Students who want to start a business, entrepreneurs who have already started their ventures, and successful entrepreneurs - there aren't many of you here who have received venture capital funding. But I've noticed that those who truly succeed in building a business don't necessarily need venture capital. For example,慧聪网 (Hc360.com) didn't have any venture capital when it first started; it only received funding after it had achieved a certain level of success. So when did New Oriental receive its venture capital? It was at the end of 2004 to the beginning of 2005, and we went public in September 2006. Actually, this venture capital wasn't really necessary for New Oriental's success. It was only after people saw that New Oriental had succeeded that they were willing to invest. And for New Oriental, going public was what made others recognize us as a good company. We were already a good company before the venture capitalists came in. Some of our large enterprises didn't have much money when they started, and neither do most startups. In fact, starting a business doesn't require much money; one just needs to think about how to make money. People who can make money don't necessarily need money. Money is not an essential condition. Those who know how to make money will find a way to earn even without initial funds, while those who don't know how to make money will squander whatever funds they are given and eventually destroy themselves.
To let everything go to others and let them follow me. Everyone wants to hear stories about entrepreneurship, but I believe you want to hear how these businesses were successfully built. Entrepreneurship isn't hard at all. You could rent a storefront right now, even a small one, and that would be considered entrepreneurship. There's no doubt that entrepreneurship simply means doing something. What I want to tell you is how to start a business, which is essentially starting with a simple event. Most businesses start small. However, some well-planned ventures can secure venture capital. Although more people in China are getting into venture capital, such lucky cases are still rare, and even those who receive venture capital sometimes fail. But what is the expectation behind these investments? If out of five investments, one succeeds, it's already considered good. If you invest fifty million, and only one succeeds while the other forty million fails, then only ten million has actually been effective. Of course, this requires waiting, for ten or thirty years. But once it succeeds, it brings exponential profits. When one succeeds, they make a fortune.
The second challenge: It was indeed difficult for someone like me to leave New Oriental back then. Once New Oriental started looking somewhat successful, other institutions stopped competing. But I had patience and worked slowly. The situation in Beijing was similar at that time. I was still running my school seriously when one of my advertising staff was stabbed several times. When we reported it to the police, they said they were too busy dealing with murder cases, so they put this aside. After investigating, I found out it was someone from another institution. Therefore, no one dared to post advertisements anymore. At that point, I really wanted to close down, but I had nowhere to go. If I didn't close, I couldn't continue operating. So, I had to find a way. I couldn't hire anyone from the underworld, and I didn't know anyone from the upper world. Thus, I had no choice but to overcome it. Now, my motto is "A person is born to overcome difficulties," and your ability to overcome difficulties is directly proportional to your happiness and success. That was my state back then, but I didn't have such a strong mindset then.
For me, starting New Oriental was prepared. I taught at Peking University for six years. Thanks to my experience at Peking University, I gained recognition from students for my teaching ability. First, my teaching skills. Second, my experience in organizing training courses outside. Though I didn't organize them myself, I helped others organize them, and because of my involvement, Peking University disciplined me, affecting their enrollment and economic income, giving me a severe punishment. Later, this punishment didn't reduce my love for Peking University; instead, the person who punished me became one of my benefactors. Initially leaving Peking University required determination, but ultimately, Peking University's punishment helped me make that decision. Although the punishment was a bit excessive, it led to my achievements today. After leaving Peking University, without strong support, I continued participating in training. I wanted to go abroad, and I had to go abroad. While working for others, I thought if I started such an institution, I would definitely succeed because I care more about students than others. Just based on this point, one can achieve success. From the core perspective, you must ensure that your employees, teachers, and recruited managers are better than those outside, which is the key issue. For example, the reward system. Regardless of which step you take, the majority of people in this enterprise should enjoy better treatment working for you than outside. Even if there’s no immediate monetary reward, you should promise a future reward. This depends on personal charm and requires strong persuasion skills. My employees and teachers believed in New Oriental's promising future, which was akin to a labor shareholding system, though it wasn't about dividing money at the time. I held ownership, and although you might earn more than me, I would still let you work there.
