The following is the English transcript of the original Forbes interview published by Krzysztof Domaradzki, Forbes — 25.05.17 13:09, updated 29.05.17 10:43. I’ve also added some photos and video links as references to the article content. Click here for the original Forbes article published May 29, 2017 — Polish Edition
“Wall Street taught me that when something looks scary and no one wants to take the risk — this is the right place to be. Because this is where innovation is born — says Joseph Jeong, a financial veteran, entrepreneur, and creator of education startups.” — Joseph Jeong
Joseph Jeong worked for some of the biggest investment banks in the world (e.g. JP Morgan, Credit Suisse, Deutsche Bank or UBS). He helped build one of the largest local Asian hedge funds in the early 2000s. Right in the middle of the Global Financial Crisis, he and partners set up an investment company, Aviate Global, which they sold a few years later to Religare, one of the largest listed financial institutions in India. After leaving the financial sector, he took to the education market.
He’s a co-founder of two educational platforms — EXLhub (an intelligent platform for learning computer programming) and FutureHack (that teaches entrepreneurship and leadership skills to teenagers). The Chinese investor, entrepreneur, and mentor talked to us about pros and cons of working at Wall Street, the global potential of Asian technology companies, and education that should train new tech-savvy entrepreneurs and leaders rather than traditional corporate workers.
Joseph Jeong is taking part in the Impact’17 Congress on 31 May — 1 June in Krakow.
Forbes: Is greed no longer good?
Joseph Jeong: (laughing) Well…
You don’t work on Wall Street anymore. Why did you decide to leave it?
Because I have reached my “Moonshot” goal. Since I was 17, my goal was to own an investment company at Wall Street. After 20 years in the business, I reached my dream, even though it seemed impossible for someone from an ethnic minority group in the US to do so at that time.
And why did you end up at Wall Street anyway?
In 1979, my family left China and came to the US. We lived in the New York suburbs. My mother was a single mother of two boys. We were not rich, we had practically nothing. When I was 11, I had two jobs: delivering newspapers and working at my uncle’s restaurant. This is where I saw really rich people. I asked them how they made it. They said: we work on Wall Street. I didn’t know what it meant at the time but from that day on, I was determined to do the same. It’s only later that I learned that it was one of the most respected and prestigious professions in the world, a bit like today’s Silicon Valley. The financial sector was the creative hub for new technologies and the fastest growing sector of the economy.
But you were interested primarily in money, not in finance or new technologies.
Not really, the prestige of the place was equally important to me. That’s why I started self-learning about the markets and trading, sitting at libraries and watching television. I read books by Peter Lynch and William O’Neil. I started learning how Wall Street works at the age of 14.
You worked at JP Morgan, Deutsche Bank, and Credit Suisse, you ran your own hedge fund. What did Wall Street teach you?
That you can always find innovation, even in big banks — for example, in the early 2000s we created “hedge funds desks”. A traditional bank hires a lot of analytics, researchers, traders, and managers. They sit at different places all over the building, it’s hard to communicate with them. Sometimes they need to call 10 people to hear the same news. A hedge fund employs 2–3 people who manage billions of dollars. Their decisions are fast and agile, often made in a matter of minutes. So we created “hedge fund desks” at the banks to mimic the workings of our customers and better serve them.
So you learned that big companies can be managed wisely, quickly and efficiently, just like start-ups.
That’s right. And I saw the benefits of innovation. When I started working for UBS Asia, revenues from hedge funds were less than 5% of total revenues. When I left a few years later, that number was north of 20%. We had an amazing team there.
What went wrong? Why is the global center for innovation in Silicon Valley and not at Wall Street anymore?
Companies overcomplicated things. Their leverage reached 30, 40 times their capital. Heading into 2007–08, right before the recession, they wanted to make huge profits with the same amount of base capital.
So, they were greedy.
