Podcast transcript #84: A mentorship platform in China helping students access the best universities worldwide
Find here the China paradigm 84 and learn more about Greg Nance’s company, Dyad.com, a mentorship platform in China that finds scholarships for Chinese students and helps them go through the admission process of the world-leading universities.
Full transcript below:
Matthieu David: Hello everyone. I am Matthieu David, the founder of Daxue Consulting; a China market research company and its podcast, China Paradigm and today I am with Greg Nance. You are the founder of Dyad.com. Is that right?
Greg Nance: That is correct.
Matthieu David: And Dyad is a mentorship platform in China that has helped to earn – I was impressed by the number – 27 million USD of scholarships for Chinese students, mainly. First, I didn’t know it was that big as it could be that big as per the market and secondly on the amount you have to get. You raised funds in China from venture capital or CSV as far as I read and you have been named by people as Asia’s most promising start-up which have raised $1 000 000 in venture capital is what I was saying before that you raised money. You also are the co-founder of Money Think. I think that’s something that is very Chinese. We can’t stop with the one start-up. We have to create another one.
You started Dyad.com in 2012 so, it has been some time already. You are among the club of entrepreneurs; entrepreneurs in China who have passed the 5 years Death Valley you know; where actually it is hard to raise a certain amount of revenues and a lasting business. Thanks very much for being with us. The first question is what’s your core business? So, what did you do? We understand that it’s a mentorship platform in China, but what do you provide to your clients and who are your clients?
Greg Nance: Yeah so, it’s a B2C model at Dyad.com. We sell actually to students and their families and the core user is a student that has really big dreams for overseas study or an overseas career, but it’s really confusing going from somewhere in China or somewhere in India or Nigeria to you know; the United States of America and so our mentorship platform in China is a free-style platform meaning we have a lot of free resources; articles, videos, events, webinars; you can get all of that totally for free and after you’ve enjoyed some of those articles and videos and you’ve seen some of the insights and expertise and you say, “Hey, I want to work one to one with one of these expert mentors” and so our core business we actually create a program of pone to one mentorship customized and tailored for you, based on our experience building really great curriculums that help you build your background then inform you about your options and actually build a step-by-step game plan to help you get to that dream university, to secure that scholarship for Chinese students, to land that dream job.
Matthieu David: I believe we understand a bit better how you work by understanding your business model. So, the students pay your mentorship platform in China or the mentor? Do they pay through the platform, do they have access to the premium videos? Could you tell us a bit more about what you’re selling as a product or a business model?
Greg Nance: Yeah absolutely. So, from a business model perspective, a student or the family will actually pay Dyad.com directly. So, they pay for our company and then we actually match them with a team of mentors. The mentors will then work side by side with these; we call them scholars. That’s the name of our clients. We work with the scholars for the duration of their program. Programs can be short; in a month or two or 18 months, 24 months, 36 months and our mentors will work with them as they go and we will actually pay these mentors for the awesome work and the really great kind of inspiration that they are providing as they go.
Matthieu David: So, now I understand why you insisted when I introduced your company on the .com because it’s fully a platform. You’re contacting the mentors, the scholars sorry. You named them scholars; with the students.
Greg Nance: That’s right so it’s all online. We were actually the very first of our kind. On September 5, 2012, when we launched there was nothing like us. We had seen that there were all these brick and mortar study abroad agencies providing advice and a lot of it is not very good, it’s not very helpful. It’s certainly not expertise. At the very best it’s based off kind of hearsay meaning, “We can do it better” and the .com and the digital reach that we have is allowed a student way better and a larger scale by helping students literally around the world through this information and through this inspiration.
Matthieu David: How much of the audience is Chinese?
Greg Nance: About 80% of our clientele is Chinese and we’ve helped folks from 24 other countries, too.
Matthieu David: I see. Talking about platforms the challenge of platforms like any platform like Alibaba, Amazon, whatever; it is to certify the product or certify the supplier. Alibaba business model actually initially is not a manual transaction because if you buy like ten shoes you are not going to go through the platform. You are going to go from one bank account to another bank account so Alibaba makes money with certification. So, they tell the factory to pay for certification and then it goes to the supplier. So, how do you make sure that the scholars you have on your mentorship platform in China or the mentors are good enough in terms of training that you have for harmonization and finally that the fit is working?
