Qifang was founded in 2007. At the time, we didn’t know we would build a peer-to-peer lending web service for Chinese student loans. Two friends and I were just talking together about ways that we could give back. We started with thinking about charitable work as a side project we could collaborate on. We’d all been blessed with the kinds of opportunities and resources inlife that it was so clear weren’t available to everyone in China. We’d studied and worked overseas and achieved some professional successes, but we felt like there had to be more that we could do. Now that we were all based or active in China, maybe we could find a way to apply our business training, backgrounds and networks to give others more opportunities in their lives.
We read Muhammad Yunus’ book, Banker to the Poor, and realized that completing a college degree was a major driver for changes in life outcomes. And so we were inspired to create a sort of Grameen Bank for Chinese students. We were excited to realize that we could take a commitment to social impact (we didn’t even have a word for it then) and make it scale quickly with a business model that pooled funding from other socially minded Chinese people. Combining technology and business model innovation with new concepts for online lending convinced us we could build a tech startup in a huge market opportunity but grounded with a sense of real societal purpose.
我们读到穆罕默德·尤努斯（Muhammad Yunus）的书（穷人的银行家），进而理解攻读一个学位是改变未来生活的主要驱动力。因此，我们被此激励要为中国学生创造出一种格莱珉银行（Grameen bank），我们了解可能需要承担的社会影响并为此感到兴奋（我们甚至无法用言语形容），并使用商业模式使之迅速扩大，并从些其他有社会意识的中国人汇集资金。我们以结合科技与创新的商业范例来建立的在线贷款，使我们确信可以根基于社会认同下，开启庞大的商机。
Fast forward through three years of tremendous successes. Putting together a talented team that shared our vision. Launching the service with rock solid technology and a new business model that was ahead of its time, we received many awards and recognitions like World Economic Forum Technology Pioneer. Press coverage was uniformly complimentary as people were excited about the prospects for social innovation in China. People in China and elsewhere really wanted the idea to work. They wanted to believe that a model that depended on trust and built on Chinese cultural values like investing in education could work. People, especially Chinese, wanted China to be the home of a new product, one that hadn’t necessarily already been successful in other markets.
This attention was converted to growth and the platform had thousands of student loans before we knew it. Each loan was another individual student who could pursue their educational dreams and try to make more of themselves. Each loan was a statement that you shouldn’t have to be rich to go to school and better yourself. Each loan was another data point that said that China could have an innovative new service and each loan said that you could build a company that married solving a deep social challenge with running a for-profit business.
But the truth is, we were probably too far ahead of ourselves. Put simply, there was one main reason why we didn’t get to the scale that we hoped, the market wasn’t ready for our model. Remember, in 2007, the Chinese Internet was just starting to get more comfortable with ecommerce and online payments. Many transactions were still paid cash on delivery. Most people didn’t have experience with long term investing, certainly not in fixed income products like loans. Most people didn’t have any experience with debt and how to manage repayments. Online services with real names were only starting to take off anywhere in the world. Social media and social networks as we know them now were in their infancy. And of course, the laws, regulations, and best practices around these kinds of new business models, around online privacy, terms of service and identity were yet to be written (many are still yet to be written and codified). We were too early, but in the end, there’s very little difference from being too early and being wrong.
Consequently, every bit of growth for the company came too hard, too slowly or too expensively.
And of course, as CEO, I made mistakes. Some mistakes we were able to learn from and improve on. Like trying to use the platform for too many different use cases, like wasting too much company time and resources exploring business development in non-core areas, like hiring people who didn’t have startup experience and didn’t have the intrinsic self-motivation to carve out their own place in the growing business. Step by step, we improved and I got better at making these types of leadership decisions and prioritization of resources. I had a lot to learn as a first time founder, and I had the support of the team and the emerging community of tech entrepreneurs and social entrepreneurs who would be peers, friends, mentors and colleagues. But most of all I had the support of our board and our investors. They stuck by me through the ups and downs, encouraged me and fostered my growth as the CEO, pushed back on me when I was off-track and basically had high expectations which left me no choice but to perform at my best and always stretch myself.
But some mistakes we weren’t able to turn around. Like a lot of startups we thought we knew what we should build and we didn’t ask enough potential customers to test our ideas. We spent money, talent and worst of all time, building additional product features that our users didn’t care about— in some cases, things that made the product more complicated and actually hurt our growth. We seemingly struggled with many of the problems that are being solved by concepts and processes like customer development, continuous deployment and the lean startup movement. Perhaps biggest of all, I made a mistake with our funding plan. We didn’t raise enough capital when we might have. Blinded by optimism, I tried to over optimize our dilution and our runway, and when the global financial crisis hit, we were left going sideways and on fumes. We were able to stretch out our runway by cutting costs and slowing growth, but it made it harder and harder to get new investors behind us. They kept looking for traction to prove this new model was working, but we didn’t have the resources to get that growth with the flawed product and acquisition model we had in place (we hadn’t yet found product market fit).
