Tan, Cong

Years of collaboration have given me deep insights into Tan, CONG's character. He is not one to conform to existing norms; instead, he consistently engages in independent thinking from first principles. When he identifies a problem, he actively seeks to address it. Our entrepreneurial journey is a prime example of this. CONG recognized several issues with the traditional institutional investment approach in China:

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First, compared to more mature markets, the Chinese stock market is still underdeveloped. Many methods of making money in stocks that are widely adopted take advantage of market inefficiencies, which often exacerbate value distortions rather than serving the market's value discovery function.

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Second, the industry is plagued by agency risk, especially in the public fund sector. Public fund companies primarily earn revenue from management fees, which are more closely tied to the scale of assets under management than to investment performance. This misalignment between the interests of fund managers and investors often leads to a focus on asset growth rather than investment returns.

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Third, even large-scale fund companies face significant challenges related to the diseconomies of scale in active investment. Companies either adopt a multi-researcher, multi-manager model that leads to communication losses and noise as the organization grows or rely heavily on a few key decision-makers who face bottlenecks.

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To address these issues, CONG founded a company with a new organizational model designed to reduce the inefficiencies of traditional investment approaches, emphasizing value investing and returning to the fundamental purpose of financial markets—value discovery. In a market where many institutions are content with domestic investments, CONG's focus on global opportunities sets him apart. Additionally, he has aligned the incentives of the team and investors to avoid the situation where the company profits while investors lose money. CONG initiated these changes, hoping to ultimately have a positive impact on the industry. When these ideas began to take shape and were implemented over three years ago, the industry was in a state of high volatility, with short-term temptations everywhere. CONG's approach was unconventional, but he firmly believed that these changes were valuable, beneficial, and effective for all parties in the long run.

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CONG's second key trait is his resilience and inner strength. He never gives up once he sets his sights on a goal. The immense challenges we faced in the early stages of our startup are a testament to this. We began our venture at a turning point of a 30-year paradigm shift, where previously effective investment and pricing strategies started to fail. It took us some time to realize this, including issues related to demographic shifts, government debt, local finance, and government influence on the market. Before we fully understood these factors, our investment products experienced significant drawdowns during 2021 -2022. Particularly in the first year of losses, while many of our competitors focused on A-shares made significant profits by investing in the new energy sector, we faced a near-deadly start. For a new company, this typically leads to the loss of early clients, difficulty in acquiring new ones, team doubts, and key personnel departures. The founder himself may face tremendous psychological pressure, doubt the original investment philosophy and methods, lose confidence, and hastily adjust portfolios to cater to market preferences, leading to even worse performance in a vicious cycle.

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However, we managed to weather this difficult period. Throughout the process, our core clients chose to stand by us, the core team remained stable, our investment framework improved, and team collaboration strengthened. Having gone through these hardships, the entire team now has a stronger sense of identity and confidence in the future. CONG was the key force in leading BEDROCK through this turnaround. He continued to believe in the foundational principles and methods, knowing they only needed refinement. He led the team in reflecting on the issues within our investment framework and working together to improve our methods. Whenever the investment results did not align with expectations, CONG emphasized the importance of not simply adjusting the outcomes, as doing so might obscure the underlying issues. Instead, we focused on optimizing our methods for future consistency. CONG was also transparent and proactive in communicating with clients, explaining where the problems lay, how we were addressing them, and allowing clients to see our efforts and progress. With the team, he ensured that we maintained a transparent and attractive incentive structure, which helped us navigate through the challenging times without significant operational disruptions. Particularly during the most difficult years of 2021-2022, one of which coincided with our being based in Shanghai under strict lockdown for several months, CONG not only led us through work challenges but also organized virtual exercise sessions, learned to cook 400 dishes, and baked cakes to send birthday wishes to team members celebrating during the lockdown.

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Lastly, CONG is exceptionally systematic in his work. He developed an investment framework and a unified research approach that ensures our team operates with a shared understanding when analyzing companies and industries. This includes standardized investment frameworks, tracking systems, and formats, making the investment process transparent, efficient, and easy to maintain and refine. Historical research findings can be preserved and easily integrated into new work, even when roles or personnel change. Moreover, because all work is built within this system and uses a unified language, each team member can easily and clearly understand the work of others. Research results across different industries and companies can be easily compared both vertically and horizontally. Our company trains all its investment research members from scratch, but with this clear framework, process and database, new analysts can often integrate into the team within a few months, achieving a level of expertise that many analysts with multiple years of experience struggle to reach.

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Tracy (COO, Partner)

2024/8/23