How Difficult is Independent Innovation?

Organizational evolution of technology companies | Dialogue with Kingwills™· Taihe Cooking Wine.

TAIHE Cooking Wine is a column for frank and in-depth discussions between TAIHECAP and future business leaders. In the column, we discuss business and life, advocate real questions and real answers, and precipitate new practices and new civilizations that drive the progress of business society.

A serial entrepreneur with 12 years of entrepreneurial experience, led the third company he founded, breaking through the technology monopoly of overseas companies in this field for more than 50 years.

These are several key figures of Chen Boyi, the founder and CEO of Kingwills Advanced Materials. Co., Ltd..

In the first two entrepreneurial journeys, he has completely experienced several peaks and troughs of the industry, experienced the collapse of the company, and also experienced the taste of industry explosion, loneliness, and prosperity; It took Kingwills™ 8 years for the product to be mass-produced. During Kingwills™'s dormant period, the Internet economy over there is in full swing and attracting everyone's attention—the material industry sounds like a niche choice.

But for this entrepreneur who has set his own life plan early since college and split it into several "five-year plans", "choose the road less traveled" is the creed he always upholds. Chen Boyi has always believed that one should never seek quick results; rather, one should pay attention to accumulating knowledge and making full preparations before making advances.

Recently, Kingwills™ announced the completion of the B-round investment of over 100 million yuan. This round of financing was jointly led by CNBM New Materials Fund and Jinpu Investment, Shaanxi Coal Investment, Yuanhe Houwang, and TAIHECAP participated in the investment. Meanwhile，Gaoling Ventures and Oriental Yuhong, which were the lead investors of Series A ,  continued to raise funds. TAIHECAP acted as the long-term exclusive financing consultant.

The core product of Kingwills™ is the flash spinning super material Hypak™, which is a special fiber material with balanced performance. It is characterized by being both waterproof and breathable, high strength and light weight, and also has the characteristics of dust resistance, anti-aging, corrosion resistance, easy processing, and easy printing. Such balanced performance allows it to be used in many fields such as medical packaging, building energy saving, safety protection, industrial innovation and creative life.

In August 2022, the first 3,000-ton large-scale production line of Kingwills™ flash spinning supermaterial was put into production, officially breaking the technology monopoly of a Fortune 500 company in the United States for more than 50 years. The scale of the first production line has increased by more than 10 times compared with the pilot production line, and Kingwills™'s production capacity will increase by 4-5 times this year to better meet the needs of the downstream market.

In this issue of TAIHE Cooking Wine, Chen Boyi, founder and CEO of Kingwills Advanced Material, will chat with Jiang Ke, managing partner of TAIHECAP, and Guan Lingzi, vice president, about the following topics:

Guan Lingzi: In the past one or two years, new materials have become a fairly high-frequency industry in the capital market, but the concept is still vague to many people. Let me first invite Bo Yi to give us a brief introduction. What is the current global technological landscape in the field of new materials? What is the level of Chinese enterprises?

Chen Boyi: Frankly speaking, in the field of cutting-edge materials, I think there is still a big gap between us and Europe, the United States and other countries, especially in terms of technical background and talent pool. After all, foreign countries have developed so many years before us. At present, the main theme in China's new material industry is still "domestic substitution", which is still in the learning stage. To realize China's own "material innovation", we need to cultivate a deeper foundation of innovation: creative scientific and technological talents and the soil for these people to grow sustainably. This will enable China to have a constant source of self-blooding in the field of science and technology innovation in the future.

China's current advantage lies in "application innovation", because the huge market will continue to generate new demands, and the application side will continue to introduce new ones, and the iteration speed is very fast.

Jiang Ke: As you said, bottom-level innovation requires more talents, longer time, more research funding and more mature incentive system design.

Chen Boyi: Yes, high efficiency and fast iteration speed are the huge advantages of Chinese industries. In many tracks where we are at the same starting point as Europe and the United States, such as photovoltaics, batteries, electric vehicles, and even third-generation semiconductors, the development speed of Chinese companies is significantly faster. This is similar to changing lanes and overtaking, because Chinese companies are efficient and hardworking, and as long as they don't fall too far behind at the start, they can catch up or even surpass them.

However, in the fields of traditional semiconductors (silicon-based semiconductors) and new materials, European and American countries have taken the lead for decades, and huge technical barriers have accumulated over time.

