DiDi's founder & how the ride-hailing giant comes into being
Exclusive book excerpt on Cheng Wei & DiDi, and giveaway of FOUR copies
DiDi is in the news today and Pekingnology hereby presents part of its story - an exclusive excerpt from the new book Zhong Guan Villiage: Tales From the Heart of China’s Silicon Valley, published on June 24, 2022 (and give away four copies!)
Zhong Guan Villiage 中关村, in Haidian District, Beijing, is home to China’s enterprising tech sector. With unprecedented access to the key figures behind the rise of Chinese tech giants, Ning Ken 宁肯 delves into more than five decades of history and reveals the hidden triumphs and disasters that forged the “Silicon Valley of the East.”
Born in Beijing in 1959, Ning, a professional writer at Beijing Lao She College of Literature 北京老舍文学院, is also a visiting professor at Beijing International Studies University. He has won many Chinese literary awards.
Zhong Guan Villiage: Tales From the Heart of China’s Silicon Valley is translated by James Trapp from Ning’s Chinese book 《中关村笔记》 published in March 2017.
This excerpt focuses on DiDi, China’s leading ride-hailing company, and tells the story of how 程维 Cheng Wei, its founder, started the business against all odds.
Pekingnology and Alain Charles Asia Publishing are glad to announce a collaborative giveaway for Zhong Guan Village: Tales from the Heart of China's Silicon Valley by Ning Ken. We are giving away 4 copies to 4 lucky winners (2 in the UK and 2 in the People's Republic of China).
UK and PRC residents only.
Submit your email to the Google form, set up and maintained by Alain Charles Asia Publishing.
Alain Charles Asia Publishing will handle the prize draw, scheduled for the 30th of August, and contact the winners via the submitted email for their postal information.
Alain Charles Asia Publishing will add the submitted emails to their general mailing lists to publicize new titles, events, and the likes. You can read the privacy policy.
Or just buy the book via Amazon!
On May 31, Pekingnology published an exclusive excerpt of the same book, detailing how Liu Chuanzhi 柳传志, Lenovo’s founder, sent Sun Hongbin 孙宏斌 to prison nearly two decades ago. Sun later founded and led the big Chinese real-estate developer 融创 Sunac, which recently defaulted on its bonds as many of its peers did.
In 2012, Cheng Wei booked a restaurant in Beijing’s Wangfujing District to have dinner with some relatives from Jiangxi. They had landed at the airport at 5 o’clock and were waiting for a taxi, so Cheng Wei settled on 7 o’clock for the food to be served and went ahead and ordered far too much. In the end, his relatives called at 8 o’clock asking if he could go out and pick them up from the airport.
Cheng Wei didn’t know whether to laugh or cry; it would take him at least an hour to get to the airport, but his relatives had said there wasn’t a taxi to be had anywhere. He was working for Alibaba at the time, dividing his time between Hangzhou and Beijing, and he had often missed a flight because he couldn’t find a taxi.
He had developed something of a neurosis about hailing taxis, so he quite understood his relatives’ situation, but there was nothing to be done about it at the time. He urged his relatives to settle for taking the airport bus, but they were so confused by the airport that they couldn’t find where to catch it; all they could do was walk around the airport, phone in hand, looking for a signboard.
On another occasion, in Hangzhou, Cheng Wei was going to a meeting only five or six kilometers away. It was raining and he walked all the way, trying to flag down a taxi. He arrived at the meeting looking like a drowned rat, but at least it took place.
Cheng Wei was born in Hekou township in Jiangxi’s Qianshan County. His father was a civil servant and his mother a maths teacher. He was a very good student and went up to Qianshan Number One Middle School. He took the Gaokao in 2001 and his excellent results admitted him to the Beijing University of Chemical Technology. He graduated in 2005 and went straight off to work for Alibaba’s subsidiary B2B Marketplace.
Just like other university graduates, Cheng Wei started at the bottom, working in sales. He rose through the ranks over three or four years to become an area manager and was the youngest person in the company to hold that post in that year. In 2011, he was promoted to deputy general manager of the Alipay B2C division, with responsibility for the Alipay product and merchant interface.
After this change in direction, Cheng Wei began to turn his attention away from the sales teams onto product management, and with the internet horizon ever-widening, within a year he had rapidly developed a collaborative company working interchangeably across three sites with a workforce that increased from several dozen to more than a thousand. The mobile internet was growing like wildfire, and although outsiders may not have understood it, Cheng Wei knew exactly what was going on.