In Chinese enterprise reforms, they were mostly state-owned enterprises. Behind state-owned enterprises, no one cared, leading to losses. Looking at China's political reforms, behind every reform is a person. A person's position represents their interests, and New Oriental faces issues of both political and economic reform together. So, no one can escape this matter. Eventually, a strange situation arose where we took turns being chairman, not letting employees or upper management know about our disagreements. No one could see our conflicts; there was no face or fault. Ultimately, New Oriental's school system kept developing with enough economic costs to support our arguments. Eventually, many people served as president and chairman. They came back and told me, "Yu Min Hong, damn it, being chairman is not for humans." Originally, we were buddies, but whoever sat in that position faced all the criticism, and they all asked me to return to that seat. To avoid arguing, we opened branches in various places. By the end of 2000, branches were established in Shanghai and Guangzhou. By 2004, while arguing and opening schools, we had over twenty branches nationwide. Then we negotiated to open more schools, using money to make more money. After 2002, we had an excellent financial system, and the finance personnel were recruited by them, not me. In 2002, the Promotion Law for Private Education also appeared, allowing school assets and profits to some extent. At that time, everyone said New Oriental would go public, but essentially, New Oriental itself wouldn't. The school served the listed company, and the listed company served the school. By the end of the year, this was basically accomplished. Then regarding financing, we finally found a pig farmer who invested 16 million RMB, bought shares, and attended a board meeting. That guy got upset after eight hours of discussion and decided not to invest, running away. The next year, someone invested 25 million RMB for 10% shares but left as well. The third year, a Chinese securities company invested 100 million RMB for 10% shares. We discovered a problem; their sole goal in entering New Oriental was to take it private. I realized something wasn’t right—how would they make money? We found out they had bought 20% of the secondary market stocks. Understanding this situation, the company absolutely refused to go public. They couldn’t wait until the end of the year when they said, "It won't work; let's withdraw." The next day, I broke out in cold sweat when the top five people were all arrested.
How to deal with competitors—the breadth of your character determines your opponents.
By 2004, after I became chairman again, domestic financing was not allowed; international financing was required. Finally, we found an overseas company to start investing. At the time, two conditions were set: they wouldn't enter New Oriental's board and wouldn't ask when New Oriental would go public. They agreed. In 2005, revenues were less than in 2004. But by the end of 2005, since the capital had already been invested, I didn’t want to go public. New Oriental actually didn't lack money at that time. After negotiating with them, we decided not to go public. From 2005 to 2006, we prepared financially and prepared for the IPO. On September 7th, the IPO was successful. We wanted to open at $13, but he said it could only open at $8. I wanted to leave; New Oriental wouldn’t go public. He brought me back and opened it at $10, saying if it couldn't sell, New Oriental would pay the difference.
As New Oriental grew larger, my wife returned, and we formed a typical family business. By the end of 95, full scholarships for studying abroad were secured. I have one characteristic—I like doing things with a group of people. Observing all the teachers at New Oriental, none met my collaboration standards. Then New Oriental began to sprout. By the end of 95, I went to America. Many of my classmates were there, and I didn’t know how they were living. So, I exchanged $10,000 and went to America, visiting anyone worth further interaction. However, despite their high salaries, their development prospects were limited. But if they returned to develop New Oriental with me, it would surely succeed. Thus, I started boasting, treating them to meals and spending $100, $100 at a time. This made them realize that, ah, it's possible to make money in China. In terms of momentum, I had already surpassed them. Then I proposed cooperation. Wang Qiang asked me what salary I would offer him. I replied that paying him a salary would limit him to earning wages for ten to twenty years. But after I earned a lot of money, he would still just be a wage earner. However, there were two factors. I told them returning would surely lead to a successful career. Why did they come back with me? This relates to my character. I’ve always liked helping others. During university, I carried water for five or six water bottles in our dormitory. Remember one time we went to watch a movie; there were six people in our dormitory plus me. They said, "You carry the six stools." So, I carried all six stools to the cinema. Later, I realized something was wrong—they were bullying me. In class, I left an impression: I was such an unremarkable person, always being bullied. Despite this, I felt very inferior at Peking University. First, I couldn’t speak Mandarin well, and second, my English level was low. When classes were divided, I was placed in the English listening impairment class. No one in our class gave me a second glance; they only looked at handsome people like Wang Qiang. As for someone like me with potential, they didn’t know. In the end, among the 25 girls in our class, I fancied all of them, but not a single one fancied me.
How to choose entrepreneurial partners—New Oriental's "political reform" path
Therefore, Mr. Yu is one of the few entrepreneurs in China who adheres to grand principles. Ma Yun is more ostentatious, thus influencing more people. But Mr. Yu follows the philosophy of water, and as his realm improves, he will also become a spiritual mentor in the future.
