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in music site Spotify, crowdsourced car-navigation aid Waze and waterproofing tech outfit HzO. One of the coolest things about him and his team is that they have this idea of where they think the world is going, says Spotify CEO Daniel Ek, who at age 29 is young enough to be Lis grandson. From the moment he made the investment, he made sure that Spotify was in his car. This was 2009, before Spotify was a mobile app. He was like, When are we going to be in all the other cars? For him it was this given thing that Spotify will be everywhere. He doesnt see the limitations of technology. He sees where the world should be. With its deep ties in Asia, Horizons is also a magnet for young companies looking for help in cracking the market in China, now the worlds secondlargest economy. I knew about them from their investments in Facebook and Skype, not anything else, says Noam Bardin, CEO of Waze, an Israel-U.S. outfit that received a combined $30 million from Horizons and Kleiner Perkins last year. Quickly, he came to appreciate Lis global view, speedy decision making and powerful Asian Rolodex. They are entrenched in China, adds Yahal Zilka, cofounder of Israels Magma Ventures, Wazes original funder, who says Horizons helps them navigate the Chinese culture and reach potential partners. He has since coinvested with Li on two other Israeli tech startups. Lis brilliance isnt just who he invests inits how. The billionaire has adroitly stepped in to fill the widening gap in the U.S. between projects that are likely to be funded by angel investors and those that are likely to be backed at the next stage, a chasm that Norman Winarsky, a vice president of SRI International, the onetime Stanford University affiliate that helped create Siri, terms a valley of death. Li Ka-shing stays in the whole game, says Winarsky, who profited alongside Li when Apple bought Siri. He is more than a gap-filler. He believes in technology that is disruptive. These disruptive startups help make his larger holdings more cutting edge. Making a business from these investments is secondary, Li says of his Web portfolio. It is more important that we are learning so much. For example, Lis mobile phone interface designer, INQ, got early access to Skype, Facebook and Spotify-ready phones. Of late Li has become particularly fascinated by the sweeping potential of artificial intelligence across all his businesses. In addition to his $7.5 million investment in Siri, the now ubiquitous iPhone virtual assistant, he gave $300,000 last December to a startup that uses AI in its summarization search engine, Summly, run by a 16-year-old. One of the biggest AI impacts, he believes, will come in education, where customized learning will become closely knitted to individual devices. AI has reached an inflection point, he says. Combined with the high-speed mobile network, disruption in several industries will be unavoidable. To understand Lis consistent passion for education, its instructive to review Lis early life, a life story as well known in the worldwide Chinese diaspora as Lincolns rail-splitting days are here. (Shanghai Book City, the citys biggest bookstore, carries ten different unauthorized books on Li and his investment strategies.) Born in Chaozhou in Chinas Guangdong Province in 1928, Li and his family had to flee during the Sino-Japanese war. When I was in elementary school the Japanese dropped bombs on Chaozhou, he recalls. They settled in nearby Hong Kong. Not long after their arrival Lis father, who had been a primary school principal in China, died from tuberculosis. The most terrible experience during my childhood, recalls Li. I, too, was infected. The burden of poverty and this bitter taste of helplessness and isolation sort of branded on my heart forever the questions that still drive me. Is it possible
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to reshape ones destiny? Is it possible to minimize challenges through lessening complexities? And is it possible to enhance chances for success through meticulous planning? Li had to seek these answers and teach himself without the benefit of formal education. At age 12 he quit school and started as an apprentice in a watchstrap factory. By 14 he was working full-time in a plastics trading company to help support his family. In 1950 Li quit to start his own business making plastic toys and everyday items. He retooled his factory to focus on plastic flowers after learning about their popularity in Italy from trade journals, figuring they offered him better business prospects. He named his first company Cheung Kong, after the great Yangtze River, whose power comes from a confluence of countless smaller streams. With profits from plastics, Li began buying up apartment buildings and factories throughout the city during the 1960s, a period of intense social unrest marked with Maoist-tinged riots and bombings, and reaped huge returns when the market recovered. In 1979 he became the first Chinese to buy a controlling stake in one of the old British trading houses, then struggling Hutchison Whampoa. In 1987, the year he appeared on our firstever global billionaires ranking, Li and affiliates paid $500 million for about half of Canadas moneylosing Husky Oil; it has been through restructurings and mergers, but he still personally has a stake worth over $8 billion. Thriving from large investments in booming China, he has scooped up more profits from its real estate and spending boom. His net worth is $25.5 billion, down slightly in the past year but easily outperforming the Hong Kong stock market and enough for him to move back into the top ten worldwide for the first time since 2007. One of the great empire builders of our time, Li continues to push into new territories around the world. In 2010 Lis Cheung Kong made its biggest acquisition, picking up U.K. Power Networks for $9.1 billion; it now supplies power to approximately 8 million Brits. Less than a year later it bought Northumbrian Water, which supplies clean drinking water to 4.5 million people in England and sewerage services to another 2.7 million. Hutchison Whampoa, one of Europes largest mobile carriers, paid $1.7 billion in February to acquire the third-biggest mobile phone operator in Austria. Businesspeople in general shouldnt have an overly narrow view of their industry, he says, explaining his interest in Europe at a time when others see a cloudy future. Rather, they need a 360-degree perspective and to look at everything from all possible angles. Thats in part why even now Li tries daily to read books about science, economics, politics and philosophy. In February he was deep into a history about an influential political leader during Chinas Ming dynasty, Zhang Juzheng. I know how to find peace within my heart and soul, he says. If I have a rare vacation, I will spend it reading. His curiosity about the world and openness to it is summed up in the spirit of a Chinese-style calligraphy painting behind his desk. Set your goals high; make friends with different kinds of people; enjoy simple pleasures. Stand on high ground; sit on level ground; walk on expansive ground. All this action with his core business explains why Li treats his Western tech investments like a high-stakes hobby. True to that spirit, Li wont personally make any money from Facebook or any of these other scores. He invests his own money through Horizons. If an investment fizzles, he takes the loss himself. If it pans out, he transfers the shares or proceeds into his Li Ka Shing Foundation, which he calls his third son, after his two real-life ones.
