Crazy guy

Why VC firms want to meet businessmens’ wives

Crazy guy

Li Yang teaches English to the masses

Forget style, sentence and syntax; let’s just screech.

Unlikely advice from a language teacher, certainly. But it has made Li Yang into arguably China’s most famous English teacher.

Over more than a decade, the founder of Li Yang Crazy English has delivered language lessons to as many as 20 million people, says Xinhua. And the teaching style that pulls in the crowds is fairly formulaic, with Li encouraging students to scream out English phrases at the tops of their voices (he claims that it helps to unleash their “international muscles” and boosts confidence).

Quite how that works out when his students actually travel overseas and ask for directions from passers-by is unclear.

Conversation with foreigners will also get an extra edge from the solid sprinkling of nationalism in Li’s lessons, with slogans like “Conquer English to Make China Stronger!”

It all seems to make for a compulsive mix as far as his students are concerned. Wang Shuo, one of China’s best-known novelists, has said Li’s teaching style “is a kind of old witchcraft” and Li has conjured up some very substantial profits from his unorthodox approach.

But over the last month the English teacher has been in the limelight for more than his teaching style, after his American wife posted pictures of her bruised forehead on weibo. The next day she posted photos of other bruises, titled “Love China, love yourself, do not use violence toward me in front of our child”. There were more pictures over following days, with the accompanying commentary: “You knocked me to the floor. You sat on my back. You choked my neck with both hands and slammed my head into the floor”

Li doesn’t seem to have denied that the physical abuse occurred, claiming instead that he was brought to fury over arguments about family affairs after long days at work. Cultural differences and conflicting opinions about education had also led to violent rows, Li said.

Commentators say the revelations could not have come at a worse time for Crazy English, which is said to be in late stage discussions with several large venture capital firms. Li confirmed to 21CN Business Herald that he was looking to attract funding to build a chain of Crazy English schools that would be “like Starbucks”. The goal was for a listing in 2014, although analysts now say those plans will likely be put on hold.

No wonder that Xu Xin, founding partner of Capital Today, a venture capital firm, told Xinmin Weekly that she now probes much more into entrepreneurs’ home lives before investing in their companies. This goes beyond standard due diligence, Xu admits, but is a necessary step.

“For those who are married I talk to their wives; for those who are divorced I meet with the ex-wives; and those who are single I ask to meet with their parents. There are a lot of hidden risks to investing in a firm.”

Crazy English is far from the only case of a company caught up in a marital dispute. Other spousal conflicts have also derailed the growth plans of some of the country’s most promising start ups.

Take Tudou, the online video-sharing site. In May, the ex-wife of founder Gary Wang (see WiC84) filed a lawsuit demanding a large portion of her former husband’s equity in Quan Toodou Network Science and Technology, one of the companies through which Tudou, based in the Cayman Islands, operates its services in China. The lawsuit alleges that the shares in the firm are part of the former couple’s “community property”.

Wrangling between the two has been a factor in delaying Tudou’s. plans to expand, with the firm originally filing for a Nasdaq IPO in November 2010 but not completing its listing until last month.

In the interim, Youku, Tudou’s larger rival, pulled ahead by raising $203 million in an IPO last December and a further $670 million in a secondary offering this year.

Youku’s share of the online video market (by advertising revenues) rose from 21.5% in the first quarter to 23.4%, while Tudou’s has dropped from 16.2% to 14%, says Analysys, a Beijing-based technology research firm.

Yang Haoran, founder of the classified information website (a Craigslist equivalent) is another dotcom boss hit by divorce problems, with a former wife taking him to court for “invalid property transfer”. And the boss of Kungfu, the fast-food chain, is also facing legal claims from his ex-wife for 25% of the company’s equity. She first made the demands in March 2009, a critical time for the company’s overseas listing (see WiC103).

Meanwhile, Li Yang at Crazy English finally issued a public apology in an attempt to limit further damage from the scandal.

“I wholeheartedly apologise to my wife Kim and my girls for committing domestic violence. This has caused them serious physical and mental damage,” Li wrote.

“Based on Kim’s request, we are currently seeking professional counselling. I would like to offer my deepest apology here. Sorry to let you down.” Let’s see whether the venture capitalists will be convinced by Li’s mea culpa too.

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