This year is the 9th year that Chuangyebang has launched the "40 Under 40 Investors" list, aiming to find those who are very insightful and stable on the cusp of capital Bole. For the selection of this list, Chuangbang interviewed some of the investors on the list, trying to decipher their unique investment logic and explore the story behind their investment.
Wen 丨 Xie Xia
Editor 丨 and Yi Rong
Picture design 丨Li Bincai
Lei Zhang is a partner at Warburg Pincus Investment and head of consumer investment in China.
"Ping" has no meaning of high and low concave, "Lei" is three stones stacked, angular, the two meet, the spark is dazzling: Zhang Lei invested in Warburg Pincus, including Yuanqi Forest, Perfect Diary, Wenheyou, Zhongtong Express, Aneng Logistics, Child King, Zhangmen 1 to 1 and so on.
Zhang Lei advocates the underlying logic and follows the first principle. The judgment of things is not limited to the established cognition of a certain field, but looks at the overall situation from top to bottom, with points and surfaces, and touches the class bypass. Looking at a company, he looks at the situation, looks at people, and looks at things from a dynamic perspective.
Zhang Lei is also a delicate and sensitive person, and it seems that any detail can touch his nerves and quickly explore the essence of the problem. When it comes to investment cases, he is like a family treasure, and the key details are at hand.
Zhang Lei's investment philosophy is not explicit, and all experience is obtained in practice. He always seemed to be able to peek into the big picture of business from a narrow gap.
Logistics investment is on the horizon
Zhang Lei, 37, is avone's youngest partner at Avighton China. He was an uncompromising academic bully, and while studying at Oxford University, he received a first-class bachelor's and master's degree in mathematics with honors. Prior to joining Warburg Pincus, he was investment manager in IDG Capital's Private Equity Investment Division, where he was responsible for investments in the consumer and retail sectors, and prior to that, in Morgan Stanley's London office.
In 2012, Lei Zhang joined Warburg Pincus China. Zhang Lei's first project led by Warburg Pincus was Aneng Logistics, and since then he has invested heavily in Zhongtong Express and Jizhijia, an investor in the consumer field, who has invested in the logistics field.
When he first arrived at Warburg Pincus, Zhang Lei's consumer group focused on looking at related projects in the garment industry. However, at that time, the rapid rise of e-commerce in China, which made Zhang Lei, who was looking for clothing companies, encountered problems, Internet companies subverted the traditional clothing retail model, traditional clothing brands suffered an impact, Amoy brands, online dealers poured out in large quantities, but there were few who could really invest.
"I don't think it was a very good point in time." Zhang Lei told Chuang Chuang Bang. Since then, he has begun to study e-commerce, while Ali and JD.com have occupied most of the market share, the boundaries of vertical e-commerce traffic are blurred, and the investment risk is larger.
Although e-commerce is a monolith, Zhang Lei has glimpsed opportunities in the logistics field: no matter what is sold online, someone must send something out offline.
Zhang Lei first came into contact with Aneng Logistics in November 2013, when the latter began to join the express franchise business for less than half a year, and just a month later, Zhang Lei decided to invest $15 million.
In the second year of the investment, Aneng Logistics lost 500 million yuan, and a dispute within Warburg Pincus over the investment ensued.
After repeated demonstration and analysis, Zhang Lei firmly believes that Aneng's model is no problem, and continued to invest an additional $50 million that year. Since then, as Zhang Lei expected, Aneng Logistics turned a profit in November 2016. At the beginning of May this year, Aneng Logistics submitted an IPO prospectus on the Hong Kong Stock Exchange, with revenue of 7.08 billion yuan and net profit of 220 million yuan in 2020, and its valuation increased by nearly 50 times from 300 million yuan when Warburg Pincus invested to 14 billion yuan in August 2020.
Immediately after, Zhang Lei invested in a second logistics company, Zhongtong Express.
At that time, the "four links and one arrival" was large, and domestic express delivery companies basically did not contact capital, especially foreign capital. Zhang Lei finally met Lai Meisong, the founder of Zhongtong, through the introduction of friends layer by layer.
The investment once again caused huge controversy within Warburg Pincus, with Zhang Lei approaching from the first half of 2014 until 2015, when the investment was finalized.
"At that time, I saw the head enterprises all over again. Shentong is the first in the market, Yuantong is second, Zhongtong and Yunda are three or four respectively," Zhang Lei recalled to Chuangbang, the second place Yuantong recently got Ali investment with a valuation of 7 billion, the first Shentong gave a valuation of 15 billion, and the valuation given by Zhongtong Express at that time was about 40 billion.
