SPEAKER_01 0:00

Hey everyone, welcome to another episode of Beyond the Case, which is a podcast where global leaders from Harvard Business School's OPM community join in a personal capacity and they share the real lessons, life principles, and mental models that go behind building enduring companies. Today's guest is my friend from OPM67, Judy Liu. Judy, how are you?

SPEAKER_00 0:22

Hi, how are you?

SPEAKER_01 0:23

Doing very well. Pleasure to have you on the show.

SPEAKER_00 0:25

Thank you. Pleasure to be here.

SPEAKER_01 0:27

Yeah. Judy, for listeners who don't know you, could you talk about your background, your business, and just introduce yourself?

SPEAKER_00 0:35

Okay. So I always use the uh keyword crossover to introduce myself because I have a crossover background. So the first crossover is between technology, internet, and luxury industry. The second crossover is between entrepreneur and also international large companies. So I started my career as an entrepreneur. I sold my company to a publicistic company called Farfrench. And since that, the last six, seven years, I was running Farfred's Asia. And then we achieved a great good result, and now I'm back to entrepreneurship again. And I'm very happy here to share more later with you about my story.

SPEAKER_01 1:18

Great. Thank you, Judy. So, like you mentioned, it's you like to talk about crossover. And you built your career at the crossover or intersection of technology, luxury, and China. So, what first drew you into this space and what are some of the early experiences that you believe shaped your growth?

SPEAKER_00 1:36

Yeah, so as I mentioned, I have a crossover background between technology, luxury, and also entrepreneur and large international companies. So my career, let's go back to 15 years ago. So I was at Group and China. So it's a joint venture between Guru Pont and Tensin. That back to that time, it was a very excited moment because I was watching the mobile internet really take off in real time in China. So I really could see that how quickly customer behavior was changing. And very early on, I saw how WeChat, which is a very important social platform in China, was starting to reshape the communication, e-commerce, and brand consumer relationship in China. And that really gave me a very strong instance for digital behavior and where the market was going. So at the same time, I was always very interested in brand and the consumer philosophy. That really makes people like what really makes people that want something beyond function. And that's why luxury, you know, feels like a very natural space for me. Luxury is not only just about product, it's also about emotion, identity, culture, storytelling, and also increasingly community. So for me, technology gave me the lens to understand scale and the behavior, while luxury gives me a more human and emotional lens that combine together, become my unique space.

SPEAKER_01 3:11

And your business that you sold eventually was called Curiosity China.

SPEAKER_00 3:15

Yes. Yes.

SPEAKER_01 3:17

You start that by yourself, or did you have a business partner that co-founded it with you?

SPEAKER_00 3:21

Very interesting fun fact here is my business partner is also my life partner. So I started that company with my husband together. At that time, he was not my husband.

SPEAKER_01 3:30

And how did you all meet?

SPEAKER_00 3:32

We met in group on China, which uh we we met at work. So we make jokes like uh entrepreneurs like us, it's better to work together, and otherwise, we will never have time to see each other.

SPEAKER_01 3:42

Yeah, that's so true. So when you all started the business, did you all raise money or did you all um use your life savings to fund the business and try and grow?

SPEAKER_00 3:51

I think I was very lucky at that time because as I mentioned, it's a very great timing. So what really bring me to entrepreneurship, I would say the first thing was timing because after Groupang, I simply just could not ignore the race of mobile internet in China. It's a it it's a peak time. So everything was moving so fast, and I feel that there is a huge opportunity being created for people who could understand both technology and brands. And this really, like, I think we were lucky at that time, just to arrive at that timing. And then the second reason I think for me to start my entrepreneurship is was a bit personal. So my father was an entrepreneur. So I grew up that with that influence. He always told me in Chinese something like how much you achieve depends a lot on how bored you are. So I didn't really fully understand it when I was a kid. But later I realized that that idea actually stayed with me. It made entrepreneurship feel very natural. And then later, as you mentioned, I sold the company I built called Curiosity China, and I worked inside Farfetch, which is a public listed company. And I learned something else. A big platform gives you scale, great talent you can never hire when you're an entrepreneur, and strong resource. But entrepreneurship still gives you like something very special, the ability to choose people to who you can work together, the culture, the direction, and the kind of company you really want to build. So I still love the feeling that to create something today.

