Notes From Duan Yongping's Talk at Stanford University - Part III

Question 31-53

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Oct 16, 2018
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In my previous two articles I translated the first 30 questions and answers of Duan Yongping's Q&A session with a group of Chinese students at Stanford University. Below is my translation of question 31-53 and Duan Yongping's answers.

Q31: What’s your thoughts on Tesla (TSLA, Financial)?

Duan Yongping: Charlie Munger (Trades, Portfolio) once said that Musk is a proven genius. His IQ may be 190, but he thinks his IQ is 250. But to run a company, you must be rational. I think Tesla’s value is zero. The company’s culture is very bad.

Q32: How do you build a long-term friendship?

Duan Yongping: Be sincere with people. I’ve learned this from Warren Buffett (Trades, Portfolio) -- the most important thing in my life is friendship. Therefore, be tolerant, be kind and be honest with your friends. He didn’t say you need to have a lot of friends. A few good friends is enough.

Q33: How do you sustain a good culture?

Duan Yongping: There are no secrets. The best way to maintain a good culture is to find people who share the same values because it’s very hard to convince people who don't believe your culture. And you can tell by body language.

Q34: How do you choose the right partners and employees?

Duan Yongping: It would be extremely fortunate to find the right partner on your first try. You have to have your own standards and eliminate the ones who don’t fit over time. You also have to have the courage to end the partnership if you know you’ve made a mistake. The earlier the better.

Q35: Can you give an example of your "Stop Doing List"?

Duan Yongping: I can’t think of a current example. I majored in radio communications. But I didn't do this because it was not something I loved doing. When I graduated from graduate school, I found a job and my boss said that you could be the director of the company in a few years and we’ll give you an apartment. But I was not interested in them so I left.

Many people often think there aren’t many opportunities for them. But in fact, what really happens is that they do not have the courage to stop doing the wrong things. Again, when you find yourself doing the wrong thing, stop doing it right away. I always think long term. If you focus on the short-term interest, you’ll be the same in 30 years.

Q36: Are there any misunderstandings of the United States against China?

Duan Yongping: Americans' understanding of China is generally very good. I support being politically correct, because if you are not even politically correct, how can you be correct? The current president of the Americans is very confused, but I believe that it will eventually get better.

Q37: What is the most important thing about investing?

Duan Yongping: Right business with right people at right price. Right business is about the business model. Right people is about the corporate culture. Price is not that important; business and people are the most important. Culture has a lot to do with the founder. Business model is the way to make money. This is something you have to realize yourself. I can't tell you. Just like if you don't play golf, I can't tell you how fun it is.

Q38: How should entrepreneurship persist?

Duan Yongping: My understanding is very simple. If you can't hold on, you can't hold on. What you insist on is definitely something you can't put down. You will know by yourself.

Q39: What’s your view of bitcoin?

Duan Yongping: I am not interested in things that do not generate cash flow. I don't understand the blockchain. But that doesn’t mean you can’t understand it.

But I don't understand, it doesn't mean you can't read it. You have to vote for yourself to understand.

40: How do you keep calm?

Duan Yongping: It is not difficult to keep it because it is already there (it is something already in you). However, Jack Ma also said: "It is very difficult for ordinary people to keep calm.” So you have to be rational and philosophical about adverse events.

Q41: How do you find your passion?

Duan Yongping: If you always stay where you don't like, you may never know what you really like. So if you find the wrong thing, you have to stop. Try more things and you’ll find what you love.

Q42: Do you think that failure is inevitable but success is accidental?

Duan Yongping: There must be a reason for success.

Q43: If you could choose to live another life, what would you do differently?

Duan Yongping: I don't know, I didn't think about it. Maybe drink less red wine?

Q44: What do you want to tell your son at this point?

Duan Yongping: It is useless to tell him what to do. As Warren Buffett (Trades, Portfolio) said, watch what you do, not what you say.

Q45: How do you find the right thing to do?

Duan Yongping: I have time to think. I may think for a long time and one day I may have a eureka moment. When I was thinking about the advertising lines for my first business’ major products, I thought about it for half a year. Many people are busy all day long and have no time to think. They may never understand.

Q46: ”‹”‹Is there a big crisis in China?

Duan Yongping: Some people also asked on WeChat whether there will be a big crisis coming. I said that I think we have always had some sort of crisis. Some people see problems and others see opportunities.

Q47: What do you think of the trade war?

Duan Yongping: If you look back at today 10 years from now, you’ll see the trade war, too, shall pass. If we have a bear market, Apple will come out stronger with so much cash. When the market goes down, you should buy a good company.

Q48: How did you find the mission of your company?

Duan Yongping: We slowly explored what our products should look like. If you find it is wrong, stop quickly. Take Apple's new charger as an example. They still haven’t launched the new charger after a year when they said they were going to launch it. It is definitely because there’s a problem with the charger that has not been resolved. If you don't solve it, don't push it to the market.

Q49: We are afraid of getting into the wrong occupation. But how do you choose among what you like, what you are good at and what looks like a promising industry?

Duan Yongping: If you know a job you enjoy and are good at, and the company is in a cutting-edge industry, go for it. The problem is that it's hard to know, so I would give priority to what you like. Money is not a good thing, because earning money is a lot of fun, and once you have a lot of money you lose a very important pleasure. You’ll almost always have enough money. It is more important to do what you like.

Q50: Is Apple Watch ECG FDA certification valuable?

Duan Yongping: Of course it is valuable. First of all, it attracts a lot of attention. Second, you have to have the certification for the doctors to admit its legitimacy.

Q51: What is the next breakthrough in machine-human interaction?

Duan Yongping: I don't know. But the machine is definitely getting stronger and stronger. Human beings people have lost to machines in Go. I would say this, you can't beat the machine if you speculate in the market. But in terms of investment, the machine will never beat human beings because the machine can't understand the essence of the business.

Q52: What’s your view of price discrimination (different prices for different customers)?

Duan Yongping: If there’s price discrimination, customers will find out sooner or later. Second, once the customers find out about it, they will try their best to bargain with you and waste a lot of time. This causes a lot of unnecessary issues. A consistent price will save a lot of trouble. The main thing to do is to cater to the customers’ needs. Take a look at Airbus's John Leahy.

Q53: Why do you invest in Huang Zheng and Pinduoduo (PDD, Financial)?

Duan Yongping: I have been friends with Huang Zheng for more than 10 years. I know him well and I trust him!

Read more here:Ă‚

Notes From Duan Yongping's Talk at Stanford University

Notes From Duan Yongping's Talk at Stanford University - Part II

Notes From Duan Yongping's Talk at Stanfard University - Part III