What's a Chief eXploration Officer? Tencent's David Wallerstein on why the world needs CXOs

Every big company has a Chief Executive Officer - a CEO. Many others have CFOs and COOs. But how many have a CXO, or a chief exploration officer?

David Wallerstein is the CXO of Tencent. In his unique role, he searches the world for innovations that could change the world - such as electric vertical takeoff and landing aircraft that could help us tackle congestion and sprawl, or artificial intelligence that could improve water management and tackle climate change.

Meet the Leader caught up with David Wallerstein at the World Economic Forum Annual Meeting in Davos last May. Wallerstein talked about how he approaches his unique role at Tencent, the opportunities he sees for change, and the habits he can’t work without. A transcript is below.

Robin Pomeroy, Meet the Leader: David Wallerstein, you're a chief exploration officer at Tencent. Tell us a tiny bit about Tencent in a sentence and then tell us what on Earth a 'chief exploration officer' is.

David Wallerstein: Thank you so much for having me today. Tencent is a global technology company. We started in 1998. We have significant operations in China but around the world. And we really started with the advent of the internet in China. And then we've grown out to to really embrace all kinds of technologies from there.

I've actually personally been with the company, since the year 2000 I started working with Tencent. And in 2014 I took a new title. I've been a member of the executive team for some time, since the beginning of my involvement, but I adopted the title of Chief eXploration Officer, which was an entirely novel title at the time. And I've decided after eight years, I think this is a very relevant title for many corporations to to consider having.

So if I could say, explain what a chief exploration officer does. So we started with this position before we had all the dialogue around ESG and carbon neutrality and many of the things being discussed at the World Economic Forum this year.

And the way we approach it therefore is slightly different than the typical way that maybe corporations are getting involved with ESG. Basically, at the end of the day, the chief exploration officer title is about thinking about global challenges and existential global challenges facing humanity, on one hand, and then, on the other hand, developing new approaches, often novel technologies, breakthrough technologies, that give us more tools as humanity to tackle these big challenges.

So let's say you realise there's a major challenge on the horizon, such as water scarcity. You ask yourself a question: what are the new technologies coming available that increase our portfolio of options for attacking this challenge that we can support and we can further develop to to attack those challenges. And that's the job.

Robin Pomeroy: So you're exploring innovations, things that can do things that we weren't doing before. And you're specifically doing that in ESG, which is environmental, social and governance, an acronym that is talked about non-stop here. Now, the sceptics of ESG would say companies are in it to make money. Normally an executive in your position would be looking around for start-ups that are going to be the next big thing and going to make you a lot of money. I'm guessing you wouldn't mind that happening as well. But presumably, from what you've just said, you believe a company can make money and grow, but also can achieve things that work for environmental, social and governance issues.

David Wallerstein: Absolutely. That's the case. At the heart of this strategy is that we are embracing innovation and breakthrough technologies. And when you think about it from a very broad global perspective, when you think about what should the most valuable things on Earth be over time, they should be the things that are solving the biggest challenges.

And you look at the most valuable companies in the world, often those are the ones that are solving a very important need for humanity. So it's really about thinking far ahead, not too far ahead, but far enough, maybe five, 10, 15 years into the future: what are the looming challenges that humanity is facing now, and maybe people don't realise it, or is definitely going to be increasingly facing, that are unaddressed by the market, that pose significant risks and then can be tackled with breakthrough technology? And with breakthrough technologies you have a chance to fundamentally alter how we try to address those challenge areas. And by capturing the value of that in a technology and through an investment, we have an opportunity that, if these strategies do well, then we can improve the valuation of our our shareholdings as a shareholder in these kinds of businesses, for example. And so it can be very good business, and we have examples of this being a good business.

Robin Pomeroy: This was my next question. Thanks very much. Can you give us some examples of where you've done that or where you would like to do that?

David Wallerstein: Sure. As a company, we invest in early stage companies. Often they can just be a seed stage company, a few people, and raising small amounts of money. In this investment world, hundreds of thousands of dollars is often a small amount of money. But we can look at those investments and we we do them quite often.

Robin Pomeroy: In what kinds of areas?

David Wallerstein: Basically all kinds of new technology areas. With my team, we focus on deep technologies. In my current portfolio that I'm managing at Tencent, there's about 70 companies in that portfolio and almost all of them are working on some kind of deep technology. About half of them may be in health-related technology. So human health related issues.

