One of the investors I admire the most is Zhang Lei from Hillhouse Capital Management. Zhang doesn’t give many public interviews. Therefore, it was quite a pleasure to find a great interview of him by Professor Liao from University of Maryland’s Robert H. Smith School of Management. In it, Zhang shared a wonderful insight about a unique aspect of Warren Buffett (Trades, Portfolio) and David Swensen (Trades, Portfolio). Below are my notes on what Zhang learned from them.
Professor Liao: Who do you admire the most and why?
Zhang Lei: There are two people who I admire the most – Warren Buffett (Trades, Portfolio) and David Swensen (Trades, Portfolio). I’ve had good relationships with both of them. Of course the thing I admire most about Warren is his investment skills. But I also admire him because he has great empathy. I like people who has empathy. With Warren, the ability to empathize with others makes it easier for him to better understand the younger generation, people who are different than him, and the management team. That’s why I’ve often told my senior management team that it’s important to have empathy. I learned it from Mr. Buffett.
Profess Liao: Why do you think Warren Buffett (Trades, Portfolio) can empathize with other people? Can you give an example of that?
Zhang Lei: He can always think about the problem from others’ perspective. For example, sometimes management team, for one reason or another, is not doing the best they can. Warren Buffett (Trades, Portfolio) can always put himself in the shoes of the management team and analyze the situation from management team’s point of view instead of his own point of view. I think it is not easy to always try to understand what others’ think because we are so used to only look at the world from our own perspectives.
I think it’s a great virtue to be able to empathize with others. Having empathy is important in investment, life, family and relationships. I also often communicate with children and let them think about it. If you think from the perspective of others, what is it like? Empathy is very important and can help to resonate better with people.
I want to be able to better connect with people. For example, when I was in high school, many of my classmates had good grades, but for various reasons they could not attend good universities. So I set up scholarships in middle schools and high schools. I’ve also set up scholarships in Yale because I was so poor when I attended Yale and I know what it felt like to have no money. I helped establish the Hillhouse Academy because I felt when I was in college, there weren’t enough courses in liberal arts so we couldn’t practice the multi-disciplinary approach.
With empathy, I can better understand the world. But only empathy is not enough. At Hillhouse, we are looking for people who also possess intellectual curiosity intellectual honesty, and intellectual independence, which I’ve learned from David Swensen (Trades, Portfolio) of Yale University’s endowment fund.
It is very important for young people to always be curious. The only thing that won’t change in the world is that there will always be changes. Change leads to innovation, so we should focus on change. Only by always maintaining intellectual curiosity and by constantly welcoming and embracing innovation can we truly create value and form win-win relationships.
Intellectual honesty means never lie to others or to lie to yourself. Especially don’t fool yourself.
Intellectual independence means never let others’ opinions affect your own opinion. If we can think independently, we won’t care what the market thinks and what other institutions think.
One of the things I admire most about David Swensen (Trades, Portfolio) is that he has a very strong sense of fiduciary duty and responsibility. He is the best example a great investor who combines fiduciary duty with intellectual honesty.
These two people are always my role models, the people I admire most.
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