I just re-read an excellent article in Technology Review titled “Why we can’t solve big problems”, discussing why the world is not able to tackle big problems anymore like it was 50 years ago. When Kennedy announced that the US would put a man on the moon “in this decade”, NASA indeed managed to send Apollo 11 to the moon – and back. But since I was born (in 1972) nobody has been to the moon anymore. What happened?

The article discusses several reasons, one of them that VCs don’t want to take big risks anymore. To quote the article, “venture investing shifted away from funding transformational companies and toward companies that solved incremental problems or even fake problems . VC has ceased to be the funder of the future, and instead become a funder of features, widgets, irrelevances.” Computers and communication technologies advanced because they were well and properly funded. But what seemed futuristic at the time of Apollo 11 remains futuristic, in part because these technologies never received the sustained funding lavished on the electronics industries.”

My VC experience started about 8 years ago, so I am not sure how VCs did their investments before that, but I wonder if it may partly be because LPs want faster returns? There are so many funds out there that VCs may look for easy returns instead of big problems – big problems with a high risk and many years before returns could be made. Or maybe it has to do with the fact that the investments in big problems would be way too high, and it’s easier to put smaller amounts in smaller companies.

Next to that the (US) government played a big role as well. In the 1960s it was still possible to get the public behind an idea to put a man on the moon, something that would be much harder right now. People feel there are more important problems to solve. Maybe – but only in the short run. In the long run we need to solve big problems to make sure this earth will still have human inhabitants a couple of centuries from now. Maybe China will be the one that will tackle and solve the big problems humanity is facing?

Of course some funds are still working on big issues, one that immediately comes to mind is Intellectual Ventures that has among others developed relatively simple solutions for global warming that were featured in SuperFreakonomics. But generally VCs seem to be focused on apps and simple problems with quick returns.

Another exception is the Founders Fund, a VC fund set up by Silicon Valley’s Paypal mafia (the Paypal employees that got rich after Paypal went IPO). Their motto is the title of this piece “We wanted flying cars, but instead we got 140 characters”. They feel meaningful disruption is necessary, but most founders have no real intent of doing big things. But it may be a chicken or egg problem: do founders not look at the big problems because they know they won’t get funded or because they don’t want to do big things? I think the first part may be more important, because most entrepreneurs that I know want to change the world.

Sometimes disruption also happens by coincidence. Looking back at the founding of Tudou, the initial idea for that company was not to disrupt the traditional way that people consume TV and other visual media (it was actually something similar to what iTunes became for podcasts). You realize the potential of what you are doing only over time and then you start really thinking big.

When the Internet started I don’t think anybody could have imagined the impact it would have on this world. Although the article does not agree with me, I feel the Internet is at least as important as putting a man on the moon. It’s a different scientific field, but the Internet completely changed the way we communicate and how (and how fast) we get our information. The Internet may also help us to solve the big problems we are facing much more quickly.

If you’re interested in this subject you should read the full article here:
http://www.technologyreview.com/featuredstory/429690/why-we-cant-solve-big-problems/

I just landed in Amsterdam after the regular 12 hour KLM flight from Shanghai, a bit jetlagged but feeling fine. I mainly spent the flight catching up on emails and RSS feeds, reading 2 newspapers, 3 magazines and part of a book. I’ll mainly be in Maastricht this week where I will give 2 talks, one at the Global Entrepreneurship Week and one at award ceremony for a start-up competition. Always nice to be back in Holland for a few days and especially to be back at my Alma Mater Maastricht University (the University Fund paid for my trip).

KLM has a special this month, where they only serve wines made by Dutch abroad, called “A Touch of the Dutch”. So I got to taste a couple of nice new wines as well, among others a South African Pinotage (Aaldering Pinotage 2009 from Stellenbosch), a Cotes de Bourg (Chateau Beaulieu 2010, Bordeaux), and a young South African Chardonnay (Breedeweelde, Chardonnay Private Collection 2012). I am generally not a big fan of Pinotage, but this was a very nice one (even at 35,000 feet!). The Bordeaux was probably a decent wine, but it had no nose and it wasn’t anything special (maybe because of the altitude?). The 2012 SA Chardonnay was really nice, still very young but despite that very aromatic. Actually not a good combination with the red snapper that I had ordered, but that’s my own mistake (I should have ordered the De Kleine Schorre 2011 instead, but I think I already tasted that one on another KLM flight a few months ago). Bonus points for the KLM for this wine selection!