Robin Pomeroy: What is deep technology?

David Wallerstein: Deep technology is actually when you're developing an approach that goes beyond only software or it could be a very novel form of software, like I think with artificial intelligence, we would consider that to be deep technology. But over time, the deep technology, when the methods and the methodologies and knowledge is more proliferated in the society, it becomes more just typical technology. What wouldn't be deep technology is maybe now building a mobile application on your phone, say booking a hotel or something like this. These are more understood technology tools, but maybe at one point 20 years ago they were in the deep technology category.

So deep technology today, in the computer science field, maybe some new path-breaking area of AI, or even doing something like a new type of climate forecasting or something like this that usually would involve very big supercomputers. There's many, many examples of that.

Robin Pomeroy: And is climate change one of the main areas, the main area, you focus on?

David Wallerstein: Well, it is a very important area. But in this framework, the exploration framework, we're very comfortable to deal with complexity, because we're looking at underlying causes and we're trying to solve those underlying causes. So when you think about an issue like climate change, you have to ask yourself, why do we have these challenges around climate change. It's because human beings are trying to meet our fundamental survival needs, which really ultimately at the core are around food, energy and water - and we call this 'FEW'. And to meet those survival needs, we're using processes and we're using energy that is actually not very sustainable.

It's very understandable why we need to use a fossil fuel, for example, to heat our homes. We want to stay warm. It's very painful when it's cold. We want our air conditioners to run when we're not comfortable. That's a fundamental human need that we need to solve. But the way we're doing it is wrong and the architecture that we're using is flawed and it creates a huge amount of waste. So then the question becomes: how do we meet our fundamental needs in a way that's resilient, that that keeps our spaces, for example, warm or cool, gives us the food we need, but doesn't have these terrible polluting effects because we're basically using 100-year-old technology to meet our needs today. And you think about it: 100 years ago, the planet only had 2 billion people and these were new ideas, like a coal fired plant didn't seem that it was going to be very dangerous to Earth.

And when you create the first coal fired plant or the first combustion car, you're wondering if there's going to be another one produced or will people even buy your combustion car There is a point in history 100 years ago when you had to decide, do I get a horse or a combustion car like a Model T? And they're roughly the same price. And over time people decide on the the combustion car. And then what happens? We have 100 million of these combustion cars sold every year on Earth, and they're creating these massive amounts of pollution. What happened is we went from 2 billion people 100 years ago to now almost 8 billion. So you've had this massive multiplication of population as well as these means we use to solve our our needs, energy, transportation, so on and so forth. And this results in massive pollution. And a big part of that is the CO2 pollution and other greenhouse gases, not only CO2, it's also methane and others.

So we have to say the needs we're trying to solve are right. The applications that we have like a car, great idea. It's the wrong architecture to realise that when you're using these fuels and you have these global supply chains around moving fuels from one part of the world to another and streaming it into the car and all of that. There's many more efficient ways that we can do that, as we're seeing with EVs. And so it's really about re- architecting to be more intelligent for the scale that we have today while still acknowledging the human needs that we have.

So I feel that climate, the climate change debate, is obviously important. We have to do so much more to abate the emissions. But we still can't ignore the fact that we're trying to meet fundamental human needs and we're trying to do that globally. We're trying to bring people out of poverty, starvation. We've got food security challenges on the horizon. We can't just look at these problems from a very narrow perspective - you're trying to solve one aspect of it - but then you forgot the whole everyone needs 1,500 calories a day aspect, and they need fertiliser, and we need to take care of these needs. So we have to actually re-architect to become more intelligent.

Robin Pomeroy: So what are the exciting ways you're looking at that address some of those problems? We're aware of electric vehicles - interesting analogy you gave about 'do I buy a horse or do I buy a Model-T Ford?' I guess people today who are lucky enough to be able afford a new car, they're deciding, should I get a plug-in car? And is the electricity I'm getting from that produced by renewable energy? The technology is there for a lot of these things. But are there things beyond the fairly mundane ones that I know about that you're exploring around the world? Pick what whichever problem you like, whether it's fuel, energy or water or anything else. Is there some technology there that really gets you excited?

