Ask Victor Koop 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.”