Too greedy and overcomplicated. From the mid-eighties until the early 2000s, the banking sector was growing immensely, all built on leverage. It blew up the whole industry in 2007–2008 and, after that, some of the financial engineering had to be dialed back.
It was a great time for you.
In 2005, my partners and I set up a hedge fund in Hong Kong. At the time, it was one of the largest locally funded hedge funds in Asia. We grew fast, but by late 2007, we felt a financial crisis was coming, and we were lucky enough to liquidate all our assets by May 2008. Investors were happy because we were one of the few funds that returned their money in one piece before the crisis. Three months later, right in the middle of the Global Financial Crisis, we co-founded a boutique institutional brokerage — Aviate Global. We thought that the market was at the bottom and the bottom was close, but we were wrong. Lehman fell (to our surprise) and global markets continued falling for another 6–7 months while we had almost no revenues. We were months away from shutting our doors.
What did you do?
We kept talking to our clients: large banks, investment funds, hedge funds. It was depressing, but we tried to do our job. In January and February 2009, markets kept falling, but some institutions started looking for independent brokerages that would be able to handle some of their “sensitive” trades. Some of the large banks and funds started working with us because they thought that some of the other “too-big-to-fail” banks may be next to collapse (after Lehman) and they needed a safe, quiet pair of hands to help them liquidate their assets (if it came to that). Other clients hoped for a market bottom, so they had to trade. Both needed us as most of our competitors that had much larger staff had all shut during the crisis. As the markets bottomed in March 2009, the phones started ringing and didn’t stop ringing for three years straight. It paid off to be gutsy and risk starting a business in the middle of the global financial crisis when everyone one else was running.
What happened to your company?
Two years later, when all the banks wanted to reopen their brokerage units, we sold it for a good sum of money. I can’t tell you how much exactly. It was bought by one of the largest listed financial institutions in India — Religare.
And after all these years spent on Wall Street and in financial institutions, you decided to create education and social enterprises. It looks like an attempt at redemption.
And that’s what it is, to a point. I decided that my next move should be teaching and helping others to be self-motivated learners so that they can create their own future, much like I did when I was a teenager. Teaching them innovation, entrepreneurship, technology, and business — all to prepare them for the digital revolution.
Didn’t you want to build a large technology company? Everybody now enthuses over the Asian giants, like Alibaba, Tencent, and Baidu.
I believe that in the future educational and social enterprises can become technology giants. Wall Street taught me that when something looks scary and no one wants to take the risk — this is the right place to be. Because this is where innovation is born. The first wave of technological changes is aimed at consumers. Tencent and Alibaba are consumer companies. Now, we have lots of companies dealing with e-commerce or creating social media, but I don’t want to follow the general trend. I want to be where innovation is in short supply, and that’s in education.
For a moment, let’s focus on Asian technology companies. How are they different from American giants, like Apple, Google, and Amazon? It’s a common belief that the Chinese mostly copy Western ideas.
It’s oversimplification. People who have experience in using both American and Chinese applications know that they’re completely different. They’re different business models, users, and products. And these differences will keep growing wider because, in the world of technology, localization is a visible and undeniable trend. WeChat (the communications app created by Tencent) is much closer to its users than Facebook because it’s focused on the Chinese — only one demographic group. It’s tailored to this group’s needs and gives it a completely different user experience. And this way, it’s easier to monetize the app. Many people think that the world of technology will be more and more open, but it may be quite the opposite.
Don’t Asian entrepreneurs have an ambition to develop global businesses?
They do. WeChat wanted to enter the American market as much as Facebook wanted to enter the Chinese market. Both companies will keep trying, but I think that none of them will be fully successful. Instead, they’ll become stronger in their local markets.
Is focus on one demographic group the main advantage of Chinese companies?
One of the two. The second one is that the IT infrastructure was created in China much later than in the West. Thanks to “leap-frogging” technologies, there are no legacy systems to compete with and it’s newer and more up to date. These days, mobile network coverage is better in China than in the USA (laughing).
