Zhang Lei: The four turning points in life, don’t miss these opportunities

Columnist: Zhang Lei, Chairman and CEO of Hillhouse Capital Group. He was born in Zhumadian City, Henan Province in 1972; in 1990, he was admitted to Renmin University of China as the top liberal arts student in Henan Province; in 1998, he went to Yale University in the United States to study, and later received a Master of Business Administration and International Relations from Yale University Master's degree; in 2005, he founded Hillhouse Capital.

Classic cases: Tencent, JD.com, Didi, Meituan, Baidu, Gree, Airbnb

Investment philosophy: "Keep the right and use the strange", "Weak water is worth three thousand, but take one The investor said: "Ultra-long-term investment is my belief and belief. The first point is to make the fund a super-long-term structure fund; the second is to make the fund a super-long-term structure fund." The second point is that the philosophy of the company and investment fund must be completely consistent.”

1. Four turning points in life

I experienced four turning points when I became an investor.

First, I almost failed to pass the elementary school entrance exam for junior high school. Because my academic performance was relatively poor at that time, the minimum admission score for elementary school and junior high school was 140 points. I scored 141 points, which was exactly 1 point more. I only started working hard when I was in my second year of high school; this was the first time I felt the need to work hard, and it left a deep impression on me.

Second, I think I am studying at Renmin University. Many of the very good friends I have made now were those I met when I was studying at Renmin University. Some of them are now friends, some are close partners, and some of them are engaged in some public welfare undertakings together.

Third, I work for the Yale University Endowment. The torturous process of finding a job made me rediscover myself, and what kind of people I worked with in my first job. I think these two things had a greater impact on me. In fact, I had no choice but to work as an intern at the Yale Foundation. And for that. I looked for several other job opportunities but was rejected.

The fourth is to start a business. Between working for a company and starting a business, I chose to start a business. At that time, I had a pretty good job and had a good relationship with the then CEO of the New York Stock Exchange, John Thain, so he appointed me to be the first NYSE representative in China. This was a very good development opportunity, and I could have continued, but then I decided to start a business. In 2005, I founded Hillhouse Capital.

2. Do things well

Now I often think about it again and again. I find that my biggest characteristic is that I love tossing, not satisfied with the status quo, and love to challenge myself. Today, the company is already so big, but I always say within the company that starting a business is the second time and always starting a business. Just like I like adventurous sports, I also like to toss in my career. In addition, I am never satisfied with the status quo. Some people may think that if you have a fund of tens of billions of dollars, it is enough to charge management fees, and there is no need to bother. But I don’t want to do this. If I want to do it, I have to do my best, or I won’t do it.

I think I think about things quite thoroughly and comprehensively, and I like to think over and think about many things over and over again. I like to plan early. In fact, I started planning very early before starting my business. I first worked for a fund, and then for other institutions. These institutions often sent me back to China, which gave me a transition period to consider and arrange my affairs. Each step is more solid.

In fact, it is very important to choose what kind of people to do things with. I'm very picky about this and I like to work with familiar people based on long-term trust. The core colleagues around me are either classmates from the National People's Congress or former colleagues. My career was first started by such a small group of friends.

3. The two people I admire the most

There are two people I admire the most, one is Buffett and the other is Svensson. I have had the opportunity to get in close contact with both of these people. What I admire most about Buffett is his investment ability. In addition, I also admire him very much for being a person with strong empathy, which is called empathy in English. I like this kind of empathetic person very much; empathy allows him to better understand young people, understand people who are different from him, and understand management. So today I often talk to my managers about the need to have empathy, and I learned this from him.

Buffett can always think about problems from the perspective of others. For example, suppose that from a strict point of view, there is a manager who is not the best, but he can always put himself in the perspective of others, assume that he is in that environment, and analyze whether the situation is due to these or those reasons. caused. He is not only standing from his own perspective, but only from the perspective of investors. I find it difficult to think from other people's perspective, because everyone is used to thinking about problems from their own perspective.

I think this empathy is a very good quality for investment, life, and even family and interpersonal relationships. I also often communicate with children and ask them to think about it, what would it be like if you thought about it from someone else’s perspective? Empathy is very important and can help you relate better to others.

Speaking of Swenson, what I admire most about him is that he has a very strong sense of morality and responsibility. It can be said that he is the person who best combines fiduciary duty and intellectual honesty that I have ever seen.

These two people will always be my role models and the people I admire the most.

Swenson also taught me many things, such as long-term value investment, institutional investment, asset allocation, understanding of risks, etc. Many companies in China, such as Social Security and China Investment Corporation, regard his book as required reading. I think these methods can promote the institutionalization of investment in China; they are helpful for institutional thinking and system building. But for example, there are many restrictions on how to apply the effective boundary in China, so if we want to better integrate it with China's conditions, we still need to do a lot of things.

4. Three Opportunities in the Future

For the Internet/mobile Internet, I think there are many opportunities, and integrating the entire industry chain is a very important one. But I am more optimistic about Internet finance, which uses the Internet to integrate the entire financial industry chain and financial products, from insurance, mortgage loans, to consumer finance. Many combinations are just beginning now, and there are still many opportunities behind.

Our subsidiary Qingliu Capital has invested in several companies in this area. For example, 51 Credit Card, which is like Mint in the United States, manages everyone's financial management and credit cards. We have just begun investing in this area, and I believe there is much more to come.