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The foundation has donated more than $1.6 billion to date; its total assets are $8.3 billion. Unsurprisingly, especially after you spend a lot of time talking with him, a lot of the money has gone to education. He has given $690 million to create Shantou University, named after his hometown. In February the university and Li Ka Shing Foundation sponsored the Prometheus Project that brought 100 high school students together with mentors from the best U.S. colleges to talk about biomedical research. On the other side of the world, in California, he donated $40 million to the University of California, Berkeley for a new biomedical research facility named after him that opened in October. (Medical research is another field close to his heart. Not only did his father die too young, a heart attack killed his wife of 27 years in 1990 at age 56; he never remarried.) His rock star status transcends the Pacific: A throng of 300 gathered outside the Berkeley chancellors house during a thank-you lunch, hoping to meet him. For all this emphasis on formal education, Lis golfing partner and fellow Hong Kong real estate billionaire Henry Fong Yun Wah, 87, maintains that merely listening to Lis thoughts about business reminds one of the Chinese expression: Listening to enlightening words is better than studying for ten years. Yet some of the fervor that once compelled Hong Kong stock investors to stand in the street by the thousands to wait in line for shares in Li-connected IPOs has cooled. Spinoffs from his conglomerate companies have disappointed lately, including Lis first Internet public offering, Tom Group, whose stock price has lost more than 90% of its value since it went public in Hong Kong in 2000. (Li maintains that the lessons from Tom awakened him to the mobile technology revolution that he has since profited from.) There has also been growing public criticism of Hong Kongs wealth gap in recent years, though Lis large-scale giving helps keep him above that fray. Some people wonder what will happen to his grand empire when he eventually retires. In terms of the public companies he controls, Li has designated his older son, Victor, as the heir apparent. The 48-year-old already serves as deputy chairman and managing director at Cheung Kong and deputy chairman at Hutchison Whampoa. If I were to tell Victor two minutes before I depart that I was going on vacation for two months, I would have confidence that the company would operate as smoothly as normal, he says. I have been teaching him by example how to be a leader since he was a boy. Lis younger, more high-profile son Richard has a stake in a family trust but runs his own telecom empire. He says he follows two of his fathers business lessons. The first is to leave something on the table for the other side in business transactions because that will help to bring deals back to you in the future. The second is a message his father wrote down for him when he was younger: Success is all about planning, study downside risk and execution; ing arrogance leads to failure. For his part, Li senior went out of his way to emphasize to me his confidence about the outlook for his own businesses, and that having a succession plan shouldnt be interpreted to mean he has any immediate plans to retire. I am not saying that I have a timetable for retirementI am very healthy, he says, almost needlessly, right before I leave him. And even if he does retire, he adds, he will remain at his foundation, keeping himself as young as he can by continuing to keep an eye on technology and the future.
Global Outlook Li Ka-shing shares his views on China, Europe, democracy and hard work.
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Forbes: Whats ahead for the global economy? LI: Im definitely concerned about the present state of the global economy. Both the U.S. and Europe are dealing with economic and political issues. Inevitably, all Western countries and even some countries in the East are democracies, with their leaders elected by popular vote. This is what our world values. Any political party that aspires to power as president or prime minister must take into account the will of the people, which means finding the means to provide excellent welfare benefits and shortened working hours. This results in a larger and larger deficit. This will make recovery more difficult and extend the time frame for a full economic recovery. Asia is faring better, but it will also be affected. The coming few years wont be easy, with GDP growth slowing. Yet our group provides products and services for the masses, not luxury products. In the midst of tough times for Europe you made some big investments in the U.K. last year. Why are you optimistic about its economy? Although the U.K. is part of Europe, the British pound remains separate from the euro currency. The British currency is relatively stable. The U.K. has good law and order. I trust that this country has accountability. The U.K. has greater flexibility, which is why I am not as concerned about the U.K. as I am about other European countries. There are a lot of worries about Chinas economy. Whats your take? I believe China can maintain GDP growth of at least 6% to 8%. The increase in wages for laborers outpaced inflation, which contributes to the stability of society. Purchasing power is also strengthening. Every year about 10 million people are moving from rural areas to urban areas for employment. In ten years it will be 100 million. Average wages in urban areas are higher than those in rural areas. I expect wages will continue to rise in double digits in the coming ten years. As for housing, the demand will still be there. Profit from property projects is not astronomical, but we can make a reasonable profit. So those talking about a hard landing are wrong? It will be a soft landing. We will slow our pace of land acquisition in China, but we will continue to buy. What advice would you give a young entrepreneur or young person about how to find success in life? Starting a business is not easy. I started my business in 1950 with only $8,700. It wasnt a lot. You could buy a Cadillac or a Lincoln with it. For a young entrepreneur today, hard work is more important than opportunities. If you dont work hard, opportunities will slip away. With reporting by Steven Bertoni and Luisa Kroll.
Billionaires 25th Anniversary Timeline Click here to see how weve been tracking the worlds wealthiest people since 1987.
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