Greg Nance: Yeah that’s a huge question. Those are million-dollar questions. If you get that right you are going to build a great business. If you get it wrong, you’re not going to go very far. It starts for us with really, really great instruction and great mentorship. So, I start on that side of the platform because if you can really build a great product and if you can attract a lot of the right customers, they can get a lot of value from it. So, we recruit folks with outstanding credentials. You know, these are folks from Oxford, Cambridge, Yale, Stanford; really, really top-notch schools, but that’s not enough. That’s just the beginning. From there we have a rigorous interview process. We want to make sure that you’re the kind of person who is patient, who is friendly, who has really great insights and you’re not just some Brainiac who isn’t reflective and doesn’t know actually achieve that opportunity.
I prefer to find people who; pointing at Harvard actually; they had a 3.5 GPA so they were really smart, but they didn’t have a 4.0. They weren’t able just to get into Harvard based on pure academic merit. It was the merit plus the insights around how they could actually put together the application. So, a lot of it is in the selection process. Then we have this training process to get you up to speed on a lot of the insights that we have collected over 7+ years and then it’s all about real-time quality control. So, our mentorship platform in China is built with scalable quality. In real-time we know how our customers are enjoying their product because they are giving us a ‘1-5 star’ rating, they are giving us feedback, they’re in touch with our enrolments and scholar success team and with that real-time feedback, we are actually able to improve the curriculum on an hourly basis. We’re able to know on a minute-to-minute level is this scholar satisfied? Are they getting value out of this? Are they confused? Are they lost because really applying for a university or a scholarship for Chinese students or a dream job overseas is stressful and it’s really anxiety-inducing.
The more that we know where you are in any one moment, the more we can give real-time help and support and be responsive and so for us that’s our kind of you know; Alibaba sales certification. If we give great mentorship and a scalable quality platform, we are going to do some really, really good work.
To the second part of your question; how about the customer side? Well, for us we are on a mission to expand education access and so the key thing is are you motivated and are you coachable and if you are motivated and if you are coachable, we want to help you. We want to give you great mentorship and if you are not motivated and if you are not coachable, we are not the right mentorship platform in China for you. Ultimately you can find someone if you need a baby sitter or if you need someone to write an essay for you. That’s not us. That’s not what we do, but if you want to be informed and inspired you are motivated and coachable; awesome. So, we look at all different kinds of students, different ages, different talent levels, different English-speaking capacity and as long as you’re motivated and coachable, we are going to do some great work together.
Matthieu David: I talked about one number which is 27 million USD in scholarships for Chinese students and students from other countries. Would you mind sharing a bit more about the size of your business now in terms of the team, in terms of revenue, in terms of the number of students you have coached?
Greg Nance: Yeah absolutely so we have crossed 2100 customers; scholars over the 7 years. We have helped these folks do some amazing work. 40% of those folks get into the top 20 US universities and a full 45% get into one of the UK’s G5; like the top 5 British universities. So, we have really built I think a pretty powerful niche amongst… really motivated, talented students getting into really, really terrific universities. The number of products sold as you introduced me is the 27 million dollars and since actually, I made some notes for the show and we actually had a couple of really big wins, including another full scholarship to Oxford University so we have compiled the data there. The number is going to be even higher the next time around.
That really fires me up. We have done all that and we have a team of three folks here at headquarters so it is extraordinarily lean that we have been able to build up a lot of this as we have gone and we’ve got 40 mentors that have been active on the mentorship platform in China doing a lot of the amazing work and one thing that I really enjoy and appreciate in this business is that it’s a bit of an accordion almost. It’s very seasonal so, students really, really need help with scholarship applications and university applications from like October through January and then from February to September most of the students are not really thinking about the application. They’re going through their day to day, they’re joining extracurricular, they’re joining extra studies and so we’re able to be flexible in the face of that. That’s one way that I think we have been able to both survive and to thrive for 7 years here.
Matthieu David: How do you manage the cycle because I believe you are very busy from maybe July to prepare the season and then until March and April?
Greg Nance: Yeah, so we… there are definite challenges there for sure and I think it would be simple if it was more of an even keel and more like a level or growth pattern throughout the year, but that’s not the market dynamic and so for us, we seem to be deliberate in our preparation and so for instance, in the late winter when we assemble a lot of scholar feedback and we use that to rapidly iterate next years’ service offerings.
We then actually fuel test a lot of that in the spring and we get lots of good real-time data from folks and a lot of our happy customers are then making referrals. “Hey, you should join Dyad. They are really impactful for me” and then we are able to then test out more of these materials with some of those early adopters for the next cycle. I’m also really big about work-life blend and so our team… and we encourage folks, “Hey, you love scuba diving? Go work on your next scuba diving certification.” “Hey, you love ultimate Frisbee? Let’s go play in some more tournaments this spring. Do you like hiking? Let’s go do some more of that.” So, you know my belief is that life is an ultra-marathon and you know; enjoy it while it’s there. Go push yourself and the different seasons of life, certainly and so that is one element that I have enjoyed; a bit of seasonality about the company.
