Bill Qian, an "entrepreneur" with both the popular tags "Bitcoin" and "Middle East".
Article: Z Potentials
In 2023, the hottest words besides AI are "Bitcoin" and "Middle East". Legendary CEO Larry Fink of the world's largest asset management company recently gave interviews to both "Fox Business" and CNBC, discussing that "Bitcoin is digital gold". The UK's "Financial Times" noted that under the trend of "the rise of the East and the decline of the West" in the global economic landscape, Middle Eastern capital, represented by sovereign wealth funds, has accelerated its pace of "gold mining" to the east. Sovereign wealth funds in the Middle East are attempting to invest directly in projects in China, and more and more companies are flocking to the Middle East to seek opportunities.
In this issue, we are honored to invite Bill Qian, a partner at Phoenix Group, the largest Web3 platform in the Middle East, who possesses both the popular tags "Bitcoin" and "Middle East" as an "entrepreneur", to chat with us about his life experiences from grassroots to management, from employee to entrepreneur, and from the domestic market to the global market. He shared the underlying logic of Web3 and his views on the future market, as well as discussed the recent Middle Eastern trend.
Guest Introduction
Bill Qian, currently based in the UAE, is the current partner and chief investment officer of Phoenix Group, the only Web3 listed company in the Middle East, and the first Chinese person to lead and experience an IPO in the UAE. Phoenix is strategically invested by sovereign funds, and its core business is the world's largest Bitcoin mining farm, Phoenix Miner, which has 7% of the global Bitcoin network's computing power and operates a joint venture mining farm with a $650 million investment from Abu Dhabi and sovereign fund ADQ. Bill also serves as the chief investment officer of M2.com, a cryptocurrency compliance exchange based in Abu Dhabi, and the chairman/GP of the investment fund Cypher Capital. Previously, he served as the vice president of global investment and financing at the world's largest cryptocurrency platform, Binance, managing assets of over $20 billion. Before that, he worked at JD Group overseeing global Fintech and technology investments, and at ZhenFund focusing on internet industry investments. Currently, Bill also serves as a director of the Ton Foundation, a public chain of Telegram with an active user base of up to 800 million.
01 Steady Progress, from Institutional Analyst to Global Team Manager, Always Maintaining the Entrepreneurial Spirit
ZP: Please briefly introduce yourself and the career path you have experienced, and the growth brought about by each experience.
Bill Qian: My career path is not a very typical one, such as attending a prestigious school and then working at an investment bank/consulting firm/big company, or a USD fund. After graduating from college, I worked at a central enterprise for two years, and even took the civil service exam, but failed. Later, I gradually explored my interest in finance and went to Singapore for a master's degree. After graduation, I joined ZhenFund, a USD fund, and then moved to JD. I caught the last train of China's mobile internet at JD, until the regulatory tightening in 2020, and then transitioned from Fintech 1.0 to Fintech 2.0 (Web3). I completed the industry transformation at Binance, transitioning from a Web2 investor to a Web3 investor, and because of managing global financing and investments at Binance, I effectively transitioned from the Chinese market to managing a global team and conducting global market investments, completing my globalization transformation. At that time, Binance was a company with a market value of $200-300 billion, and as the person in charge of financing and investment at this large company, it was also a step forward in my career. Later, I joined Phoenix, serving as the CIO of the group and also managing the Cypher Capital fund, completing the transition from being based in Asia to being based in the Middle East.
In terms of my career path, I consider myself someone who can endure a lot. If time is considered as bullets and investments, I belong to the "concentrated holding, rarely changing positions" type. I worked in the Chinese market for Web2 investments for almost 10 years, and at that time, I experienced a rather uncomfortable transition because I always had to find direction. I consider myself lucky in that I may have had a bit more awareness than most people around me. In early 2020, I began to feel that the entire red envelope period for China's Web2 was coming to an end, so I spent the whole year thinking about what to do in the future.
I think there are two important aspects to consider in terms of thinking: where to go and which industry to focus on. These two things are the most important and determine the most important investment beta. After thinking about it, I chose "globalization" and "Web3". In terms of growth, I completed a basic training at ZhenFund; at JD, I learned how big business is run and became a manager; at Binance, I began to be a manager of an international team at a global company with Asian elements; at Phoenix, I directly entered the pure overseas market, being both a manager and an entrepreneur.
ZP: Currently, as the head of Cypher Capital, the ecological investment platform of Phoenix, what changes have occurred in terms of the required abilities and mindset, from being an investor to a fund operator?