But the KLM actually deserves more bonus points on today’s flight. This weekend I was featured in an article in FD Persoonlijk, the weekend magazine of Holland’s largest (or better: only) financial newspaper. The interview (about my working style, especially the number of hours that I used to work per week) was done a couple of months ago already and I had totally forgotten about it. I only remembered the photo shoot that took place at Amsterdam Schiphol airport in September during a stop-over from a morning flight from Cyprus to an afternoon flight to Shanghai.

Someone mentioned that the FD article had been published on Twitter on Saturday, but of course I can’t buy the magazine in China. Therefore I tweeted @KLM and asked if they could have a copy on board the flight from Shanghai to Amsterdam on Sunday. They replied right away and indeed the paper including the magazine was waiting for me on the plane. I am often quite negative about the service of the airline, but this was a nice experience. Thanks KLM!

A couple of months ago I wrote a post on the fact that sports and politics don’t go together in China. Among others I wrote that the Beijing Marathon would not take place in mid-October because of the 18th Party Congress. I felt bad for the runners who had trained hard for this event, but luckily for them the race was eventually just postponed (Interesting fact: the Party Congress was also postponed, so in hindsight the marathon could have just taken place on its original date).

However, if you are a Japanese national you are out of luck, because the organization won’t let you participate. Officially for ‘safety reasons’, but I suspect that it’s just a case of bullying the Japanese because of the ongoing affair with the Diaoyu/Senkaku islands. It’s really sad that this is happening. To be honest, I probably would not join the marathon if the organizers were stopping one nationality from participating.

I wonder if main sponsor Hyundai (a Korean brand, not Japanese) agrees with the exclusion of Japanese runners. And do the other partners, such as Adidas and Gatorade, know that this happening? It’s a bloody shame if they do and if they don’t pull out because of this.

I went to the Beijing Marathon site to check if it’s really true that Japanese can’t join, but after registering as a user I could not continue the registration process because I did not receive their confirmation email. Maybe they put all registrations on hold because people started complaining to the press?

Because I plan to participate in the Shanghai marathon on Dec. 2, I immediately checked their website as well. The Shanghai Marathon kicked out their Japanese sponsor (they were forced to do so by the government), so I was a bit worried that they would also not allow Japanese to join. But luckily that was not the case, so if you are Japanese and living in China (and you’re not sick and tired of all the anti-Japanese campaigns that don’t seem to stop) you could potentially still run in Shanghai.

Update (Nov. 12): The Beijing Marathon responded and now says Japanese can sign up. They changed it because “Japanese normally don’t sign up individually”. My take: pure damage control, because they didn’t realize that media would pick up this story.

I am always looking for interesting new investments, whether start-ups or completely different asset classes like wine or real estate. Earlier this year I started researching peer to peer (P2P) lending after reading about Kleiner Perkins’ investment in Lending Club, and Mary Meeker (KPCB partner) and John Mack (former Morgan Stanley CEO) joining their board. P2P lending basically means that you can directly lend money to other people. Sites like Lending Club and Prosper.com facilitate this, by putting borrowers in several risk classes and giving you the opportunity to spread your investment over many different borrowers (e.g. if you invest USD 5000 you could lend USD 25 to 200 people).

When I was reading that returns of around 10% (net) per year are quite normal I thought it sounded too good to be true. Based on my corporate finance background I knew this kind of returns without a huge risk should not be possible in an efficient market. But the fact that some top VCs invested millions of dollars in the company intrigued me. These are smart people, did they see something that I didn’t see?

It took me some time, but I finally figured out that sites like Lending Club are actually giving small investors the same kind of returns that in the past only banks could get. The Internet made this possible, because the bank as a middle man was cut out. Because you diversify among many different borrowers you can estimate the default rate in advance, making the investment much safer than it would be when you would just loan to a couple of people. Returns of 10% on their loan portfolio are nothing special for banks, that’s how they got rich and that’s how they finance their huge overhead.

After talking to some people at Lending Club in June this year I decided to “join the club” and put money into a fund run by Lending Club subsidiary LC Adivsors. The advantage of the fund is that you don’t have to decide which loans to invest in, which is something I don’t have time for (or don’t want to make time for). There is a minimum investment for the fund obviously, but if you want to make P2P investment a significant part of your asset allocation you should certainly look at it.

So far my experience has been exactly what I expected, with net monthly returns over 0.7% per month in my portfolio. Service is excellent, with monthly updates and a contact person that I can get in touch with any time. If you’re interested in the fund feel free to contact me by email (marcvanderchijs (at) gmail (dot) com) and I can put you in touch with my contact person at Lending Club.

