On April 12, 2019, Hillhouse Capital hosted a summit in Beijing featuring leading entrepreneurs and institutional investors to discuss the future of business innovation and value creation. During the summit, Lei Zhang, founder and CEO of Hillhouse Capital, gave a speech entitled “Let the Miracle Creator Create another Miracle”. Lei Zhang said that there is only one moat in the world, which is entrepreneurs constantly innovating and creating long-term value.
Below is the full text of Lei Zhang’s speech:
Welcome, everyone! Thank you for joining us on this wonderful spring day. People often say that the road less traveled is key to effective investment. At Hillhouse, we say something similar — rule with principle, win with ingenuity. In 2010, we proposed the idea of “making time your friend” and being in it for the long haul. We not only help emerging companies grow rapidly but also see it as our mission to help companies in traditional industries transform themselves digitally. These are the commitments we make as an ever-evolving, cross-cycle investment institution. We are Solution Capital. We invest not only financial capital but also operating resources and industry expertise to enable long-term success.
From the day Hillhouse was founded, we’ve required ourselves to make investments that make sense. Let’s not underestimate the notion of “making sense.” This is actually the hardest thing to do because there are many things in the world that don’t make sense. As an investor, we need to return to the basics when we look at problems and use first principles to make value judgments.
As entrepreneurs who happen to be investors, Hillhouse works hand-in-hand with our long-term-focused, value-creating entrepreneurs to help them build growth-oriented solutions. Brands, models, scale, intellectual property are crucial to a business but are not moats. We believe that the only true moat in business is an entrepreneur who invests in innovation and constantly looks at extremely long horizons for value.
We want to be long-term investors who can traverse all cycles and stages. Whether it’s an early-stage startup or a more established industry player, our goal is to provide long-term solution capital and help them build their businesses the right way. Many entrepreneurs here today are our old friends; some are new friends we have just met. We hope to have the opportunity to continue investing in them and continue to be long-term friends with them. We have found that world-class entrepreneurs have a common trait, which is the ability to learn and study for life. To them, learning is a way of life.
This is also true with investment. As you know, at Hillhouse we value research greatly. Many people say that implementation is important, but I believe that many of the problems that arise in practice are not a result of poor implementation, but are actually issues of strategy in disguise. So how can we strategize better? The foundation of strategy is research. Only more in-depth research can make more accurate judgments. Only a more accurate judgment can make a better strategy.
Finally, I’d like to talk about inner peace. There are many ways in which people can achieve success in life, but what we care about the most is how to balance it with peace of both heart and mind. The way we invest might not generate the fastest or the most returns, but it is the way that gives us the most inner peace.
When you recognize the value of time and have a small handful of like-minded confidants, you won’t care about success through the lens of today or tomorrow, but will focus on the value of compound interest. Not many people understand the value of compound interest — it not only leads to accumulated wealth but also can let you achieve peace of mind and the joy of life in the process of realizing value. With peace of mind, miracles will be born of you, and you will continue to create value and give back to society.
The people you choose to travel with in your life’s journey matters more than reaching the destination itself. I’d like to thank you all for sharing the journey with me.