Chen Boyi, Founder and CEO of Kingwills Advanced Material

Jiang Ke: Innovation in the field of materials can also be divided into bottom layer innovation and application layer innovation. Kingwills™'s current application scenarios are very extensive, including medical care, construction, industrial manufacturing, consumer goods, etc. In addition to replacing the stock in the existing market, how can you open up the situation further in your vision?

Chen Boyi: In the current scenario, the most important thing we need to do is to redefine the market size, which is also the key to innovation at the application layer. Many people will look at the future from the current perspective, thinking that a certain segment, such as the field of medical protection, is such a big market, and what you can do is to completely replace the products in the existing market. But this is wrong. The development of the world is not a zero-sum game. We must look at the future from the perspective of development.

First of all, many application scenarios can be extended downstream, combining other new technologies at the application level to create brand new products and demands. Secondly, new application scenarios are constantly being born. Emerging industries that have grown rapidly over the years, such as electric vehicles, new energy, batteries, and biotechnology, are also creating huge new demands. Third, larger-scale industrialization will accelerate the decline in the unit cost of the entire industrial chain, and the new cost system will also generate more needs that have been ignored.

The infinite possibilities of the future depend on our imagination and creativity.

Jiang Ke: Compared with metal materials and inorganic materials, we feel that organic polymer materials have more application scenarios and a higher degree of diversification in their own structures, resulting in a very high price elasticity of demand, because it is essentially a cross-material competition , its market size is not determined by the current stock, but by the future price and scene development.

Guan Lingzi: This also echoes what we said earlier, China's innovation on the application development side is very strong.

Another notable feature of the material industry is that the categories are very scattered, and the ceiling of a single category is limited. Maybe some material companies are destined to only be a "small and beautiful" company in their own track. What kind of company do you think can break the ceiling?

Chen Boyi: This is a very profound question. The periodic law is the basic law of the world's operation, especially the periodicity of single-category materials is stronger. In addition to the prosperity of downstream application scenarios, it is also related to the relationship between supply and demand itself. The supply and demand of products are also constantly tending to a dynamic balance during development.

The Chinese market is very unique, everyone is too hardworking, or too curvy. For any new technological breakthrough, a large number of people will try to rush forward and make it a popular product. When enough people enter the market and the supply exceeds the demand, there will definitely be a cyclical impact. The photovoltaic industry I was engaged in before was an industry with very obvious cycles and severe fluctuations.

Moving through cycles is a very interesting topic. There have been many excellent companies in China that have successfully crossed the cycle,  like Wanhua Chemical, Fuyao Glass, etc. in the field of materials.This is even more typical in the photovoltaic industry. In addition to predicting the future, planning in advance, paying attention to new technologies and other things that everyone will do, there are some similarities between everyone:

First of all, focusing on one field for decades, insisting on making a little progress every day, and accumulating over time, is a huge competitive advantage that is difficult to replicate; secondly, increasing the interconnection between talents, technology, product pipelines, and customers to form a network shaped structure, rather than one point, for example, different product lines have similar customer groups or products come from similar underlying technologies. In the end, the factors that seem to be irrelevant to each other are glued together to form a stable network structure, similar to a platform technology innovation center.

Concentrating on achieving the ultimate and increasing links to industrial products are all conducive to enterprises to go through the cycle.

Guan Lingzi: We mentioned this when we first met. If we want to break through the ceiling, platform companies are the inevitable path in the field of materials. One is vertical platformization, such as Wanhua, which extends a series of upstream and downstream products from the core product (MDI); The other is horizontal platform, such as the very famous 3M company, all the technology, research and development, process and other links in the organization are modular, forming a strong set of middle, and constantly developing new products on the basis of the middle.

Chen Boyi: Yes, I agree with you when you put forward this point of view. If we look down one more layer, the underlying foundation for the company to achieve platformization is the organizational culture of the company.

Our product competitors can copy, talents can be poached with high salaries, and customers can be robbed at low prices. These things that can be taken away are actually not the core of the company's success. The real competitive core is what I spread out on the table and tell the other party how I do it, but the other party can't learn it-this is the culture.

In order to maintain the vitality of the enterprise, it is necessary to build a core culture that continues to create new value, so as to continuously attract more outstanding talents to join us, to keep the team strong in combat effectiveness, to innovate, to create more competitive products, and to create extra value for our customers. extra value. As long as an organization can maintain this cultural state, it can make the enterprise high-spirited and keep making progress.

Guan Lingzi: Materials companies, or all technologically innovative companies have one characteristic—the research and development cycle is destined to be long, and the result is destined to be unknown. From the growth of a scientific research seed to the final mass-produced product, no one can tell how long it will take. The development of each product may be a long battle.