In the eyes of the outside world, there is no difference between these express delivery companies: the founders are all from Tonglu, the business is the same, the model is the same. But after Zhang Lei's research, he judged that Zhongtong could outperform the first two, because the core of Zhongtong is different from the other two, mainly reflected in two aspects: the key model and the founder himself.
"Operating a franchise model of express delivery network, in essence, is operating an ecosystem, the real investors of these companies are not the capital side, but franchisees, each franchisee will borrow money through their own circle of relatives and friends or invest funds in the business." Zhang Lei said that how to operate this franchisee ecosystem well is the core competitiveness.
Each company has a slightly different approach to operating the franchisee system. Some excessive decentralization to franchisees, which makes it difficult to implement the headquarters strategy in the landing stage, and some are split after the franchisees become larger, which makes franchisees lose confidence and are unwilling to invest again.
"Zhongtong's approach is that when the franchisee becomes bigger, it will neither over-delegate nor split, but absorb the franchisee into the shares, become the shareholder of Zhongtong, and also be responsible for the original region, through the long-term interest binding of both sides to solve the problem." I went to talk to his franchisees, and obviously felt that the spirit of Zhongtong franchisees was higher, they trusted Zhongtong more, and their expectations and confidence in the future career were also higher. Zhang Lei said.
Lai Meisong, the founder of ZTO, is also a key factor in Zhang Lei's determination.
Zhongtong has a distribution center in Shanghai, next to which there is a wooden house, where Zhang Lei and Lai Meisong meet most of the time. "The whole family lives in a simple wooden house next to this distribution center, and he doesn't have any bad habits and is very focused on his career."
In ZTO Express's 2015 Series A financing, Warburg Pincus invested US$250 million to become its largest financial shareholder.
Facts have once again proved that Zhang Lei's judgment is correct. In the following five years, ZTO completed automation and digital upgrading, with the highest degree of automation in the industry, and its market share increased from 14.3% in 2015 to 20.4% in 2020, making it the world's largest logistics company in terms of business volume.
In addition to Aneng Logistics and Zhongtong Express, in the field of logistics, Zhang Lei also invested in the warehousing robot Jizhijia. Jizhijia is an intelligent robot company leading the global intelligent logistics revolution, and currently has a market share of up to 10% in the global AMR (Autonomous Mobile Robot).
Bet on new consumption
From the development experience of developed countries, Zhang Lei judged that China will usher in the "golden decade" of the rise of new consumer brands.
"Europe, the United States and Japan in the rapid economic growth, the emergence of a new middle class, when the economic growth slowed down, the social structure began to solidify, the middle class turned to more spiritual attributes of the products, which is conducive to the production of brands, China is currently in the high-speed growth to the middle and low speed growth of the shift period."
In Zhang Lei's view, there are only two types of things that can be called "brands": one is that you are willing to pay a premium for it, for example, when buying a Hermès bag, consumers usually do not consider how much the leather it uses is worth; the other is the preferred brand by default, because it has won the trust of consumers and does not have to compare every time.
Since 2020, Zhang Lei has frequently made moves in China's new consumption field, and has invested in mainstream new first-line new consumption head enterprises such as Perfect Diary and Yuanqi Forest.
He is also actively laying out the industrial chain of the brand. In 2020, Warburg Pincus, together with Tencent and other parties, completed the holding acquisition of Yanli, the second largest offline beauty collection store in China.
"Yanli's foundation is very good, with the rise of domestic beauty brands, offline beauty brand collection stores have a lot of room for growth in the future." Zhang Lei analyzed that the founder of Yanli is from Hong Kong, China, who started out in foreign trade, has rich experience in offline retail, and has high barriers in the supply chain. At the same time, we also see a lot of improvements, such as improving the social attributes of the brand. With the experience of Kid King (a maternal and infant retail enterprise invested by WARCON) and WARBURG PINCUS's in-depth post-investment management capabilities, it will assist the management team in digital transformation and help it gain new momentum for development.
When talking about investment, Zhang Lei said to founder Zhou Guanlun, "You have done it from 0 to 10, and from 10 to 100 in the back, I will help you, you used to be the driver's seat, now you sit in the co-pilot, I will help you drive for a while." ”
In today's hot catering track, Zhang Lei said that "eating" is a carrier of Chinese entertainment consumption, but he also frankly admitted that the risk of "like the new and tired of the old" in the catering industry is very high, and investors need to think carefully about the essence behind the explosion. For Zhang Lei, Wen Heyou is more like a non-traditional theme park.
"Offline catering companies actually want to do standardization and rapid replication, but consumers want a different experience."