Of course you can also invest in loans with much smaller amounts, a lot of people seem to start out with a few thousand USD and add a small amount every month. There are a lot of tools out there to decided which loans to invest in, and which doesn’t need to take a lot of time if you don’t add a lot of $$ every month. There are quite some blogs about P2P lending and on how to get started, check out http://www.lendacademy.com/ for a good overview.

The reasons I decided to write this post now is because Lending Club keeps on growing very fast, and announced earlier this week that the company now has over USD 1 billion in person loans and is cash-flow positive, which is a major thing for a fast growing company. Their funds have about USD 250 million under management. If you are looking for an interesting and high-yield investment you should make sure to take a look at p2p lending. Lending Club and Prosper are disrupting the financial market for loans and I think this might become a big industry with very interesting returns for lenders.

Over the past 2 weeks this blog moved to a new server. I used to host marc.cn at Hostway, but they had too much down time and I wasn’t very impressed by their customer service. So eventually I decided to host it on my own server at Amazon, a bit more expensive but (hopefully) more stable. Of course not everything went smooth right away, but it seems now the blog is working fine again (knock wood…). Thanks for your help in setting up the server and troubleshooting Joop!

The picture below is going viral on the Chinese Internet today. It was posted on the official Durex account on Weibo (China’s Twitter), with the title “The difference between Obama and Romney is…”

(Source: Shanghaiist Facebook stream)

At home before going to school

Today the kids celebrated Halloween at school, so they both dressed up in their favorite Halloween costumes.

Walking (or in Scott’s case running) to class

Elaine only wants to dress up as a princess, so also this year’s outfit was an easy choice. Scott loves the movie Cars and admires our race car driver friends Ho-Pin Tung and Alexandre Imperatori, so we found him a Lightning McQueen race car driver suit. He was so proud when we arrived at school!

Happy Halloween @ Soong Ching Ling!

View over Yangshuo

Last weekend I spent in Yangshuo, the small backpacker town on the Li river in Guangxi province. I had not been there since 2006 (see this post and this post) and I looked forward to going back and see the changes. I went together with Danny Wilms Floet, my best primary school friend who by pure coincidence now lives in the same street in Shanghai. It’s a small world!

We left Friday afternoon and flew to Guilin from where we took a taxi to Yangshuo (a 1.5 hour drive). We stayed in the Rosewood Hotel on West Street in Yangshuo, because it had great reviews on TripAdvisor and other sites. However, it turned out the hotel was not as nice as I had hoped, with slow and grumpy staff and damp rooms without windows (only my bathroom had a window).

But the biggest problem was that it’s so extremely loud outside that you can’t go to sleep before 2 AM (which was a good reason to stay out late!), and even after that I woke up a few times because of people walking through the hallways and closing doors (rooms are not well isolated). Anyway, they did provide free earplugs and we did not visit Yangshuo to sleep, so it was not a major deal, but because of this I would not recommend this hotel to anybody.

View from my hotel room balcony

Danny and I decided to have a pizza in the pizzeria downstairs (owned by the hotel). We ordered a bottle of Italian Cabernet Sauvignon (Cielo), which took them about 20 minutes to bring (and only after asking the waiter 2 times where our wine was). I took one sip of the wine and realized we were fooled: this was not an Italian Cabernet Sauvignon but likely a cheap Chinese wine that someone (the hotel? the distributor?) put into Italian wine bottles. I know this regularly happens in China, but you would expect a hotel to try their own wines before serving them – unless they are in on the deal of course.

Our bottle of fake wine…

We checked the bottle for signs of tampering and soon realized that the bottle had been reused: the label was a bit torn off in some parts (meaning other people had had this bottle on their table before) and the cover over the cork was not straight like it shoud have been. I did not drink another sip and changed to mineral water instead. I started to seriously regret my choice of hotel even before the weekend had really started… Later during the weekend we checked some other bottles of Cielo that the hotel had in stock and none of the labels was completely clean, confirming our suspicion. Well, this is China, so you can’t do much about it.

Danny & Marc having a beer at Lucy’s

Because the pizza was rather small and we did not want to spend another Chinese Yuan in this restaurant we moved on to a different place, Lucy’s. To our surprise the place served Dutch french fries (“Patatje Oorlog”) which tasted pretty good with local beers. We had a few more beers and then walked around town a bit. We ended up at another bar in West Street around 11 PM and by that time the street was still extremely crowded. Much more busy than it had been 6 years ago, and with 99% Chinese tourists instead of the many backpackers that had still been here during my last visit. West Street used to be a nice place to hang out with a lot of Western style bars, but now it was full of Chinese bars blasting out loud cheesy music and shops that were all competing with ever louder announcements to get the tourists in. A pity, the old atmosphere was completely gone.