Bill Qian: In "The Flowers," Bao experienced explosive growth at a certain stage, but I didn't have such dramatic growth. I feel like I have not had a breakthrough or epiphany moment, but rather, it has been a gradual and snowball-like growth. From being an analyst to independently managing cases, from independently managing cases to managing an investment team, and then participating in the company's strategy and transformation, these were all completed at ZhenFund and JD. I extracted all my abilities from Web2 and applied them to Web3, and transitioned from managing a Chinese-speaking team and focusing on deals in the Greater China region and Asia to managing global deals. These were all completed at Binance. After that, I transitioned from managing an international team based on Chinese people to managing an entirely international team with partners who are white, Arab, Iranian, Indian, and Russian, and operating an entirely international fund. These were all completed at Phoenix. So, I think that every step involves accumulation, and each accumulation becomes the foundation for the next step. However, when reaching the next goal, new challenges and growth opportunities arise.
ZP: Have the dimensions of problem-solving also changed correspondingly?
Bill Qian:The first 7-10 years were about "doing things," the second 7-10 years were about "doing things with people," and the third 10 years were about "using people to do things." Many times, the challenges and business areas have completely exceeded my own ability boundaries, so expanding my own ability boundaries can be achieved in two ways: one is to step out, and the other is to let the team step out.
ZP: I saw that you said your philosophy is "I am an entrepreneur happened to be an investor." Why do you define yourself in this way? What entrepreneurial traits do you believe you possess?
Bill Qian: The entrepreneurial spirit is essentially a mindset, which means not following the rules, being willing to accept challenges, and creating new things. From this perspective, whether it's an industrial builder, a founder of an investment fund, or the ruler of Dubai, they all ultimately need to have an entrepreneurial spirit. Since 2015, I have not been a pure financial investor. Investment has always been a part of my work and life, and many times I need to be involved in the organization's construction and the development of new businesses. So, nowadays, my time is roughly divided into one-third at Phoenix Group and M2, one-third in managing the Cypher Capital fund, and one-third in incubating new businesses. In this process, I think the most important thing is to help the entire platform achieve effective resource allocation, including capital, talent, and the effective allocation of time and attention in decision-making.
ZP: What were your expectations for yourself 10 years ago, and have you achieved them? Standing here today, what kind of person do you hope to become 10 years from now?
Bill Qian: Ten years ago, my expectation for myself was to one day become a partner in a fund or the head of a strategic investment department at a major internet company. Today, it seems that I have been fortunate to exceed these expectations. The previous goals have become a thing of the past in my own development process, and many of today's circumstances are things I never thought of before. For example, I never thought I would live abroad for an extended period. I used to think that the next 20-30 years would be focused on the Chinese domestic market in the technology field. Looking back, this was a very simple idea at the time. It's a paradigm of linear thinking, where everyone uses a linear mindset to describe growth curves. However, my experiences over the past 36 months have taught me that many times, you still have to live in the present, be resilient, and adaptive. I think this is very important.
At the same time, I believe it's important to lower expectations for the future. I don't plan to establish higher expectations for the next 10 years just because the outcome of the last 10 years exceeded expectations. I think Charlie Munger's advice to "lower expectations for young people in the future" is very important. So, I have no expectations for the next ten years. Everyone will experience different seasons in life, and each person will have ups and downs. I hope to lower my expectations and live each day with a grateful heart.
ZP: Do you have any words for young people today?
Bill Qian: "Do not slack off in good times, and do not despair in bad times." During less prosperous times, it's important to do your best every day and remind yourself that a gentleman hides his strength and waits for the right moment to act. Once the right opportunity comes, do not hesitate, because most people cannot win the lottery every day, and it's very likely that most people will never win the lottery in their lifetime. Therefore, it's important to live a good life or occasionally encounter the help of a few benefactors or have a few opportunities. When your time comes, make decisive decisions. I think it's also a way of living a life that adheres to principles and surprises.
02 "Web3 is an innovation in factor allocation, AI is an innovation in productivity"
ZP: Can you briefly introduce Phoenix in the Web3 field?
Bill Qian: Our business includes the world's main Bitcoin mining farm and a compliance exchange based in Abu Dhabi. We are also entering new internet fields and incubating new businesses. We are currently listed on the main board in Abu Dhabi, with a market value of nearly $4 billion, and we are also one of the three technology stocks on the Abu Dhabi Stock Exchange.
ZP: As a Web3 fund, what are the differences between Cypher Capital and traditional equity investment funds?