You have fully experienced the photovoltaic cycle in the first two periods of entrepreneurial experience. It took another eight years from the establishment of Kingwills™ to the completion of the first mass production line. In an environment of ups and downs or depression in the market, how to fight tough battles?

Chen Boyi: In fact, most people can understand the major trends in the future: such as the application of AI, the extension of human life, more convenient transportation, and cleaner and more efficient energy.

What everyone can't understand is what will happen in the next two or three years. Short-term events are too accidental. Therefore, it is enough that the general direction is roughly correct. If you follow it and focus on it for decades, you will always achieve success.

There is also the issue of team belief you mentioned, which I call "consensus value", which is also a very interesting phenomenon. The historical process of mankind is the process of constantly creating and advancing "consensus value". For example, religion, if everyone thinks these stories are true, then it is true and can become a huge force to create everything; Law is a general consensus of common knowledge and behavior; Currency itself is just a piece of paper, which has incomparable value when it is deemed valuable by all.

The core of an organization leader is to create "consensus value". When everyone has the same goal, has a consistent value judgment, and believes in the inevitability of this matter, success will eventually be achieved.

Jiang Ke: When it comes to the cycle, China's economy, many industries, and the capital market have been in a downward cycle in the past one or two years. This is something that many people have not experienced. For example, many entrepreneurs in industries represented by the Internet may experience such a big cycle change for the first time.

In addition to the long-term beliefs and firm goals that are necessary for leaders just mentioned, do you have any experience to share in leading the entire organization through the cycle?

Chen Boyi: Personally, I prefer the down cycle of the industry. Only when the big waves recede do we know who is swimming naked. Only in the down cycle can we eliminate the false and preserve the true, eliminate those companies that cannot continue to create value, and make the market more pure. Moreover, the industry will produce a large number of redundant talents, which is more conducive to our accumulation of better teams. Just like in the development process of Zhongfu Energy, whenever a big company goes down, we can absorb a large number of outstanding talents. In the past, these talents would disdain to join a start-up company like ours. In addition, the "remaining" is king, and customers will naturally gather to the "remaining", without even doing any market development work.

The most basic trick to resist the cycle is to compete with yourself, maintain long-term focus, and ensure that you are doing better today than yesterday, tomorrow will be better than today, and you are improving every day.

Jiang Ke: In the past few years, Taihe itself has experienced such changes. The primary market was once in a period of huge dividends of the times, and everyone was focusing on growth. On the contrary, in the counter-trend cycle, we can truly think about the nature of our business.

In the FA industry, as a professional service organization, to go through cycles is to create value for our customers. Customers can change, customer needs can change, and the way of creating value can change, but we must insist on creating real value in everything we do.

When the dividends disappeared, I realized more clearly than before that as long as you can create value for customers, professional service organizations can continue to develop, and the relationship with external changes is not so great.

Chen Boyi: I agree with what you said about value creation. I just mentioned how to make judgments and how to go through cycles. First of all, the core is still to return to the first principle. Is there value creation in the essence of this matter? If there is, it can be done.

For example, the evolution of the photovoltaic industry: some people are creating value, making technological iterations, continuously improving conversion efficiency, reducing the cost of electricity, introducing new ones, and exploring new technological paths. After a few years, these people will be among the forefront of the industry. But there are still some people who are constantly enclosing land, circling money, expanding production capacity, and reducing production costs by stacking repetitive things. I think it is very dangerous.

Buffett has a famous saying, "I am greedy when others are fearful, and I am fearful when others are greedy." I also like to do "reverse selection", don't get together, don't join in the fun, and go to places where there are few people. Most of the time, the difficult road is easier to walk with fewer people passing by, and the road with many people is not necessarily a smooth road.

Guan Lingzi: Then what kind of expectations do you have for Kingwills™?

Chen Boyi: Within three to five years, Kingwills™ will focus on the Hypak™ product system. First, he will focus on doing one thing solidly, making his product quality stronger than imported ones, so that the products and teams can develop the ability to iterate and evolve themselves.

In the medium term, Hypak™ will not be our only product pipeline. Kingwills™ has built multiple product systems, and there are many common connections in the market and customers. Many underlying technologies, resources, and personnel can be reused, which will form a more stable technological innovation structure.

In the long run, organizational culture and values are also the basis for sustainable development. When an enterprise develops to a certain stage, it will enter the no man's land. There is no template to learn from and refer to, and it is necessary to cross the river by feeling the stones. Gathering a group of outstanding people with a common vision and values to create some more interesting and valuable products, I think it will be a very interesting thing in the future.

