Chapter 37 - Robert Kuok, A Memoir
Today’s Chapter is based on the book “Robert Kuok, A Memoir” by Robert Kuok with Andrew Tanzer.
Kuok is often known as the King of Sugar and is currently one of the richest men in Malaysia.
Buy in on Amazon here:
https://www.amazon.com/Robert-Kuok-Memoir-Andrew-Tanzer/dp/9814189731
Here’s what I have learned from the book:
Man Must Work
“Hard work, honesty, if you keep at it, will get you anything.”
— Charlie Munger
Robert Kuok is well-known for being the founder of the Shangri-La Hotels and Resorts. In his opinion, one of the keys to success is to work hard. In fact, he believes that there is no substitute for hard work. He says that one must work for a minimum of 12 solid hours a day. Kuok never took a day to rest and worked every day including Sundays. In fact, according to Kuok, he only took days off for his honeymoon and a 6-months trip to Europe he took with his mother.
“All my life, I've believed in the therapy of being occupied. Man must work; work is therapeutic, it binds your mind and body together. When you work, you wake up earlier than everybody; you go to bed earlier than everybody because you need to recharge your batteries. You're not wasting your life away.”
— Robert Kuok
He mentions that he was lucky to be born in a time where he didn’t have any television or any electronic games that would distract him from his goal. Kuok explains that “there is only so much time in any given day. When you’re awake you must focus on what you really want in life.” While others may be tempted for the sports cars and other material goods, Kuok was focused on only one thing — making money, not for the money itself but to become one of the great businessmen.
Similarly, Kuok understood that persistence is a must if one is to succeed in life. While others often mentions that failure is the mother success, Kuok believes that the inverse is even truer: “success often breeds failure, because it makes you arrogant and incautious.” As such, Kuok believes that ideally, a man should acquire wealth gradually through working hard, as it teaches humility and persistence.
“By gradually acquiring it, he knows the meaning of thrift and how to conserve wealth. He becomes more aware of the poverty around him in society because he has been working hard all his life, rubbing shoulders with all sections of the community, and has become intimately aware of the needs of the less fortunate.”
— Robert Kuok
Persistence is a must because the road to success in business is not linear and is certainly filled with challenges where one must show resilience. As such, Kuok advices us to not be afraid or worried when facing a problem as it can weaken one’s mind.
Instead, he explains that you must tell yourself that “You can walk through a problem. Penetrate it and go on to the other side; forget it and start life afresh. Perhaps you have to start from zero again, but you always have a chance in life. You may not make it, but at least you have a chance.”
“Stay focused, work hard, and work intelligently.”
— Robert Kuok
This is eerily similar to Kazuo Inamori’s key to succeed through persistence. Inamori mentions that one who improves steadily will be rewarded for his or her efforts in the end. It may take a long time, but you’ll eventually find a person who will appreciate and who will reward you if you persist long enough.
All people who are recognized as masters in their field surely attained this status through diligence and steady efforts. Inamori once said, “If we remain steadfast in our efforts and do what we can without retreating when that happens, something will surely come along to put wind in our sails.”
Furthermore, it is also a reminder of how Inamori achieved his dreams and succeed in life by facing his misfortunes with a positive attitude. He thought these trials in life were meant for him to improve his character as a human being. Inamori mentions that it is by overcoming difficulties that one’s abilities can be expanded limitlessly.
“Life is not comprised solely of setbacks. Good things and bad things come in alternation. Therefore, to young people who will one day take their place as leaders of society I say: don't be disheartened in times of pain. The efforts you make when you're suffering will certainly bear fruit; they will enrich your life and enhance your own humanity.”
— Kazuo Inamori
By consequence, considering it takes resilience and hard work over a long period of time to achieve long lasting success in business, Kuok truly believes that a strong physical and mental health are vital. In fact, they are critical for the ability to bounce back from the unavoidable challenges that a businessman will face along the way. To Kuok, “the golden rule for good health is to lead a simple life, physically and mentally.”
Furthermore, having healthy values are primordial to living a long life. As a matter of fact, Kuok mentions that to live a happy and long life, one must avoid envy, jealousy and greed. He once said, “If you are able to catch 10 fish and are satisfied with six fish, you are always going to be happy; if your ability is limited to catching 10 fish but you desire 20 or 30 fish, then you will never be happy.”
This reminds me of Charlie Munger’s concept of “All I want to know is where I'm going to die so I'll never go there.”With the power of inversion, Munger figured out what to eliminate from his life in order to live a long and happy life. Notably, similar to Robert Kuok, Munger believes that one must eliminate self-serving bias, envy, resentment and self-pity.