Beer pong at Mojo

Eventually we ended up at rooftop bar, the Mojo, at the end of West Street close to the river. That was the kind of bar I had been looking for (or at least, the kind of bar that I remembered from a few years ago), with decent music and full of backpackers drinking beers and playing Beer Pong. An added advantage was the view over town and the surrounding mountains, this place is probably the highest bar in town. We stayed there until it got more quiet on the streets around 2 AM and then walked back to our hotel.

On my beautiful pink ladies bike

We had breakfast at 9 AM in the hotel (nothing special) and then rented bikes. We wanted mountain bikes, but were told that they were not available and we ended up with the worst kind of transportation for the dirt roads in the Yangshuo countryside: pink ladies bikes without suspension or gears. At least they were cheap at about USD 2 per bike per day. We first rode around town, looked at the river and drove through some of the backstreets, and then went into the countryside.

I still remembered most of the roads from 6 years ago and that was a good thing because we did not have a map. We made a long ride through the Yulong river valley, a beautiful area surrounded by karst mountains. Close to Yangshuo we still saw a few people, but after about 5 km the roads were almost deserted.

Country roads

When we crossed the Yulong river, however, we suddenly saw all the Chinese tourists again. It turned out that as part of the tour group packages they all get to make a trip on bamboo rafts. Not sure what the fun of that is if you are surrounded by hundreds of other rafts, but I guess I am not the target group. Touts tried to get us to join as well but we kindly refused.

Danny looking at some of the hundreds of rafts on the river

We continued our trip and eventuallly rode about 50 kilometers on our pink bikes (luckily none of us got a puncture on the bad roads). Danny managed to get into an accident with a big motorbike on a small road up a mountain. The motorbike drove down rather quickly and had to brake hard to avoid hitting Danny. The motor guy then slipped and his motorbike fell partly on him. We helped the man to get himself and the bike up again, and then continued our ride. I probably should have taken a picture, it was just so funny to see a motor bike floored by a pink ladies bike on a slope in the middle of nature.

Yangshuo ferry

Not much later the road ended at the river. I had hoped for a bridge, but there was none. Luckily a guy on a raft was willing to take us to the other side. It was a bit wobbly with 2 bikes on the bamboo boat, but we managed without getting wet. We then had some drinks at Giggling Tree, a Dutch owned hotel/restaurant in a nice location close to the river, before climbing Moon Hill a few kilometers down the road from there. Around 5 pm we were back in town, took a shower and had a cold beer on a balcony overlooking West Street.

Moon Hill, Yangshuo

At night we had dinner before going to the 9 PM showing of Impression Liu Sanjie, an impressive light show with a cast of over 600 people. I had seen the show before, but it was still impressive. After the show we strolled through town and again ended up at Mojo where we finished most of their stock of Heineken beer (the waitress remembered us from the night before because we were the only ones not drinking the cheap local beer!).

West Street late at night, extremely noisy and busy with Chinese tourists

On Sunday we decided to rent better bikes and ended up at Bike Asia, probably the best place in town to rent mountain bikes. And not expensive either, we paid just RMB 70 per bike (USD 10). Service is excellent and they even give you a decent map!

Bike Asia, the best place to rent bikes in Yangshuo

We first crossed the Li river to check out a hill that I had considered buying in 2006. It was now a resort and we had some drinks on the terrace overlooking the surrounding mountains and the village of Yangshuo below us. We then drove to the north on the west side of the river and had drinks at the Secret Beach, close to the place where the boats from Guilin land. A nice place and we were the only guests. At 4:30 PM we were back in town, got our luggage and took a taxi back to Guilin airport.

Drinks at Secret Beach with Danny Wilms Floet

It was a great trip with lots of exercise and lots of beer. Yangshuo has changed a lot, but it’s still a nice place as long as you stay away from West Street during the evening. If I should ever come back I will for sure not stay on West Street anymore (nor in a place owned by the Rosewood Hotel, the place that sold us the fake wine), but there are many decent hotels within a few minutes walking distance from West Street.

West Street, Yangshuo

I put some of the pictures that we took during the trip on Flickr, you can see all of them here.