Conversation with Dennis Hong: On Living a Positive-Sum Life

Dennis has weathered the storms to get to where he is today, and he carries with him years of experience and wisdom that he willingly shares with the next generation. Don't miss out on him!

Dennis is a successful investor, but his journey was not one without challenges. Despite these difficulties, Dennis crafted his own story of happiness and significance. Due to the generosity and willingness of so many that offered help to him, he actively pays it forward to the next generation.

Next Gen has been a major benefactor of Dennis' kindness. Beyond donating financially to Next Gen, Dennis invests a lot of time in sharing his life experiences and journey with students from the Z Club. Dennis speaks at online and in-person sharing sessions organized by the club. He also invests time to mentor members on an individual level by guiding them on investment related questions.

Next Gen can only be strong because of generous supporters and professionals like Dennis. Please read on to understand the driving forces behind this man.

Paying It Forward: The Inspirational Journey of Dennis Hong

Dennis Hong, the Founder & CEO of ShawSpring Partners, exemplifies the principle of paying it forward. His journey from modest beginnings to leading a successful investment firm underscores the importance of extending opportunities to others. Under Dennis' leadership, ShawSpring's assets under management has grown substantially since the firm’s inception nearly ten years ago. The firm's focused investment strategy primarily targets high-growth businesses globally. ShawSpring manages capital for prestigious institutions, including universities and high-net-worth individuals, highlighting Dennis' commitment to prudent wealth management.

Dennis grew up in Canada, where his Korean immigrant parents ran a convenience store, thereby imparting in him the values of hard work and perseverance. Despite the challenges at the start, Dennis cherished a fulfilling childhood and nurtured ambitions beyond his hometown. As the first in his family to attend university, his path took a transformative turn at Yale, where he secured an internship at Yale University's Investments Office. He had the privilege to be mentored by the late David Swensen during this pivotal period, laying the foundation for his career in finance.

Following his time at the Yale Endowment, Dennis worked for Matrix Capital and Altimeter Capital researching businesses across the globe. After pursuing an MBA for a year at Harvard Business School, Dennis withdrew to launch ShawSpring, pursuing his long-term entrepreneurial goal.

Throughout his journey, Dennis has emphasized the importance of resilience, mentorship, and seizing opportunities, serving as a beacon of inspiration for individuals from similar backgrounds.

Dennis at a 'Meet the Investor' session with the Z Club in 2023

Founding ShawSpring Partners - A Leap of Faith

Despite a successful first year at Harvard Business School, Dennis decided to leave the program after one year to start ShawSpring Partners. It was a leap of faith, but it was not blind, as Dennis had received an offer from the family investment office of a well-known entrepreneur in Boston.

Thus in 2014, ShawSpring was born. With the family's funding as well as Dennis' own capital, Dennis set out to build a world-class partnership based on four pillars:

1. Seeking exceptional returns

   While acknowledging the economic benefits of growing assets under management, Dennis prioritizes generating great investment returns over building the biggest asset management firm.

2. Compounding

   Dogged incremental constant progress over a very long time frame. - Peter Kaufman

   Dennis firmly believes in the power of compounding, noting that even small pools of capital can grow into significant sums over time.

3. Constant improvement to build a lasting firm

   Dennis aims to provide his team with a fulfilling career environment and wants to add value to company management. He emphasizes the importance of constant improvement over the long term.

4. To be the best partner for his investors

   Dennis believes that maintaining a tight-knit partnership where he is the single point of accountability is critical to success. He values relationships with investors and wants to be directly involved in their lives, even if it limits the firm's size. He believes that maintaining strong relationships and transparent communication with investors is important for weathering downturns and optimizing for long-term returns.

Highs and Lows at ShawSpring Partners

In his career, Dennis has encountered triumphs and setbacks alike. One of his recent memorable highs was when a prominent technology entrepreneur and his family were able to fund the construction of a campus in India that trains and upskills rural villagers for jobs funded through the returns from their investment with ShawSpring. Dennis was deeply satisfied by the direct impact of positive investment returns.

