1. Do the right thing, do things right
To walk the great path, I understand it as the core of Duan Yongping's investment and business philosophy. Duan Yongping's explanation of the path is: doing the right thing. This sentence has a second part, called 'doing things right.'
Duan Yongping said that doing the right thing can be understood as not doing the wrong thing. It can also be understood as quickly correcting oneself upon realizing a mistake, 'no matter the cost, it is the smallest cost.'
Duan Yongping's original words were: 'What is doing the right thing? Is there really anyone who knowingly does the wrong thing? Just look around at how many people smoke and you will understand. Why do people still do things they know are wrong? Because wrong things often have short-term temptations.'
In fact, people often know what the wrong things are; as long as they stop doing the wrong things, they are one step closer to doing the right things. Therefore, doing the right things actually means stopping the wrong things immediately when they are discovered, 'no matter how high the cost, it's the smallest cost.'
Duan Yongping said: 'Diligence and talent are not that important; doing the right thing is the most important.'
On one hand, diligence and talent are more like given conditions; diligence may stem from character, while talent comes more from genes. However, 'doing the right thing' is indeed something that people can choose for themselves.
On the other hand, we have indeed seen some exceptionally intelligent people merely squandering their time, or even getting themselves into trouble because of their intelligence. As Munger said: 'Smart people think they have stronger abilities and better methods, so they often find themselves on a more difficult path.'
2. Making fewer mistakes and not having a negative list
Duan Yongping said that managing a business is like investing; making fewer mistakes is important.
Duan Yongping once asked Buffett what should not be done in investing. Buffett's answer was: don't short, don't borrow money, don't do things you don't understand—don't touch what you don't understand.
Duan Yongping said: 'As long as you always adhere to the attitude of not understanding and not doing, you will make fewer mistakes. Over time, your results will naturally be much better than if you do things without understanding. This falls into the category of doing the right thing.'
Running a company is the same: 'The secret to running a good company is not what to do, but what not to do. Good companies always have a long stop doing list.'
For example, BBK emphasized from the beginning not to do OEM. The reason is, 'In the long run, we want to build our own brand and need to invest all our resources into our own products. There are very professional companies doing OEM; they have specialized methods to meet the different requirements of different customers, and we simply don't have the energy to do these things. In the long run, we would lose to those professional OEM companies. Since we know we can't compete with others in the long run, we simply won't do it.'
Many years ago, a Walmart supplier approached him, saying they wanted to place an order for 1 million VCDs. Duan Yongping directly refused on the phone. The other party asked, 'Aren't you going to negotiate the price?' Duan Yongping replied: 'No, I refuse regardless of the price; you won't give me a good price anyway, so discussing it is just wasting time.'
For example, when sourcing from BBK, regardless of the size of the distributor, it is a fixed price, no bargaining. The reason is, 'When I first arrived in Guangdong, I found that people talked about prices over and over when doing business. At that time, I thought, if we could avoid discussing prices, we could save at least 70% to 80% of the time.' In another place, he said that at that time he had to eat eight meals a day and take many saunas, mainly to discuss prices. Fixed prices eliminated all these troubles.
The rest of the negative list: no credit sales, no delayed loans, no late salary payments, no dishonest acts, no attacking competitors…
3. Being responsible and having an ordinary mind
Duan Yongping himself said that people often ask him about the success secrets of BBK and the later BBK group of companies, 'What people often say: advertising, employee stock sharing, distributor shares, dense network points, offline channels, etc., are all wrong! Our secret is actually: being responsible + having an ordinary mind.'
What is being responsible? Duan Yongping said that being responsible means 'doing the right thing and doing things right.'
In another place, he said: 'Being responsible probably means doing what you should do, being who you should be.'
One can also understand the concept of being responsible from a reverse perspective: 'To understand what being responsible is, one also needs to look at what is irresponsible. For example, paying back debts (including interest) is being responsible, not paying back is not.'
Regarding having an ordinary mind, Duan Yongping explained: 'An ordinary mind is actually the ability to eliminate all external disturbances at any time, especially when there are temptations, and return to the essence of things (the original point), discerning right from wrong, and knowing what the right things are.'
Ordinary people find it hard to have an ordinary mind. Therefore, an ordinary mind is actually an extraordinary mind. 'If you are not concerned with the essence of things, it is normal not to have an ordinary mind. There is no way to have an ordinary mind on the wrong path.' (The corresponding saying is that common sense is not common.)
Ultimately, it comes back to doing the right thing.
Someone asked Duan Yongping about the company's accounts receivable issue, and Duan Yongping's response was: 'It seems we really don't have much trouble collecting money. We have a relatively ordinary mindset; we don't do businesses that can't collect money, no matter how good they sound.'
4. Maintain integrity without being extraordinary
There is a joke about venture capital: 'The projects that made me the most money were those that I did nothing and found very boring; whereas my worst projects were those that made me jump around every day, feeling very important, as if the world would stop turning without me.'
Duan Yongping said: 'Many so-called capable people are actually just doing what they are supposed to do honestly. It's hard to see their capabilities when looking at each individual thing.'
'Ordinary people persistently try to do the right thing, and decades later they have the chance to achieve greatness.'
So, it still comes back to being responsible, doing the right thing. 'Do complex things simply, repeat simple things.'
5. Everyone will eventually become the person they want to be
Duan Yongping said that this sentence was told to him by a lawyer. Many years ago, he was very angry about something and hired a lawyer, planning to sue the other party to teach them a lesson. After hearing his thoughts, the lawyer said, as a lawyer, he was certainly happy to have business come to him, but 'people never learn; it's very difficult to achieve the purpose of teaching the other party a lesson, but you will spend money and effort on something that cannot be achieved, are you still willing to do it?'
Duan Yongping said he immediately dismissed that idea and instead entrusted the purpose of teaching the other party a lesson to 'bad people have bad people to grind against them.'
Including him saying he doesn't short stocks. One reason is that shorting has to face the market's craziness; even if you are right, you may not sleep well due to the market's madness and even lose money. (Whether one can sleep well is very important to Duan Yongping. Many times he refers to whether to do or not do something based on whether he can sleep well.)
Another reason is to simply avoid things you don't like. 'Just avoid companies you don't like, and definitely don't short them... There are many things in the world you don't understand; why make things difficult for yourself?'
As for how humans dislike learning, he said: 'People generally find it hard to open themselves up to learn from others, even when the other party is doing very well; they always find an excuse not to learn from them, which is quite interesting.'
'No matter what I say, they always say but, just not listening to what I actually said. This self-righteous attitude makes it hard to make progress.' (I will never say 'but' anymore.)
6. Try to live this life well
Duan Yongping's advice to try to live a good life is something ordinary people can fully adopt.
He said: 'To try to live this life well means to try to avoid people and things you don't like, and to do the things you like. The result should have a higher probability of being happy than average.'
In his two discussions at Zhejiang University, he mentioned that the three most important pieces of advice are: do the right thing, do things right; have no grand aspirations, and do things steadily; be a righteous person.
He said: 'I don't know what rewards come from being a righteous person, but at least it allows one to live life with peace of mind.'
As for money and financial freedom: 'Not doing things you don't want to do for money actually means you already have financial freedom.'
Regarding life, from a positive angle, 'do what you like to do, with a pursuit above a little profit'; from a negative angle, 'don't touch what you don't understand, don't be greedy, and try to look long-term to avoid the vast majority of troubles.'