“Generally speaking, envy, resentment, revenge and self pity are disastrous modes of thought. Self-pity gets pretty close to paranoia, and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity.
I have a friend who carried a big stack of index cards about this thick, and when somebody would make a comment that reflected self pity, he would take out one of the cards, take the top one off the stack and hand it to the person, and the card said, “Your story has touched my heart, never have I heard of anyone with as many misfortunes as you”. Well, you can say that’s waggery, but I suggest that every time you find you’re drifting into self pity, I don’t care what the cause — your child could be dying of cancer — self-pity is not going to improve the situation. Just give yourself one of those cards.
It’s a ridiculous way to behave, and when you avoid it you get a great advantage over everybody else, almost everybody else, because self-pity is a standard condition and yet you can train yourself out of it.
And of course self-serving bias, you want to get that out of yourself; thinking that what’s good for you is good for the wider civilization and rationalizing all these ridiculous conclusions based on the subconscious tendency to serve one’s self.”
— Charlie Munger
Honing Your Senses
“Nothing has such power to broaden the mind as the ability to investigate systematically and truly all that comes under thy observation in life.”
— Marcus Aurelius
Robert Kuok believes that to become a successful business, it is primordial to brush up your business’ senses every morning, just like you would brush your teeth or take a shower. Using one’s vision, hearing, sense of smell, touch or taste can be useful in a business’ perspective.
In fact, by honing in his sense of vision, Kuok “would go into a room and spot everything in the twinkling of an eye. If there were more than twenty people, then maybe it took me a few moments to size everyone up. But if there were only six, I would immediately know what was going on. I could sense tension or camaraderie.“
“I have always felt that wisdom is in the air. Structured learning is fine. But you can pick, you can distil, wisdom by yourself. However, to do that, you have to hone your senses, listen more carefully, smell more deeply, see more sharply, and through that try to distil the wisdom from the air.”
— Robert Kuok
A reminder that Sam Zell was also a believer that seeking information through keen observation is an important quality to have as a businessman. For example, based on the simplest law of demand and supply, Zell realized, through his intense observation, that by targeting small high-growth cities where there is no competing capital for his real estate projects, he would be able to obtain higher margins as he identified that the largest fixed costs of real estate were taxes and utilities and both were much lower in these second-tier cities.
“The cost of construction was significantly less in smaller cities like Ann Arbor and—even more important—there was no competition. But the syndicators didn’t know those second-and third-tier cities even existed. So there was no real capital looking for assets in those smaller markets. Without competition, I could set the price—and the market.”
— Sam Zell
Furthermore, Zell also reminds us the importance of using our ears to listen. In fact, being a good listener can make all the difference in the world, since you never know when or how you will learn something new. Similarly, in business negotiations, Zell quickly understood the value of listening and understanding what is truly important to the other person.
“This is perhaps my most fundamental principle of entrepreneurialism, and to success in general. But my experience with Mrs. D was also about the value of really listening, which is at the heart of any negotiation. Understanding what’s truly important to the other person out of the dozen or so things they might tell you. Mrs. D’s brother had to be taken care of. That was her bottom line. Homing in on that got the deal done.”
— Sam Zell
Similarly, in the case of Robert Kuok, upon careful observation, he first started his business around the simple trading of three basic food commodities: rice, sugar and wheat flour. His reasoning was that it was important to focus on products for which there are a large market and for which demand is sustainable. As such, considering basic processed foods such as sugar and flour were the base of any diet, they were great products to do business in.
Kuok especially got into trading sugar as it was a volatile commodity where he could make tremendous profit due to sugar prices moving up and down like a yo-yo. Once again, he mentions that success in futures trading depends on one’s feel for the market. Obviously, this did not all come naturally to him, as he learned through experimentation and keen observation.
Another illustration of Kuok’s tremendous senses was his ability to simplify complex business problems. For example, while he never studied hotel management, through his observation, he realized that the hotel business was quite simple. In fact, he explains that “weary travellers need to sleep on a comfortable bed; they need to have a good bath; if they're too tired to walk 100 metres to a restaurant, you should provide some good food and beverage outlets for them. Everything else is a gimmick. It's really a hostelry pattern, just as when the tired, dusty horseback rider hitched his horse at the inn, ate and drank and retired to bed to awake fresher and recharged the next morning.”
“I could make the same statement about the need for simplicity in doing business in general. Mind you, I'm not saying that certain businesses are not more complex in nature, but I am saying that within a complex business you don't have to make it more complex. In each and every business, whether simple or complex, there are simple ways of tackling problems and operating the business. It's those who adopt convoluted ways who never get to the top, because they are tripping themselves up all the time.”