Despite his efforts to manage expectations and explain the nature of long-term investing in a concentrated portfolio, periods of underperformance still occur as no investment is permanently on an upward trajectory. During these moments, Dennis feels like he is letting his investors down. Nevertheless, he emphasizes the importance of resilience and learning from one's mistakes during these challenging times, especially reviewing and addressing one's blind spots.

Dennis at a dinner with the Z Club in 2023

Guiding the Next Generation

Dennis's dedication to nurturing the next generation of investors is multifaceted and deeply rooted in his belief in the power of mentorship and community. There are three pieces of advice he would like to offer to students:

1. Approach the mentors

   Mentors have more experience and have made mistakes. Internalize the mistakes of others so that you do not have to make them yourself. Try to approach every mentor with the goal of adding value to their lives. Just because you are young does not mean that you have nothing to contribute. For example, Ryan Ang, a member of the Z Club, wrote an initial memo on Intuit, providing Dennis insightful commentary on the company. Although Dennis provided suggestions to Ryan on next steps and memo structuring, Dennis also benefitted from the process.

   Before connecting with a potential mentor, make sure to do some background work on them. This allows you to ask targeted, insightful questions tailored to the audience.

2. Utilise resources to hone your investing skill

   Do reps

   i.e. Keep repeating the task to hone your skills until you become proficient.

   There is no shortcut to becoming a great investor. Study businesses, practice financial modelling, write out case studies (like initial memos or stock research reports). The Z Club provides incredible resources for growth, so make the most out of it. With practice, you will get faster and more efficient over time.

   While students may see initial memo writing as extra homework, there is great value in putting thoughts into words. It will train you to become more effective communicators. Writing is an essential part of investing and doing the necessary reps to improve.

3. Place trades

   There is no better teacher than the market. Place trades. Start investing. The Z Club is the perfect place for you to gain real world experience without bearing consequences. Don't let this opportunity go to waste.

Students should work on their communication skills, both in writing and public speaking. Dennis shared his own experience of overcoming shyness and how he learned to make persuasive arguments.

In the Z Club, students should seize opportunities to learn from mentors, peers, and club resources. He suggests that students should put themselves out there, share their work, and volunteer to host sessions that can train their public speaking skills.

Dennis in Yunnan in 2024 with the Next Gen team for the annual Z Club Scholar's Trip to Wang Ying's (Z Club scholar) hometown

Empowering the Next Generation

Because of Dennis' passion for empowering the next generation and his generosity to the Z Club, we invited him to join us for our annual Scholar's Trip to Yunnan in April 2024 where we visited the hometown of Wang Ying, one of the Z Club scholars. You may read more about the trip here.

The trip was certainly "eye-opening" for Dennis. He was struck by the happiness and contentment of Wang Ying's family despite their modest circumstances and shared that the trip taught him that happiness is independent of one's material resources. The team also went on a 9 km hike to experience Wang Ying's weekly journey just to go to middle school. It was a challenging walk, but Dennis also developed a great respect for Wang Ying's resilience in pursuit of education.

When asked why Dennis supports Next Gen so wholeheartedly, he reflected that Next Gen's mission is important and he wished such an organization existed when he was starting out as an investor.

I feel a fundamental obligation to pay it forward to this generation. A lot of people opened doors for me and I feel an obligation to open doors for other people.

Next Gen holds a special place for him because it aligns with his belief in starting one's investor journey early in life, and the importance of a network of peers, mentors, and professionals to help you on that journey.

On Living a Positive Sum Life

At the core of Dennis's philosophy is the belief in living a positive sum life. He understands the importance of kindness, mentorship, and giving back, not only for the benefit of others but also for one's own fulfillment and happiness.

Dennis believes that the best way to repay kindness is by helping others succeed. He encourages young people to offer their time and advice to those who seek it, as a way of paying it forward. He emphasizes that expecting nothing in return is key, as kindness has a way of coming back in unexpected and positive ways.

Being kind is free.

Everyone wants to be surrounded by successful people, but the easiest way to do that is to help make your friends successful.

Dennis Hong's journey is a powerful testament to the transformative power of paying it forward. From his humble beginnings to his professional success, he remains committed to opening doors for others and creating opportunities for the next generation. By opening doors for others, Dennis continues to create a ripple effect of positivity and opportunity that reverberates far beyond his own achievements.