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Michael Minhong Yu: Entrepreneurial Spirit and the Road to Success

Apr 18-2013   



 

A part of BiMBA’s Alumni Entrepreneurship Series 
Written by Rubin Wang and translated by Tim Wang

 

 

“What is the Entrepreneurial Spirit?” “What are some challenges that entrepreneurs face?” To answer these questions, BiMBA welcomes the CEO and Chairman of the Board for New Oriental Education and Technology Group (NYSE:EDU) – Michael Minhong Yu. Michael, Peking University alumnus, is considered one of the twenty-five people that has great impact on China in the twentieth century. As the owner of one of the largest private educational services, Yu is known as the "richest teacher in China", and "Godfather of English Training".

 

On November 22, 2012, BiMBA at Peking University received a highly anticipated visit from Michael Minhong Yu, who shared with BiMBA’s students and faculty some of the challenges he faced and conquered throughout his career. Dean Prof. John Yang welcomed Mr. Yu on behalf of BiMBA, commending Mr. Yu on his entrepreneurial journey. New Oriental started off from nothing, but through the hard work and dedication of Mr. Yu, it grew to become a family business, then further upgraded to a corporation, and lastly became an international corporation listed on the NYSE. Although the speech fell on Thanksgiving Day, the auditorium was packed with people, eagerly waiting for a chance to learn from the acclaimed entrepreneur.

 

No such thing as a “small” idea

Before discussing about the entrepreneurial spirit, Michael Minhong Yu shared with the room some of his own insight - Nowadays when people talk about starting up a business, they love to include some grand magnificent proposal, but the truly magnificent companies usually begin small and later expand. When New Oriental first started, it was simply a preparatory course in English, with a few dozen students; we didn’t even have a business license. Even today, it’s still very easy to enter the industry. Wal-Mart, the number one retail giant in the world, also started off as a small shop. The founder Sam Walton started off selling cheap clothes at a small store in town. In an entrepreneurial perspective, restaurants and technology companies are all the same. Successful restaurants may become the next McDonalds or KFC, they’re not necessarily at a lower class than say Facebook or Google. Before Starbucks, no one would have thought coffee shops would become international franchises.

 

You must never cross the line, Integrity is everything

There is no high class or low class businesses in entrepreneurship, but that doesn’t mean there’s no principle, you must never cross the line, especially if it has to do with the integrity of the business. New Oriental survived our recent incident because of our integrity, because we never crossed the line. Mr. Yu mentioned that during your entrepreneurial journey, you will face many challenges along the way, especially when the industry has a very low barrier of entry, because your opponents may be wolves, or they may be rats. The wolves will teach you about the cruelty and brutality of competition, while rats will teach you that there’s no hole too small to crack. Whether its wolves or rats, they will bring you a lot of stress at different stages and industries, it becomes a test of endurance and will-power. Many of New Oriental’s rivals compete through marketing, price-competition, size, but they do not focus enough on the core materials that they teach. When the muddy water incident arose, and investors stopped blindly investing in education, turning their attention towards determining the actual value of the businesses, all those companies with elaborate business structures built only to finance the company all broken down and failed. Mr. Yu emphasized that a business without a bottom-line is just asking for its eventual demise. It’s only a matter of time.

 

Corporation is like an Empire, you need both heroes and a system

Mr. Yu showed that corporation and society are two different systems. A country and society needs democracy, to ensure the equality of opportunity and human rights. However, as a business, democracy is not necessarily a good thing, especially during the initial stages, a corporation lead by a small group of capable entrepreneurs will be better for the growth of the company. 
For a business, leadership and governance is very important. The importance of strong leadership lies in the ability to improve the company through the efforts of the entrepreneurs, while strong corporate governance prevents people from abusing the system through strict codes and regulations. A new empire’s longevity primarily depends on whether or not it has a strong leader. Similarly, governance also plays a critical role in the development of an empire. The reason why the Roman Empire lasted more than a thousand years compared to most Chinese dynasties which lasts only a few hundred years is the difference in its governance system. Ancient Rome had a senate to watch over and restrict the power of the emperor.

 

The 4 Dimensions of the Entrepreneurial Spirit

Mr. Yu then continued to share his interpretation of the Entrepreneurial Spirit

 

1. Spirit for Adventure: There are no guarantees when it comes to business, starting up a business means you must be prepared to fail 90% of the time, because of every 100 start-up companies, only 10 will survive, and only 1 will become a huge success. The life of an entrepreneur is a gamble, you must calculate the costs you accumulate through forgoing a stable career, and measure it against the risk and returns of starting up a business. Before you start a business, you have to ask yourself whether you can handle the failure.

 

2. Resilience: For entrepreneurs, success and failure are two sides of the same coin. While most people easily become discouraged after experiencing failures, entrepreneurs will strive and look for opportunities within the failures and challenges they face. For entrepreneurs, bumps along the way actually further stimulate their enthusiasm, what they fear most is actually stability. Mr. Yu related this to his most recent experiences during the muddy water incident, and shared with the audience his three biggest gains through the crisis: stock repurchase, clearing the competition, and encouragement of the management.

 

3. Team Spirit: Michael Minhong Yu expressed that when it comes to entrepreneurship, the entrepreneur is the hero, but the hero must not overindulge in his individualistic heroism. Both hero and individualistic heroism share the common trait of strong individual abilities. However, they are very different in the sense that heroes have a strong team spirit—they are willing to employ the aid of others to achieve their goals. Individualistic heroism on the other hand, is egoistic in principle, they reject teamwork, they see other talented people as a threat, and try to get rid of them. Mr. Yu stated that without Mr. Xiaoping Xu and Qiang Wang in his team at the early stage, New Oriental would not have achieved today’s success.

 

4. Innovative Spirit: Innovation is just like starting up a business, we don’t need it to completely “change the world”, as long as it’s an improvement from before, it’s an innovation. In Mr. Yu’s eyes, Innovation is like water, it comes in many forms, and there are an infinite number of possibilities.

Mr. Yu concluded with the ideals of the entrepreneurial spirit. He mentioned that a true entrepreneur must be idealistic in nature, not simply just someone looking to make a profit. If an entrepreneur lacks ideals, the company will lack culture, and a company without culture is just a business machine, and will eventually die out. If an entrepreneur has time, he or she should also take on their social responsibilities and give back to their community. During the Q&A section after the speech, Mr. Yu used his charismatic yet humorous way of communicating with the students to further elaborate on the entrepreneurial spirit. Many students praised him for being able to maintain his composure and low profile, even after achieving such extraordinary levels of success, which is a rare trait to have in these modern times.

Michael Minhong Yu: Entrepreneurial Spirit and the Road to Success

Apr 18-2013   



 

A part of BiMBA’s Alumni Entrepreneurship Series 
Written by Rubin Wang and translated by Tim Wang

 

 

“What is the Entrepreneurial Spirit?” “What are some challenges that entrepreneurs face?” To answer these questions, BiMBA welcomes the CEO and Chairman of the Board for New Oriental Education and Technology Group (NYSE:EDU) – Michael Minhong Yu. Michael, Peking University alumnus, is considered one of the twenty-five people that has great impact on China in the twentieth century. As the owner of one of the largest private educational services, Yu is known as the "richest teacher in China", and "Godfather of English Training".

 

On November 22, 2012, BiMBA at Peking University received a highly anticipated visit from Michael Minhong Yu, who shared with BiMBA’s students and faculty some of the challenges he faced and conquered throughout his career. Dean Prof. John Yang welcomed Mr. Yu on behalf of BiMBA, commending Mr. Yu on his entrepreneurial journey. New Oriental started off from nothing, but through the hard work and dedication of Mr. Yu, it grew to become a family business, then further upgraded to a corporation, and lastly became an international corporation listed on the NYSE. Although the speech fell on Thanksgiving Day, the auditorium was packed with people, eagerly waiting for a chance to learn from the acclaimed entrepreneur.

 

No such thing as a “small” idea

Before discussing about the entrepreneurial spirit, Michael Minhong Yu shared with the room some of his own insight - Nowadays when people talk about starting up a business, they love to include some grand magnificent proposal, but the truly magnificent companies usually begin small and later expand. When New Oriental first started, it was simply a preparatory course in English, with a few dozen students; we didn’t even have a business license. Even today, it’s still very easy to enter the industry. Wal-Mart, the number one retail giant in the world, also started off as a small shop. The founder Sam Walton started off selling cheap clothes at a small store in town. In an entrepreneurial perspective, restaurants and technology companies are all the same. Successful restaurants may become the next McDonalds or KFC, they’re not necessarily at a lower class than say Facebook or Google. Before Starbucks, no one would have thought coffee shops would become international franchises.