Matthieu David: I see. It’s a good way to see it because seasonality is usually very difficult to manage, but indeed if you see that part of the heat is more for yourself as a balance on work; that’s a good perspective. You talked about scholars, students and we are referring to you as a good mentorship platform in China which helped. How do you reach out to new clients, new students you would help? Is it online acquisition, is it offline, is it a blend of both of them, is it mainly word of mouth now?
Greg Nance: Yeah so this is one of the biggest challenges. So, education in China for listeners who aren’t as privy is enormously expensive to acquire customers and so if you are in Shanghai or Beijing and you see a billboard with an education brand it is safe to assume that person is paying 100 000 RMB per week for that billboard. If you see an ad on the subway; that’s at least 5 or 10 thousand RMB for a small subway ad. If you see a banner ad on a website every click could be 300-1000 RMB. Every phone number that is acquired might be 500 RMB. So, you certainly can do the math and it is ridiculously expensive just to get leads to let alone clients in the space and of course there are thousands of education businesses all competing for the same people and that drives up the price. So, I give that as a key context here because we are a small outfit. Yes, we have raised funds in China, a million dollars in VC, but you can blow $1 000 000 very quickly in China’s education and trying to acquire customers.
So, for us, we have been very lean from the very beginning. When we got this business started I was making a 5-minute video tutorial about how to write a personal statement or how to pitch yourself in a scholarship application from my dorm room at Cambridge University and then I would upload those videos onto Rinrin which it was like the big WeChat before WeChat back in 2012 and these videos got a little bit of traction because people found it useful, they shared them and then I woke up one day and it’s like, “Wow that video I made last week has a quarter-million views. Wow” and that was how we acquired the first customer, by content creation marketing in China. So, it is all about content creation marketing in China and showing our expertise and then getting people to find it valuable enough to share it and so it was a whole lot of free advertising and that mentality has guided us ever since. We have written over 1000 articles, produced hundreds of videos and I have spoken at thousands of events in China ranging from campus lectures to webinars to saying yes to all kinds of conference invitations and forum invitations and the result of that is we are able to advertise much, much more effectively and so a lot of that is literally shaking someone’s hand, learning about their goal, “Hey, we can actually help you. You’ve got a goal that is part of our expertise. Let us help you” and so, we have had far more success with that, with content creation marketing in China and word of mouth and of course we have also tested Baidu and I have wasted 30 000 RMB on Baidu and it literally went nowhere.
I wasted a lot of cash on other online digital ad buys. I presume that there is a lot of; a suspicion that a lot of Chinese consumers have around stuff that is advertised online. You don’t know what it is and you are far more privy or far more likely to actually go with the first recommendation and so I think part of our business is just to do a great job and getting one friend to recommend to another and 40% of our customers will actually recommend a friend who then signs up. So, that is the very word of mouth driven and that is far more capital efficient for us and it allows us to really focus on our product and service instead of building a big marketing team. We limit the marketer at HQ because we are able to focus on client delivery and do the job.
Matthieu David: Word of mouth is great because it shows that your product and your service is working, but it’s slow. Word of mouth is slow and it’s difficult to manage. How do you… what is your perspective on it? You say you don’t have a marketer, but you do content creation marketing in China. When you create content could you elaborate more on what you do now? It seems that it is very social and less SCO driven so less search and more social. Could you tell us a bit more about the content you create and how you accelerate the growth based on word of mouth?
Greg Nance: Absolutely so the way we actually do it is our scholars or happy customers they do a lot of our marketing for us so they will actually write a WeChat article, “Hey, here’s what I’m learning from my mentor. My mentor went to Yale and got a scholarship there and here’s what they’re teaching me.” So, it’s very, very instructive. It’s not an advertisement. It’s not, “Hey, go buy from Dyad.” It’s very, very much, “Here is how this person has helped. Here is how they expanded my world view. Here’s this new perspective I have” and then here’s a pretty actionable intelligence; for those of you reading this WeChat article, “Go do this” and, “My mentor taught me about the importance of a morning routine.” “My mentor taught me like a better format to brainstorm.” “My mentor taught me how to ask a professor for a recommendation letter.” Basically, if you make it actionable and you make it interesting and kind of fun and engaging people then share it and so, what we’ve seen is like a lot of our articles will have thousands of shares because students find it useful and students want to help their friends out.
