​1. What leads Everest's journey? 

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Picture this: 2011, me, a 22-year-old young student in an empty classroom, watching Prof. Robert Shiller's “Financial Markets” Yale open course. That's how I first “met” David Swensen, who was a guest speaker in the lecture.

 

Fast forward to post-graduation, and I dove headfirst into an investment career. After almost seven years of navigating the asset management industry, I've discovered a strong passion for long-term, fundamental-driven investments—my treasure hunt for the next big ideas.

 

But here's the twist: I've also seen the “scale-first” mentality, the 'follow-the-herd' indexing, and the 'short-term' sprint that's particularly rampant in China. It's like everyone's talking about a marathon but is only training for a sprint. Many funds claim that they put investors first and that they are long-term, but their incentive structures often lead to the opposite. It's like they're more focused on filling their own piggy banks with fee income rather than achieving long-term returns for the investors. The interests between LPs and GPs are misaligned. 

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Then, I stumbled upon David Swensen's book, “Pioneering Portfolio Management: An unconventional approach to institutional investment”. It was David's teachings that made me realize the importance of aligning interests with LPs. It's like finding a dance partner who not only shares your rhythm but also your love for the tango. And so, with a spirit of adventure, I embarked on a quest to solve these problems, which led to the birth of Everest Growth Capital.

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2. What does the fund's name mean?

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"Everest Growth Capital". Three simple words: First, "Everest" has two meanings: it refers to Mt. Everest, the peak of peaks and a symbol of my lofty aspirations. Plus, I love mountain trekking, and my start-up epiphany hit me at the Everest Base Camp in Nepal, so it's personal. Next, "Growth" means my focus on growth companies with value investing philosophy. Lastly, "Capital" means the endeavor of compounding capital. 

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3. When was Everest founded? 

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Everest was incorporated in the Cayman Islands on 17th Aug 2021. 

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4. What's the investment strategy?

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The strategy is anchored to three simple principles: 1/ Growth Investing: Everest uses value investing approach on growing businesses; 2/ High Concentration: Everest selectively invests in up to 10 companies. The largest holding currently commands around half of the portfolio. This approach might seem to diverge from the conventional wisdom of diversification, and many LPs may view it as riskier. I disagree. I believe a concentrated approach can actually reduce risk, provided that it increases both the rigor with which Everest analyzes a business and a deep conviction in the economic strengths of the companies I choose to invest alongside. 3/ Long-Term Perspective: thinking like a long-term business owners sets us apart from the short-sighted 'stock renters' prevalent in China. This perspective is not just a strategy; it's a competitive edge that I believe is pivotal for sustainable success. 

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5. How is Everest designed? 

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The ultimate goal of Everest's design is full alignment with investors: firstly, I have my entire net worth invested alongside my shareholders. Secondly, Everest's incentive scheme is very carefully designed by using a budget-based management fee and 3-year performance fee above the 8% fixed hurdle. 

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The importance of incentives is always neglected. In Charlie Munger's speech The Psychology of Human Misjudgment, Charlie reflects on how the power of incentives never disappoints him: "Well, I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther." So incentives are important. 

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Everest's budget-based management fee design is the same as Costco's business model of shared scale economy. Although we are all interested in scale, it must never be done at the expense of Everest's philosophy. Scale must be obtained by better organization design, better investing, emphasis on selling the kind of services I want to buy for myself and my family, having a skin in the game, lower costs, higher operating efficiencies, etc. To put in simpler words, scale should come morally and naturally. For the typical fund managers, they follow a fixed (and mostly are very high) management fee rates and justify it on the basis that they are still "prioritzing" investors' best interests. Unfortunately, this could only lead to a rude awakening in the future. 

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Everest's long-term performance fee design coincides with the fund's long-term lock-up requirement. That makes sure all the investors' attention centers on capital compounding over a long period of time. It then ensures the durability of the capital. We cannot possibly do long-term investing with short-term capital. It's just like building a castle on a sand dune - the faster you build, the quicker it collapses (even when there is mild wind, just like market volatility). Typical hedge funds choose the incentive of charging annual performance fee. However, I believe this incentive design is deeply flawed. This design is definitely good for them - taking money back home every year. But the money taken out should have compounded longer for the investors. Also, by designing a 1-year performance review period, their longest investment horizon is 1-year - at the beginning of each year - may be this is the reason why so many sellsides and buysides like the idea of writing a new year outlook.