 

You must never cross the line, Integrity is everything

There is no high class or low class businesses in entrepreneurship, but that doesn’t mean there’s no principle, you must never cross the line, especially if it has to do with the integrity of the business. New Oriental survived our recent incident because of our integrity, because we never crossed the line. Mr. Yu mentioned that during your entrepreneurial journey, you will face many challenges along the way, especially when the industry has a very low barrier of entry, because your opponents may be wolves, or they may be rats. The wolves will teach you about the cruelty and brutality of competition, while rats will teach you that there’s no hole too small to crack. Whether its wolves or rats, they will bring you a lot of stress at different stages and industries, it becomes a test of endurance and will-power. Many of New Oriental’s rivals compete through marketing, price-competition, size, but they do not focus enough on the core materials that they teach. When the muddy water incident arose, and investors stopped blindly investing in education, turning their attention towards determining the actual value of the businesses, all those companies with elaborate business structures built only to finance the company all broken down and failed. Mr. Yu emphasized that a business without a bottom-line is just asking for its eventual demise. It’s only a matter of time.

 

Corporation is like an Empire, you need both heroes and a system

Mr. Yu showed that corporation and society are two different systems. A country and society needs democracy, to ensure the equality of opportunity and human rights. However, as a business, democracy is not necessarily a good thing, especially during the initial stages, a corporation lead by a small group of capable entrepreneurs will be better for the growth of the company. 
For a business, leadership and governance is very important. The importance of strong leadership lies in the ability to improve the company through the efforts of the entrepreneurs, while strong corporate governance prevents people from abusing the system through strict codes and regulations. A new empire’s longevity primarily depends on whether or not it has a strong leader. Similarly, governance also plays a critical role in the development of an empire. The reason why the Roman Empire lasted more than a thousand years compared to most Chinese dynasties which lasts only a few hundred years is the difference in its governance system. Ancient Rome had a senate to watch over and restrict the power of the emperor.

 

The 4 Dimensions of the Entrepreneurial Spirit

Mr. Yu then continued to share his interpretation of the Entrepreneurial Spirit

 

1. Spirit for Adventure: There are no guarantees when it comes to business, starting up a business means you must be prepared to fail 90% of the time, because of every 100 start-up companies, only 10 will survive, and only 1 will become a huge success. The life of an entrepreneur is a gamble, you must calculate the costs you accumulate through forgoing a stable career, and measure it against the risk and returns of starting up a business. Before you start a business, you have to ask yourself whether you can handle the failure.

 

2. Resilience: For entrepreneurs, success and failure are two sides of the same coin. While most people easily become discouraged after experiencing failures, entrepreneurs will strive and look for opportunities within the failures and challenges they face. For entrepreneurs, bumps along the way actually further stimulate their enthusiasm, what they fear most is actually stability. Mr. Yu related this to his most recent experiences during the muddy water incident, and shared with the audience his three biggest gains through the crisis: stock repurchase, clearing the competition, and encouragement of the management.

 

3. Team Spirit: Michael Minhong Yu expressed that when it comes to entrepreneurship, the entrepreneur is the hero, but the hero must not overindulge in his individualistic heroism. Both hero and individualistic heroism share the common trait of strong individual abilities. However, they are very different in the sense that heroes have a strong team spirit—they are willing to employ the aid of others to achieve their goals. Individualistic heroism on the other hand, is egoistic in principle, they reject teamwork, they see other talented people as a threat, and try to get rid of them. Mr. Yu stated that without Mr. Xiaoping Xu and Qiang Wang in his team at the early stage, New Oriental would not have achieved today’s success.

 

4. Innovative Spirit: Innovation is just like starting up a business, we don’t need it to completely “change the world”, as long as it’s an improvement from before, it’s an innovation. In Mr. Yu’s eyes, Innovation is like water, it comes in many forms, and there are an infinite number of possibilities.

Mr. Yu concluded with the ideals of the entrepreneurial spirit. He mentioned that a true entrepreneur must be idealistic in nature, not simply just someone looking to make a profit. If an entrepreneur lacks ideals, the company will lack culture, and a company without culture is just a business machine, and will eventually die out. If an entrepreneur has time, he or she should also take on their social responsibilities and give back to their community. During the Q&A section after the speech, Mr. Yu used his charismatic yet humorous way of communicating with the students to further elaborate on the entrepreneurial spirit. Many students praised him for being able to maintain his composure and low profile, even after achieving such extraordinary levels of success, which is a rare trait to have in these modern times.