Ten Years of Entrepreneurship, Wanwu's New Chapter | 5Y Capital Congratulates ATRenew Group on Successful NYSE Listing
Do things that create long-term value, even when they draw controversy in the present.
After ten years of hard work, ATRenew reached a milestone moment — on June 18, China's largest secondhand consumer electronics trading and services platform ATRenew Group (hereinafter referred to as "ATRenew") successfully completed its initial public offering on the New York Stock Exchange under the ticker symbol RERE.
Left: ATRenew Group Founder and CEO Xuefeng Chen
Right: 5Y Capital Founding Partner Jianming Shi
We were fortunate to accompany ATRenew from its earliest days, witnessing its evolution and growth from Aihuishou to ATRenew. Our best wishes to ATRenew!
The story began in 2011, when smartphones were not yet as ubiquitous as they are today, and the business model for phone recycling was still unclear. But in Xuefeng Chen, we saw the resilience, vision, and potential of an entrepreneur. His ability to endure solitude and persist day after day left a deep impression on us.
Over ten years, Chen and his team broke many boundaries in the industry and achieved remarkable success. Looking further ahead, the door to the circular economy has just opened, and ATRenew will play an even more important role in society, exploring more possibilities.
Recently, 5Y Capital Founding Partner Jianming Shi sat down with ATRenew Group Founder & CEO Xuefeng Chen for a conversation. They discussed models, moats, decisions, and the future. Entrepreneurship is like mountain climbing — ups and downs are the norm. They shared many experiences and insights, hoping to help you better understand ATRenew and Xuefeng Chen :)
01
Looking Back at Ten Years
Q: Can you recall the scene when you two first met and what you were thinking at the time?
Xuefeng Chen: It was in 2011, at 5Y's office — a beautiful garden space.
Jianming Shi: I'm a heavy electronics enthusiast myself, and at the time I was worrying about what to do with a drawer full of secondhand phones. You pitched a recycling idea, and we felt it had long-term value for society. There was a lot of internal debate back then. Our biggest concern was that this was a very low-frequency activity and would be difficult to build.
Xuefeng Chen: Actually, we hadn't thought it through that clearly either, but we identified a major trend. We first set a principle for ourselves: don't chase the crowded tracks that everyone thinks are great. Choose directions that are difficult but have long-term value. I believe secondhand recycling is such a direction.
Jianming Shi: What struck me most was your description of the secondhand market at Bu Ye Cheng. During our due diligence, we went to see it ourselves — from the first floor to the third, from retail to wholesale, there was severe market inefficiency. If someone could solve this social problem, there would be tremendous value.
Xuefeng Chen: Yes, in fact, over the years we've transformed the offline industry quite significantly. Today, markets like Bu Ye Cheng have been gradually optimized online because of Aihuishou and Paijitang's presence.
Jianming Shi: When you started the company, did you ever imagine it would become today's ATRenew?
Xuefeng Chen: Around 2011–2012, we set a goal of reaching 1,000 units per day — that already felt like a huge achievement. Later, Richard (Qin Liu) proposed a much bigger target: 10 million units per year. When I heard that, I thought how could that be possible? Ten years ago, 10 million really seemed like an enormous, unattainable number. But today, in 2020, our figure is 23 million.
Jianming Shi: I remember the 10 million figure was reverse-engineered from China's phone production volume — how many phones needed to be recycled for a company to be at scale and have real social impact.
Xuefeng Chen: Inspired by Ken (Jianming Shi), Richard (Qin Liu), and 5Y, we set an ambitious goal for ourselves: 100 million units per year in China, and another 100 million overseas — two 100-million-unit targets.
Jianming Shi: Actually, from 1,000 to 100 million, people just hear two simple numbers. But we know that Aihuishou overcame tremendous difficulties in its entrepreneurial journey. I still remember how you initially had to send text messages to get people to recycle, and how you had to solve the problem of doorstep pickup. Because of this, Aihuishou pioneered many innovations in the industry.
Xuefeng Chen: Yes, I can say that over the past 10 years, in this industry, we pioneered virtually all model innovations and technological innovations.
In 2011, Aihuishou was founded — the first company in China's entire industry, and indeed globally, to do phone recycling. In 2013, we were the first in the entire internet industry to take the enormous risk of opening offline stores. In 2016, we were the first to invest in developing automated inspection technology. In 2017, we were the first to begin overseas business expansion. In 2018, we were the first in the industry to launch a B2B open platform. In 2019, we were the first in the industry to achieve a full industrial chain闭环 of C2B plus B2B plus B2C through the acquisition of Paipai. In 2020, we were the first in the industry to achieve full integrated platform capabilities.
02
Paths and Decisions
Jianming Shi: How did you come up with these initiatives, and how did you find the resolve to pursue them?
Xuefeng Chen: The entire entrepreneurial process is one of constant trial and error, correction, path-finding, and ceiling-breaking, provided that the direction is right and the track is long enough. With sufficient exploratory spirit, you'll likely find new opportunities.
