This founder climbed Mt. Kilimanjaro after a big pivot - and learned a key lesson about patience

Linda Lacina, Meet The Leader: Welcome to Meet the Leader, a podcast where top leaders share how they are tackling the world's toughest challenges.

Today we talk to Yuxiang Zhou about the one of a kind journey he took to found Black Lake Technologies, one that includes climbing an actual mountain. He talks about that and the potential he sees for digitalization and manufacturing.

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I'm Linda Lacina from the World Economic Forum and this is Meet the Leader.

Yuxiang Zhou, Black Lake Technologies: We failed in the first startup. We locked ourselves up in the ivory tower and used our brainpower to imagine what the factories were like. We almost decided to give up.

Linda Lacina, Meet The Leader: Digitalization is poised to change how we live and work, but it isn't happening as quickly as it needs to anywhere, especially in manufacturing.

Yuxiang Zhou understands these challenges firsthand. He's the founder of Black Lake Technologies, a platform designed to help factory staff, from managers to line workers, better monitor data and collaborate digitally in real time. You may not know this, but many factories still depend on analog systems, things like pencil and paper or even managers walking around to understand what's happening on the shop floor. And as you can imagine, that's a system rife not just for inefficiency, but errors and even safety issues.

Creating a solution to help digitize manufacturing is not easy or fast, as you Yuxiang told my colleague Kateryna Gordiychuk at our Annual Meeting of the New Champions this summer in China. It is a process that requires new tech, new training and even a cultural overhaul. After all, it is hard to digitize a non-digital system.

In fact, his first start-up attempt failed. Leaving Yuxiang to give up nearly entirely. But it was what he did next that made a difference: from taking a job on a factory floor to learn what workers saw firsthand, to even climbing Mount Kilimanjaro to clear his head and get the right perspective.

He'll tell us about how all of that eventually led to Black Lake Technologies and how it has changed him as a leader.

But first, he'll tell us about the trips to Frankfurt factories nearly a decade ago in a job after college that changed everything. He worked on Wall Street then and helped Chinese firms get the information they needed to acquire factories overseas. The experience opened his eyes to the potential of digitalization, and that's something that has inspired and motivated him ever since.

Yuxiang Zhou, Black Lake Technologies: I was a accompanying a Chinese delegation in Frankfurt. They were trying to acquire a factory that was in distress after a financial crisis. But on the plane, all the senior team from China. They were bragging about how they have an advanced way of managing their Chinese factory, which they call management by walking around. So meaning that their middle management is no longer sitting the office, but walking around and trying to solve problems. But when we got to the Frankfurt factory, even though they were in financial trouble, but the shop floor, there are no humans. There are no people on the shop floor. They all sat back in their office, looking at the screen with data and a tool. So the data is pushed to them in real time and they can analyse in real time. So I believe maybe that's the future and not management by walking around.

In China, we make a lot of affordable goods for the world and became the world's factory. But I believe as wages rise and people want better things, better than just cheap things. How do we make sure that 'Made in China' represents a cheap price, but also it's of high quality, it's agile, it's customised products based on the demand. So I feel that could be the future goal of digital transformation rather than efficiency improvement or cost reduction. So that's how I got inspired to fund my company.

Kateryna Gordiychuk, Meet The Leader: What do you think are some of the positives and negatives with this approach of walking around? Because, of course — in other areas of life we might think, "Oh, it's nice to have humans who could maybe oversee some operations. They could maybe give a human touch to some things." But what do you think this approach is lacking?

Yuxiang Zhou, Black Lake Technologies: Well, the good approach is the middle management are no longer lazy sitting in their office. They don't get fat. They walk around. They exercise. But I think it's very inefficient because it's — where you're looking at? What problems you're trying to solve, are purely subjective. But rather, if you have, suppose you have a digital platform that mirrors everything happening on the shop floor, you can allocate your priority. You can be guided by data to locate the problem. You can also navigate the data to try and find the root cause of the problem and then solve it. So I think management by walking around here is a good way to a good mindset, but if it's empowered with data, then the efficiency can be doubled or tripled and you can find the real problem to solve.

Kateryna Gordiychuk, Meet The Leader: And what happened after [the tours]?

Yuxiang Zhou, Black Lake Technologies: After, I moved back to China and actually I started the first company. We called ourselves the Chinese version of Palantir for manufacturing. So I was assuming that. In China, it's easy to digitize the shop floor, and then we should focus more on data analytics and data prediction. So we gathered a team, we raised the funds and rented a courtyard in Beijing and lock ourselves up for half a year and built this product.

Once it was ready, we decided to roll it out. Then I realised in China it's really not that easy to digitize. So there's no data. When you get to the shop floor, you see people still use a pencil and paper to document their daily production. People use WeChat to communicate and dedicate tasks. So, we got really frustrated because if we leverage data prediction model as the beginning point of the startup, that's doomed to fail. So, we quickly pivoted. We feel maybe digitalization will be the first step. But then how do you digitize? It's not a new word. People talk about it all the time, but with PC based software, it takes like months or years to deploy and to train the workers.

So if there was any way for us to incubate a really agile, simple and light tool that people can quick to deploy and a quick to learn and a quick to be up and running, then then I think that that will fundamentally accelerate the digitization process as a first step. So that's what happened after the Frankfurt trip. And then with those two trips in mind, we decided that we should pull ourselves into the factories to become interim workers.
Otherwise they wouldn't understand how to make this so-called agile and the light tool. So I myself, I worked at a factory that was producing for L'Oreal. They were kind of their biggest supplier in China, but on the shop floor, it's very funny. Back in 2015, you see two kinds of workshops. One workshop is the traditional one. They take bulk orders from international brands, and each order, each SKU requires about 300 to 500,000 pieces. So the factory will be running with three shifts daily continuously for 20 or 30 days.

But then there's an innovative workshop which they are taking orders from some emerging Chinese brand. Those brands are leverage out e-commerce, social media, etc. So each SKU, the order size is much smaller, but they are targeting to specific niche segments of consumers and that those are waiting to pay higher price for individualised products, certain colour of lipstick, blah blah.

So those workshops, they're willing to earn the margin with those high-quality niche brands, but then they don't have the capability to deliver it because each order versus before, it's about 20, 30 days. Now it's 6 hours. You change gears. And that's very difficult for them to communicate how to reallocate resources to really coordinate shifts, workers, logistic people.

I figured, okay, maybe we can use an application on the mobile phone to help workers communicate with each other, but different from WeChat. They can communicate in a structured way with data structure data so people can be guided by data instead of waiting and the miscommunication the data tell them what to do exactly right now. So this maybe can shorten the waiting time between orders and the gear shift in time. So that was just the inspiration that led us to found a new company in 2016, which is called Black Lake.

Kateryna Gordiychuk, Meet The Leader: It's fascinating that you sort of went back to the ground because you were thinking so high level, right? How do I solve this issue that I saw happening on factory floors? But then you want it to really feel what it's like to be a worker. And what are some of the gaps? How did it feel for you to shift from that sort of I'm sitting in my office trying to come up with a solution to this digitalization issue, to then go to the factory floor and actually do the job and fill the gaps yourself?

Yuxiang Zhou, Black Lake Technologies: Because we failed in the first startup. We locked ourselves up in the ivory tower and used our brainpower to imagine what the factories were like. And to be frank, after the failure of the first startup, we almost decided to give up, go back to a corporate job, etc. But then we feel we were back in China already for a month. I'd be such a waste. We knew the problem, so maybe we should make up for it. At the moment we did not know if it's going to be something big. At least we want to learn about factories to make up for the lesson that we're missed. So we decided to go to the factory, but very luckily we found the problem to solve and to the problem evolve into product and probably evolved into a company.

Kateryna Gordiychuk, Meet The Leader: So what are you offering now at Black Lake that's so unique, that's kind of tackling this shift from pen and pencil, as you said, to more of a structural approach to data, making sure that everything's accounted for and making it — freeing up the people right to do other work?

Yuxiang Zhou, Black Lake Technologies: So the idea of replacing the paper pencil methods was the very first step. And now we have kind of three product offerings, what is called a Black Lake manufacturing platform. This is targeting medium- to large-sized factories and these products based on mobile phones and IoT devices and wearables so we can quickly, affordably digitise the shop floor activities with tools on the cloud.