2012 was the first year of the development of the mobile internet; it was the year that smartphones like Apple’s and Samsung’s grew less and less expensive and began to be seen everywhere, when previously, Nokia products had ruled the roost. Smartphones meant that all you needed was a handset and you could connect to the internet; you could find out exactly where you were at any given time; and you didn’t need to be in a room with a computer to get online. It was made possible by hardware developments and the ubiquity of 4G internet, and it made possible new and innovative formats.
Observing all this, if it wasn’t the time for Cheng Wei to start his own business now, he didn’t know when would be! On this fast-moving new platform of the mobile internet, everyone was rushing to get online, and if he didn’t make his move, he would regret it. A whole generation of people at the cutting edge of the internet felt the same, including Wu Gansha at Intel Labs China. This was a shared phenomenon which illustrated the hyper-reality of the relationship between the age and the individual.
Nine months before he resigned as deputy general manager of Alibaba’s Alipay division, Cheng Wei had thought up six different projects but not gone through with any of them. Forming a start-up is an act of impulse, but that can’t be all; in the end, it is also shaped by the individual’s own business acumen.
Impulse is a kind of hope and business acumen is the control imposed on that hope; the two things work together in opposition, and intuition plays a vital role. Intuition is the product of accumulation and maturation, often superseding hope and reason in its return to the original. Cheng Wei’s focus returned from the outside world to himself, to his innermost feelings: what was the most painful thing that had happened to him? What was the lowest point of his existence? He thought of food, of clothing and of accommodation, but none of these had ever been a headache for him. Whenever he was out and about, every time he was left standing in the biting wind, every time he missed a flight, these were his most painful times and that pain became his starting point.
Submit your email to the Google form, set up and maintained by Alain Charles Asia Publishing, and participate in the lucky draw for one of 4 giveaways!
Or just buy the book via Amazon!
Taxi-Hire Software
On 6 June 2012, the day after he quit his job, Cheng Wei set up the Beijing Xiaojie Science and Technology Company to provide software used for hiring taxicabs called ‘DiDi Dache’. He invested Rmb100,000, and his colleague at Alipay now turned angel investor, Wang Gang, put up Rmb700,000, and with that, the company was launched.
Although pain was their starting point, there was no problem with the basis of their venture, but the reason the place of pain was painful was precisely because it was a difficulty: a difficulty not just for Cheng Wei, but for society as a whole. People had been cursing the taxi industry for a long time, but no one had ever done anything to change that.
Why not? Cheng Wei consulted all his friends over what they thought about creating taxi-hire software, and they almost all reacted as though he were delirious. Even those who encouraged him couldn’t agree on what kind of software he should make. Everybody felt that China had never had a proper taxi system: you call for a cab which may or may not come; when the driver sees there is only one of you wanting to go to the airport, he may take on another fare; while the taxi is on its way to you, you may see another empty cab and take that one instead of waiting for the original one.
Often, drivers didn’t have smartphones; indeed at the time, only 10% of them could fish an iPhone or a Samsung Galaxy out of their pocket, and most of them were still using Nokias. Nothing that wasn’t a smartphone could be loaded with software.
Moreover, at the time, there was no online payment and people were most emphatically not used to the idea of paying the taxi fare when you made the hire. Although you could make card payments, that was certainly not the norm, and drivers were used to taking cash and would refuse this kind of internet payment.
Then, of course, there was the political risk, the possibility of contravening government policy. “Every day I asked myself if this thing was actually possible. I weighed it up, over and over again, asking myself, but I had started and there was no turning back. Even so, I constantly doubted myself, always trying to refine my plans,” Cheng Wei says.
“At the Guiyang summit meeting, at Davos, at the Chinese Academy of Governance… how could one not have doubts facing such difficult situations? But I also knew that entrepreneurs are not thinkers or strategists, they are adventurers and very few of them have thought things through completely when they start out; if they had they wouldn’t be doing it. But the things that you say should be thought through are all things that are subject to change and so are unpredictable. Besides, change is what entrepreneurs are seeking. If the market isn’t ready yet you can’t do it, is how people who think things through see it, but it is precisely in those conditions that entrepreneurs succeed. With smartphones commonplace, and both end-users, drivers, and customers properly educated, the market would be ready but it would be too late for you to launch taxi-hire software.”