— Robert Kuok
As such, it is fair to say that Kuok is another great example of how one can succeed in business by thinking problems in first principles. As we have learned from Charlie Munger, first-principles thinking is a great way of reverse engineering a complicated problem. By breaking down the complicated problem into basic components, it will become much easier to find creative ways of solving the issue at hand.
Elon Musk’s work at Space X is a great example of this. Considering that rockets are absurdly expensive, Musk knew that he had to find a way to build cheaper rockets to send people to Mars. To solve this problem, he asked himself, by using first principles, what materials were required to build a rocket and he quickly realized that the materials cost of a rocket was around two percent of the typical price. In conclusion, the solution for cheaper rockets was for Musk to build them himself.
“I think people’s thinking process is too bound by convention or analogy to prior experiences. It’s rare that people try to think of something on a first principles basis. They’ll say, “We’ll do that because it’s always been done that way.” Or they’ll not do it because “Well, nobody’s ever done that, so it must not be good. But that’s just a ridiculous way to think. You have to build up the reasoning from the ground up—“from the first principles” is the phrase that’s used in physics. You look at the fundamentals and construct your reasoning from that, and then you see if you have a conclusion that works or doesn’t work, and it may or may not be different from what people have done in the past.”
— Elon Musk
Chinese Business DNA
“Learn how to be a person first. Learn how to do things later.”
— Ho Sin Hang
Robert Kuok is a perfect example of how following Chinese values can help in running a successful business. In fact, while he was born in Malaysia, Kuok never forgot that his family roots were from China and was raised under Chinese values by his parents. He believed that these values helped him as a businessman. As a matter of fact, Kuok mentions that having a naturally intuitive mind and possessing a great deal of native wisdom and business sense is the “DNA of the Han Chinese”.
Kuok elaborates that “if there is any business to be done on earth, you can be sure that the Chinese will be there. They will know whom to see, what to order, how best to save, how to make money. They don’t need expensive equipment or the trappings of office; they just deliver.”
“Chinese entrepreneurs are efficient and cost-conscious. When they search for foreign hardware and expertise, they know how to drive hard bargains. They work harder than anyone else and are willing to "eat bitterness”, as the Chinese say. The Chinese are simply the most amazing economic ants on earth.”
— Robert Kuok
Furthermore, it is fair to say that Kuok’s work ethic and concept of “honing your senses” comes from the way he was raised in a Chinese household. In fact, his dedication to hard work most likely came from the fact that Chinese businessmen in his surrounding, including his father, had no true weekends or holidays. Kuok mentions that “every moment, they are listening, and they have skillfully developed in their own minds —each and every one of them—mental sieves to filter out rubbish and let through valuable information.”
For Kuok, good Chinese business management is second to none and the very best Chinese management is simply not comparable to anything:
“I haven't seen others come near to it in my 70-year career. This doesn't mean to say that Chinese firms are the wealthiest or the biggest in the world. If you take companies such as GE, or businessmen like Bill Gates or Warren Buffett, their successes and wealth dwarf that of Chinese businesses. But Americans operate in the largest economy in the world, caressed by political and social stability, a strong legal system and generally sound institutions.”
— Robert Kuok
In my opinion, another factor for Chinese businessmen’s success is due to their Confucian values. As we have learned from Ho Sin Hang, Hang Seng Bank’s corporate values were greatly inspired by Confucian teachings of respecting virtuous characters and of cultivating the virtues of being temperate (wen), kind (liang), respectful (gong), frugal (jian) and forbearing (rang).
Notably, Ho Sin Hang puts great emphasis on is the virtue of forbearance which he believed was not only an essential element of success, but the manifestation of a high moral cultivation of a person. The virtue of forbearance is defined as the ability to endure or tolerate difficult or challenging situations without becoming angry, frustrated or upset. This virtue allows one to exercise self-restraint and understanding by showing empathy and compassion even in the midst of a disagreement or conflict.
Ho Sin Hang’s management style at Hang Seng can be summarized by this ancient maxim: “He who loves others, others always love him. He who respects others, others always respect him.” Ho Sin Hang made sure that the company upheld the belief of love. He would often say that external love means that "[we] always uphold love and with all our heart provide services to the common people in society." And internally, love requires that "[we] treat each other as a member of a family, with love and sincerity, mutual help and encouragement and try with great determination to achieve progress together."
