Zhang Lei, Chairman and CEO, Hillhouse Investment Management
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Established in 2005, Hillhouse Capital has now become one of the funds that manage the largest investment portfolio in Asia. One of the most famous achievements it has made must be becoming early-stage investors of Tencent and JD.com. Zhang Lei, the Chairman and CEO of Hillhouse, believes in long-term fundamental value investing. In both developing investment projects and young talents, he values the ability to create value.
Zhang studied in Yale University in 1998, and earned a MBA and a master's degree in International Relations. While he was in Yale, he did not settle for study only but also worked at the Yale Investments Office helping to manage endowment funds. When he established Hillhouse in 2005, the Yale’s Endowment entrusted US$20 million to his management and also became one of the Hillhouse's early-stage supporters.
"The nature of both nurturing an enterprise and a talent is the same: create value."
Value investing is not merely a principle that guided Zhang to the success of his funds, but also a principle that is applicable to how Zhang selected and nurtured talents. "Value investing is not only about discovering value. Another important factor of it is to create value. When we evaluate an investment project, we don’t just look at its existing brand or room for profit. We are also concerned about the potential of creating long term value. This potential comes from the sustainability of its business model and the vision of the entrepreneur."
Zhang thinks that the process of nurturing talents is a process of creating value. "To nurture an investment practitioner, the first thing is to be able to spot such talent and then bring out and enhance his/her potential through education and training. This is similar to the process of us finding an investment project with long term potential and then growing with the enterprise."
"I always say that education is an investment you never quit. In the era of knowledge-based economy today, the society's need for goods and business types may change but the need for talents never changes. Indeed, I think talents bring more creativity and value to a society, and so, in a broader sense, nurturing talents is an investment too."
Mr Zhang outlined the latest developments and market landscape in the internet finance industry at the forum jointly hosted by FSDC and CUHK in 2016.
"The game of fintech has only just begun and the experts are entering into the game."
Though the development of technology and internet industry is ever-changing in the United States and Mainland China, Zhang does not think that the local technology industry is stagnated. "Fintech per se is an emerging industry, to Mainland China or the rest of the world. The reform of fintech has only just begun. That is what I meant by saying the game has just started and the experts are entering into the game."
He believes that Hong Kong, as the financial center of Asia, has gathered a lot of talents. This, together with the Fintech Supervisory Sandbox mechanism recently implemented by the Hong Kong Monetary Authority, encourages the industry to promote more innovative financial services. With the collaboration between the advantage of a traditional industry and the help of government policy, Hong Kong's finance industry is still with strong competitiveness.
Tips for the younger generation
1. Be able to raise basic questions
"The younger generation nowadays can get information from various channels. Through the internet, they can easily learn new technology and acquire new knowledge. In this vast ocean of information, however, we have to remind ourselves not to lose the instinct of asking the most basic questions. Young people should always have critical thinking and ask basic questions. Do not be confined to the success or knowledge itself that is right in front of you. Also, do not have the thought "I know this piece of information and so I know the answer, too." Business model depends on business nature after all, but not purely on a novel idea. Therefore, critical thinking at all times and being able to ask basic questions are crucial to career development."
If he had to interview a young fresh graduate, Zhang honestly said that he would not ask any questions about business models or technical issues; instead, he would ask the most basic and simple questions, for example, "why do we do it this way?" or "what is the purpose of doing so?". He stresses that whilst it is important to accumulate knowledge, being able to go back to basics and to see the innate issues is more important. The business is changing all the time, so is innovation. Keep asking and thinking about basic questions and see the innate needs of the business in order to improve.
2. Do meaningful things with brilliant people
"I hope young people can remain to have some humanistic feelings – critical spirit and independent thinking allows them to better understand human nature and society. This is how then they get to understand better the relationship between enterprises and consumers, as well as the fusion between technology and industries. To the students who wish to get into the private equity business, I would suggest them to work with people who share the same vision. The scale of the business and the glam of the industry don't necessarily matter. What matters more is who you work with every day."
"In Hillhouse, we simply call this 'doing meaningful things with brilliant people'. It may sound easy but the focus is that what kind of people you spend time with determines what kind of person you will become. Back to our first topic here - value creation. When you join a company or a team, you have to think about who the value creators in the team are and what you will be able to do in the process of value creation."
Education Background:
MBA and M.A. in International Relations, Yale University
B.A. in Economics, Renmin University of China
Professional History:
Mr. Zhang Lei is the Chairman and CEO of Hillhouse Investment Management. Prior to founding Hillhouse, he worked with the Yale Endowment and a global emerging market fund covering South Africa, Southeast Asia and China.
He is a trustee of Yale University, and is also Vice Chairman and Trustee of the Board at Renmin University. In addition, he is the Chairman of the Yale Asia Development Council.