SPEAKER_01 5:25

Going back to that quote that your father mentioned, what you achieve depends on how bored you are. Does that mean you need to be a lot more bored, or does that mean you should be busy? How do you interpret that?

SPEAKER_00 5:36

I think I think it's really, you know, uh in the Eastern education, especially in China, the education tells us to follow the rules in a box, right? But my experience is a bit different. I'm kind of a rebel type of student. So I think that courage is something very unusual. You know, I think it's something really plays a very important role as an entrepreneur. I think that's what my dad means. You need to have the courage to be bored, to challenge yourself, to always move ahead.

SPEAKER_01 6:06

Very well said. How did you go about getting your first few customers once you decide to start out by yourself?

SPEAKER_00 6:12

Actually, one of my first customers is the American brand coach. So I think everyone should be aware of that. And we I still remember at that time, Cures T China. So we are the company who works with coach and bring coach membership on WHET to one mini members, so which is a great result. So when I started Curiosity back to 2013, my original idea was actually to build a SaaS platform. So my mindset actually is a product builder. So at that time, you know, WeCHAT would just take off. I was studying many SaaS platforms in the US that I believe that brands actually need a way to collect their traditional SARM system with the new social platforms in China, especially we are in a mobile-first environment. So in the beginning, I was really thinking as a product manager. So we tried, you know, to build the product, the platform. After a few years, I really realized the SaaS ecosystem in China was very different from the US. So the users have low willingness to pay, the unique price was lower, the retention was weaker, and the sales cost was much higher by the uh competition. Also, a lot of the ecosystem was dominated by the mega platforms. So if we want to survive and grow, we had to adapt at that time. That's when we shifted from being purely a technology company that we actually became a marketing technology and solution business. So basically, we combined tech with service, and in some ways that was not my original dream, but it was the right business decision. So it made us profitable and also made us much more relevant to our clients. So we start from coach, Clarence, and later we worked with more than 100 luxury and premium brands, like all the names you know, start from Louis Louis Vuitton, Chanel, and two different uh categories. So I think our differentiation really came from that mix. So we were not just an agency, we were also not just a software company. We understood data, platforms, and digital behavior, but we also understood that luxury brands, like their standards, their sensitivities, and how carefully they think about image and customer experience. And that's why that we are able to actually crack the market and work with more than 100 luxury brands at a time.

SPEAKER_01 8:41

Amazing. Sorry, this might be repetitive, but could you explain again what you did for the brands through VChat in China? You scaled to 100 premium brands, so it sounds like what you were doing was very compelling.

SPEAKER_00 8:51

Yeah. So at the beginning, my idea is to create a uh called social CRM SaaS platform. That one side we can collect with the traditional CRM system of the brand. On another side, we can connect with the social platform. Basically, we can help the brand adopt to the new social platform, actually, you know, build a data hub, collect the membership together, serve and communicate with the customer better on the social platforms. That's originally the product. And later we realize that you cannot only provide the product, you also need to provide the service and solution. So later we become a marketing solution company. And that is good for the business, as what I mentioned, bring us profit, also bring us the capability to actually really build a strong and deep relationship with the brands.

SPEAKER_01 9:42

Amazing. Why do you believe bigger brands missed this opportunity and it took someone like you and your partner to tap onto this opportunity? Why could they not think of this sooner?

SPEAKER_00 9:51

I think at that time, you know, uh, we are talking about 15 years, uh, 10 years ago, and um the mobile internet grows so fast in China. So we are really in a mobile-first environment. And we have new platforms arrive every couple years. And brands need to adopt themselves to the new platform. But each platform has a new way of communication, new format of the content. And also, at that time, we still need to build the API and collect the data to let the brand have kind of data hub, to have an understanding of each platform, which flows back to their core business, which is retail channels. So I think that's why, especially when chat arrived on the market, everyone is trying to figure out what's that platform, how to communicate with their customer on the platform, how to leverage it for the commerce side. So I think, yeah, so we took that opportunity because we understand both sides, we pilot the product, we kind of need the innovation in the industry. At the same time, we are a very international team. My partner, which is my husband, he's come from Europe, like France, and which is a hub of the luxury brand. And for me, you know, I'm a native Chinese here, understand the internet ecosystem. So combine all the expertise together. Our team is a very young team that some of them degraded from Parsons or New York or Cematon from London. That, you know, when you think about a young group of talent, understand both sides, I think we're the right choice for the brand to lead the innovation, the social uh I would believe that luxury brands would want more certainty on what they can expect from the product.