As such, when Ho Sin Hang was at the helm of Hang Seng Bank, his management style was eerily similar to a father’s love towards his children. In fact, he was well known to treat his employees, especially the younger generation, like if they were his own children.
Fish Where The Fish Are
“The first rule of fishing: ‘fish where the fish are’. The second rule of fishing: ’Don’t forget the first rule.’”
— Charlie Munger
One of the biggest concept in business that Robert Kuok reiterates is the fact that you need to be fishing in the right waters. In fact, Kuok explains that throughout his business career, he has always set a course for deeper and richer seas in which to fish. This reminds us of the importance of putting ourselves in a good position to succeed.
In a recent podcast with Tim Ferriss, Shane Parrish explains how everybody can look like an idiot if put in a bad situation and anyone can look like a genius if they are in a good position. Here’s how Parrish would describe the success of Warren Buffett due to his ability of being always in a great situation:
“And so what he’s always doing is everybody thinks he’s out of touch and he looks like an idiot. But he always wins because no matter what the outcome is, he wins. If the stock market goes up, he wins. If the stock market crashes, he wins because he’s put himself in a position where no matter what happens, he can take advantage of circumstances rather than having circumstances take advantage of him. And I think that that’s a key element we don’t realize. If you put Warren Buffett in a bad position where all of his options are bad, it doesn’t matter how smart he is, it doesn’t matter how Warren Buffett he is.”
— Shane Parrish
In the case of Robert Kuok, he understood the importance of obtaining licenses to protect his company’s competitive advantage. As a matter of fact, when he first got into the sugar business, he understood that it was a priority to obtain the license to run a tariff-protected refinery from the Government. This would allow Kuok to be in the best circumstances to become the most dominant player in the Malaysian sugar scene compared to his larger competitors such as Tate & Lyle and Taikoo.
Similarly, once he obtained a license to operate a flourmill in Malaysia, he focused on procuring Blue Key, a brand that was well-known to retailers and consumers. This would allow him to have an easier access to the current flour market in Malaysia. Furthermore, Kuok also decided to purchase a flour-milling license in Butterworth with the sole purpose of elimination third-party competition.
Finally, what made Kuok such a great entrepreneur was that he understood that his business strategy approach had to change depending on the country where he was doing business in. Understanding what pond you are fishing in is tremendously important in doing business.
Here’s how Robert Kuok explains it in his own words:
“In the case of Malaysia, if you start a flourmill, the market is saturated in the twinkling of an eye. Then you must move sideways. So we did feed mills. In another blink you have reached your low ceiling again. Okay, I'll do vegetable oils now; that's a natural extension of animal feed. To produce feed you crush corn or soybeans for the meal, and you can take the oil that flows out and refine it for human consumption. So, we again moved sideways into a new core business because we had reached the limit. I call them shallow ponds.
In Malaysia, I always felt like a little fish swimming in shallow waters. As soon as I tried to dive, I would hit the concrete bottom of this man-made pond. So you need to swim laterally all the time. You couldn't go down deep. In the fishing world, the best fish are those that can dive deep, like the tuna. If I could only dive deep- and that could easily take up 20 years of my life - I might not even have the energy to go sideways. But in Malaysia, the only choice open to me was to expand sideways, so I swam as fast as I could.
If I had been fortunate enough to be born in Indonesia, I would probably have taken a different course. There, the waters are deep; the fish are plentiful. Whatever industry I would enter in Indonesia, which has a huge population and landmass, would last my family three generations. So I envied what the businessmen of populous Indonesia were able to do. I had a seat at the flourmill table in Bogasari; but I was eager for more.”
— Robert Kuok
This ability to put himself in great circumstances to succeed reminds me of Napoleon. To him, nothing happens by coincidence. It is always the result of one’s planning and wisdom. In fact, Napoleon believes that being lucky is the ability to exploit accidents.
Napoleon mentions that “Military science consists in first calculating all the possibilities accurately and then in making an almost mathematically exact allowance for accident. It is on this point that one must make no mistake; a decimal more or less may alter everything.”
“A consecutive series of great actions never is the result of chance and luck; it always is the product of planning and genius. Great men are rarely known to fail in their most perilous enterprises. . . . Is it because they are lucky that they become great? No, but being great, they have been able to master luck.”
— Napoleon
Beyond the Book
Read "Inversion and The Power of Avoiding Stupidity" by Farnam Street
Read "Mental Model: Bias from Envy and Jealousy" by Farnam Street
Read "The Munger Operating System: How to Live a Life That Really Works" by Farnam Street
Read "First Principles: The Building Blocks of True Knowledge" by Farnam Street