Thread by @ruima

1/ One of the most famous investors in China is low-key Zhang Lei, founder of Hillhouse Capital, $60Bn long-term asset manager investing across multiple stages and industries. He published his first book "Value" last yr. It's excellent & I'll have to post multiple threads on it.

2/ Hillhouse was founded in 2005 and its first LP was Yale Endowment, where Lei had interned during his Master's program. (The late David Swenson was a very important mentor to him.) Lei is a proponent of value investing. None of his other 4 cofounders had investment experience.

3/ Actually, he only half did himself. He recalls of his Yale Endowment internship interview: he answered mostly "I don't know" to Swenson's questions. He believes he was hired bc he was honest about his shortcomings. Besides honesty, Swenson prized fiduciary duty above all else.

4/ "I'd rather lose a customer than lose their money," Lei is fond of saying. He says his founding team had 5 qualities in common:
- more interested in learning than making money
- believes everything can be learned
- practice what they learn
- share openly
- love reading/books

5/ Their first investment ('05) was Tencent. They had doubts. They didn't know if a) Tencent could find more monetization opps; b) if enough ppl would use it. Luckily, when doing DD of another co, they found that small merchants all over China were putting QQ on their biz cards.

6/ Hillhouse is a research heavy org. They believe in firsthand rsch. They also believe that one must know at least a few decades of each industry's history before making an investment. They do "anything that makes sense," including incubating biz. They also seed lots of funds.

7/ They also have a large roster of operating execs who help give portfolio cos advice. They believe their main value is in helping founders see the big picture, then leaving them alone to execute. They connect a lot of founders, and were responsible for linking up Tencent & JD.

8/ Lei believes there are 4 qualities to great entrepreneurs:
- long term thinking, even in face of great uncertainty
- industry insight that results in innovation
- focus on execution, artisanal obsession
- high empathy, so as to coordinate & gather more resources

9/ He believes in letting entrepreneurs make their own decisions, esp low cost / low time experiments. Investors' role is to study innovation, esp as it applies to organization and management & provide solutions in these areas. He has lots of thoughts on org culture & design.

10/ On culture, he believes this is more important than biz model, product, and on par w team, perhaps only less impt than the founder. At Hillhouse, he built a culture that was more research / academic at first then as it grew bigger became more like a prof sports team.

11/ A prof sports team culture, in his opinion, means:
- want to win, work hard, but not afraid of losing
- prizes coordination
- players can be bench / backup, but don't have that as their goal
- results-driven (ie tenure, title, don't count, only results)

12/ To this end, he believes that the main job of mgmt these days is to not assign tasks but pair up employee passions w problems that need solving. Orgs need to:
- be always learning
- turn learning into action
- be decentralized
- evolve constantly

13/ To achieve this, they need to hire folks who are:
- self motivated
- time sensitive* (Lei loves saying "killing time is killing people")
- empathetic
- have a growth mindset and are lifelong learners

14/ One thing I wanted to do this yr is to highlight more Chinese tech voices. They influence a lot of my thinking & I want to give proper credit. Zhang Lei doesn't really need much introduction but didn't want you guys to miss his wisdom just bc he's low-key! Follow for more.

15/ PS I also want to thank @ryansoh for giving me the motivation to read more these days. He's been sharing his notes w our @techbuzzchina Insider community, which you should join if getting into the weeds on China tech is your jam.
We're at techbuzzchina.com/insider: