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Zuo Hui, founder of Beike, on being an onlooker in the organization

Written by Liuyan Feiyu Published on     10 mins read

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A visionary leader, Zuo has built and developed Beike to be the golden standard in the housing transaction and service industry in China.

This article was originally written by Liuyan Feiyu (Wechat ID: liufeinotes) , a Chinese WeChat public account. Translated and adapted by Ellen Tay. 

Beike founder Zuo Hui passed away on 20 May 2021 at the age of 50. 

Zuo Hui founded Lianjia, a Chinese real-estate brokerage company in 2001. The company provides sales and marketing of both new and secondary market homes, rental, and other advisory services through its network across more than 140 cities across the country.  Lianjia’s list of investors includes several top-tier venture firms including Hillhouse Capital, Baidu, Tencent, Source Code Capital, and Sunac China Holdings. The company listed on the NYSE as KE Holdings Inc. (“Beike”)  (NYSE: BEKE) in Aug 2020. Under Zuo’s leadership, Beike has since grown to be the leading integrated online and offline platform for housing transactions and services in China.

In an interview with Li Xiang, chief editor at de dao APP, Zuo talks about his leadership style, his view on competition, and his stance on choosing the right, but difficult path.

01 Cultivating self-awareness

Zuo Hui does not like to talk about his competitors; in fact, he feels that a competitive mentality  is a form of inefficiency :

If you want to win, you can either focus on self-improvement or focus on making your competitors weaker. Those who choose to focus on making their competitors weaker rarely succeed. Most of the time, people think inefficiently, and they are oblivious to it.

Back in September 2020, when e-commerce giant Alibaba launched its online property platform, Tianmao Haofang , with great fanfare, Li asked Zuo if he was concerned about the competition.

Zuo Hui (ZH): We do not have a competitor. 

Li Xiang (LX): Not even Alibaba?

ZH: First they need to build up the platform’s credibility and ensure the accuracy of all the listings. I am more interested in what he has done and not what he will do. 

Zuo’s focus has always been on creating value for his users and his business. He rarely concerns himself with his competitor or frets about hitting financial metrics. Zuo prefers to channel his energy to brainstorm solutions that can add value by solving both user and organizational problems.

Zuo himself sums up his business philosophy :

Most people often make wrong judgements on crucial matters. They simply care too much about other people’s business. For us, it is always about who we are, and what we can do

Many organizations misinterpreted business as competition and going to war. This is why we have outrageous TV drama tropes playing out in real life—chairman of a company sneaking into competitor’s company to take photos, partner trying to poison the company’s founder. These organizations and employees have lost their sense of self-awareness and neglect the needs of their users and business.

Zuo is not bothered by the fluctuation in the share price of his company, in fact, he views the fluctuations as a result of the irrational behavior of investors. By cultivating a sense of self-awareness and focusing on what he can do for his business, Zuo has built up a strong understanding of the true value of his company.

LX: There was a brief period where competition in the market was so stiff that it was hard to predict who would be the winner. But, all of a sudden, it became clear that Lianjia has emerged as the industry leader.  

ZH: Perhaps this is how everyone views Lianjia’s growth, but I honestly do not feel so. When we are performing at ten, people think that we are performing at one. Now that we are at 100, people think we are at 1,000. We often discuss this internally and conclude that others have overestimated us. 

While it is essential to prioritize users and products over competitors, this is not to say that an organization should completely neglect its competing space. A fair assessment of the competitive landscape can bring about healthy competition that spurs productivity and innovation in an organization.

02  Focusing on the essence of the problem

Zuo enjoys applying both macro and microlens to problem-solving. While it seems to be looking at a problem from two different perspectives, Zuo is actually focusing on the essence of a problem.

Zuo’s expansion into the real estate business has been part of his plan since the very beginning.

LX: Your first business was an insurance company, and your second a real estate company. What do these two industries have in common?

ZH: The commonality is that both insurance and real estate markets are huge and addressable markets. I was inspired by a book that I read in the past that mentions that the amount of effort it takes to complete a small task and a big task is about the same. Back then, I thought to myself, if this is the case, I choose to build businesses that can impact many.  

The decision to focus on “small task” or “big task” depends on an individual’s concept of value fulfillment. For example, if a product manager is determined to build a product that has a global impact, he needs to focus on accomplishing “big tasks”. A product manager who finds fulfillment in building a product that values design and details can choose to focus on accomplishing “small tasks.” Both product managers will be able to achieve success in their own rights. But one should not expect a small and beautiful product to have WeChat-level impacts that influence hundreds of millions of users.

As for whether the directives by the Chinese government and general public opinions will affect KE Holdings’ business, Zuo offers his take on the issue.

LX: We have seen this year that many online platforms have encountered a backlash from the general public and the government. How does this affect KE Holdings?

ZH: KE Holdings will inevitably face public scrutiny. However, we are very aware of the fundamental values that KE Holding’s growth is built upon. We have created an online real estate platform that is fair and transparent, and most importantly, discourages speculation. Our mission is to create stability in property and rental prices. Our values and mission are aligned with the directives of the government and the wants of the public. In this sense, we can accomplish many things through our platform.

Identifying the core issue is a valuable tactic that can be applied in many areas. For example, after the official media started publishing articles that appear to be criticizing group buying, many thought that the government would clamp down on the industry. This has even led to several companies pulling out from the market.

At its core, group buy solves the problem of supply chain inefficiency. From this perspective, improving supply chain efficiency is closely related to the national economy and people’s livelihood. Once the efficiency and cost along the supply chain are optimized, it will help solve poverty in many rural areas and improve the overall quality of agricultural products. The end result is in fact aligned with the goals of the government.