So, that has been the strategy and you’re right it’s slower than going and buying a big ad buy on Baidu later today, but ultimately I think it will just convert at a much, much higher rate and that’s how we’ve approached that, so far and almost all of our customers from places like Honduras or Columbia or Egypt or France or Japan or Korea; those folks come through Google and actually they will Google things like, “How do I write the UPENN essay?” I am glad you asked because Google just ranked our article by that name, number one. “How do I ask for a recommendation letter?” Well, we’re on the front page. If you quote that and so people read this article and it’s like, “Wow, that’s really good advice from this guy from Oxford or this guy from Upenn.” “I want to like to connect. I want to figure out how I can actually write a great essay Upenn as it applies to me. I need a mentor” and we make it really easy to actually click to connect with a mentor right there on Dyad.com and before you know it we’re working with this Carlos; this wonderful Honduran who dreams of being a doctor someday and, “Wow that’s so cool. I have never been to Honduras. I have never met a Honduran to my knowledge and yet here we are helping a wonderful student from Honduras as he prepares his application.”
Matthieu David: I see so you generate and do content creation marketing in China basically by the user or the client; the scholars and it is for you a way to generate content. What about in China? Do you publish directly to your blog or do you publish on WeChat or do you publish to all of the platforms plus some Q&A and so on? What are your favorite platforms?
Greg Nance: Yeah two favorite in China are WeChat and Zhihu; the Q&A quorum like platform is a really, really nice way for us to show expertise because if you go and dig into some of Dyad’s answers what you’ll see is there will be a question: “Hey, how can I prepare my resume before I apply for a scholarship?” A lot of the answers before Dyad weighs in will be very, very like two or three sentences and not super insightful, very little depth and it will almost be a little bit snarky; like here’s a clever answer, “Do better stuff. Do cooler things.” That’s not very helpful to somebody who actually likes ha a genuine question and one of our scholars or one of my colleagues will weigh in with a very in-depth, point by point by point. You know, “Here’s seven things that you can do today to improve your resume” and it’s just sort of night and day and on that platform people then give thumbs up to the answers that they appreciate, that they want to up-vote so that more people see them and a lot of these questions Dyad will be the most up-voted. So, that’s our style. We don’t actually answer tons of questions, but those that we do we do a good job at and that’s our mentality.
Matthieu David: So Zhihu is giving you visibility because difficulty with WeChat is that it’s somewhere closed. You cannot get onto WeChat through Baidu or through a search. You have to be referred. It’s good for word of mouth, but again it is slow, it’s closed, it’s more selective, but Zhihu is right by Baidu and people may go on Zhihu to look for questions.
Greg Nance: Precisely and you know; I mentioned to you a few minutes ago that we need a coachable and motivated customer. That’s the key for us for this mentorship platform in China to work. If you’re on Zhihu and you’re looking up a question like, “How do I write a great essay” or, “How do I make a good CV”, or, “How do I prepare for an interview?” Well, boom; I know for sure that you are someone that’s motivated because you are actually doing the work. You’re not just paying some study abroad agents to write an essay for you or like draft out your interview prep notes. You’re doing the hard work here and those are the students that I am most motivated to help. I was a scholarship student myself and that’s why I started this business 7 years ago and because of that, we are able to find more of the right folks on Zhihu so I’m personally for Zhihu. I think it’s a great platform and I think it’s a wonderful, free resource that folks can learn from and I want to be a voice that will help more folks kind of inform themselves as they go.
Matthieu David: It’s the second business I know which has been partly built on Zhihu and another one is a cosmetic business; she built it on Zhihu initially. It’s very interesting. I have a question about conflict of interest in your business. I feel that some players in the field have a conflict of interest and get payment from the university and from the students and scholars and actually they push some universities which may be less known, but need to fill in the quota of students. How do you answer this conflict of interest?
Greg Nance: Yeah, I think it’s a really powerful one and you see a lot of players take a lot of shortcuts and they end up hurting universities, hurting students just to enrich their bottom line and so for us, we’ve actually never accepted a dollar. We’ve never made any revenue at all from universities and the main reason is we want to be a purely honest broker doing the right thing for each student and every student’s path will be different and we don’t want to, “Oh yes Utah Valley State University is where you belong.” Secretly I’m taking $5 000 from Utah Valley State University… We don’t want to be in that position and so we have certainly been approached by a variety of places, “Hey can we put this ad on your site” or, “Hey can we pay you 5 to even $10 000 for a placement?” But for us, we have said no because we want to do the right thing for students as we go and for us, we thought that that would help us build a stronger business. It really does the right thing for each student and plays that long game to do the right thing.
Matthieu David: So, that’s a topic in the industry that that is a challenge, right? Some players are getting money from both sides.
