennies. I mean, they weren't even in the States. I mean, nobody was making any money. But, you know, all of a sudden, I don't know, Goldman or whatever, credit or whatever, started saying it's worth $2 billion and, you know, manipulates valuations and dumps it on the NASDAQ at $2 billion, their commissions, and... You know, now you've got to fend for yourself. So that was what was happening a lot, you know.

5:02 And after I, you know, everybody made a lot of return, I remember it was like something like, I don't know, I had almost like close to 40, 50 million or something like that. And I'm still relatively young. But I don't want to be an investment manager. It's not fun. It's not fun. So I made a huge mistake, which was the classic thing that everybody told me. And, you know, do you remember that time? That was when News Corp purchased MySpace for Light of Fiber. So all of a sudden, News Corp purchases, like, MySpace for, like, 500 or something million dollars. And we all were like...

5:44 $500 million. That was a big thing back then. Today it's like nothing. But back then that was a big thing. So I had made a lot of money. I was young still. I had a lot of money behind me as well and my own. And I saw what these Chinese entities did. were getting valuation-wise, you know, like all these Sina, Sohu, Baidu, right? Amazing companies, amazing. But at the end of the day, China operates as, you know, the China internet landscape.

6:26 You had still, you know, 44, 48% of online activity came from internet cafes. Nobody had computers at home. And everything was, you know, there were no Facebook, there was no, you know, all this, they were local, you know, counterparts, if you will. So the Chinese government, you know, to set up a company in mainland China, you can't as a foreigner until today. You have to structure a WUFI, which is a wholly owned foreign entity, which is basically out of Hong Kong. That company can hold a certain amount of equity in a local company, but still it has to have a local own majority.

7:09 And you can start operating like that. So a lot of the public companies, like Yahoo, this, or, you know, how do you convince your board? Let's enter China. We will put our IPs and we're going to invest billions, but we don't own it. All right? So a lot of them couldn't. So Yahoo made a wonderful deal. You know, they invested in Alibaba. They turned out successful. But everybody else had all of a sudden a local counterpart, um, basically copycat their product with the support of the PRC. And, you know, so everything that was happening in the West was getting duplicated in the Far East.

7:55 By the way, is that rule still holds today? What rule? The rule that you cannot, as a Westerner, own a China, own a company in China. Yeah, of course. Yes. I didn't know that. So if you want to... So this is still why, as a Western company, it's not easy to get into China. Because, again, you're still risking that you're giving your IP to something that's not even... What's not easy? Go get a lawyer. Get the big law firms. They'll structure you some holdings, you know. And they'll get you a local person, and you'll pay a little bit more, and, you know, there'll be back-to-back agreements. You'll be fine. But... The actual ownership will be held by a local and the bank account and signatories and all that type of stuff.

8:41 You won't be able to have it. Hong Kong is different, obviously, but not in mainland China. So I saw all this, you know, people doing it. I said, okay, great. I'm going to go copy Craigslist. I'm going to go copy, you know, MySpace. I'm going to go copy, you know, YouTube and all this type of stuff. And I'm going to go copy all of that for mainland China. And I moved to Beijing, and this is like early, early, you know, early on, you know, and I decided to stop being an investment guy, even though I had an amazing... Everybody was like, no, what are you doing?

9:25 But I thought that was the right move to do. And I was disregarding my talent. My talent was raising capital. I was good at packaging and... But I thought that was the way, that was what people tell you to do. I still see people say the same nonsense on, you know, on social media and YouTube, you know, oh, you've got to have the passion or you've got to have this. Forgive me for saying, I don't know, for me that never worked. Never. Um... And I went into China. I went into Beijing. I set up office. I don't speak Mandarin. I've been until today. I moved in and I stayed at the hotel.

10:10 There was nobody at the hotel. China likes to build like thousands of hotels, but like there's nobody there. I stayed in this like 500 room hotel. I think there was maybe three people there. Okay. It was awesome. You know, I lived in that hotel for like a year. And one of the guys at the front desk, Chen Chi, I spoke great English, became my brother from another mother. And, you know, he later on turned into my right hand, my brother, my general manager for, I don't know, 12 years um he's a he has two multi-billion dollar companies today he's trading on the shanghai uh index but uh back then that's how i met him and i said uh leave the front desk and come and help me like i don't know how to speak i don't know how to rent to this i need an engineer i need this let's you know let's set up shop And I set up shop and I hired a whole engineering team and an office and, you know, but for like, you know, for 14 months I was in Beijing.

11:14 I didn't leave. No, it's, uh, you eat breakfast, lunch and dinner by yourself for 14 months. Um, and you think you're on this bigger purpose. Um. But I was in it for money, okay? That was, I thought this was the way to make the money. And I'm like, oh, and you need to spend all this time, you know, and it takes years. That's not true. That's really not true. It's a mask. It's a mask.

11:56 You know, and I went and I, you know, set up and I had like, I don't know, 200, 300 engineers. And we were copying the shit out of everything that was in the West. And at the time, China was very much provincial. So there wasn't like one website that was for everything. But each province had like 60 million people. You know, you've got almost 2 billion people there. So we did like a Craigslist, if you will, for each province. And it was wonderful because I started gaining a lot of traffic. And then I did like a copycat of MySpace and I did a copycat of video sharing.

12:40 And I had like 80 websites out in China, software. I even built a browser. And they had IE, if you remember, and mine was called IQ. And, you know, but my IQ reached eight, I don't know, eight million users in its first two months. You know how? I met the number one bootlegger for Microsoft Windows. Nobody in China goes out and pays, I don't know, $300, $400 for their assault, right? They'll rip it off. It's all, it's China, you know. You guys, you know, pirate movies, pirate this. I went and I met this guy through chat.

13:20 He introduced me to this really fat guy who's amazing, actually, because I met him at this restaurant on the street eating noodles. And... I gave him $250,000 in cash to basically on his next batch of, you know, windows to remove IE and put IQ. And when he did that, he placed it all across internet cafes. And he dispersed like, I don't know, like 100,000 of these around. So all of a sudden, the internet cafes, the users in China don't know what IE is.

14:05 You know, they go in and all of a sudden they see something called IQ. And all of a sudden, I had a lot of users from that. So I had a bunch of platforms, and I was all of a sudden, you know, I had millions of users as the sector grew on my platforms. Millions, you know, tens of millions. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.