Don’t think so much, just start from the fact that it is doable; you are going against the current, so first produce the software. That is what is doable, so get on and do it, and don’t worry about anything else. Painful decisions have to be taken, that are quite right and the right direction to travel, so just do it and let the journey end how it will.
This is how it has always been for entrepreneurs, and this generation of them is certainly no less impetuous than any other. Cheng Wei had two possible courses of action, either to assemble his own team to produce the software, or to outsource it. Setting up your own R&D team was the traditional way for old-school entrepreneurs, but Cheng Wei decided to outsource and find a technology partner.
This is the way of the internet entrepreneur. He met with quite a few potential outsourcers, one of which was the producer of what they called E Drive software. If they had made that, they must be alright, so Cheng Wei went to talk to them. They quoted three different prices: Rmb100,000, Rmb80,000 and Rmb60,000. Cheng Wei thought about it and chose Rmb80,000. At that time, he did not know about the technical divisions of iOS, Android, frontend and backend.
When the product appeared two months later, it was next to useless as it only had a 50% connection success rate. That is to say, for every two calls from customers, only one would connect at the driver’s end. But Cheng Wei was in a hurry to get the app online, so he just had to make the best of it.
At the time, there were 189 taxi companies in Beijing and DiDi’s target was to break through the 1,000-driver barrier for the installation of the software. In the end, after 40 days, not a single taxi company had signed up.
Every morning, the off-line co-workers set out full of hope, but every evening they returned downhearted. Every day, they were asked the same question, “Do you have a red-letterhead document from the Traffic Committee?”
This was the first requirement when it came to assessing political risk. No one can afford to mess around with political risk. In China, this is just the way things are, but Cheng Wei decided to test the water. He was a young man, and it is in actions like this that a young man’s hopes lie; they are also sometimes where the progress of the age lie.
He couldn’t do anything in Beijing, as the policy was too strict, so he decided to switch cities and try somewhere else. He felt that Shenzhen was a more open city than Beijing but, in the end, he hit the same problem. Just when he thought he had reached the point where further effort was hopeless, heaven opened a new window for him.
On the 49th day, one of their peripatetic real-time agents phoned Cheng Wei to tell him that he had found a taxi company that was willing to work with them. It was a small firm in Changping with only 70 cabs, called Yinshang Taxis. The owner didn’t really understand what DiDi was offering, but had had a merry time out drinking with DiDi’s rep, and had agreed while flushed with wine.
This was a glimmer of light. With one company signed up, when they went out pushing for more business, they could say, “Look, Yinshang Taxis are already working with us, and if you don’t do the same, you are going to lose out to other companies and before you know it, your own drivers will have gone off to work for them too.” Used like this, that glimmer of hope could be a guiding light. In the course of the next week, the rep’s colleagues signed up another four companies.
As taxi firms slowly began to join them, the next thing to do was to organize training for the drivers. Cheng Wei undertook this in person. He told them that he himself had started out with Alibaba, which was a big-name company that everyone was familiar with. Lots of the drivers had bought things on Taobao and some of their family members had opened online shops on the site. He went on to say that, although he was an outsider to the taxi business, he had been working with the internet for a long time and had seen many different businesses improve their efficiency that way and increase their profits.
DiDi’s software could improve efficiency in hiring cabs and so help the drivers earn more money. Cheng Wei thought he was being very open and up-front, but the drivers in the audience just sat there, smoking cigarettes and chatting to each other, and not listening at all.
They found meetings really boring and irritating as all they did was waste time during which they could be earning money. They had been cheated out of money by all the oil and petrol companies and thought that DiDi was just a new scam to do the same.
At that time, only 20 out of every 100 taxi drivers in Beijing had a smartphone and, as a rule, on any given day DiDi could only equip seven or eight. Then, one day, one of the reps equipped 12 drivers, and he phoned in delighted, saying that he had made a major breakthrough.
It was indeed a breakthrough of a kind, but really it was a dispiriting one since the original plan was that they would have signed up 1,000 drivers in the first two months. If they could only get 12 a day, how long was it going to be before the company took off?
But they couldn’t waste any more time; they had to get on with it, put on a bold face and settle for the connections they could make. They still had to go before the Traffic Committee; they couldn’t go and, no matter whether they were successful or not, there was work to be done. Even if they only gained a basic understanding of what they were trying to do, that would be enough.
Cheng Wei went in person to make the presentation to the Traffic Committee. Because it was something completely new, the members of the committee were full of curiosity and stared attentively as though waiting for some kind of message from an extra-terrestrial.