Greg Nance: They are and a lot of companies have done very, very well with both side model and I think some of them; hey, they have walked the right side of that line and I admire them for it. My view is there is a lot of grey in the China education model and as much as possibly can we stay on the right side of that line and the way that I have just analyzed it is as soon as you start taking some money or well, it gets much easier to take the next and the next and the next and before you know it you are doing things that you set out not to do and part of how I envisioned our business from the get-go is we want to clean up this market that has a lot of antiquated practices and a lot of unethical practices and we want to be a provider that does the right thing every time and as soon as you start kind of cutting corners your business can become unrecognizable to what you set it out to be and so it’s easier to say, “Nope, we just don’t do any of that” and that’s the position we’ve taken for 7+ years and it’s served us well enough.
Matthieu David: You said that it’s a very lean business. At the same time, you raised $1 million USD from CV which is a very active venture capitalist industry in China; William, right?
Greg Nance: William Baldini, that’s right.
Matthieu David: Why do you raise funds in China then?
Greg Nance: Yeah so our business over 7 years; we’ve gone through many different iterations so we started as a kind of a content platform and we were growing like crazy and for us to kind of assume a market-leading position we ended up raising $400 000 to help kind of supplement operations, grow our team as we go. As new competition flooded the market it was hey like, “This content play is not going to get us to the next level and so let’s actually look at how we can build a premium kind of mentorship opportunity in order for us to build a lot of the tech behind that; to build a great product,” we thought raising funds in China would actually help us to do so and we raised the back half of that million dollars.
We actually haven’t raised since 2016 and we basically want to build the right tech and the right team to execute there. We have had really good fortune from SOSV, from 500 start-ups and from ToYou Incorporated which is an Aztech-listed education company and those are our four largest investors and they have been enormously helpful and valuable in us getting to where we are and we’ve now realized the beauty of lean after raising a million dollars. So, this is my first venture company in China and so you do a lot I think and you are learning as you go and there are some decisions that you might feel a little bit differently, but ultimately as long as you’re working with great people to keep powering forward with even more momentum.
Matthieu David: Are you part of China Accelerator?
Greg Nance: Actually no, I was roped in by William during batch 5 as a mentor and it’s been an amazing experience. I spent a lot of time at CA; the China Accelerator and I learned a lot through their methodology and I think the lean kind of style is really valuable and even a company of 7 years old like Dyad.com.
Matthieu David: So how did you raise funds in China? So, we understood that the reason for raising money was to build tech and to cope with risk as well with scalability and initiating new products. How did you raise funds in China? How did you get the attention of them? $1 000 000 is not a small amount.
Greg Nance: Yeah so part of this is luck and good fortune. So, I came to China and we started building this mentorship platform in China and we were pretty visible pretty quickly because Rinrin was putting us on their homepage like every week, a lot of our videos and articles were reaching on folks and so we were in a situation where investors were actually kind of reaching out to us, “Hey are you raising funds in China? Have you heard of our fund?” Those were cool kinds of opportunity back in 2013/2014 and that helped us put together the seed round with some great folks as we go. As we got to the second round of funding you know; our investors had watched us, had seen us execute and they were excited about what we were doing and they were excited and posted it to their friends to kind of fill out the round so you know; my kind of advice here and what worked for us is put yourself out there, go to a lot of meet up’, build your network. It helps to know a few folks and then critically important is keep people updated, keep them appraised of your progress and it could be as simple as a monthly note, “Hey, here are the three things we achieved last month. Here are the three things we’re going to achieve next month.”
Then write that update again, “Here are the three things that we achieved and based on what I told you; here are the next three things.” You know I did that for the first like 3 years of the business and it basically showed investors that we have a nose for execution and we like to get stuff done and we like to move fast, we like to set big goals and get after it. That’s my mentality. Look, start-ups are fun because you can get agile, you can achieve big things, but use that to your advantage and really show people that you’re on kind of the founder’s clock and you are able to move fast, get stuff done. As simple as that sounds; that’s how we raised funds in China.
We then got to talking terms, we agreed on a basic term and we got used to liking the simplest documents we could and you know; we paid a gradual $5 000 for legal fees for all of this which is unheard of low. You can burn a lot of cash on lawyers, but we built relationships and then used super vanilla documents, got the deal done for very little and got back to building the business.
Matthieu David: That’s the thing actually when you meet with investors or people who want to invest; even business angels a no is never a definite no. If you keep updating them actually, they may say yes or they may refer you to someone else who would like to in this sector.