David Wallerstein: Right now, at this point in history, we're very focussed on replacing our architecture and continuing to have the kinds of innovations we've had as humanity for the past 100-200 years. But doing it in a more resilient way. But often, sometimes, it's a little bit boring. Electricity sources don't really excite people. You might go from a coal fired plant to a solar plant or a windmill, and it was good that we did it. But you kind of just ended up where you were before. But these are important innovations, and probably the bulk of our work is in that area.

However, I think there are many new opportunities evolving where we can actually do things better, in a more resilient way, in a more intelligent way, with with no footprint or the most minimum footprint imaginable, that's actually just a purely better approach than what we have today.

Something I've been spending a lot of time on, as an example ,for the past five years is electric aviation and in particular a subset of electric aviation called electric vertical takeoff and landing planes E-VTOL. If you haven't heard of this term, it's really interesting to look it up.

And what E-VTOL allows you to do is with a battery like you have in an EV, you can actually charge your plane. This plane can take off vertically with very low noise, no pollution. Think again about an EV. There's no pollution coming out of it. Obviously, this needs to be charged with green energy. And you can fly hundreds of kilometres away very quickly, avoiding all the traffic on the ground and so on and so forth, and land at your destination. Your destination actually doesn't even need to be at the end of a road. It could be on the top of a mountain, top of a hill.

What this now enables is for humanity to travel very fast to basically any destination you point to on a map as long as you can land there with permission. This strikes me as the next generation of transportation going beyond the ground, the car that we've all become very familiar with over the past hundred years. Because what it basically allows you to do now from an efficiency perspective is simply build these planes, build places to land them. They don't need so much space. You can charge them, but electricity is everywhere. You just need to get the connexion into the plane with an interface, and now you're flying and your infrastructure is the air.

So I'm very interested in this technology for the developing world. The planet uses $1 trillion of investment a year for road infrastructure. It's the single biggest category of investment in the world. It's not healthcare. It's not power generation - you read a lot about power generation, of course, everyone feels like their healthcare budgets in their countries are huge. Actually the single biggest category for investment for humanity, 1 trillion a year or more, is road infrastructure. And I'm thinking, of course it's polluting, there's all these resources going into it. So how can you actually imagine new infrastructures that are fundamentally better because you're moving faster around the globe and getting to your destination faster without traffic, but you're also using less resources. It's only renewable energy into the plane. And then the air is your infrastructure and then you land. I love examples like this where as humanity we're moving forward with with something that's more exciting and more enabling and resource efficient.

Robin Pomeroy: You make a really interesting point there about the developing world because we do a lot of social videos on flying cars, flying taxis. Everyone loves these videos. But there is sometimes this feeling of, this is a rich person's toy. What you're saying is it could be a rich person's toy, but one application here is to get people or goods around in places that need to get people and goods around, but don't have any roads right now.

David Wallerstein: Absolutely. And it's very exciting from that perspective. When you think about the overall investment required to realise transportation infrastructure, when you aggregate all of the costs in the system, you can see how actually capital efficient this is. And and then the question is, well, can this be global? Why is it not perceived to be more global? I think that's just a matter of communication and in showing the case studies and engaging with different parts of the world,

I would say at the same time it is true when you buy a new piece of hardware like a plane, it is expensive. So the question is who wants to pay for it first? And that's really how the technology will evolve. You know, Tesla started with their cars at the higher end of the market, these Model Ss, Model Xs and then came out with the Model 3, and who knows where they're going to go from here with more affordable cars. And then, of course, there's the whole EV industry now developing globally with more affordable models. But it may start for a little bit of time at the higher end, just the way the markets work. But over time, this should be a far more efficient transportation technology for the planet, especially the developing world.

At the same time, people will be moving faster and more efficiently in those developing countries. Why sit in traffic? Why do you have to build a bridge across an area where it doesn't get much traffic, but you absolutely need that bridge to be able to move. It's going to be a better experience for those people. And just think about in the developing world, people went right to mobile. They didn't have to do dial-up often and have big sloppy computers. It is possible to leapfrog and that's what's very exciting about this technology to me is there's actually leapfrogging just for fundamental better architectures for the developing world.

Robin Pomeroy: Another area really interested in is water scarcity. Tell me about this movie that you've been involved with called Day Zero. What is that movie? What's your involvement?