Regarding the investment opportunities in the next five years, I am optimistic about innovation first, secondly about the huge consumption opportunities brought by the middle class, and thirdly about the financial and asset management industries. The current demand is far from enough. Being satisfied, especially in asset management, I think there will be many good business models coming out.

5. Everyone can fight

Some people say that I am not only a successful investor, but also an excellent leader. But I think these two characters are different and often contradictory. A good investor must have a strong questioning ability, and a good manager must have stronger affinity and management capabilities.

My leadership style is influenced by two aspects: one is ancient Chinese culture, especially the philosophy of Lao and Zhuang; the other is Internet thinking and Internet spirit.

From the perspective of Chinese philosophy, it is more like Laozi’s “governing by inaction”. From a true organizational behavior perspective, I believe in a subversion brought about by the Internet model, which I call a decentralized management model. Like fighting on the front line, I think like Ren Zhengfei, the person who hears the sound of cannons should make the decision, rather than the person who hears the sound of cannons who should call the company commander, then call the battalion commander, and then the battalion commander. The leader makes the decision. The decentralized decision-making model can greatly improve the combat capabilities of squad leaders and soldiers on the front line.

The second is to significantly reduce the company's hierarchy. Our company has very few levels. I am on the first level, the six partners are on the first level, and all employees are on the first level. There is only one level of partner between each employee and me. In this case, the levels will be greatly reduced. At the same time, every employee is carefully selected. "Decentralization" plus "reduction of levels" strive to enable everyone to fight.

But I will also encounter many challenges in the management process. First, temptation. There are many things that China can do. How do we choose the one that suits us among the temptations? "We are weak but we can only take a scoop." Second, the challenge is the cultivation of talents. This process is longer than I thought, but we are now on a good path. People have to put effort into selecting, and after selecting, they also need to spend a lot of time carving it out according to Hillhouse’s culture and values. Curiosity, honesty, and independence are Hillhouse Capital’s corporate culture.

Whenever I have time, I also want to do some sports, such as surfing and snowboarding, which can fully express my personality and require full concentration during sports. It's like you're on a snowy mountain, what else can you think about? I often go surfing in the summer, three or four times a week. I go out at eight o'clock, come back at nine o'clock to take a shower, and go to work at nine thirty. It's easy in the summer, and I go skiing in the winter.

6. Zhang Lei’s investment philosophy

Hillhouse Capital represents a very different investment institution, covering the earliest venture capital to private equity investment to listed company investment and listing future mergers and investments. We are the only organization in China that is working on the entire industry chain, which is actually not common in the world.

Because there is no distinction between private equity and listed company equity in the United States, the entire equity industry chain is the best, most successful, and largest. In fact, the United States is where Buffett buys both Coca-Cola stocks and listed company stocks. Make your own venture capital or even private equity investment. In essence, this is how investment should be done, without defining whether it is venture capital or listed equity investment.

In fact, in the ever-changing China, one year is equivalent to ten or twenty years in the West. The most important thing is not the format of the equity, but what kind of business model it is. What kind of person. In Hillhouse Capital’s internal training, the first lecture is about people and business. What kind of people we want to invest in and what kind of business model we want to invest in. The combination of people and business is the first criterion for us to choose a company.

Why can’t most people meet this standard? Some people say that I should either do venture capital or listed equity investment.

I think there is only one belief, which is the first principle of our investment. What is it? It’s We don’t have to do anything. You don’t need to do anything. This is our first philosophical idea in investing. When you say you don’t need to do anything, you have the opportunity to do the things you think are most important. We all practice this in the investment process. One principle.

The scale and returns of our global investments are also very high. Many people know that I am from the Yale school, and many people know that the Yale Investment Fund gave me ideas on how to invest. While translating "The Road to Innovation for Institutional Investors", I gained a deep understanding of investment. In fact, I have worked in many industries before, and it was not until later that I found what I wanted to do.

The most difficult thing about investing in China is that the market is very fickle, and every day someone tells you what is happening in the market. How do I stay calm in a volatile market? This is my first investment philosophy, "Run the country with righteousness, use military force with miraculousness, keep righteousness and use miraculousness." When you can be "righteous", you can withstand all kinds of temptations and challenges.

Why use Qi? A person would rather have conventional failure than unconventional success. Why? If you are unwilling to break the rules and make mistakes, then all kinds of people cannot break through various restrictions and use strange things after "keeping upright". If your ideas are different from others, you can find your own way. the way.

When investing in China, it is more important to know how much you can put in your bowl. So the second point I want to talk about is, "Water is weak, but it takes only one scoop." Your daily effort is to make your gourd bigger, stronger, and deeper, instead of drinking and eating everything in the pot and on the table all day long. There is such a theorem in investment. Chinese and Western cultures are the same. To foreigners, it is a piece of mine. When you see that others have invested in something very good but you cannot invest, you will be anxious. If you have this philosophical support, you will find the piece of mine, something you think make sense.

When you are low-key, you can concentrate on doing your own things well. You were very high-profile in your early years. In the words of God, "If you want to destroy something, you must first make it crazy." Keep a low profile and invest in a down-to-earth manner. Really good resources, really good investors, and good investment projects will gradually find you.

The most dangerous thing in this industry is that you are driven by money. Either you make a lot of money very quickly and you don’t know what to do, or you haven’t made any money and you are anxious and you don’t know what to do, so being driven by money is the most dangerous idea. Money is not important. It is the last natural income. It cannot be a goal. You must have a passion to carry you down.

We are an "extraordinary" with independent thinking and don't care about the market or other investment institutions.