Greg Nance: Precisely, we’ve had a couple of really, really fun ones where the ‘no’ really means ‘not now’ and a number of times where this has happened; like, “Hey, can we do this thing?” No, and then it seems deflated. “Let me just keep you updated” and 6 months later you go out for another coffee and the investor then shares, “Hey we are actually raising a new fund and given your current growth let’s stay in touch on this” and a number of those folks have become you know; a coupe folks have said no through their friend and have written a check as an angel because their partner may not have agreed, but they see the promise. They write the check and in other cases, the fund is taking too long and they still come on board and so yeah; keep folks updated and we faced 80/90 no’s for the 13 yes’s that we got and we found the right 13 people who believed in what we were doing and helped us to get it. So, ultimately that’s what you need. You need one yes and that one yes then leads to a lot of momentum and it leads to referrals and even those no’s as you put it; that could lead to new intro’s, new introductions.
Matthieu David: Talking about surrounding with great people; you have the board; an advisory board or board member. You have the CEO; I don’t know if it is China or another country and you have a secretary. First, how do you get them and secondly how do you incentivize them? How do you keep them motivated?
Greg Nance: Yeah so, I am a huge believer in luck surface area. You have got to give yourself the best chance to get a lucky day in and day out because as an entrepreneur you have to kind of make your own luck sometimes. I’ll tell the quick story on how I met Ed Ramsay; the former CEO of Mc Donald’s. I was at a conference and we were at lunch. There were 12 people around a table; most were in their 20’s and there’s one gentleman who is clearly much, much older. HE was in his 70’s. He is sitting next to me and we strike up a conversation and while most of the gentleman around the table are talking about the party last night or how excited to go out and hit Burban Street tonight. I am chatting with this fellow and he is prepping me with questions about, “You’re in China. So, tell me a bit more about your business” and he’s asking me the kind of questions that show yeah, this is a really sharp guy.
After 5 or 6 minutes of kind of giving him my elevator page, the MC heads up to the microphone and before I had a chance to get to know what this guy was up to the MC kind of clanks the glass and begins introducing today’s keynote speaker, “The former CEO of Mac Donald’s, Ed Ramsey.” This gentleman who is next to me stands up and he taps me on the shoulder twice and heads up to that microphone and in that speech one of his big messages was, “As young people, you need to take risks. Take more risks because you never know where your career can go when you aim big and swing for the fences.” That’s a beautiful message and then he literally points at the table and says, “Look, this young man here; he moved to China to start his own business. You can also take big risks like this and when you’re young the cost of failure is so low. You just go get a job like everybody else is doing” and I was like, “Wow the CEO of Mac Donald’s talking about me and my business.”
So, at the end of it, I give him my card and I get one of his cards and I say, “Look I am learning so much as I go but I want to learn faster. I am building an advisory board and I’d be so honored if you’d join it” and he said, “I’ll stop you right there. Count me in. I want to help” and so you how do you incentivize? Well, in this fellow’s case he is made all the money that he needs for his life. He now is in a place where he wants to make a bigger social impact by contributing to mission-driven organizations and so for him the way that he does that is by helping mentor young business people that are working on mission-driven organizations and so then he doesn’t need you to know; stock options, he doesn’t need a salary or a commission or something. He does want to be updated about our progress, he does want to know that his time is being well invested and really that’s what I try to do with him and the air force secretary, with the former chairman of the Jefferson awards and the other kinds of luminaries that we’ve worked with, is how do we create a really inspiring experience for them and a lot of it is we are doing good work and we want to showcase that for these folks.
Matthieu David: In this case, I feel that the skill that I needed is to know how to manage a relationship, how to know what is important to say, what would be interesting for them; where they will feel valued. That is the key.
Greg Nance: Absolutely and making… really being thoughtful about it, too. For instance, this fellow Ed Ramsey; what is he looking for here and I quickly look. Even if he had 100% of Dyad that would never move the needle for him financially compared to what he has already done. It’s just not going to be of interest and so what would be and then sort of doing a bit of analysis on that and then you know making sure that the time that he is investing in alignment with that value that he has. You are right; relationship management is an underrated skill within entrepreneurs.
Matthieu David: Talking about the market; so, you said 80% of your clients, of your scholars and students you help are Chinese. How do you analyze the current situation of Chinese going overseas for studying? We are in a very specific moment. Chinese universities are getting better and better. Nottingham is in England for instance and some universities have invested to build campuses, to build strong relationships with Chinese universities so you can go to a good university by doing a degree in exchange. What is the constitution or market, from your side?