David Wallerstein: I started to make Day Zero in the year 2017. It's a documentary movie and a very serious documentary movie on the global water crisis, which is really explained by the following: With climate change, we're actually getting shifting patterns of water falling on Earth. In some cases, there's drought, significant drought, and agricultural regions around the world are facing this drought. But in other parts of the world, there is floods, there's too much water. And when that too much water situation, those floods affects agricultural regions, we're also facing another kind of stress. So agricultural productivity is going to be facing challenges on all sides.

The movie really tries to explain this new dynamic from a very global perspective. It's not only a story about, let's say, the United States or somewhere else in the world. It's a global story. And it seeks to try to help audiences understand how, when you have climate change, you're actually getting these dramatically shifting climate patterns and water precipitation patterns around the world.

And in the movie is very serious, which I think was new for a documentary movie, to have a climate change movie that that is very serious and focuses on these key issue areas. So it is now available on Amazon Prime in the United States, Canada, Australia, New Zealand, on many broadcasters around the world, often on TV broadcasters. We hope people get a chance to see it.

Robin Pomeroy: On water scarcity, what are the solutions, do you think? Are there technologies that can help? Because, if a country ceases to get its water from the way it's been getting it for hundreds or thousands of years, there's not much you can do, is there?

David Wallerstein: I think there's a lot that can be done, actually. And this is actually related to another innovation area that we're very interested in, which is artificial intelligence.

Let me explain. We actually released a book last year called Re-Architecting Earth: Artificial Intelligence for Food, Energy and Water. Actually it was released in China in Chinese. It's not in English yet. But the premise of the book is the following: that in most countries around the world, developed or developing, a majority of the water is either used for agriculture, sometimes up to 70% of national water going to agriculture, and another, let's say, 40-70%, let's say more like 40%, depending on the power sector situation in a nation, for power.

So take a nation like the United States, about 80% of all water in the U.S. is flowing through the agricultural system, about 40% and about another 40% is actually flowing through the energy system. This is the nature of thermoelectric power. So thermoelectric power means you're applying heat to water as it passes through and that's spinning a turbine and it's creating your your energy. Even nuclear does this. And so the idea is the following: if you can use artificial intelligence to more accurately only apply the necessary amount of water to your agricultural system and your energy system, you can significantly reduce the amount of water being used by those sectors, particularly agriculture.

We often found around the world that when you apply artificial intelligence to the fields for agriculture, that the plants are often healthier when you're optimising the amount of water they need, meaning that usually farmers are overwatering their plants. You can use sensors and other forms of artificial intelligence to understand what the optimum amount of water is to precisely deliver to a plant. And usually they're just getting too much. So in many strategies, when you try to optimise the health of a plant, you actually end up reducing the amount of water used by 20-40%.

So let's say you can get a 20-40% gain on 40-70% of the water being used in your nation or your region. It's a significant gain. It doesn't have to be 'agriculture needs so much water because they've got to grow their food. What am I supposed to do?' It's not about that. It's really saying, let's optimise plant health. Let's use technology like artificial intelligence to truly understand how can I get the most out of that plant. We love our plants, right? We don't want to overwater them. But at the same time, you're going to be saving on water.

And this is so this is such an important idea that I feel that governments and ministries of agriculture haven't fully embraced it yet.

There is a cost to deploying these technologies. You have to have the knowhow. There may be some limited capital expenditures or adoption, but these are really low cost technologies in the overall scheme of things. And I think this idea of efficiency, resource efficiency and saving and conserving, conserving, but doing it through software that moves very fast and very efficiently, is not fully appreciated as a strategy for resilience and even attacking climate goals.

If I could just say further, there's a powerful relationship between food, energy and water. When you try to optimise for all three factors together, as I was saying, water is a key input for energy. Energy is a key input for pumping water in the agricultural fields. It goes on and on and on how these areas are related to each other. And once you actually start to try to optimise for all three together using intelligence, you can really get very holistic gains in a region. Let's say you don't need to pump that water anymore for your fields. Well you've just saved on energy as well. So now you've actually contributed to a balancing act on the grid. You're drawing less energy.

If you can remove your coal fired plants from a region and you replace it with solar or wind, now you have an entirely water-free form of energy. You're not having to do any calculations or any kinds of things around water transport because now your energy is now water-free. You can just deploy all that water for something else. It becomes very interesting when you think about these three in combination and you can really develop resilient regions and societies around that. I hope this is an idea that that gets more discussion around the world.