Our previous investors stepped up time and time again, and for that I will be eternally grateful. They kept the company alive, even through those toughest of times. They believed in our vision and they backed me up. I know they also believed in the good that Qifang was doing and trying to do. And wouldn’t you know it, even as we faced tough challenges, we generated some really exciting interest from new strategic partners. There were talks with local investors and the government about getting a banking license or a new consumer lending license. We explored using a trust or a guaranty company to scale up our capital base. There were high level talks with domestic and foreign banks about selling the company outright or licensing our technology or brand. For a time, it looked like we were going to be able to scale up Qifang’s model with the support of big existing players in the financial services world. We would even get a good outcome for our investors. And of course, we’d continue to write student loans and pursue our social mission.
But personally, I was burned out. I’d put my family through a roller-coaster ride. Through several years of our startup, ultimately forgoing a paycheck to keep the company alive, my wife stood by me and we also started our family. We now had two young children but we didn’t know how long it would be before a step function change for the company. Given the new strategic focus and with the core technology of the product in place, I stepped back and we found a new, local CEO, based in Beijing to take up the charge. We thought this would be a better fit for the next stage of the company and where it could go. However, as a founder, I wouldn’t be giving up my commitment to seeing Qifang through, nor giving up my responsibility for its actions.
These strategic talks got serious and from my new distance it sometimes felt close or good as done, but in the end, I think we ran out of time. As is often the case, the deals took a long time to move ahead, longer than we had planned for, and the growth we needed to keep our momentum petered out.
It was then that we made another mistake. We kept hoping too much for too long that something would change for Qifang. Perhaps because we’d put so much of ourselves into the company and we wanted it to succeed so badly. We dragged things out. Even when the new CEO didn’t work out, we kept pushing ahead and then waiting for progress on the strategic deals or an exit. As an entrepreneur you’re always straddling the line between foolish naiveté and unwarranted, unbridled optimism, but maybe this was too much. It was this hope that led us to not shut down the company even when our ICP license was expiring. We kept hoping there would be another chance at life for the company and more importantly for the model. We thought that by shutting everything down and winding down our users, we would be closing off the last chance hopes that one of these strategic deals could come together.
The truth is we still all have this hope. But at the time it kept us from being totally clear and transparent with the people on the platform, the students and the lenders. We kept hoping that things would turn around. Had we shut everything down, what would’ve been the point of all the struggles after all? Would our ideas about trust and opportunity be proven wrong? Worse would Qifang’s closure prove that China couldn’t innovate or that it wasn’t possible to make successful businesses that focused on social innovation? And honestly, winding down the company would have felt like defeat to me. Would it mean that I’d let everyone down: our users, our team, our investors?
So we decided to suspend online operations while the board kept working on the strategic opportunities. A skeleton crew managed the bare minimum of what was required for the company. And time passed. Days became weeks became months. Having stepped aside, this time passed quickly for me, but not painlessly. I dwelled on the missed opportunities and regretted each and every mistake I made. I lost sleep and gained weight. I blamed myself for what happened. But over time, slowly, I came to accept the outcome. I consoled myself by thinking about the good that we had done, the relationships I’d made, and in the hope that we might have inspired others to take up the challenge of social innovation.
I started spending more time with startups again. It felt good to share my experiences with other tech and social entrepreneurs as an advisor, a friend or an investor. It felt like coming up for air after spending all my time focused on Qifang, especially during those most difficult times. And I had interesting opportunities start to emerge: joining startups, running new lines of business for existing companies. Then a friend of mine recruited me to join her venture capital team. My Qifang startup experience was a particular asset as they were also looking at financial innovation and underserved market segments. It would mean a big shift for me, joining an existing, structured team with policy and processes which were mostly fixed. It would probably be more stable and more predictable as well. I was certainly excited by the intellectual and professional development challenge, and so I decided that I owed it to myself and my family to try being a vc.
Still hungry, still foolish 求知若饥，虚心若愚
But something gnawed at me still. Having spent so many years as an entrepreneur, I wanted to keep moving at that same pace. I wanted to move the needle. I loved being a part of a great team with really smart people, but I wanted more. Ultimately, I was still hungry to test the ideas that were so fundamental to Qifang. Could we build profitable businesses that had social purpose?
So when I had the chance to try again, to test our theories again, I couldn’t resist. In my heart, I knew the answer was “YES!” it is possible to do good and do well. I’d give up the stability and predictability. An investor who I’d met through Qifang had been supporting social entrepreneurship and wanted to become more active in impact investing as well. He was looking for someone he could trust who shared his values and vision for technological and social innovation. As we spent more time together, we hit it off. More often than not, we looked at the world the same way. More importantly, we shared a common vision for the way the world could and should be.