Jianming Shi: Yes, every time we discussed problems together, the ideas you proposed — none of them seemed easy to execute.
Xuefeng Chen: This is indeed a fundamental way of thinking for us. Using a fashionable phrase today: do things that are very hard and very tough, but valuable. This may sound catchy now, but actually doing it is extremely difficult. I believe we've done quite well on this point over the past 10 years.
Jianming Shi: Can you share with everyone some of the most difficult and controversial key moments from the past 10 years that proved highly valuable in hindsight?
Xuefeng Chen: In Aihuishou's development, there were three major business decisions with significant impact. The first was in 2013, when we opened offline stores under very difficult circumstances. At that time, 5Y gave us a $1 million bridge loan — that was life-or-death help for us. With that money, we opened Aihuishou's stores. It was very risky and controversial at the time, but today our nearly 800 stores have become a core company capability.
The second was in 2018, when we built the Paijitang open platform, investing over $100 million — basically putting all our raised capital into it. It was also highly controversial at the time, but in retrospect that was a very successful strategy that upgraded Aihuishou's business model from a relatively simple phone buyback recycling model to an open platform model.
The third was even more dramatic — in May or June 2019, under very precarious circumstances, we paid a relatively large price to acquire JD's Paipai business. This allowed Aihuishou's business model to evolve from C2B plus B2B to include B2C, achieving a闭环 of the entire industry chain and the opportunity to realize an integrated platform model. This was also a very critical decision.
Jianming Shi: All three decisions were crucial, and all were high-risk with low visibility. If we dig one layer deeper, many decisions are actually driven by cognition. What key cognitions have you developed over the years?
Xuefeng Chen: First, we firmly believe this is a supply-driven industry. Supply is scarce, so how to capture inventory is critical. Second, we believe the best way to drive supply is through scenarios — trade-in scenarios, new device sales scenarios — rather than buying traffic or advertising.
Third, we firmly believe that compared to the high-dispute logistics and mail-in method, face-to-face transaction is a better, more sustainable approach. And we firmly believe this is a global business because of its high degree of standardization. These underlying cognitions give us our own judgment and thinking when making key decisions.
Jianming Shi: When making decisions, what principles are particularly important to you?
Xuefeng Chen: Every company's situation may differ. For me, the most important are two. One is risk: what are the risks of not doing this, what are the risks of doing it, and what potential risks might not be visible now — I probably think about this every day. The other is long-term value: even if there's short-term loss, is there long-term value? These two points are what I consider most.
Like the decisions mentioned earlier, each one may have been controversial, but I felt in my heart that it was right, I believed in it. For example, in 2013, I believed that users needed a better experience — compared to logistics and mail-in, the face-to-face communication and transaction experience at stores would be better, and with more stores, there would be long-term brand penetration. So even with controversy, we persisted.
Jianming Shi: Both of our companies did brand upgrades last year — we changed from Morningside Capital to 5Y Capital, and you changed from Aihuishou to ATRenew. Why did you do this brand upgrade, and why ATRenew?
Xuefeng Chen: Because Aihuishou's business model was evolving — from the single-brand Aihuishou recycling business, to Paijitang as a B2B trading platform, to Paipai as a B2C retail platform, plus our many overseas business lines. The single Aihuishou brand could no longer represent our overall business, and sometimes even misled people, so we did a group-wide brand upgrade.
ATRenew represents a green environmental初心, and also broadens our vision to see greater possibilities within the larger green technology赛道.
Jianming Shi: Speaking of green technology, ATRenew actually invests very heavily in technology. Can you share with other entrepreneurs what work you've done in technology, and why technology is so important to ATRenew?
Xuefeng Chen: From day one, we positioned ourselves as a technology-driven, data-informed operations internet company, so technology and data are very important. This may also relate to my personal background — I'm technically trained myself.
Our technology investments over the years have mainly been in two areas. One is automation technology. Starting in 2016, we were the first in the industry to invest in automated inspection technology R&D. Today we are globally industry-leading, with the world's only scaled automated operations center. The other investment is in data — we use extensive data models and algorithms in our operations. These investments have indeed benefited the company tremendously, improving inspection efficiency and operational efficiency significantly.
03
Entrepreneurship Is Like Mountain Climbing —
Only Through Layered Fog Can You See the Scenery
Jianming Shi: As the founder of such a large-scale company, the daily pressure is immense. I remember during one meal you also talked about psychological pressure. How do you relieve this pressure?
Xuefeng Chen: Everyone has pressure; entrepreneurs have entrepreneurial pressure. This is an inevitable part of the journey. If I really had to name a way to decompress, I quite like finding a snowy mountain every few months to spend a day or two — that tends to relax my mood.
Jianming Shi: I know you went to Mount Siguniang last September with your team to climb together. That's also a very good way to decompress and build team cohesion.