Bill Qian: I think the term is very important. For VC, Web3 projects typically have a maximum investment-to-exit period of 36 months. Additionally, the amount of capital required is relatively small. Before a project becomes a secondary market asset, it only needs to raise a few million to a few tens of millions of dollars. Therefore, VC in this market does not require a particularly large amount of capital, and many excellent founders can directly raise funds from their users, further reducing the amount of capital available to institutions.
ZP: What is your favorite investment project so far? What was the investment logic at the time?
Bill Qian: The first project I invested in at Binance was Layerzero, a Web3 infrastructure project. At the time, its market value was $50 million, and now, in less than two years, its market value has reached $3 billion. At Cypher, in 2022, I invested in Sui as the only investor in the Middle East. It has now returned more than 5 times the investment, and the project's market value has reached $19 billion. Both of these are infrastructure projects, as I believe that most opportunities are still in infrastructure, much like the early 1990s internet, "first build the airport (infrastructure), then make the plane (applications)."
ZP: How do you view the long-term value of Web3? What is the underlying logic?
Bill Qian: First, I believe that Web3 is an innovation in factor allocation, not in productivity. It should not be evaluated from the perspective of efficiency. Innovation in factor allocation, for example, goes beyond the capitalist factor allocation method and has led to the emergence of socialist public ownership economies. Innovation in productivity, on the other hand, is like the steam engine revolution. Now, we need to understand Web3 from the perspective of factor allocation. Bitcoin has become a form of digital gold that everyone can hold, which has transformed the concept of gold. Ethereum, as a global computer, allows everyone participating in network construction to receive the currency and dividends of this global computer. This is an innovation in factor allocation. In fact, any form of productivity can ultimately be combined with innovation in factor allocation. Ethereum, as a global computer, is an innovation in factor allocation for traditional centrally managed computing resources (such as AWS).
In traditional corporate governance, there were many fixed paradigms. For example, a company's ownership belongs to the shareholders, and the company provides services to users to earn surplus value, which is then accumulated as net profit and returned to the shareholders. This paradigm has been in place since the first publicly traded company stock in the Netherlands in 1600. Additionally, no matter how large a company is, especially in modern times, it cannot issue its own currency within its system; only sovereign nations can issue currency (of course, this is a gradual process, as initially, the East India Company was able to issue its own currency). After Web3, the private sector can also issue currency, which is a paradigm shift. It means that in a business, the user, builder, and investor can be one and the same. In the past, these three roles were separate within a company. For example, with Ethereum, the user holds Ether and is also an investor in Ethereum. A programmer or node contributor participating in the construction of the Ethereum global computer can earn profits and use the computer, making them a user, builder, and investor in Ethereum. However, when you use Office365 from Microsoft, it does not mean you are a shareholder of Microsoft; you would have to separately buy stocks. Using Ethereum naturally makes you an investor in Ethereum.
ZP: How do you understand the often mentioned bull and bear markets of Web3? What are the reasons for the impact of the cycle?
Bill Qian: Web2 transformed the information industry, with the first innovation being electronic newspapers, such as Yahoo. However, Web3 transforms ownership and distribution methods, so the first innovation is digital gold, followed by a global computer with a currency (Ethereum). This process will bring a lot of speculators and create bubbles because Web3 has asset properties from the beginning. Since it is an asset, it will definitely experience ups and downs. Therefore, from 2009 to the present, Web3 has experienced small cycles of four years, but now these small cycles are more closely linked to the larger cycles of the global economy. This is why whenever Web3 is mentioned, people also talk about bull and bear markets and asset prices.
If we consider Web3 as an economic entity, there will be a basic population on one hand, which is the global number of Web3 users, representing demand. On the other hand, there is the supply side, which determines whether there is more supply. Previously, there were various air coins with no intrinsic value competing for the status of digital gold. In 2014, a new type of supply emerged, which was the crowd-sourced global computer, including Ethereum and Polkadot, competing to be the world's largest worldwide computer. Later, the gaming industry began to emerge, and the categories on the supply side began to grow. At the same time, the assets on the supply side are also affected by everyone's expectations, leading to bull and bear markets.
Finally, I think as this industry continues to develop, we will find that because it has financial attributes, it will have cycles, but because it has growth attributes, it will ultimately be a growing industry. It will be an industry of "short cycles, big growth." This is why people say there is a cycle every four years in Web3, but every four years, Bitcoin reaches a new high. Now, people have started discussing when the total market value of Bitcoin will surpass the $14 trillion of gold. BlackRock CEO Larry Fink stated in an interview with CNBC that "Bitcoin is digital gold." Gold itself is not inherently "gold"; it took 5,000 years to reach a consensus. Due to the globalization of the internet, Bitcoin's consensus formation relative to gold will be much faster.