Robin Pomeroy: Tell us something about yourself then. I'm reading an article here in front of me. It calls you 'the guitar playing vegan, who's based in Palo Alto, California'. So how does a guitar playing vegan based in Palo Alto, California, become a senior executive in a massive Chinese technology company?

David Wallerstein: Well, I would say those things sound true. I'll validate the rumours. These are true. But I've been with Tencent, like I said, since the year 2000. I've been living in China on and off since 1994, also in the U.S. and even Japan for a while since, I think, the late eighties, early nineties. And so I've been spending many years of my life from a very young age, even when I was in high school in Asia, you know, Japan and China, and then, of course, the U.S. and then other Western countries.

And really, being in a company for 22 years, I started when it was 45 people in Tencent, and it's really like family. And many of our executives who were there at the beginning are still with us now. So we have very deep relationships throughout the company.

I always felt that that China was always very interested to get these ideas from the rest of the world, to figure out the best way to incorporate Western ideas with also Chinese ideas about how to develop. And I always felt very welcome to raise challenging ideas and to try to do things unconventionally in the team.

It probably helps, though, that I speak Chinese and and read and write. Often in our company environment in China, I'm working in Chinese.

And then we go to this kind of 'guitar playing vegan' stuff that was mentioned. I think there is something very interesting about the corporate environment in China, or at least our Tencent environment, which was always very, very interested in kind of our own, you know, personal habits and things like that. And really when people found out that I play guitar, they want to do events, they want to see what what I can do. And they bring me out in front of crowds there.

And the the vegan aspect, you know, if people ask me about that, it becomes very interesting and very curious and about this. And I found the Chinese market very interested in innovation, new approaches, and I try to do what I can through my role as a CXO to to extend just some new ideas and new ways of thinking, not just within Tencent, but across the the Chinese market. I think we also have a responsibility to do that. But I guess sometimes some of the personal hobbies and things like that also go into the picture.

Robin Pomeroy: You didn't bring your guitar to Davos then?

David Wallerstein: I didn't. Next year. If I'm invited, I'll rock the place. Just let me now.

Robin Pomeroy: Can I join you on bass?

David Wallerstein: Yeah. Are you kidding? Of course. I think Davos probably needs a heavy metal band - a lot of tension building up in the world. We need a release out here. Most people are wearing ties and putting on a jacket. Most people, as soon as they leave the place, they put on a T-shirt. So maybe there's an aspect to this where we can kind of let our hair down a bit.

Robin Pomeroy: What's the one habit you wouldn't be without, as a leader? What's the positive thing that you do?

David Wallerstein: A habit as a leader, for myself?

Robin Pomeroy: That works for you and that maybe would work for other people.

David Wallerstein: I would say, my own experience now, and I've been working now for 25 years and with Tencent for about 22 years, and here I am in the executive team and obviously having leadership responsibilities. So what what really would account for that?

And I think that the the good and bad news is the answer is pretty darn clear to me. It's constant work. But the thing is, if you're doing something that you love, it doesn't feel like work. To be quite honest with you, my CXO role, I try to explain it as if it's a real job and I hope it is a real job, eight years running now, but it's really more like a mission. I'm thinking about it constantly.

This is why I don't like to use the term ESG, because sometimes I feel that some of these concepts are forced upon the industry a bit. And this is a good forcing. But sometimes people react, and it's like, 'okay, they're saying we have to do something about carbon neutrality. So I got to try to figure out the words everyone's using and then reflect it back'. But the actual reality of what's happening in the world is very complicated and I feel like the way to really dig in past it is just to treat it like a mission and constantly be thinking about it.

I was going to say working around the clock. But again, the work shouldn't feel like work. It should feel like you're just genuinely interested in this challenge that we're facing. And then we're using technologies, really using them, to address the challenges. And you're trying to foster these companies - startup companies are always in danger of going bankrupt and things like this, but you're trying to foster them, to give them a chance to to have a new solution that the world can benefit from.

That's a two part answer then: treat your work as a mission, see valuing people as the fundamental value for what you're doing through your mission. Whatever that expression of it is, whatever you're doing every day, you're always serving people, right? And then when you're truly engaged and your heart is in it, when you're working around the clock morning to night, you think about these things all the time, it's very easy to do because it's all about the mission to try to get to that point.

Read David Wallerstein's essay: Our Greatest Challenge: Rearchitecting the Planet to Accommodate 10 Billion Humans by 2050

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