Guan Lingzi: Now that we have talked about corporate culture, let's talk about Kingwills's organizational construction. What are the key words of Kingwills's values or corporate culture that you value the most?

Chen Boyi: Kingwills's culture is "1+2+4", 1 is value creation as the core, and every employee needs to ask himself whether he has made new value creation when evaluating every job he does ? If you have, do it. If not, don't do it. This is also the core point at which we evaluate the work of team members.

We encourage every post to think about what he is doing every day, how can he do better the next day? What small improvements can be made?

Any small difference can become a huge gap after the accumulation of time. How are hidden champions made? It is nothing more than accumulating over a long period of time, running in small steps and fast iterations.

2. It is based on the struggler and the responsibility. 4 is our four core values: innovation, focus, customer first and safety.

Guan Lingzi: Proposing values is as important as implementing values. In the process of serving Kingwills™, I can feel that Kingwills™'s values are very unified, the team has a particularly strong sense of belief, and all executions are uniform and efficient.

Chen Boyi: I have always felt that what can really lead the team forward is the belief shared by each member, which is what I call "consensus value", rather than short-term profit-driven. The practice of corporate culture is useless to shout slogans. Employees are the "missionaries" of corporate culture. Everyone is a key node in spreading organizational culture. From me to everyone, I believe in the goal we want to go together. , and are living our values.

At the same time, all system design and incentive mechanisms of the organization must focus on the implementation of corporate culture and values to form a strong correlation. Let everyone get positive feedback, that is, if you practice the core values, you can get positive motivation. And vice versa..

Guan Lingzi: I have always been deeply impressed by a sentence you once said, "It is more important to fire people than to hire them." What do you think of the construction of the enterprise's talent system?

Chen Boyi: As a CEO, in addition to building corporate culture, what I am most concerned about is how to find good enough people, because good people do not need management, they can drive themselves and manage themselves. Just make sure everyone shares the same values and works towards the same goals.

"It is more important to fire  than to hire." is also out of the consideration of corporate culture. When recruiting a person, how can it be possible to fully and correctly evaluate a person in two or three hours? More is to rely on the work process to recognize new colleagues. Letting unqualified employees leave is the greatest explanation for excellent employees. I think the loss of a person is far less serious than the damage to the corporate culture. We must do our best to defend the core values of the company.

Jiang Ke: In the Internet industry, many companies pay great attention to building organizational culture and values, but in the material industry and even all manufacturing industries, there are quite few companies that attach so much importance to corporate culture.

Chen Boyi: This is why the Internet industry can run out of such powerful companies as Ali, Tencent, Bytedance, and Pinduoduo. This is the governance system and proper corporate culture of a modern enterprise. Only when everyone shares the same belief can the organization develop well.

Most of China's traditional manufacturing industries are still traditional command-based organizations or highly disciplined organizations. Everyone emphasizes the transfer of benefits and orders and prohibitions, rather than maximizing everyone's subjective initiative with common beliefs.

Guan Lingzi: So when it comes to "finding someone", how did you find it?

Chen Boyi: Finding someone is not a one-day effort, it takes time to find someone slowly. My choice of team follows Confucius's "Threesome must have my teacher".

Guan Lingzi: Yes, this is the principle you often mention.

Chen Boyi: Not only the principle that I have been practicing, but also the requirement for all team leaders. Everyone you recruit must be better than you in the field they are focusing on. In many private enterprises, the boss may be a superhero with outstanding personal abilities, but the level of his employees is not good. If you find a group of people who are not as good as yourself, won't the company develop more and more badly?

The development of the organization must be stronger from generation to generation. In Kingwills™, all the people who report to me are far better than me in their own fields. My core job is to keep everyone with common goals and beliefs and work together. Only in this way can a virtuous circle of organizational development be formed.

Jiang Ke: Many investors now prefer serial entrepreneurs, because serial entrepreneurs have accumulated a lot of experience and lessons in previous experiences and can face uncertainty more calmly.

Even if the entrepreneur starts a new business in a different field, although the attributes of different industries are different, they are actually common in terms of organizational management and organizational culture.

Jiang Ke, Managing Partner of TAIHECAP, Guan Lingzi, Vice President of TAIHECAP

Chen Boyi: Yes, the reason why I pay special attention to organizational culture is related to the previous several entrepreneurial insights. Good people and good organizational culture can make the organization exert great power.