Greg Nance: Yeah, it’s an interesting moment in a number of aspects. There are big opportunities in that because of the one-child policy there’s this decade+ law or megatrend where families are really trying to position their sole child and with the best possible education and a lot of families have decided, “Look, that means we’re going to do our Bachelor study in China and then we are going to spend $100 000 for a Masters overseas.” A lot of families, of course, can’t afford that. That’s a crazy amount of money for a lot of families who are kind of the middle-class bracket and so the way that we’ve identified the market is we are going to most effective and most helpful with that middle class and upper-middle-class people. Those that are super fluent; they don’t need scholarships for Chinese students. Those that are super fluent are going to work with a study abroad agent. They are going to just write essays for them and that’s less our market.
So for us, we actually look at the slice of middle class and upper-middle-class that merely could use the value that we are able to provide through scholarship advisement and then we are going to focus on that cohort; overwhelmingly that cohort spends its bachelor years in China because if you do the math; paying $ 50 000 a year for 4 years for a bachelor’s degree. That’s crazy money for these folks. There is no way that their family can reasonably afford that and scholarships for Chinese students are exceedingly rare at the bachelor’s level. It’s extremely rare. So, that’s what we have kind of sliced this and I think that the middle class is getting larger. I think that the middle class is getting more discerning. I think they are looking for value and we are able to find folks and again through word of mouth and then do a good job and inform them of their options and then giving them the best possible opportunity.
Matthieu David: How do you qualify the middle class? I feel that’s a definition that is actually evolving and not very clear. Middle class and upper-middle class in China, in terms of revenues or maybe in terms of as you said; association of what the need could be?
Greg Nance: Yeah so, I don’t have a precise you know demographic definition or income definition. The way I kind of frame this is sort of a metal framework. When I ask a family about their budget for overseas study, if they respond with either a little bit of laughter or if they respond with, “There is no budget.” I put that person into sort of the fluent bucket where I’d say, “Look, they are probably not actually the right fit for our mentorship platform in China” because a lot of families that have that attitude; they are the kind of family that has paid for numerous tutors, numerous private travel opportunities, white-glove services in their daily life and real people with that attitude don’t actually do as well with our model because our model; there is no babysitting. We don’t call you up, “Hey Johnny. Here is the new draft of your essay.” It’s the opposite. We say, “Look, Johnny, you have got to actually do the hard work require to make this next draft” and that is not for everybody and for those that have been conditioned to kind of have handouts from private tutors and private agents and all. That just doesn’t go very well. So, so it’s not very scientific.
It is very much if someone tells me, “I have got to make this happen for less than $35 000.” Awesome. You are my kind of person. We are actually going to make this work. Let’s look up universities that could fit that price range and let’s look up some scholarships for Chinese students where if we’re able to hit it, it would enable us to go to a place like Oxford. Just actually last week I got the happiest news. This lady Zuree; she wants to create sustainable fashion in China. That’s her dream. She wants to create a fashion industry that is employing poor people from rural places and that’s using low environmentally non-invasive water techniques because there is a lot of water that takes place in fashion, apparently. I didn’t know until I met Zuree and coloring and dyes which actually there is a lot of toxicity to that. She has actually created her own studio that’s done $10 000 000 in sales over the last 3 years from a 20-year old woman in middle-of-nowhere China and I said to her, “Zuree, you are incredible and you have a very tight budget. We are going to make this happen” and bam; we advised her on her public policy applications which she is aspiring to.
We found a great program at Oxford which of course is way over her budget, but I said, “Look Zuree, we are going to find a scholarship for Chinese students for you because you are just such an incredible person and we are going to make this happen” and here a little over a week ago we got great news form the KWAK Foundation which is a Hong Kong-based family foundation and they are giving her $73 000 full scholarship to Oxford for this degree and that’s the moment we are saying that’s why you know; we do what we do and I am just real fired up about that. So, the short answer to your question is there probably are definitions that we could utilize. I don’t ask people their income and I don’t… but I have proxy and little signals that can tell me a little bit more about where someone stands. So, yeah…
Matthieu David: Very interesting. I see the impact of what you do on the life of some of your students and scholars. Impact on the trading world? Is it impacting now?
Greg Nance: It is impacting us in ways that I would not have expected. So, number one, I think fewer student s are aspiring to the US and I think that will show up in the data if not this year then probably the year following. A number of folks think that President Trump is arbitrary and a number of folks think that this is racially motivating and others think it is sort of unfair bullying from President Trump and that perception affects the perception of reliability of the US as a commercial partner into the future and I think it undermines the US’s position and simultaneously England and Australia and Canada are making it even easier for Chinese to come. So, you basically have a place where the US is shooting themselves in the foot which is a bummer because my belief in America is strengthened by having really smart people in the country working in the country and studying in the country, but unfortunately, the president isn’t viewing it that way and yes…
Matthieu David: When we look at numbers it’s about 30 000 students; Chinese students in the US every year.