Xuefeng Chen: I personally quite enjoy hiking; I love the process. I increasingly feel that entrepreneurship is very similar to the process of mountain climbing — it has ups and downs, and where there's an uphill there must be a downhill. So you need a good mentality in entrepreneurship: don't be too proud when things are good, and don't be too depressed when things are bad.
In mountain climbing, you also easily encounter bad weather, and need to pass through layered fog to see new scenery. This is also like entrepreneurship — you may not see the path ahead, and need to constantly explore and find your way, and only after climbing one step higher can you see something new.
Although the entire climbing process is arduous, the feeling of summiting after persisting is wonderful. This is also like entrepreneurship — no matter how hard or exhausting the process, you can't give up. So many of our team-building activities involve taking the team hiking and mountain climbing. Last year we went to Mount Siguniang at over 5,000 meters elevation. The process was very challenging, but the team showed tremendous resilience, and everyone felt the experience was beautiful afterward.
Jianming Shi: The feeling after summiting is truly wonderful. I previously saw a post you made saying that ATRenew Group's achievements today didn't come easily, and that trust and unity are fundamental. Why do you say trust and unity are fundamental, and how do you cultivate this atmosphere of trust and unity within the company?
Xuefeng Chen: The atmosphere emphasized at each company stage may differ. Early on we emphasized innovation, mid-stage we emphasized striving, and now we emphasize trust and unity. After 10 years of development, today's Aihuishou has formed a complete integrated platform model. What we most need to do is promote synergy between various capabilities within this integrated platform, forming a truly complete capability. This requires breaking down previously independent business lines and merging them together — everything must connect to the integrated platform strategy. At this point, unity becomes extremely important, and the foundation of unity is trust.
04 A Further Future, Larger Boundaries
Xuefeng Chen: Actually, looking back at this 10-year journey, I'm also very grateful for 5Y's companionship and support. In 2011, when we only had an idea and very little data, 5Y gave us our first funding. In 2013, when we were at our most difficult point and about to collapse, 5Y gave us a $1 million bridge loan based on trust. Today, $1 million may not seem like a large number, but at the time it was crucial support. And the support through subsequent funding rounds, the insights and management advice along the way — all were tremendously helpful.
Jianming Shi: My own feeling is that we may not have had more business insight than the founders themselves, but we were particularly fortunate to collaborate with entrepreneurs like you over the years, sharing a common vision and trial-and-error together.
I still remember when we first met, you were a startup team of just two or three people. Over these 10 years, I feel you've changed tremendously — from a complete entrepreneurial novice to a leader capable of directing such a large team and large-scale business, and now to the IPO, welcoming this milestone moment for ATRenew. How do you feel about it yourself?
Xuefeng Chen: A colleague previously asked me: if the company goes public, what will you do?
I said I would do three things. First, I would open a good bottle of wine and have a proper big drink with all my brothers, colleagues, investors, and partners who supported us — to express our gratitude. Second, I would go home and have a proper meal with my family, to express my gratitude to them. Third, I would go eat a bowl of plain noodles by myself — just one bowl of noodles — to remind myself that the IPO is only a comma, it's just the beginning, and there's still a long road ahead.
Jianming Shi: Good investments often start from an unsolved big problem. Environmental protection, the pollution brought by electronics — this is a massive problem, and this was our original初心 for investing in Aihuishou. In the future, society and the world may face increasingly severe environmental challenges. We believe ATRenew will play an even more important role in future society.
Xuefeng Chen: After these years of development, we have growing confidence in our capabilities and increasingly broad vision. But we will firmly focus first on growing the phone recycling business — this is our foundation. On this basis, we will continuously innovate and challenge larger boundaries.
I believe all business models must solve social problems. The larger the social problem solved, the greater the value created, and the greater the commercial value.
Jianming Shi: I'm curious — what do you think cannot be recycled?
Xuefeng Chen: What cannot be recycled, I believe, is people's enthusiasm for recycling and their environmental awareness. This not only cannot be recycled, but needs to keep growing.
We were very fortunate that 10 years ago, almost inadvertently, we chose a path that led us to a massive赛道 of green technology and circular economy. After 10 years of effort, we've pushed the door open. Today, our capabilities in this赛道 are leading, and I believe there's even greater space and possibility ahead. In the coming 10 years, we will use our technology, capabilities, vision, and thinking to make greater contributions to circular economy and green technology.
Jianming Shi: As we move from a relatively粗放 economic development model toward a more refined, environmentally friendly model, we need companies like ATRenew to continuously explore new boundaries and protect our environment.
I believe society will develop toward a green and environmentally friendly direction, and ATRenew's space will grow larger and larger. We hope that as investors, we can accompany you for another 10 years.
Xuefeng Chen: Thank you, and I also hope to continue journeying together with 5Y Capital — another 10 years, 20 years.
5Y Capital (formerly Morningside Capital) currently manages approximately $5 billion in USD and RMB dual-currency funds. We believe that if the you whom others see as crazy begins to be believed in, the world will be a better place.
BEIJING · SHANGHAI · SHENZHEN · HONG KONG