And the second product we incubated over the years is called a mini worksheet. It's not even an app. It's on WeChat. It's a mini program. So whoever uses WeChat can just find this app and when they've found it, they can pay and download it within 3 hours and learn within 5 hours. And the next day the system can be up and running. These are targeting SMB clients. Normally in China, we have a 2.5 to 3 million SMB factories. Their digitization level is none. So they are still using Excel and very traditional forms. So this is sort of their very first tool to digitize.

And over the time when we realised two products penetrated the market quite well and now our customers and users really like them. And we observed some patterns, very interesting patterns. So those two tools were targeting specific factories to shop, digitise their own shop floor activity. But we noticed in our system some of the users would create additional accounts and pass the accounts on the cloud to their end consumers, which are factories that purchase the supplier's component sample into something else.

And so that we interview them. Why? Why did you create additional account capacity to someone not in your organization? They said, because I want our progress, our data, our material amount, etc. to be in real time visible to them. So the clients don't have to call them, WeChat them to have them to ask, Where's is my progress, what can you deliver, etc. So this gave us huge inspiration. We believe that the cloud computing is not just about moving software from a server to the cloud. It's about connecting. Once data is on the cloud. Data will flow from one city to another, from a factory to their supplier, from factory to the end consumer, etc. So maybe this way cloud computing and create another value which is about connecting. Allow the data to flow across entities so that people can collaborate across the supply chain in a more efficient way. So that's how we offer it.

And we believe in the future. I don't know how far the future is where we have a strong belief in it, that in China the factories will be interconnected. So in the real time they have different factories in different provinces. But on the cloud, they are all interconnected. You can do business together, They can monitor each other's data. They can collaborate with the guidance of real-time data. Yeah. And with that network, people's products, customisable products can be more easily produced, in an affordable way.

Kateryna Gordiychuk, Meet The Leader: You got it figured out. You have your dream. But of course, it wasn't always easy. I know that you also had a lot of setbacks on the way. And one of them you've already talked to me about. During one of them, I think you climbed a mountain. Right? Tell me, how did that happen and what did it teach you?

Yuxiang Zhou, Black Lake Technologies: That's between the first startup when we failed terribly — the algorithm-driven startup — and then before we moved in to the factory and started the second one.

So at that time, we were really frustrated because we all got educated from overseas, and then we came back to China. So initially we were blaming ourselves. We thought it's because we don't understand the market. We are no longer like a true Chinese, in order to be successful as entrepreneurs in China. And somehow we fail. We spent a month in China. If we just go back to the US or Hong Kong, and that'll be such a waste of the month.

Instead of making any decision, some friend recommended maybe I should go somewhere else and to figure out the puzzles in my mind. So I joined the hiking trip to Kilamanjaro and the trained for a period of time, and I summited the mountain on Christmas Day 2015. And the journey to the summit was really, really tough. It was snowstorm nights with very strong winds and sand and mixed with snow. But you know the process, how you are to summit you just to follow your guide one step by another. Ignore everything else. Just watch your step one, two, one, two, and continue to do that for 6 hours. Then I reached the top. I was tearing in my eyes. I felt maybe this is how we should do a start up. Instead of being to have a big idea, we want to be Palantir in China, and a rush into the ivory tower and not understand the market. We should take time. Maybe is just we didn't spend enough time rather than that we are not Chinese enough, etc. So after the climbing, I went back and talked with my previous co-founders saying that we should make up the lesson that we missed by going into the factory and maybe we can figure something out from there. So I guess this more Zen mindset opened our eyes to more opportunities and be more patient.

Kateryna Gordiychuk, Meet The Leader: I guess the lesson here for anybody listening is the perseverance. Perseverance matters and kind of the tunnel vision — sometimes it's good.

Yuxiang Zhou, Black Lake Technologies: Yeah, I think perseverance and also patience and also trust time and trust that your efforts accumulative will convert from single steps to a summit.

Kateryna Gordiychuk, Meet The Leader: How many customers now are using Black Lake? And what is your hope for the business to grow?

