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Ask victor koo about Stanford
influences, and he blurts out Jack McDonald’s
name before you finish asking the question. McDonald
was his mentor, explains Koo—COO of Sohu.com—the
guy who got him interested in venture capital, which
eventually proved his entrée into the hurly-burly
of Internet portals.
McDonald, a professor of finance in the Graduate School
of Business, worked with Koo to develop and teach a
case study based on an audacious joint venture Koo engineered
in China.
At the time he proposed the venture, Koo was fresh out
of Stanford’s MBA program, heading business development
at Richina Capital, a Shanghai-based venture capital
firm trolling for Chinese investment opportunities.
His bold idea: persuade China’s largest leather
company, a state-owned enterprise called Shanghai Leather,
to engage with Richina in a joint venture to develop
fine leather that could go head to head against Italian
producers who dominated the top end of the market. (China
is the world’s No.1 leather producer but traditionally
focused on the low end, where profit margins are smaller.)
To make the new company work, Koo first had to get buy-in
from the huge state corporation—no small feat
considering Koo’s VC firm was a non-entity in
the world of leather. But he also had to wrestle with
the challenges of creating an enterprise that could
capture and deploy skills it took Italy generations
to hone. And do it in a few months.
To find the latest technology and expertise, Koo looked
outside the country. “They had to work out a very
complicated deal to acquire a New Zealand leather company—because
the Italians weren’t going to give them the technology,”
McDonald says. “They used the New Zealanders as
the lead guys to go into this new spinout to make high
quality leather.”
McDonald remembers how Koo lived for two years in a
Shanghai hotel room trying to work out the project’s
daunting complexities.
From his mentor’s standpoint, Koo’s effort
delivered double payback: besides creating a successful
business, his former student provided the raw material
for “one of the all-time great case studies on
international entrepreneurship.”
“We taught it for a number of years,” McDonald
says. “We wrote it up to put the students in the
shoes of Victor. How would you solve the challenges
at this stage—for example, financing the New Zealand
acquisition? How do you deal with all the technology
problems of going into China? How do you negotiate with
the largest state-owned enterprise in an industry?”
For McDonald, the project underscored his enjoyment
of teaching Asian students. “It’s absolutely
incredible to be a professor and work with Asians because
they hold teachers in such high esteem,” he says.
“Their motivation and their degree of quality
interaction with faculty are just extraordinary.” |