Wen Heyou, known as China's "Disney of the restaurant industry", meets such needs and integrates different cultural styles in different cities, such as Changsha Wenheyou has a city culture, Shenzhen Wenheyou integrates cyberpunk elements, and these experiences are constantly upgrading, "Each city's format is different, which is its core competitiveness in itself."
In addition to branding and catering, Zhang Lei is also focusing on the field of going to sea. He believes that there are two main logics behind going to sea, one is the output of China's supply chain, and the other, perhaps more importantly, is the output of management capabilities.
"With the rising cost of Chinese, supply chains may move to cheaper countries and regions, but the management capabilities of Chinese manufacturing enterprises will become an irreproducible competitive advantage." We also see the ability of Chinese companies to export marketing until the brand goes to sea. Zhang Lei said to Chuang Bon.
Potential, people, things
Zhang Lei's investment philosophy is divided into three layers, the first layer is potential, the second layer is people, and the third layer is things.
If the background of mathematics gives Zhang Lei a strong ability to think rationally, then years of investment experience have helped him equip him with a pair of emotional wings - based on perceptual judgment and the perspective of the overall view.
"Many investors are very good at studying 'things', such as business models, market scale, profit distribution, etc., and the excellent investors I see are committed to understanding 'people', because things are done by people, and top investors must understand 'potential', have a God perspective, or a global perspective." Zhang Lei said that investors who understand the general trend are no longer limited to the gains and losses of a single project, but do systematic layout in key nodes and dig deep into the bottom needs of consumers.
He took Weilong spicy strips as an example, before Weilong, the spicy strip market was very small, if you really invest according to the subdivision category and market size, you must not be able to invest in Weilong. "The earlier you use the tools of traditional investors, the less you invest."
"We are in a business environment that is changing a lot and changing rapidly, and investors need to judge what is constant in this changing business environment. What doesn't change? I think that people, specifically, the underlying needs of people are constant. ”
Zhang Lei divides the underlying needs into three categories, the first is "addiction" products, the second is social or spiritual attributes, and the third is functional.
Take coffee and milk tea as examples. Caffeine in coffee is addictive, sugar in milk tea is addictive, and both are somewhat addictive. But why does milk tea need to constantly update its own menu, keep doing product innovation to attract customers, and the menu of coffee has not changed much in the world? "The reason is that coffee is more addictive, milk tea is a liquid dessert, and desserts need to constantly innovate products." From the scene of the intake of the two products, it can be perceived that their underlying attributes are different. He explained.
Zhang Lei believes: "The popularity of the industry and the growth potential of a company can probably be arranged in this order: functionality is the worst, there are social attributes and spiritual attributes in the center, addiction is the best, and then the track within each attribute can be further subdivided and sorted." ”
After the "potential" thinking, "people" is the most critical factor. In investment, Zhang Lei attaches great importance to character, which is his investment red line.
"The ultimate question investors need to think about is, what do I want from my investment? For me, what I want is not a list of beautiful investment firms, what I want is lifelong friends. Therefore, I will be very careful in choosing friends and will not make friends with people with bad character. Zhang Lei said.
Projecting character into investment reflects Zhang Lei's long-term values. He believes that investors should be very sensitive and cannot be nervous, otherwise they will ignore a lot of details of the character examination and spend a lot of time to communicate. "Every time I meet the founder, I have to communicate in depth for a long time, often for about 5 hours."
Of course, Zhang Lei's team also has a set of mechanisms for evaluating founders, such as brainpower, mental strength, influence, etc., but he believes that evaluators need to distinguish between two dimensions, one is static and the other is dynamic.
"When I meet a founder, it is impossible to take a form in my hand to score him, the judgment of people is a very subjective thing, which tests your comprehensive ability, it is difficult to summarize into a set of blunt methodology, this set of mechanisms for evaluating founders is by no means static, because people will grow or get lost, things are ever-changing, and things are made by people." 」 Zhang Lei said.
Of course, to find the best people, investors themselves also need to be of good character.
In April this year, in the latest round of financing of Yuanqi Forest, Warburg Pincus Investment was the largest new investor. This project is competed for by many investors, which can be described as "one vote is difficult to find". Zhang Lei believes that sincerity is one of the important factors that impressed Tang Binsen (founder of Yuanqi Forest).
"Tang Binsen is a game background, the essence of the game is human nature, so he is very understanding of human nature, some people pretend to be sincere, or the purpose is very strong, he can see it at a glance." Zhang Lei said.
Everything returns to the first principle, returns to the underlying logic, and constantly tries and iterates on the methodology, which may be Zhang Lei's unique way to success.