Yuxiang Zhou, Black Lake Technologies: The three products collectively — accumulatively — we have a 12,000 customers on our platform. And the hope — I think this is, I believe this number is going to continue to grow. So my expectation is no longer just around this number, but I hope that the users and the clients on this platform, they can have meaningful collaboration. So while the number is growing, we also want to measure the success of this platform by how much meaningful collaboration takes place between different entities.

Kateryna Gordiychuk, Meet The Leader: You know, it's interesting that it seems that there's been so many steps on your journey to arrive where you are with the different start-ups and then this huge trip. I mean, that took a lot of training, I'm sure. How has that changed you as a leader, you think, all of these different areas of your life?

Yuxiang Zhou, Black Lake Technologies: Actually, the my transformation as a leader is taking place on a daily basis while at Black Lake. You know, before when I started this company, of course, young and ambitious, at platforms like Davos, I think that gave young people a lot of recognition. So I would say for my first two or three years — recognition, impact, even sometimes valuation, the valuation of my company were the goals that I was seeking. But then that got me into a lot of stress. I feel that's not sustainable and not durable. It's not really the ultimate goal that I have in my mind.

So in 2019, when the company was kind of in a bit of a difficult situation, was we have a product, but we had to figure out how to commercialise it. I figured it out. We should forget about all the, whatever, Forbes 30 Under 30, the titles from Davos, etc. But focus on, if we are on a daily basis, making the factory better than yesterday, then we are doing something meaningful. And if that became our goal for myself and also for my company and the team, I think it's just like climbing the mountain. Then I realised maybe doing a start-up, or a company is not really comparable, like climbing a mountain. There is no summit because how to make factories better then yes, there is always room to improve. So with that in mind, we became more patient, we became more long-term driven, became more visionary in what we want to achieve and are less impacted by short-term market change and geopolitics. All those factors.

Kateryna Gordiychuk, Meet The Leader: Was there a piece of advice along the way that you feel has been with you all this time, or for some time, that helped you along the journey?

Yuxiang Zhou, Black Lake Technologies: I think having a long-term vision, have a vision that's benefiting others and I truly believe in it, and practice it, will be the ultimate path to success rather than short-term stuff.

Kateryna Gordiychuk, Meet The Leader: I'd love to also get a book recommendation from you. If there's anything that you've read recently or in the recent years, it doesn't have to be that reason that you'd recommend to anyone who would like to get inspired.

Yuxiang Zhou, Black Lake Technologies: For English ones I think what I've read is pretty conventional — those tech books. But I read — there's a really interesting Chinese biography of this so-called entrepreneur in 1920s Shanghai. He's also in the kind of a gangster, but he's also an entrepreneur in his own form. Because 1920s Shanghai is a chaotic period, a chaotic time. Who knows, maybe next 20 years we may enter such time. But how do you thrive from such a situation? And to build your team, build your enterprise, your vision, realise your vision, the vision. I think the book gave me a lot of inspiration, but I'm only halfway through. I was reading that yesterday.

Kateryna Gordiychuk, Meet The Leader: We'll have to do another interview to find out how it ends. Is there any other message that you'd like to send to anybody who is watching or listening about how to start a business or how to not get carried away by doubt or anything else that you'd like to tell us about?

Yuxiang Zhou, Black Lake Technologies: I think the most important attribute for a good founder is the speed and the ability to constantly upgrade him or herself. So it's not necessarily about when you started the business, how you are, who you are, how good, how capable you are. It's more about how if you can constantly learn from your daily peers, competitors, your colleagues, your clients and then upgrade yourself. So I think that's the most important attribute.

Linda Lacina, Meet The Leader: That was Yuxiang Zhou. Thanks so much to him and thanks so much to you for listening. A transcript of this episode and my colleagues’ episodes, Radio Davos and the Book Club podcast, are available at wef.ch/podcasts.

This episode of Meet the Leader was presented and produced by Kateryna Gordiychuk with Taz Kelleher as editor and Gareth Nolan driving studio production.

That's it for now. I'm Linda Lacina with the World Economic Forum. Have a great day.