Later, I'll tell you how to coexist with competitors. But I firmly believe that villains are people who cannot be restrained by morality or law yet can harm you. So, I have a saying: "Rather offend a hundred gentlemen than one villain." I've encountered villains in my life, but today I won't talk about petty matters. Let's discuss what you should do with street competitors. In the early stages of entrepreneurship, while holding classes in our own classroom, the neighboring training school would send people to distribute flyers outside our classrooms. Teacher Yu never minded, possibly due to his personality, which let him live under such bullying. Until one day, the principal of the neighboring training school suddenly called, saying he wanted to talk to Teacher Yu. Teacher Yu thought this time it couldn't be good news. He wondered if it was another stabbing incident. Unexpectedly, he learned that the four teachers at that training school simultaneously demanded raises, which the principal refused. The four teachers then threatened to quit together. The principal was a laid-off female worker who couldn't swallow this indignation and didn't want to give the four teachers an easy win, feeling very aggrieved. Her main purpose in contacting Teacher Yu was to transfer all four hundred students from her training school to Teacher Yu's school, then quit herself. Perhaps for others, this would be cause for celebration—finally losing a competitor and an entity that bullied them. But at this moment, Teacher Yu made an extraordinary move, saying resolutely: "Please bring those four teachers back. Tell them if they're willing to return, you'll pay them the same salary as New Oriental teachers. If they don't return, New Oriental will dispatch four teachers to you until you find replacements." Such magnanimity clearly transformed the relationship between the two entities, no longer as strained as before. By the next day, anyone distributing ads at New Oriental's entrance would provoke immediate anger. Your breadth of character determines your opponents, not your power determining the future of your competitors.
If you have no money, how do you retain them? I implemented a profit-sharing system instead of a stock system. At the time, the Civil Promoting Law hadn't been introduced. Upon returning, each person was allocated a portion of the school's operations, each managing their own part and earning their respective incomes. From 96 to 2001, this policy was fully enforced. But as the school grew larger, I ended up with no money. The problem was that they all had money to take, while all my money had to be used for the school. Later, I wanted them to buy shares, but they said that after taking money at New Oriental for years, if they had to buy shares, they'd have no money left. They wanted shares, but they couldn't afford to pay. This step later caused countless troubles for New Oriental, but it was a necessary step. By 2001, New Oriental had grown quite large. Two problems emerged at this point. If transitioning from a family business to a partnership, finances were an issue. The biggest problem I encountered was my wife's involvement. After these friends returned, we occasionally argued. I'm relatively calm-tempered, and when calculating finances, I often rounded up their numbers. However, my wife insisted on precision. I noticed that they listened to me when I pointed out discrepancies, but they wouldn’t listen to her. I realized that if my wife stayed involved in New Oriental, the team would eventually disband. So, I arranged for her to contact a foreign school, making our affairs easier to manage. Two years later, my wife wanted to return. Thinking we only had one child, I suggested having another. She stayed abroad, gradually becoming completely disconnected from New Oriental.
Many times, people feel that Mr. Yu's comments are overly verbose. However, he possesses two qualities that may surpass other entrepreneurs. First, his public consciousness—judging from his speeches in various settings, he not only hopes to share successful experiences but also emphasizes the journey of life, adding depth. Second, his sense of crisis, which stems from his introverted personality, his humble origins, and the hardships he endured during his entrepreneurial journey. Regarding this aspect, his views roughly align with Ma Yun's—that if he succeeded, most people could succeed.
Due to time constraints, I won't elaborate further. Thank you, thank you.
So, how does one grow a business? It's not about how to do one thing; it's like having a child. Of course, it must be with an opposite-sex friend, post-marriage, and the child appears. Starting a business is easier than having a child; one person can suffice, without needing two. From conception to birth, parents must care about whether the child in the womb is healthy. More importantly, they worry about whether the child will remain healthy until age eighteen. Running a business is similar. When I initially approved New Oriental, after six months, I dealt with the education bureau. After six months, the educational institution finally said, "Young Yu, I’ll give you a six-month trial operation period. If there’s even one complaint within six months, I’ll revoke your business license."
Nowadays, it's easier than before to get approval, but it's also harder. For instance, the registered capital must be 500,000 RMB. But the advantage now is that if they’re willing to give it to you, they’ll give it; if not, you’ll never get it. Now, I alone can approve licenses. Back then, I had to use family assets as collateral. In principle, starting a business now isn't harder than before, but why do nine out of ten businesses fail? I firmly believe that regardless of what you do, people determine everything. For example, in retail abroad, why do some people fail while Walmart grows from a small roadside store to the world's largest supermarket? Why did he succeed?