ZP: In the next few years, what new technologies or innovations do you foresee emerging in the Web3 field?
Bill Qian: New technologies will definitely emerge. For example, Ethereum as a global computer, how to increase its Transaction Per Second (TPS) has always been an important question. However, these important questions do not necessarily have to compete with other productivity innovations. From the perspective of TPS, Ethereum will never be able to compete with AWS or Microsoft, but improvement is about filling the gaps. Subsequently, innovation in factor allocation can better stimulate the creation of every factor unit and every participant within this economic entity. I believe this is the value of technological innovation in Web3. It is actually to meet the challenges faced in the process of factor innovation and then better amplify the advantages of factor innovation.
Additionally, I believe that almost any C-end product globally can be tokenized. Larry Fink said that even all the public funds in the world can be tokenized, essentially making all global fund flows on the blockchain. Ethereum may allow global cloud resources to be tokenized.
03 Go Global, Mining in the Middle East
ZP: How did your connection with the Middle East come about? What was the biggest motivation at the time?
Bill Qian: Choosing the Middle East was actually an inevitable result because at that time, I was the only executive still in China at Binance. Later, I also prepared for globalization myself. On one hand, it was a work requirement, and on the other hand, I felt that working in a new place was also an opportunity.
ZP: What has been the biggest change in the Middle East in the past few years? Why do people now want to mine in the Middle East?
Bill Qian: One is capital, and the other is the market. The deepest pockets globally are still in the United States. If we compare AUM, Blackstone has $1 trillion, and BlackRock has $10 trillion, all still in the United States. However, in the Middle East, there are a few centralized, fast decision-making, and deepest pockets, mainly in the UAE, Saudi Arabia, Qatar, and Kuwait, from the capital perspective.
The second point is the market. When the opportunity cost for Chinese entrepreneurs became lower (domestic market growth slowed down), they suddenly discovered a market of several hundred million people with a decent per capita GDP, which made it worth pursuing. Additionally, whether it's for ToB technology procurement or ToC commodity procurement, the Middle East is relatively friendly to China, essentially having both capital and a market.
ZP: Many Chinese internet companies have done well in expanding their overseas business in the Middle East. Are there any points worth learning from?
Bill Qian: Huawei has been in the B-end market here for over a decade. They have a regional headquarters for the Middle East, North Africa, and Central Asia (MINA) in Dubai, with several thousand employees. In the C-end market, there are TikTok, Shein, and Yalla. I think the key to success is having a good product in the original domestic market and then focusing on internationalization with determination and dedication.
ZP: How do you view leveraging Chinese advantages to introduce technology in the Middle East?
Bill Qian: On one hand, there is the advantage of the manufacturing industry in the secondary sector, and on the other hand, there is the Know-how advantage in the digital economy. Each country has its own endowments. Filipinos are endowed with English-speaking abilities and low costs, so they have dominated the market for domestic helpers. Indians and Pakistanis have the endowment of low costs and good employee obedience, so they have dominated a range of markets from taxi drivers to enterprise frontline and middle management.
ZP: For young entrepreneurs who want to mine in the Middle East, do you have any advice?
Bill Qian: From a capital perspective, the Middle East is actually a dumbbell-shaped market. On one end, there are various high-net-worth individuals and family offices, and on the other end, there are sovereign wealth funds. I think family offices are not institutionalized enough, and when you add up the sovereign wealth funds, there are only about 10 of them, and they only invest in large, leading enterprises. So, the Middle East actually does not have an intermediate market. In the United States, there are both family offices and professional GPs, along with Endowment Funds.
From a market perspective, as the opportunity cost in China gradually decreases (market growth slows down), the Middle East is gradually becoming attractive. As long as you can provide first-class products and good localization here, the competition will not be as fierce as in China.
ZP: Can you share someone you particularly admire?
Bill Qian: Lee Kuan Yew. Without a good hand, he used his leadership and foresight to lead his group to the forefront of the world. I think from an entrepreneurial perspective, he is an outstanding founder.
ZP: How do you usually motivate yourself and continue learning?
Bill Qian: To motivate myself, I think different people have different levels of satisfaction. For example, Charlie Munger's great satisfaction comes from the accumulation of knowledge and insights. He said he wants to go to bed a little smarter than when he woke up. I think I also belong to the category that gains satisfaction from the accumulation of knowledge and insights. I think it's an internal driving factor, a non-monetary driving force that can drive me in the long term. As for continuous learning, it may depend on one's state of mind. There are a few years when I read a lot of books, and there are a few years when I travel a lot, depending on the circumstances at the time.
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