Prior to joining GGV Capital, Chao Luo was the co-founder and CSO of Laiye, an AI platform offering intelligent assistants to consumers and enterprises. After experiencing the dual roles of both an entrepreneur and an investor, Luo described the two as a revolving door, meaning you need to gain perspectives on both sides.
“Now I define myself as a venture capitalist,” he said. “To me, it is not like a real transformation but more like I’m learning different things at different stages.”
In January, Chinese authorities called for the formulation of a relatively complete top-level design for an industrial internet network by 2020. According to a report by bg.qianzhan.com, the average annual compound growth rate of China’s industrial internet in the next five years is about 13% with its value hitting RMB 1 trillion in 2023.
Luo told TechNode that he believed tech companies who can empower the secondary industry will form a new force, which is also what he is focused on now.
“In fact, there are many pain points within the industry area,” he said. “A large number of devices used in industrial scenarios are yet to be digitized. From meter devices to industrial operating systems, the majority of them are still operating offline.”
A lack of digitization in industrial sectors causes two main problems: The first is operational issues and the second is maintenance, which all require a lot of manual work. However, by introducing useful IoT devices, coupled with background data analysis capabilities, Luo expects 90% of these scenarios to no longer need people in the long term.
The market is full of opportunities, along with challenges because platforms should be able to deal with different types of devices, models, and API interfaces. This requires that those who want to work in industrial internet have more patience and are okay doing the dirty work needed before products can roll out.
Black Lake Technologies, a software-as-a-service (SaaS) company that provides digital applications for manufacturers, is a successful GGV investment. The company has already empowered many traditional manufacturing companies with its cloud-based data collaboration and analysis tools. In the future, Luo contends that companies with a strong combination of software and hardware will be more competitive and prepared for long-term survival.
He explained that by combining software and hardware services, the company could increase the value generated for customers and also boost their stickiness so that the relocation costs for customers will be relatively high. “Only by developing the hardware can the data be digitized,” he said. “If the company only provides software, it’s very possible for customers to find a replacement.”
When asked about how to intelligize one specific industry, Luo said there are three key factors. The first is to build an infrastructure for digitization, the second is to have robust data analysis and processing capabilities and the third is to have the ability to facilitate the application, which requires a team with multi-talented individuals.
“We’re seeing lots of excellent teams that are not just made up of PhDs but more mixed teams with all kinds of talents,” Luo said. “And teams like this will have a better chance to succeed.”