Good afternoon, everyone. This morning, sitting below, I realized I differ greatly from Mr. Guo Fan Sheng. He considers himself very smart, whereas I consider myself not smart. I think I’m not necessarily stupid either. He believes he’s very attractive, and indeed, to middle-aged people aged thirty to forty, Mr. Guo has great entrepreneurial passion, as evidenced by his ability to maintain such tone and style for two hours. His lecture focuses on shouting, while mine focuses on speaking.
Why is New Oriental the largest educational institution conducted abroad by China? This is due to people. Today, I’ll discuss two aspects: first, the growth process of New Oriental and how I overcame these challenges. Second, the spirit and mindset I believe entrepreneurs should possess, which directly affect whether their businesses succeed or fail.
I have two abilities. One is that even if I know I'm lagging behind, I haven't given up. Even if it takes you ten years to accomplish something, I'll take twenty. If it takes you twenty years, I'll take forty. If it's impossible, I'll remain cheerful and healthy, ensuring I outlive you to eighty before departing—a form of success. Later, I realized that with such perseverance, New Oriental only took a dozen years to grow significantly. Graduating from Peking University in 85, by 95, New Oriental had gained some fame. Girls who never spoke to me before, who didn't even know if I was in our class, discovered how accomplished I had become. All my Peking University classmates are now in New Oriental, and none regard me as a leader. They are all grateful to me now, each becoming billionaires. New Oriental's current market value upon listing is 25 billion RMB, but no one says anything nice about me, nor acknowledges me. They all say without them, New Oriental wouldn't have reached today's level. Indeed, their return changed New Oriental's genes. However, they think that even if Yu Min Hong weren't successful, he wouldn't let everyone starve. They feel I'm a good person, but not necessarily someone who gets things done. The benefit is that they indeed returned. By the end of 95, all invited classmates returned in 96.
Secondly, provide space for personal growth and emotional satisfaction. If someone in your workplace lacks growth opportunities and progress, they will leave on their own. Employers fear adopting this attitude: "I'll pay you, so you must work for me," treating people like animals. This is a common mistake employers make. In the West, an employer informs an employee a month in advance of termination, and the employee readily accepts it, using the remaining time to properly hand over their work—a Western professional work mentality. In China, it's different. At New Oriental, we say, "You're fired, don't come tomorrow," but the following month's salary is still paid. When the employee is a professional manager but lacks a professional attitude, you must cater to the employee's psychology rather than expecting them to cater to yours, ensuring they feel cared for by the boss in all aspects. You must articulate things well and find meaning in the matter. Everything has social significance, like papermaking. This establishes a moral foundation for the existence of enterprises. For example, I committed to giving all the earnings of New Oriental's first year to the teachers. I adopted a strategy where I ensured New Oriental's teacher salaries were 100% higher than those outside, satisfying their expectations and making them feel they would grow bigger by following me. This proved true as the school gradually expanded, demonstrating personal charisma. Eating out at night or riding horses monthly created a team. From a societal perspective, New Oriental contributed greater practical significance. At the time, China neither acknowledged nor denied education for studying abroad. Few returning overseas students stayed. With historical foundations, from the first generation of young overseas students like詹天佑 (Zhan Tianyou), to later figures like Deng Xiaoping, Zhou Enlai, and Sun Yat-sen, along with other data, I had theoretical basis. New Oriental promoted well. Coincidentally, Deng Xiaoping once said, "If ten Chinese overseas students return, I am satisfied with one." Personally, I believe this ratio absolutely exists. Among the masters I know, their English proficiency is extremely high, as is their understanding of Chinese culture. When people questioned whether learning English would impact Chinese classics, my experience showed that learning English didn't make me lose Chinese culture. Now, all sectors of society recognize that studying abroad is a trend for China's future development.
The spirit and mindset entrepreneurs should possess—loving students more than others
Returning to the topic, by 2000, problems arose. New Oriental had grown significantly, and new businesses were uncertain who should handle them. If given to them, they wouldn't do it; if assigned to them, I wouldn't do it. Eventually, disputes arose over interests. Not knowing how to merge, we hired a consulting company manager who said, "You can't divide quickly; merge immediately. New Oriental could go public next year."