Greg Nance: Yeah it’s huge and we are going to see if there’s a modest uptake or if that flattens out a bit because that, of course, was growing 10/12% year on year on year for like a decade so like there was huge growth and my prediction is that will slow until a lot of these underlying fundamental issues with the trading world are resolved.
Matthieu David: Quick last questions. We sent to you before the interview to know more about how you manage your knowledge about China. What do you read to stay up to date about China?
Greg Nance: Yeah so, a couple of resources. I am a big fan of connecting with really smart people and really great podcasts so Daxue Consulting; I think you have some really, really fascinating studios. I work with China Paradigm so I think this is a great resource and a second that I have come to really enjoy and just launched which is Mosaic of China with a fellow named Oscar who was a head hunter in greater China for almost two decades. He interviews fascinating folks and so I recommend these resources as gateways for folks to stay updated.
Matthieu David: What books inspired you most when being an entrepreneur?
Greg Nance: One of them is called the ‘Start-Up of You’ and it’s the story of treating your life as the CEO of your life and it is written by the founder of LinkedIn. It just inspired me to take bigger risks and all while you have a big A plan, a B plan and a C plan you have to have a really small Z plan or when everything goes wrong you still have a really good situation and that framework have helped me just take bigger risks.
Matthieu David: The founder of LinkedIn who has a podcast as well; the Master of Skill, right?
Greg Nance: There you go.
Matthieu David: What book on China would you recommend, if any?
Greg Nance: I recommend ‘On China’ written by Henry Kissinger; the American diplomat and foreign policy reader. It is a really fascinating history of China. It’s very kind of understandable and a couple of hundred pages and how that leads to China’s current kind of psyche and world view.
Matthieu David: What productivity tool are you using in China?
Greg Nance: The productivity tool that I get probably the most value out of is One Note and actually it’s a Microsoft tool and is quite popular, I think where I record the various ideas and it’s really helpful so I use that to log ideas. I use the Pomodoro Timer to do 25-minute sprits for getting tasks and work done.
Matthieu David: What is the most surprising experience you have had so far in China?
Greg Nance: My most surprising experience was probably out in the Gobi Desert. I’m an ultra-marathon runner. I’m running 250 kilometers through the desert and a gentleman on a motorcycle was following me and going, “Wow, what’s this guy doing” and then when I finally took a break to eat a banana this gentleman offers me a cigarette and it was just this beautiful moment in the middle of nowhere bonding with this guy on a motorcycle.
Matthieu David: Two last questions and actually those questions are inspired by Peter Juik; the founder of Business Strategy and one of the questions he is asking is what unexpected success you have witnessed in China? Something you have seen as successful and you were a bit surprised that it was successful.
Greg Nance: Yeah one example of this would be actually two of my friends from college; they started a business called Strikingly.com. They went through a white combinator and are having incredible success in America with this product and they then moved to China to try to build a China version and I thought, “Hey it worked in the US, but the Chinese are different in market and opportunity.” They had to pivot and pivot and pivot and now their China business is even bigger than their US business years later and that really showed me that, “Look, if you have the right team and you are willing to be super agile and follow the data you can achieve just enormous results.”
Matthieu David: That’s the thing; when building a company in China even if it’s a subsidiary you are actually becoming an entrepreneur again because you have to iterate, you have to adapt to the market.
Greg Nance: Exactly.
Matthieu David: What unexpected failure; the opposite you wouldn’t have expected to see in China?
Greg Nance: Yeah so, I look at a lot of large companies that are extraordinarily well-capitalized, brilliant people, leading them who come into China and they end up hitting their head on a brick wall time and time again and you know I remember back to like E-bay. I follow technology since I was young and I remember E-Bay entering China and I said, “Wow, like E-Bay is taking over the world. This is going to be amazing” and you know; now learning about that years later and what all contributed to failures of that kind; smart money. A Las Vegas gambler would have invested a lot of money on E-Bay succeeding in China and becoming a true global leader and yet E-Bay now is a total shell of itself and Amazon, Alibaba is others that have totally eaten it as lunch. That’s the kind of failure that even with all the money in the world; if you don’t have the right strategy or if you are not willing to be agile to follow the data you are going to fail and you’re going to fail hard.
Matthieu David: Thank you very much for your time. It was very inspiring to see how your company is impacting the lives of students especially this middle class which is going to be becoming massive in China and going to be looking for improving life and getting more experience. Thank you very much, Greg. I hope you enjoyed.
Greg Nance: I absolutely did. Thank you. My Pleasure.
China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.
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