SPEAKER_01 11:30

And given that you had a younger company and the fact that a platform like VChat was exploding, and so you were somewhere distributing your product through VChat, if I understand correct, meant you had to be very nimble and adapt. How do you feel you you were able to keep up with innovation while maintaining the guidelines that a luxury brand may expect from your business?

SPEAKER_00 11:52

I think at the end, people is everything. So on one side, we need to have talent, which means product manager, engineers, designers, UIUE, that actually can build the product. But on another side, we also need to have the team understand the language of luxury fashion industry and lifestyle and retail. How to communicate with them. As I mentioned, we understand their standards, we understand the sensitivity they have, we understand what kind of customer experience they care on the social platforms. So from content quality to the frequency of communication, I think we really can pilot in that industry because we are much more sophisticated and dedicated for those uh luxury and premium brands.

SPEAKER_01 12:37

And then how did the entire acquisition opportunity come along? Could you walk us through that?

SPEAKER_00 12:44

Yeah. That was a very important moment in my life, both professionally and personally, because I at that time I had just become a mother. And actually, I went back to work around 10 days after giving birth to my first child, like all the female entrepreneurs. So at that time, I was kind of already uh very clear that I wanted to sell the company. So I feel that we we had built something strong, but I also knew that the next stage would require a different scale and platform advantage. So we were quite close to deal with a large mega Chinese internet company, and then Farfetch entered the conversation. So in the end, we chose Farfetch for many, I think, two reasons. First was culture. As I mentioned, even although we are a startup, our team was quite international. Parsons from New York, Samarton from London, IFM from Paris. So at that time, Farfetch felt much closer to us culture. And second was that Farfresh gave equity to all employees, which I thought was very important too, because I want the team not just to join a bigger platform, but to have a real upside and future there. So, you know, but at that time, I have to say I also have my concern too, because I was like running from the internet industry. We saw so many up and down happen in the industry. So I was never blindly optimistic about vertical e-commerce. Let me try to explain. Vertical e-commerce is a very simple but tough mathematic game. So let's assume the acquisition cost for vertical e-commerce versus the multicategory platform marketplace, that acquisition cost per customer should be similar, right? But when we acquire the customer on the platform, the vertical e-commerce will only have one category to generate the lifetime value. But in multi-category marketplace, they have multi-categories to split the cost of the acquisition. They have more uh, let's say, more frequent repeat purchase, they have higher lifetime value. So it's a very simple mathematic game. So at the end, how vertical can actually compete with the multi-category uh marketplace. So at that time, I have concern on this. And then I try to uh have an answer on that, because most of the e-commerce traffic is the king, demand is the king. But however, luxury industry is a little bit different. First, you know, our average order value is very high. I remember back at that time on our platform, the average order value is more than 800 USD dollars. So in that case, if we can build the model in a right way, we actually can generate a very good lifetime value with fewer orders. So this is one. Another reason is because, like what we said for most of e-commerce and traffic is the king, but for luxury at that time, the uh supply is the king, means the brand assets means the unique uh products. So this actually will help, they uh help us to drive a lot of organic traffic. So I think maybe, yeah, we have a chance. So that's how everything starts. And later at Favre, um, we actually show the results show in three, four, five years, three, four years, we grow the regional business to a billion dollar size. So yeah, I think that is uh it's really that shows that when you build a model, right? It's the uh action you can gain the good result. But not only on the I think the revenue achievement later at Farfresh, you know, I also had a chance to lead or participate in serious numbers of major transactions, including the strategic strategic investment involved JD, Tansan, Alibaba Enrichmond, which include most of the internet magazine in China. So from there, for example, let's take Alibaba Enrichmont. I bring the founder, we met the uh CEO of Alibaba, we got 1.1 billion USD investment from them, from Alibaba Enrichment. This is also a very good recognition of our success in the region. Those nonstop deal experiences also give me kind of much broader view of what strategic capital and long-term partnership really means at scale. We are always talking about scale here because that's what we care when we build a platform business. And when you talk about acquisition, your question is about the acquisition deal. I always have something in my mind that it which is advice for a friend. I cannot forget this lifetime. They said the most important thing for acquisition and negotiation is always have a second option. So you can imagine in negotiation, we will have one more buyer or seller for you, depends which side you are, that really changed your mindset completely. So it really gives you the calm, the clarity, and the confidence on the negotiation table. And by the way, I enjoyed so much of our negotiation class in OPN. I hope you are the same.