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6. How do you approach building Everest?

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We approach it like solving a maze. Normally, people navigate a maze by starting at the beginning and heading towards the end. Most of the time, they get stuck in wrong turns or dead ends. However, we think a different approach: reverse engineering. We start from the end and work backward to the beginning. What does it mean? It means studying what the most elite LPs value in their enduring GP relationships, then meticulously crafting Everest's core philosophies based on those highest standards. Our goal isn't to be everything for everyone; our ambition is to be the best investors for the best LPs. This aligns with Charlie Munger's wisdom: "The safest way to try and get what you want is try to deserve what you want." By starting with the end in mind, the path through the maze becomes clearer - and our odds of reaching the 'cheese' (success) grow exponentially.

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7. How do you approach investing? 

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I grew up in a small town and my grandparents are all farmers. This growth experience gave me solidity. I view investing as farming - I plant seeds then I water them and take care of them. There is an element of nature - either it's a sunny day or it rains. So in investing, we look for opportunities that are under-valued or unrecognized. We do our work and then the environment keeps tossing problems at us, and we have to keep solving them. It's a process. 

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8. Have you made investment mistakes? 

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Yes, of course. Mistakes are inevitable in decision making. I think where we as a group are very good is we're not scared of admitting mistakes, we share and fix them. Our shareholder letters normally started with mistakes - reinforcing humility and margin of safety. So there is ongoing self-assessment about lessons learned and what we should be doing differently. What we try to achieve is reduce mistakes, so that we can get enough of the good things and avoid the bad things. 

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9. What is Everest's competitive advantage? 

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Bill Miller once shared insights with Columbia Business School students about the three key competitive advantages in investing: informational, analytical and behavioral. Informationally, primary sources are important. I've visited major plants of portfolio businesses and even sent interns at one to gain first-hand insights. I love doing diligence in founders’ hometowns (two are hidden in mountains) to assess their integrity. I once discovered a eulogy to an entrepreneur who was pivotal to my portfolio company's founder. Analytically, I commit to reading 500 pages weekly, mostly annual reports. I focus on acquiring knowledge with long shelf life (I recently read reports 50 years ago) and expanding my thinking horizons. Behaviorally, I carefully cultivate habits to enhance focus, such as living in a quiet suburb and checking stock prices only four times a year. Adding to the three advantages, Everest’s unique structure and full alignment with LPs is another tailwind (will be stronger in future). 

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10. Has Everest taken outside capital?

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I secured initial outside capital from three private investors whom I have known for my entire career. The fiduciary duty of stewarding their hard-earned capital represents one of the most significant privileges of my career to date. From inception, I have managed this capital without seeking additional money. It’s important to have and maintain high standards - some LPs were turned down as they didn’t fit. Others didn’t invest in Everest because: 1/ Many have withdrawn from Chinese market after prolonged periods of underperformance; 2/ Some LPs perceive Everest as too small and too un-institutional, preferring larger and more institutionalized firms; 3/ Some view Everest’s concentrated strategy, focusing on 5 to 10 companies, too risky; 4/ Everest’s requirement for a 3-year lock-up is at odds with liquidity preferences of certain investors. 

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11. What kind of LPs is Everest looking for? 

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For future shareholders, I maintain the mindset of only partnering with the right ones with the following qualities: 1/ a long-term mindset: the shareholders must share the long-term mindset with Everest and Everest’s portfolio companies; 2/ a mutual respect for autonomy: autonomy is important for rational investment decision making. Just imagine - the worst thing that can happen to an NBA basketball player is to listen to the crowds when shooting or playing. That will only make the player distracted or nervous. This is the same for me to run Everest as well; 3/ a right value: I am looking for the shareholders who share the value with Everest. I want to work with LPs who have a bigger purpose than simply generating profits. Endowments, foundations and family offices, with meaningful social purposes, are the ideal shareholders that Everest are keen to partner with for the long term.

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12. Is there any outside ownership of Everest? 

