Frank Wang (also known as Wang Tao) is a 38 year old entrepreneur and self-made man. Born in Zhejiang province, in 2006 he founded DJI (also known as Dajiang), the world’s largest consumer drone company. The company has not gone public, but is already considered a “unicorn” and Wang is known as the “Lord of the Drones” in China. DJI’s revenue last year was USD 2.7 billion, with a net profit of USD 678 million, its net profit having grown by 123%.
DJI selects investors through a bidding process, which has caused fierce competition. The financing adopts a form of bidding for integrated Class D and Class B shares. If investors want the right to invest in Class B shares, they must first subscribe to non-voting Class D common stock. In the last investment round, DJI set the Class B and Class D shares proportion at 1:1.5. According to Frank Wang, this design allows the company to choose the best investors and reduce financing costs. DJI completed its last round of investment in April when it secured USD 1 billion. The Shenzhen-based company chooses investors who not only have strong financial ability but who can also help the company develop new markets. No more than 20 investors were finally approved. In the near future, DJI plans to extend its activities to new areas such as artificial intelligence for medical treatment and education.
One of the few people Frank Wang truly admires is Ren Zhengfei, founder and president of Huawei Technologies, which is also based in Shenzhen. Huawei has not gone public either. If Wang really follows Ren Zhengfei’s line of action, then DJI will not be considering an IPO. Even if DJI considered going public, its share structure and its links to the military could prove to be an obstacle. Frank Wang thinks the company’s experiment and success with financing through bidding has proven that an IPO is not necessary. Sequoia Capital, Aeternam Stella, Lighthouse Capital, Maison Capital and Accel Partners are among its investors.
Last year, DJI had to face strong competition in Xaircraft (Jifei in Chinese). DJI felt the pressure in the agricultural drone sector and responded by cutting salaries. Some employees who were making between 2,300 and 4,500 dollars could only get 1,200 after the adjustment. Many employees had banked upon their original salary and found themselves in financial straits after the adjustment. Frank Wang had to intervene and concede to some of the staff’s demands.
Same as Huawei, DJI likes to shuffle its sales representatives and transfer them to different departments and regions, every now and then. This prevents them from teaming up with commercial agents but it also makes it more difficult to create a bond with customers, since salespersons do not have the time to develop a connection with them. But, Frank Wang gives much importance to a culture of constant improvement within the company and he would like to nip creation of small factions within the management in the bud.
Frank knows what he is talking about. He was one of the founders of DJI. Apart from him, there was Chen Jinying, Lu Zhihui and Chen Chuqiang. After disputes about the stock rights, the three of them quit and became DJI’s competitors. After the collapse of that team, Frank Wang has been extremely busy. The company now has 12,000 employees and Frank is now both the CEO and the CTO.
In an interview with Forbes magazine, he said that as management keeps him busy, he has to rely on colleagues for product development, but that is difficult for a perfectionist as himself. He is known for his tough management style. He often yells at employees when he is not satisfied with their work. But for those who are creative and want to grow professionally, DJI is actually a great place. New ideas are welcome and given due consideration by the research and development team.
Chen Yiji was one such employee who profited from this encouragement. In 2012, when Frank Wang was struggling with the 360º camera of the Phantom series, Chen Yiji dared to propose a solution. Frank Wang did not just approve of his idea, he assigned Chen a team of more than 100 people and more than USD 1 million to develop the solution. Two years later, the first drone with a 360º vision camera came out in the market.
Frank Wang is very demanding but also knows how to reward his employees. The best employees receive impressive bonuses. In 2014, the company handed several Tesla cars to the best performing employees. In 2015, there were Audi cars and a year later, BMWs. Also, according to people familiar with the company, the best employees can receive annual monetary bonuses of up to 40 times their monthly salary.
In 2003, Frank Wang had left his studies at East China Normal University. He was an average studen. He applied for Stanford and MIT but was rejected. Finally, he was admitted to Hong Kong University of Science and Technology and graduated lwith a C. Soon after graduation he became interested in helicopters. He took part in a robot competition in Hong Kong, which he won. He got funding from his school and set to work. Five months later, he developed a small helicopter but it fell during the first presentation flight. But it was enough to convince Professor Li Zexiang, who helped him and even provided financial assistance during DJI’s infancy. He is now a member of the board.
Today, the company controls 80 percent of the market for consumer drones and its products are sold in 100 different countries. It has made inroads in industries such as energy, public safety and construction. The global market for consumer drones is estimated at USD 900 million and projected to grow at 30% in the next 5 years. However, this is not such a big number if we compare it to a behemoth such as Tencent, whose annual revenue is USD 36 billion. If DJI wants to play in that league, it needs to extend its activities to new markets, especially AI in healthcare, technology in early education, algorithms, image processing, microchips and self-driving cars. The company hopes for AI and self-driving cars to account for 30-40 percent of its revenue by the year 2022.