Cheng Wei made two attempts, each of 30 seconds, but neither connected. How amazing, how persuasive it would have been if they had, but as it was, Cheng Wei felt like a fraud, and just wished the ground would open up and swallow him.
Fortunately, the members of the Traffic Committee were good sorts; they fetched a cloth for Cheng Wei to wipe away the sweat on his forehead and told him not to get agitated and to have a drink of water.
If he hadn’t been an ex-employee of Alibaba and a senior manager, he might well just have been thrown out completely at this point. He went back to give a second demonstration, and this time he took two cell phones with him: whichever one connected would be the one he used. Outsourcing technology is not a very reliable way of doing things. You have to find technical partners, but if there aren’t any to be found in the mobile internet industry, what do you do?
Cheng Wei went to every possible length. First, he sought out a colleague from his Alipay days and got him to make up a list of all the technical people Cheng Wei might know who were working in Beijing. Then he went and talked to each of them in turn, but none of them wanted to leave to join him. Then he thought of an older cousin who had opened an internet bar back in his hometown and was a computer studies graduate. He asked him if any of his old classmates were working in Beijing and might want to become his technical partner. But none did.
Then, one day, Cheng Wei heard some news about Sogou and Tencent, and thought to himself that if those big companies were going through changes, then there were bound to be some of their technical staff on the lookout for new jobs. He immediately did the rounds of Baidu and Tencent, asking people out for meals and for coffee, but all to no avail.
There was no one who wanted to join him. He happened to be part of a WeChat group, one of whose members called himself a head-hunter. He asked Cheng Wei what kind of person he was looking for, but after he had told him, he heard no more from him.
“When you have reached your wits’ end, heaven may open a window for you!” These are words you will often hear Cheng Wei say. A month later, out of the blue, the head-hunter telephoned him to say he had found someone. He made immediate arrangements for Cheng Wei to meet this person, who turned out to be DiDi’s current CTO, Zhang Bo.
Sometimes people are brought together by fate, and as soon as Cheng Wei clapped his eyes on Zhang Bo, he knew he was the man he was after. It was the same with Zhang Bo, who immediately recognized their shared talent.
Cheng Wei was delighted after his talk with Zhang Bo, delighted beyond measure, and as soon as he was out of the door, he telephoned his angel investor, Wang Gang, telling him Zhang Bo was a gift from the gods. The fact that the Rmb 800,000 seed money was almost exhausted, and the Series A funding was not yet in place, didn’t affect Cheng Wei’s delight in the slightest.
Even so, after his meeting with Zhang Bo, Cheng Wei did ask Wang Gang for an injection of funds. Both Cheng Wei and Zhang Bo were, in reality, inexperienced in the world of venture capital, but DiDi gave another presentation using their equipment with its unreliable internet connection, seeking US$5 million of funding. They tried everywhere among the mainstream venture capitalists, 20 or more different companies, but not one of them was willing to invest.
In truth, one couldn’t really blame them given the discrepancy between what the company was worth and the amount it was seeking. With no orders on their books and no one calling their cabs, despite Zhang Bo’s superb technical know-how, there was no denying this was a serious problem; not the most serious problem, because all their problems were equally serious and interconnected. But as a young man still, Cheng Wei plowed on regardless, like a newborn calf that hasn’t learned to fear the tiger, like a cat risking all its nine lives, and kept searching for a way up like a man climbing a cliff face.
Again, Pekingnology and Alain Charles Asia Publishing are glad to announce a collaborative giveaway for Zhong Guan Village: Tales from the Heart of China's Silicon Valley by Ning Ken. We are giving away 4 copies to 4 lucky winners (2 in the UK and 2 in the People's Republic of China).
UK and PRC residents only.
Submit your email to the Google form, set up and maintained by Alain Charles Asia Publishing.
Alain Charles Asia Publishing will handle the prize draw, scheduled for the 30th of August, and contact the winners via the submitted email for their postal information.
Alain Charles Asia Publishing will add the submitted emails to their general mailing lists to publicize new titles, events, and the likes. You can read the privacy policy.
Or just buy the book via Amazon!
On May 31, Pekingnology published an exclusive excerpt of the same book, detailing how Liu Chuanzhi 柳传志, Lenovo’s founder, sent Sun Hongbin 孙宏斌 to prison nearly two decades ago. Sun later founded and led the big Chinese real-estate developer 融创 Sunac, which recently defaulted on its bonds as many of its peers did.