Author | gongyouliu
Editor | gongyouliu
After coming to Shanghai in early April, it took almost a month to finish reading the book "Value" written by Zhang Lei, the founder of Hillhouse Capital. After reading the whole book, it is quite rewarding, and now I would like to share with you some of my thoughts and insights.
Since I started a business by myself, I usually have more time, and I especially want to understand the current focus of entrepreneurs in the startup market, so I recently visited several startup companies with a friend who is an investor (as an investor). , I have a more comprehensive understanding of the positioning, value, and business model of startups. I am also starting a business myself, and I have been thinking about what value I can provide to others. Based on these two backgrounds, reading this book will give you a deeper understanding. Based on my own understanding, I will share the 4 points in the book that touched me more.
Value investing and long-termism
Zhang Lei is also a believer in the practice of value investing. He believes in the long-term value of promising companies and hopes to invest in a company for a long time, using the resources and technology provided by Hillhouse Capital to help the company grow together, and ultimately bring excess returns. friend.
This point is very consistent with my own values. I mentioned in Principle 6 of " 20 Life Principles I Have Deeply Realized Through Years of Life Experience ": the best way to gain value is to persist in long-termism. Personally, I like to run wild (often walking more than 100 kilometers at a time), writing (in order to write a book, I will persist for several years) is my best practice of long-termism. Why does long-termism work? Personally, I think there are three main reasons:
① In the short term, the market will fluctuate violently due to various factors, making it difficult to see the truth. In a longer cycle, the noise of many short-term changing factors will be "shielded" by the long-term trend. In the big "trend line" "The essence of the problem can be seen clearly;
② Many things have an exponential effect (especially like investment and personal growth), and only when a certain critical point is broken (which takes a long enough time) can there be an explosion. The exponential effect determines that when the time reaches the threshold and the development trend satisfies the exponential law, the value will increase exponentially;
③ Most people are impatient and have no staying power. If you can persist in one thing for a long time, you can defeat 99.9% of people. Someone asked Buffett before why he invests so well and earns so much money. Buffett's response is: Most people can't bear to get rich slowly.
2. In-depth investment in the front line of enterprises and grow together with enterprises
Another feature of the book "Value" that I think is rare is that their investors will go deep into the front line of the invested company (that is, an investor joins the invested company, works in the company for several years), and works together with the company. Solve the problem. This approach is something I haven't seen in other investment books or methods.
I agree with this method and philosophy of investing. Only by going deep into the front line can we better see and solve problems. Only through practical exercises can investors better exercise their business capabilities, deepen their understanding of an industry, and recognize the essence of this industry.
Because Hillhouse Capital practices value investing, which is long-term holding, and will not invest in companies that are particularly large (compared to other non-value investment institutions), this method of throwing an investor into a company and training investors is also can be fulfilled.
I have a previous resume that I have been in an industry for nearly 10 years. Now I deeply feel that you have to stay in a certain industry for at least 5 years and participate in it deeply before you can truly understand an industry.
From discovering value to creating value
If a valuable business is found, it can only be considered a discovery of value. The investment strategy pursued by Buffett's early mentor Graham (he is the founder of value investing) is to find those companies whose value is undervalued (this can be regarded as a method and strategy for discovering value), and then buy them at the right time ( That is to say, when the value of the invested enterprise returns to rationality and there is no mismatch in value) and sell it, the investor earns money whose value is underestimated.
So is there a better way? The method I saw in Zhang Lei’s book is to create value (in fact, now that the information is so developed, it is becoming more and more difficult for companies whose value has been undervalued for a long time. Graham’s method of finding undervalued companies is in It's getting harder now). Discovering value is only the first step. A better way is to create value, which can expand the valuation of enterprises to a larger space and obtain higher capital returns.
So how to create value? The first is to choose a good company, choose to invest in a company with structural growth space (that is, how high the ceiling is), and hold it for a long time, waiting for the moment of the exponential growth curve to arrive. The second is to provide strong support (talents, capital, resources, information, technology, etc.) for the invested companies to accelerate the growth of the company and help the company create an ideal growth curve.
Guard every penny raised
It is mentioned in the book that every penny raised must be protected, which is the responsibility of the fund client. I think this is also the trump card for insisting on long-term value investment. Only by living up to the fund raiser can you be better trusted, and others can deliver the funds to you for investment and operation in the long term.
This requires value investors to be prudent, to think more comprehensively and deeply in every investment, to find invested companies with long-term value, to achieve high multiple returns on investment through time, and ultimately to provide investors with high returns. s return.
Since value investing will eventually yield more returns, generally speaking, investors will be more patient. In this way, investors do not have too much short-term pressure, and can deeply understand the company, focusing on long-term value discovery and value creation.
This is true for corporate investment, but why not for personal growth? Individuals who insist on long-termism also need to discover the value of what they do (only do things that have long-term value for themselves), and through their long-term persistence, they will finally create value in their careers, and finally repay their original intentions and return Family and friends who have supported me along the way.
That's all for my sharing. There are many highlights in this book. The book introduces a lot of investment methodology, and there are many stories of the author's own growth, as well as rich themes such as talent cultivation, personal perception, values, and corporate culture. We can get a lot of value from these multi-dimensional materials. In short, this is a good investment book worth reading. Interested readers can click the link below to purchase and read.