And Transist Impact Labs was born. I left the vc, grateful for the opportunity and learning, and was able to recommit myself to social venture and impact. We set up a great team, an office and have been investing, incubating and accelerating tech startups solving social problems ever since. Already more than a dozen projects. We also rolled up an existing project the investor founded and been supporting called ECSEL. It had grown into one of China’s largest fellowship programs for social entrepreneurs, but we already set to work maintaining and accelerating its growth in scope and quality to take it to the next level. While the sector remains young, we are probably one of its most active investors and capacity builders. We’re also helping define a new global trend of combining technology and social impact. It feels great to have taken the lessons of our challenges from Qifang and poured them into our new successes. While we may have been too early when we started in social impact, by persevering and getting back up from our stumbles, we’ve pushed things forward -- we’re closing the gap between what’s necessary and what’s possible.
于是，Transist Impact实验室就此诞生。我以充满感激的心情离开让我有学习机会的VC，并重新致力于社会冒险和影响力实验。我们建立了一间办公室、一支伟大的团队，并自此全心投入于研发、培育与加快使用科技解决社会之问题。至今我们主导十多个计划，也号召了一个由投资者与支持者成立的团队，称为ECSEL。它俨然已成为目前中国最大的社会企业家奖学金计划之一。不仅如此，对于其领域与质量上我们不仅审慎维持并加速将其提升至另一个层级。尽管该行业仍为新兴领域，且我们可能也是最活跃的投资者和最有能力建设者之一。我们还定义了一个新的全球发展趋势结合着技术和社会影响。能将在齐放阶段获取的教训运用于我们新的成就中是相当愉悦的。虽然当时我们可能过于急促投入社会影响之领域，但透过我们愚拙的坚持，终将事情推动向前了 - 我们正拉近可能与必须之间的距离。
But I was so busy in this new role, more time passed, and the ups and downs of Qifang continued to drift from my focus. But truthfully, I still held out hope that our board would close on one of Qifang’s strategic opportunities. The online operations remained suspended. On the rare occasion, I’d get an email or bump into someone who would ask, “What happened to Qifang?” but there remained unresolved questions about the site and the users who had open loans or remaining account balances.
Those issues stayed unresolved until I was contacted by three individuals who wanted more full answers. Led by a lender named Ni Huan, they all felt a deep sense of participation in the social innovation that Qifang had as its mission. They were stakeholders in the true sense of the word. They wanted Qifang to be successful, but short of that, they wanted transparency and clarity. They believed that the Qifang story could be helpful to other social entrepreneurs and that the lessons that we’d all learned might be helpful to others.
To be honest, at first, I was scared and embarrassed. I didn’t want to be judged for my mistakes and I didn’t want the Qifang story to be over. I’d never been called out in public this way and I was used to guarding my “face.” I also worried about the potential impact on my new work, my reputation and my family. We all hoped that there would still be that second life for Qifang. But as stakeholders, these individuals held me and our board accountable. They insisted we be more communicative and more pragmatic. They pushed us to recommit resources into developing a clear plan for resolving the remaining open items. By volunteering their own time, they served a vital role as objective stakeholders who could advocate on behalf of Qifang’s users as well as the social innovation sector. They pushed to work together with the remaining Qifang resources to make this happen. I sincerely appreciate their time and commitment on behalf of me and Qifang and our larger mission. They acted as collaborative partners throughout.
And so we worked together to close this chapter in the Qifang story, resolving the remaining issues and being more clear with the audiences that we had touched. By the end of April 2013, Qifang will work on behalf of existing users (both students and lenders) to clean up their outstanding account positions. We will reach out to lenders with existing account balances and give them the option to either donate the proceeds or request their return. A formal announcement with more details will soon follow.
All of us have certainly taken our bumps along this road, but we have also learned a lot and remain committed to the original values which had all of us stakeholders believe in Chinese social innovation. In sharing this now, I hope that everyone can see that there are second chances, and that it is possible to stumble and climb back up. I hope we can all open a new chapter where social entrepreneurs, their advocates, their skeptics and everyone in our stakeholder society can open an honest dialogue so that we can use our work life and our volunteer time to find our way to a better China and a better world together.Qifang was founded with the purpose of enabling students to get an education and better their lives and the lives of their families. I am proud to say we helped thousands of students get their education. Even though I was humbled during the process, I found that not only did these students get an education, but I also got an education. An education in business.An education in social entrepreneurship.And finally an education to allow me to contribute to China via Transist the next stage of social innovation.
KEY LESSONS 重要的经验教训
1. The hardest things in life are the most meaningful. We aren’t defined by the way we fall, but by the way we get back up again.
2. Doing anything hard exposes deficiencies in yourself and your team. Learn to improve those deficiencies or complement them, but never lose sight of the things that you’re good at and your core values. No one is perfect.
3. Being early may seem like being wrong, but with endurance and perseverance, the world can finally come to you and your ideas.