Global Corporate Venturing Rising Stars Awards 2018: #23 Bo Zhai

Having joined in March last year as head of enterprise and emerging technology investments in the US, Bo Zhai China-based online retailer Alibaba Group’s corporate venture capital CVC investment efforts in enterprise, cloud and emerging tech, such as artificial intelligence, outside Asia-Pacific.

He said: “My primary responsibilities include both minority stake equity investments, acquisitions and joint ventures. Some areas I closely follow include cloud infrastructure, AI infrastructure and applications, autonomous, big data, and security.

“In additional to investment transactions, I also introduce the best innovators to the right Alibaba business units in China for commercial collaboration.”

Alibaba has a dominant ecommerce position in China, which was appealing to Zhai.

He said: “At Alibaba, a good investment coupled with the right business logic can bring tremendous positive impacts to millions of businesses, through which the investee company also benefit handsomely.

“It is a greater sense of achievement beyond just an internal rate of return [a form of annual performance measurement].

“Second, a good CVC investor has to have a genuine understanding of a rather technical domain. That is personal growth. Today Alibaba’s businesses touch almost every facet of tech landscape.

“Third, having close access to Alibaba’s businesses is the best way to stay abreast of innovation in China. I am very humbled to learn from our business unit thought leaders at an operational level.

“My role ultimately is to be the bridge between east and west. It is not an easy task and remains a work in process. I cannot discuss our investments. But through various investments our team has created valuable commercial dialogues between startups in California’s Silicon Valley and our BUs in China. It is more difficult than it sounds especially not all leaders speak fluent English. On the other hand, I am very happy to see my short tenure at Alibaba has already increased the awareness of Alibaba as a technology partner among Valley entrepreneurs, VCs and universities.

“The biggest challenge so far is to align expectations. Most Alibaba’s businesses today reside in Asia-Pacfic. We are used to doing deals in certain way and to requesting certain terms.

“However, being a strategic platform, we have to understand the different market norm in the west. It has created misunderstanding among startups. It is my job to reduce such friction and I am very hopeful.

“Entrepreneurs tell me China is an attractive yet opaque market. They are eager to enter but often feel helpless. I think this will change in the near three to five years as the enterprise market in China is at an inflection point. I would like to find the right formula where capital coupled with the right operational support at Alibaba will remove the barriers for western startups to serve the millions of businesses in China.

“It is difficult to generalise for CVCs given each corporate is unique, more so than financial VCs. I do believe collectively CVCs should strive to provide more transparency to the target companies. Examples are lack of visibility into internal processes for decision making and diligence. That is one key reason companies sometimes shy away from CVCs.”

He added on his LinkedIn profile: “Some areas I am looking into –  artificial intelligence], deep learning, cloud, security, big data, computer vision, voice, neuro-linguistic programming and the internet of things.”

The scope of his interest reflects the interests and influence of Alibaba, which has expanded from a China-focused ecommerce company to a global company with a market capitalisation of more than $500bn.

As news provider Fortune said, in 2003, as Alibaba battled US peer eBay for control of China’s online shopping market, Jack Ma, co-founder of Alibaba, predicted that in their home market Chinese startups like his would inevitably triumph over Barbarian invaders, no matter how deep the foreign firms’ pockets or how sophisticated their technology. EBay, he said, might be a “shark in the ocean”, but Alibaba was a “crocodile in the Yangtze River”. As Ma put it in Fortune’s article: “If we fight in the ocean, we lose – but if we fight in the river, we win.”

And while much credit goes to chairman Ma, it is his other co-founder, Joseph Tsai, executive vice chairman and who controls its investments and corporate venturing strategy along with direct report, Ethan Xie, managing partner of Alibaba Innovation Ventures and member of the Global Corporate Venturing Powerlist 100, that have built up its market dominance.

Ma also underestimated Alibaba’s growing clout outside of China and Zhai’s role will be pivotal in its longer-term success in finding opportunities from deep tech in Silicon Valley. Most of Alibaba’s investments have been in China, with few publicised outside, such as the $27m series C round for Finland-based open source database provider MariaDB in September and India-based payments group Paytm. However, its few US deals include large bets on Magic Leap, an augmented reality development company that in December released its first product a year after its $793.5m C round, ride-hailing service Lyft through a $1bn F round in December 2015 and messaging service Snap’s $200m E round earlier in 2015.

Prior to Alibaba Group, Zhai was the director of strategy and operations at China-based electric vehicles maker Nio’s (formerly NextEV) US operations and remains a close follower for autonomous vehicles, an area of strong interest for Alibaba.

Zhai said: “I was leading the US operations and strategy while acting as US CEO Padma Warrior’s chief of staff. It was a great experience to get hands-on exposure at a fast-growing platform in an exciting space. It brought me operational perspective at a startup and helped me understand the challenges founders face.”
Before NextEV, which has raised $2bn from a host of investors, including corporations Tencent and Baidu, Zhai was an investment professional at corporate venturing unit Hewlett Packard Ventures under Lak Ananth (now head of Siemens’ Next47 unit) and Ray Schuder, who used to run chipmaker AMD’s corporate venturing unit.

Schuder said:” Bo was with us a little over a year and was a solid performer. He showed leadership in focusing on the storage sector, worked well with the storage business unit and drove our investment in Scality.”

Zhai had trained as a staff engineer at AMD, designing the first low-power Fusion processor, having earned his MBA from Stanford Graduate School of Business and his PhD in electrical engineering from University of Michigan after graduating top of his microelectronics class from Peking University.

And this love for coding remains important. He said: “When I have time, I enjoy being with the engineers and geeks. For instance, I have attended a few technical classes designed for engineers and practitioners, in deep learning and blockchain.”