SPEAKER_01 17:57

Yeah, yeah, absolutely. That was incredible. A lot of folks have spoken very highly about the negotiation classes on this podcast. It was a great experience. Going back to some of the KPIs you mentioned, average uh order value, customer acquisition cost, etc., could you mention some of the KPIs you were tracking to gauge the health of your business?

SPEAKER_00 18:17

For e-commerce business, most important KPI is cost of sale. So in an ideal world, if your cost of sale stays stable, so in a range, it means you have unlimited budget. Which is not a real world. The real world is the bigger size, the business you grow, the incremental margin actually becomes, you know, the incremental margin actually becomes higher. So it means the bigger your business, so ideal world, the bigger your business is. The organic traffic will take the big part of your business, and then you are going to gain more profit. But at a growing stage, so when you grow your business, your cost of sale become higher because every year you have two cohorts of your customer. One is new customer, one is existing customer. When you grow your business, it means the share of the new customer percentage will grow much bigger. That you can grow the business. That means your cost of sale actually grow much bigger. So one of the most important target for us is how we can control the cost of sale while we are growing the business. That's really the e-commerce game.

SPEAKER_01 19:24

Did you learn this on the go, or did you have a board which guided you on what are the right key metrics to focus on to position the business for an eventual sale?

SPEAKER_00 19:35

You know that so we're all entrepreneurs. We learn by ourselves. And we learn every day the world is changing, the ecosystem is changing. So I think we learn by ourselves and then we make the most smart decision at that moment.

SPEAKER_01 19:48

Well said. Okay, so talk about life after the acquisition, right? You helped uh you sold the business, you also helped scale Farfetch to about a billion dollars, you mentioned. And so what was your journey post the sale and how did your leadership style evolve?

SPEAKER_00 20:05

I think the biggest reason was the extreme localization. I mean, I know localization is a very common word, but I really believe that if you don't localize Deepney, you will never become number one in a market like China or others. So at Farfetch, we didn't just translate a global product and call it localization. What we did is we build for the local customers. So we launched a dedicated China app. So we create more localized experience and build a team structure on the ground that could move with the local speed and also the local market understanding. That makes a huge difference. And also in luxury, you know, growth is not only about getting more traffic, it's really about trust, curation, service, and brand relationship. We stay very close to our core luxury customers. One example here is 1 to 2% of our private client generates more than one-third of our revenue. So understanding that customer deepening was essential, that is also one big reason that we were able to scale the regional business to $1 billion. And if you talk about leadership, right?

unknown 21:20

Yeah.

SPEAKER_00 21:21

So leadership, I think one principle I have is I believe I need to hire people who are smarter than I am in each function. So people are everything. First, get the best people in their field, then align them around the same goal, and then give them an ambition enough to let them feel you know they are building something meaningful. So hire smarter people than you are is always my principle for leadership. But in some way, I think the shift from founder to executive was a very interesting journey for me. It's not new for me in Farfetch because. Earlier in my career, which I mentioned, I already experienced high-ball growth inside a large company. So at that time at Groupon China, in six months, we hired 3,000 people and scale very quickly to more than 80 cities. So leading to the IPO. So I had seen what repeat expansion inside a large system looks like. And that also helped my leadership back to Five French. And also moving from founder to executive, and now I'm also on the board roles. I think it really changed how I think about leadership.

SPEAKER_01 22:38

After all of the success, why did you decide to go back to school and attend the OPM program at Harvard?

SPEAKER_00 22:45

And so, you know, last year I just uh finished my EMBA in Tinghua University. I'm not sure if you heard about it, which is top one in China. And at that stage, this stage of my life, I think first I really want to experience the what's the top-level business education looks like globally. And also I think curiosity is something I benefit the most from my learning and the study. And the reason why I choose the OPM is not only about the program, of course, and it's about the cohort. So I heard OPN. Most of us have an entrepreneurship background, so which proof is true, right? Everyone comes from real entrepreneurship experience. People are not there just for diploma. And we really come with genuine motivation to learn, to challenge ourselves and to exchange ideas with each people who are also building business. I think that creates a very different energy compared to another education or study I had in the past. And also, you know, one one point I always mention, I'm very close to my living group. So we always mention at our age, a lot of times we meet a lot of interesting people. Like you and me, we never had time and chance and sit down to talk enough, right? So at our age, we often meet people very interesting, also very good vibes and chemistry between us. But however, you know, we are too busy, we are traveling around the world. We never actually have the chance to build that kind of banding. But OPM program, they put, you know, even we come from different cultural backgrounds, but we are all entrepreneurs, we're all building business. They put us from around the world, lock our ass together 21 days in the dorm. I think that level of banding is not, you know, you can get it from everywhere anywhere else. So that really also attracted me to the program. It's proof. It's very, it's a very right decision. I think OPN gives me both perspective and also community. Yeah. Sorry, I cannot hurt you.