Furthermore, the negative impact on consumers brought about by the malicious competition between group buy, supermarkets, and vegetable market is another key concern of the government. To resolve this, the government issued guidelines to call for more price and quality control. The directive by the government did not deny the value group buy has brought to the overall supply chain, and the industry continues to flourish.

03 Focus on the specific issues, and not the form

The media likes to promote the idea of the “critical stage,” the PR department of companies enjoys glorifying the company’s history, adding in elements to make the story more compelling and legendary to the audience. Zuo is not fond of such formalities; he feels that an organization follows linear growth.

LX: I remember you mentioning to me that your company’s internal strategy pivots every three years. In 2007, it was to build a comprehensive real estate database. In 2011, it was to verify the accuracy of real estate data. In 2014, it was to establish the foundation for a national expansion, and in 2017, it was to bring the business online. 

ZH: This is all retrospective. . We didn’t deliberately plan to have a three-year timeline for each project. Looking back, a three-cycle seems logical, every milestone that we have accomplished involves a process, but the time taken is not intentional.

Over-dramatizing key events and momentous moments can mislead readers to believe that achieving success involves taking a large amount of risk or cutting corners. Inspirational stories can be dangerous when misconstrued by readers. Zuo feels that the education system is to be blamed for such a mindset.

I recently read The Cambridge History of China, and it suddenly dawned on me that the way history is taught in school overemphasizes key historical events without providing students with much context about the lead-up to the events. Often, when reporters ask me to describe any critical or pivotal moments that have influenced the company’s growth, I do not have a reply as I believe that an organization’s growth is linear.  

Zuo’s dislike for formalities and buzzwords also reflects his emphasis on focusing on the essence of the issue.

LX: Amazon has a “No PowerPoint” rule during a meeting. Does KE Holding have any similar rule?

ZH: I believe these are all formalities. We use PowerPoint during meetings, but each slide has very few words. The presenter still needs to be able to communicate his thoughts articulately to the audience.  

As for the media’s constant pitting of offline and online businesses against each other, Zuo offers his personal view :

LX: When Pony Ma from Tencent invested in Lianjia, he commented that the business is an offline traditional intermediary model that defeated the online model. When interviewed by reporters later, you said that this is not the case. 

ZH: Yes, I believe it is pointless to discuss if the offline business model has defeated the online business model or vice versa. Any industry needs a robust offline and online business network. However, I feel that it is easier for an online business to leverage the capabilities of an offline business than the other way round. 

Zuo also has a unique interpretation of the term “operating system” and “infrastructure,” buzzwords that Alibaba frequently uses.

LX: You frequently talk about “operating systems” and “infrastructure” in your interviews. This is also something that is frequently talked about by Alibaba.

ZH: Both companies are part of the modern-day business revolution. Traditional industries have yet to find their footing but face immense pressure from e-commerce, Artificial Intelligence, mobile internet, etc. New businesses are constantly being created in this era. This is true for the past 20 years and will continue to be the same for the next 20 years. New businesses allow you to make fundamental changes that can reshape the industry. “Operating system” and “infrastructure” are merely interchangeable words that don’t carry much meaning.

The above snippets are examples of how Zuo tries to distill the logic behind each concept to its very essence. In the past, internet companies have a flatter hierarchy structure and are more agile in their execution compared to state-owned enterprises and foreign companies. However, as internet companies expand, some are gradually starting to adopt the culture of state-owned enterprises, resulting in inefficiency and deviating further from identifying problems and solving them.

Zuo is a firm believer in the value that can be created from solving problems.

In Beijing and Shanghai, we have around 2.5 million housing units that do not have an elevator. The average age of these buildings is more than 30 years old. These old buildings have structural issues that prevent us from installing a standard elevator. To solve this problem, we have an elevator factory that specializes in shallow-pit elevators for older buildings. 

Zuo also has an explanation for spending on online advertisement even though traffic to Beike’s platform comes from offline.

ZH: We are not bothered about the volume of traffic to our platform, but everyone else does. Even though we do not care about advertising, everyone else cares. 

LX: Advertising becomes more of an assurance to the companies who choose to list their properties on Beike.

ZH: Yes, that is right. We want to give them a sense of confidence, which was crucial then. 

In 2008, Zuo engaged IBM as an external consultant to solve specific business challenges. Once again, Zuo offers a realistic explanation for his decision.

ZH: We have been in touch with IBM since 2007 and officially engaged their services in 2008. The profits we made for that year went towards paying for their services

LX: Most companies believe that they can solve their problems internally. 

ZH: We admit that we needed help. Even though it did not seem like IBM provided much help, we gained more from poaching their talents. 

04 The mentality of an onlooker

Unlike those aggressive and domineering leaders, Zuo describes himself more as a neutral onlooker who is able to view his relationship with the company objectively. He has appointed professionals to run the companies he had founded and is not heavily involved in the daily operations or decision-making.

My role in the organization is a neutral onlooker. I am not willing to impose my will on the organization. However, I am insistent about certain matters. But if everyone is not on board with my idea, so be it.  

This mentality could be the very reason why Zuo is able to make rational and objective decisions.

The Chinese real estate brokerage industry has lost one of its brightest, visionary leaders. Zuo’s contribution to the healthy development of the industry in the past decade is undeniable, from providing customers with access to reliable real estate databases, polishing the professional image of realtors, and establishing the ACN network (broker cooperation network). Zuo has brought about much-needed disruption to the industry, and his legacy will live on through Beike.

WRITTEN BY

Liuyan Feiyu

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