Do you think that Chinese brands can be as strong as American ones? People all over the world love brands like Apple and Netflix.
In my opinion, the only fully global tech brand is Apple because it’s the sole big company that managed to conquer the Chinese market. Google, Facebook, or Amazon don’t have a strong brand in China — unlike Baidu, Tencent, or Alibaba. But everything can change. In the past, companies that got into the S&P 500 index stayed there for 30–50 years. Now, they’re able to keep it up for less than 20 years. Disruption is abundant. The only constant — is change.
What needs to be done to change the order in education?
We need to change young people’s attitude and this requires system changes. These days, the main goal of education is to produce employees for corporations. But at the time when a prototype of a solution can be created in a few days, a computer program can be written in a basement, and a company can be established for several thousand dollars, start-ups are the main employers. They turn into multi-billion dollar companies, which provide jobs to hundreds or thousands of people. Therefore, we need to teach people resourceful thinking — and always continue to learn new skills, even after school. We must beat into their heads that they need to design their own future and that they should see themselves as startups, companies that want to create something new, or as products — realize their qualifications and define how much companies should pay for using their skills.
This skill could save your job - and your company
With the world of work changing this fast, companies need to find employees who can and want to learn. But how do you…
That attitude and way of thinking are just one of the problems. In Poland, we have people with superb technical skills, broad programming knowledge, but without any soft and leadership skills. They want to be entrepreneurs, but they don’t know how to build companies.
That’s why we need to teach people entrepreneurship. MIT and Stanford University are the best schools for startups because they know that you need an entire ecosystem to build foster entrepreneurs. Entrepreneurship is a skill that can be practiced and learned, not an acquired characteristic.
A lot of inexperienced entrepreneurs think the opposite. They believe that entrepreneurship is in your blood. You can’t learn it.
Because they confuse entrepreneurship with creativity. Entrepreneurship is a set of skills that you can learn. I don’t consider myself to be smarter than others. In fact, I know lots of people who are smarter than me. My IQ isn’t that high. But I always wanted to be an entrepreneur and I learned the hard way to become one. And perseverance and doing several startups is the only way to get better. You can also train to be more creative. There are many ways to do that. I used to keep a notepad next to my bed because I realized that the best ideas came to me in the middle of the night when I was half asleep. In the morning, they were gone. So I started jotting them down, sometimes at 2–3am.
“We all love great teachers, but they’re in short supply in our schools” — that’s a quote from the EXLhub website. People don’t want to or don’t know how to teach people?
We have too many restrictions regarding who can teach. YouTube is a place where you can find lots of great teachers, but they don’t have official qualifications so schools don’t use this platform as a pedagogic tool. If I ran a school, I’d use YouTube 50% of the time. The society doesn’t accept the fact that the latest technologies should constitute a major element of the teaching process and the teaching curriculum. In EXLhub, AI helps to analyze pupils’ responses and assists them instantly in their learning. It draws conclusions from their mistakes and explains various intricacies as they are practicing. We started teaching computer programming because these days it’s as important as teaching English was 20 years ago. Back then, English gave you a chance to get a better job, no matter if you worked in China or in Poland. Now, computer programming gives you this chance.
Are you more an entrepreneur, investor, mentor, or teacher?
Do I need to choose? I don’t see myself in black and white. I guess you can say that in ‘quantum’ terms, it is very natural as humans to always fill multiple roles at the same time within our lives.
It’s easier to classify a person this way, assign a role to them in the society.
True, but it isn’t natural for people. It’s a concept that was created in the 20th century. It was accepted that you should work in one place for 50 years, for example, in a factory or an office. Meanwhile, the role of a teacher is natural for us. Since cavemen times, people have been teachers because they’ve passed their knowledge to their children. But age isn’t important here. Sasha Varlamov, my co-founder and chief architect for EXLhub, is only 17 years old. Every day, I learn from him more than from anyone else. And he learns from me.