SPEAKER_01 24:50

Um I was saying you sound like a very deep thinker and you articulate so well. Could you tell us about a book that you believe has influenced the way you think?

SPEAKER_00 24:59

I actually won't blame just uh one book. I think what uh what has helped me most is reading across very different fields. Sometimes uh now, as in today, we're a little bit too uh practical. So we want to read one book and immediately we want to get one answer or one film work. But when I was younger, I remember I read a lot of books that it didn't seem directly useful at that time. But when I look back, I think many of them shape me much more deeply than I realized, right? So I really believe that there are no wasted books. It's just like no wasted roles. So recently, for example, I have gotten a lot from books which are related to Buddhist, uh Buddhist thoughts and philosophy. They have really helped me think differently about life, ego, pace, and everyone has our own karma and uh blessings. And beyond books, I also believe that one of the best forms of learning is still cross-cultural exchange. I have traveled a lot and work cross-market. Now I'm sitting on the board of three international consumer brands. One is uh Treasury One Estatis, which is a public listed company in Australia, one of the largest one group in the world. Another one is Acne Studio, which is a luxury fashion brand star from Stockholm, developed in Paris also. And Shangsha, which is a Chinese luxury brand co-created by MS. So this kind of cross-cultural experience really that brings this kind of cross-industry and cultural context. So one thing I have seen again and again is sometimes misunderstanding and bias between cultures be everywhere. And I really feel that our generation somehow has a responsibility, or even we can call it mission, to help bridge the gap between different cultures, between East and West. And even sometimes we think our individual impact is limited. But using our own work and the voice, you know, to reduce this kind of misunderstanding is already meaningful. So that to me is also kind of go back at the end is a form of leadership. And you also mentioned that how I keep the learning, you know, during my entrepreneurship journey. And I also saw you ask the question about the younger yourself. So I think so. The first is be bored. As my father used to say, how much you achieve depends a lot on how bored you are. So I think that is even more true today, right? We live in an AI world now, and a lot of things that used to require huge resources or take years can now happen much faster. So sometimes the real limit is not the market, not the resource, not the technology. It's whether you are thinking big enough. I think second, uh, I would say stay curious. Yeah. Curiosity, China is the lame of the first uh startup I had, but curiosity has probably helped me more than I think more than anything else in my career. So curiosity about ideas, I believe is the best way to learn. And curiosity about people, I believe is the best way to connect. So if you stay curious, I think you can always stay growing. So if I could talk to myself, my younger self, I would say be bored and never lose your curiosity.

SPEAKER_01 28:38

Amazing. Judy, you referenced Buddhism as having an impact and an influence on how you think. Is there any one takeaway from your readings there that you want to share with us?

SPEAKER_00 28:48

Because most of the books I read is in Chinese. So I think I started reading by myself, and a lot of them is from the Tipism, Buddhist thing, called uh, you know, the method knowledge. And then I start to take some of the class with masters. And that I think, you know, I'm not still I'm not in the religion yet, but however, I love the philosophy behind. I really believe this is really help us to clarify ourselves, to look inside. Um, it's a very good way of well-being too. And this and at the same time, this is also, you know, we are all playing different roles in our life. So we are a boss as an entrepreneur. So we are parents for our kids. We are also children for our parents. So in different roles, we have a different challenge. So facing this challenge, how do we deal with ourselves? I think the philosophy uh philosophy behind really helped me a lot.

SPEAKER_01 29:45

Great. Thank you, Judy. Phenomenal conversation. I appreciate the time a lot today. And uh thank you for being so forthcoming.

SPEAKER_00 29:51

Thank you. And uh looking forward to see you in person and continue our conversation offline.

SPEAKER_01 29:56

Yeah, absolutely. Take care, Judy.

SPEAKER_00 29:58

Thank you.