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Build great companies during difficult times: a dialogue between Sequoia China Neil Shen and Blackstone founder Schwarzman

Shen thinks that it’s probably the time to double down on china now in many sectors.

The coronavirus outbreak that is still wrecking havoc across the globe has posed great challenges to governments and businesses on many levels in an unprecedented way.

At a time like this, two of the greatest investor minds in the world, Neil Shen who helped found Sequoia’s China operation and Stephen A. Schwarzman the founder of the Blackstone Group sat down together for a conversation in an aim to share their wisdom in how to ride out a storm, to make the best out of a bad situation and come out even stronger.

According to Neil, many leading companies actually are born out of a difficult time like this, and he also suggested that founders should attend to their cash flow and think about how to survive with a truly differentiated product. 

You can watch the video or read the transcripts below.

Schwarzman (S): In terms of China itself. You are one of the top experts in the world in terms of looking for investment opportunities there. What do you see in terms of industries that you think would be interesting now and areas of the country so that I could learn a little about that.

Neil (N): Thank you. You guys have also been very active in China. I have been investing in China in the last 15 years and have seen several cycles of ups and downs. Many leading companies coming out of such tough times, because they become even bigger players in their respective sectors. They take advantage of the “dark moments”, and make offensive moves and gain more market shares.

And I think this is the same for the investors. The current environment actually provides some great opportunities for us to back those long-distance champions in different industries.

If there is any sort of successful formula for us in the last 10-15 years in china it’s because we consistently long china, and I would say now it’s probably the time to double down on china in many sectors.

I think there are many obviously attractive investment scenes in china. Probably the most important ones are around technology and innovation. And digital technology as you know including the internet, AI, IoT, transform many services and manufacturing industries in China. And the recent coronavirus crisis might actually accelerate some of the transformation processes.

In china clearly the public health system will be further strengthened. The healthcare industry will enjoy higher growth as investments from both the private and public segments will increase. It’s gonna include vaccines, innovative drugs, medical devices, hospital services. And we are gonna see quite some new areas of innovation growth in the broader healthcare area.

S: So I think I’d like to ask you what’s your No.1 career advice for people given the disruption in the economy today in china.

N: I would say whether there is a disruption or not, I think the same law actually applies and you have said that so well. I think you need to be enthusiastic about your job and your career in something you truly love. And in addition, I think you should choose an industry where there are a lot of exciting developments I would say. Not in the short term but also in the medium to longer term.

I think I would advise young college graduates to look at those criteria because those are much more important that just compensations. For young entrepreneurs whom I know, many of them just started their companies, it’s not an easy time. I would suggest that they focus on survival during this very special period of time. And I think the most important thing is, attend to your cash flow because that’s the only way you can make sure your company will survive.

Then also like any startups, focus on your products. I think the crisis will be over, and if you have a truly differentiated product, you are gonna come out as someone much stronger in the sector. I just feel like you need to be resilient in a tough market like that because many great companies actually have been built during a special period of time like this.