Business leaders also need to have a good understanding of the future, and always maintain a sense of awe, hunger, and fear for the future. Not blindly arrogant, not proud and complacent. Only by being prepared for the winter at all times can we resist the great uncertainty of the external environment.

Jiang Ke: So when the market is booming, you have to be more cautious about prosperity than most people; when the market is at the bottom, you have to be more optimistic about the future than most people.

Chen Boyi: Yes, I am greedy when others are fearful, and I stay away from others when they are greedy.

Guan Lingzi: During this round of financing, Dr. Ye (Kingwills Advanced Material CTO Ye Kongmeng) told me that he was impressed with you when he was a student at Zhejiang University, because at that time, no one had any specific plans. With life planning, you have already decided what you want to accomplish in the next five, ten, and fifteen years. He thinks that Bo Yi is really a forward-looking person.

Jiang Ke: Which five-year plan is it now?

Chen Boyi: (laughs) The development of life does have a lot of chances. The so-called "five-year plan" is a relatively long-term personal goal. I think everyone has a consensus on the long-term general trend, but it is difficult to grasp the short-term perspective.

Therefore, personal development is the same as corporate development. I think people only need to anchor their own big goals and keep walking towards them. The twists and turns on the road are inevitable.

Jiang Ke: Then what is the main line of value you set for yourself?

Chen Boyi: Some special experiences I had while studying, including the intensive course on innovation and entrepreneurship management at Chu Kechen Honors College of Zhejiang University, all pointed me to entrepreneurship. It is very interesting to build a meaningful and valuable enterprise.  Watching it grow bit by bit, it can eventually create huge value, and maybe it can do some more interesting things that promote social progress.

My first "five-year plan" is to work for a company that I think is the best after graduation, to see how the best company operates, so my first job was at DuPont, where I stayed for five full years , not a bad day.

Jiang Ke: The first "Five-Year Plan" that fits perfectly.

Chen Boyi: Yes. When we graduated from undergraduate courses in 2006, the first choice of most of the students at that time was to study abroad, followed by postgraduate study or postgraduate direct Ph. D. Among the students who had these two options, few chose to work directly.

I like to take the road less traveled, which seems to have become my consistent philosophy of life.

Guan Lingzi: "Take the road less traveled", on the one hand, it is because of your personality, on the other hand, you need to make a preliminary judgment. After all, no one is sure that the road they choose is 100% correct.

After leaving DuPont, your first venture was related to photovoltaics and semiconductor materials, your second was also related to photovoltaics (MV Energy), and your third was Kingwills Advanced Material . However, when Kingwills™ was first established in 2014, new materials were an unpopular track. This is obviously a "road that few people take", and now it has become a hot road.

So at the point in time when you made your choice, what kind of logic and reference did you use to make your judgment?

Chen Boyi: When I was doing the first and second stages of entrepreneurship, it was really not my subjective choice, but to see what I had in my pocket and what my ability could support what to do, so the choice at that time was very fraught of coincidence.

Kingwills™ is different. When I was in college, I studied chemical engineering and materials, and I have a special love for materials. In addition, I think that China needs independently innovative products and technologies that break foreign monopoly, so Kingwills™ is an inevitable result of planning from a very early stage.

Guan Lingzi: Every period of your entrepreneurial experience has experienced many ups and downs. You told me before that in the first three years of starting a business, you couldn’t sleep well. Later, he also experienced a complete cycle in the photovoltaic industry, seeing peaks and troughs, and his company also experienced ups and downs. I can feel from our communication that your mentality has become a little calmer now.

Chen Boyi: Peace comes from a sense of security. In the early days, I didn’t have any experience, resources, or capital. I fought alone and felt highly uncertain about all changes and risks, so I naturally became highly anxious.

But as I gradually accumulate, I have experienced enough, I feel that I can control many things, and I can predict the future, so I feel that there is nothing to worry about. In the past, starting a business was to step on a rock and not know where the next rock in the water would be, but in the process of Kingwills™'s business, there was a very clear voice in his mind telling him how to take every step, and he could do it with confidence. Making a decision is like looking at the "standard answer" in an exam.

Guan Lingzi: Entrepreneurs or leaders have a sense of belief that is particularly important. This is what I have felt deeply in the past one or two years. When you have experienced enough difficulties, you really feel that there is no big thing that can stop you. This kind of super sense of belief can lead the team forward.

Chen Boyi: Just like learning scriptures from the West, you will have a sense of security after you have experienced many ordeals and enough hardships and setbacks, because you have nothing to fear.