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Currently, I am the sole owner of the firm. This will evolve as the firm develops. My vision for the future ownership structure includes two strategic shifts: 1/ Employee empowerment: I plan to distribute ownership to future employees, fostering a culture of shared interests and entrepreneurial spirit. This alignment is essential for nurturing a fiduciary mindset and creativity, which are vital for the firm's enduring success. It's about building a legacy that benefits all stakeholders, not just the founder; 2/ Philanthropic commitment: A portion of the ownership will be dedicated to a philanthropic foundation, focusing on critical social initiatives, such as the education of children in rural areas whose parents work in urban centers. This foundation will be funded by the firm's retained earnings, ensuring that my work not only delivers financial returns but also contributes meaningfully to society. 

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13. What's Everest long-term development plan? 

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My approach is to invest for 3 or more years to lay the foundation, such as honing value investing skills, improving the investment process and building the track record. Then, I start developing around this foundation. At present, Everest Growth Capital operates as a solo endeavor. However, I am constantly seeking partners who share my passion and embrace Everest's philosophy. The search for a compatible partner mirrors the quest for a lifelong spouse—ideal in its singularity. I am patient in this pursuit, echoing the ancient Chinese wisdom that a true confidant is a rare gem (知音难觅). I have been fortunate to collaborate closely with an exceptional intern called Zhouzhou Cui for the past 2+ years. I have also worked with a few investors with great potential during their internship in Everest. It is my goal to naturally develop Everest by identifying individuals whom I both admire and trust.  

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Everest's long-term aspiration is to become a valuable fund that will continue to develop the best long-term results, make positive impacts and prosper beyond myself. The key is to adopting an open ecosystem mindset. Even though Everest is a one-man-fund now - just like one mountain, its future will be a chain of mountain ranges. How? Everest will develop new talents and incubate new ideas. For example, if there is a new fund's idea that is worth having a try. After careful thoughts, other Everest teammates can lead the new fund. Everest will not only seed it with long-term capital, but also be a shareholder of the new fund. Since a part of Everest's future ownership will be distributed to employees, Everest's employees will also be a shareholder of this new fund, incentivizing them to contribute to the success of the new fund. Unfortunately, the vast majority of the hedge funds have a very closed system, just like a fortress with high walls. Most of the decision making and economics are controlled by the founder. When the founder retires, the fund also disappears. I believe the outcome can be avoided with the right organization design that must be an open, evolving and growing one. ​​​

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14. Why is Everest still invested in China? ​​​​

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Investing in China is our commitment to our shareholders. This is what they expect us to continue doing in both good and tough times. Otherwise, it's like a Chinese restaurant that secretly replaces the Chinese dishes with spaghetti or paella. It's not hard to imagine the reactions from the customers who'll feel cheated. Of course, this is not good. 

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Also, Everest believes staying focused on China is the right thing to do. We were born and raised here, so this region is within our circle of competence, and this is some of the biggest market inefficiency opportunities reside. Indeed, the past several years have been the most challenging period. ​​The market went into turmoil in the past 3 years after having an incredible run. It’s in this typical environment - when the market is moving up and down and there’s panic in the streets and in the papers - that presents opportunities for long-term investors.

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My investing experience over the past 10+ years teaches me that if you rush in a good time, you will pay a very high price, and you will always lose money. Most investors lost their money in the 2016 and 2020 bubbles. However, when everyone is running for the gate, that's not a bad time to start looking for the opportunity to go in as prices are low and expectations are reduced. 

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My optimism on China's long-term prospect comes from the following aspects:  

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First and foremost, I believe that economic conditions are cyclical in nature, so things will get better at some point. Secondly, there are things in China that need to be improved or corrected. However, over the longer term, China is still in good shape. China has the second largest economy, the largest population and the deepest talent pool in the world. China also has the most comprehensive supply chains. The culture of strong work ethics and the entrepreneurial spirit remain quite vibrant. It’s going to take a long time for that to change. Thirdly, one of the things that people don't realize is the huge growth in markets overseas. Everest's companies have stepped up their globalization efforts. I view global markets as a very wide pool of opportunities. If we refer to the golden days of the US, Japanese and Korean companies, they rapidly went global in the 1990’s. Now Chinese companies are following exactly the same path. In this process, I believe many great Chinese businesses will emerge as global champions, just like what Samsung, LG, Uniqlo, Nitendo and Sony have achieved.  ​​​

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(Last update in Mar 2025)