Later there was a brief pause for a raucous victory banquet. Li treated his staff to classic Chateau-Pichon Longueville wine, downed several glasses of champagne and warmly toasted everyone in the room, including the secretaries. The HKT deal more than doubled the stock-market value of his empire, from $30 billion to $70 billion, and extends its reach from Internet ventures into telecommunications. But this was no time to rest. Li, famous from birth as the son of Hong Kong tycoon Li Ka-shing, has many powerful rivals who are also out to shape the e-future of Asia. The next morning Li was in the office by 7, and three hours later announced another huge deal: a strategic alliance with the largest computer manufacturer in China, Legend Holdings. “We just have to keep going,” Li said later, in an interview with NEWSWEEK. “I think we are at the very small beginning of a new revolution.”
Much as his father did before him, Richard Li is dragging Hong Kong into a new world. Li Ka-shing is Hong Kong’s most fabled tycoon because he rose to challenge the British colonial grip on the Hong Kong economy before other locals dared. And he saw early on that real estate would be king as Hong Kong became the gateway to a modernizing China. Now that Hong Kong is once again part of China, the territory is looking for new sources of wealth, and it is following Richard Li into the online world. While Li Ka-shing once had to fight to wrest control of the Hutchison Whampoa trading house, a symbol of British rule, from its owners, Richard Li simply dazzled HKT’s British owner, Cable & Wireless, with high-flying CyberWorks stock. In Hong Kong, a breeding ground of speculative fevers, this was the first deal done in the blinding speed and gravity-defying stock of the Internet age.
The media business in Asia will never be quite the same. Li showed the region that an Internet start-up could outmaneuver one venerable giant to buy out another. Only two months before, Steve Case of AOL had bought Time Warner and demonstrated to America how the new economy can toss up business empires like so many volcanoes. Asia has trailed America by years in developing an Internet business culture, but after Li’s deal for HKT, it looked to be behind by only a matter of weeks. Rivals as far away as the News Corp. headquarters in New York and as close as his father’s offices in Hong Kong began maneuvering to answer Li’s bold move, and to buy up the newly exposed pieces of HKT’s former owner, Cable & Wireless. The deal seemed to confirm the gravitas of Richard Li, who had once struggled to prove his success was not just a credit to his father’s famous name.
Only a year ago Richard Li’s vision of a virtual economy in Hong Kong was greeted with loud skepticism. His plan to develop a Cyberport as Hong Kong’s answer to Silicon Valley was criticized for supposedly trading on his father’s government connections to corner cheap land. But after Intel agreed to be the first high-tech firm to set up shop at the Cyberport last March, the criticism started melting away. CyberWorks stock has climbed 1,400 percent since April, driven up by its rapid-fire investment of $600 million in more than 30 start-ups. CyberWorks is now the most important “incubator” of new Internet companies in Asia outside Japan, and has helped spread Internet fever throughout Hong Kong (following story).
Yet as the year 2000 dawned, Li still had much to prove. CyberWorks had no profits, and that unnerved the many investors who still wonder whether the “new economy” is for real. By early February, Li was eying SingTel’s campaign to buy HKT and merge it into a traditional but larger regional phone company. One morning, Li has said, he woke up and realized he could do far more with HKT himself, by merging its expanding cable network into his vision for the Internet and interactive TV. More than that, HKT had 14,000 employees, millions of customers and $4 billion in annual revenue–concrete assets to show investors.
Li decided to launch his own bid for HKT. But Cable & Wireless was cool to the idea of accepting PCCW stock in payment, no matter how loftily the Hong Kong market valued it. CyberWorks, after all, was a company with no profits–whereas SingTel had $6 billion in cash. But in just 48 hours between Feb. 13 and 14, Li raised a cool $1 billion by selling CyberWorks stock; he subsequently used the cash to arrange $13 billion in loans. The stakes were serious; a losing bid would undermine market faith in Li and deflate CyberWorks stock. “The scariest moment was when I decided how much cash to offer,” says Li. “That was the sleepless night. I had five cups of Starbucks and a chocolate bar.”
Li’s ability to raise billions virtually overnight reportedly startled and impressed the board of Cable & Wireless. But the game wasn’t over; media mogul Rupert Murdoch was about to enter the play, and he was no stranger. Li had founded Star TV and sold it to Murdoch in 1993 for $950 million, but they are now archcompetitors in Asia. Murdoch’s News Corp. rushed in at the last minute to help SingTel sweeten its offer by $1 billion. For Murdoch, like Li, the chief prize was the HKT prototype for a fast cable network. “They both were going after the same holy grail,” says Andrew Sherry, vice president of i-quest, a smaller broadband player in Asia. Last Tuesday Cable & Wireless announced the winner: Richard Li.
Li had come a long way. His parents raised Richard with all the advantages of a princeling. Richard’s voice still echoes the accent of his childhood British nanny, and it was assumed he would take a place in the family business. Yet Li Ka-shing never let Richard forget his family roots: the elder Li migrated to Hong Kong from southern China and worked his way up from laborer to magnate. Among Richard Li’s earliest memories is a Pan Am transpacific flight he took at the age of 6. His father showed him the first-class lounge, with its crisp white tablecloths, and then banished him to economy over the objections of his mother. “Kid,” Li remembers his father saying, “you’re going all the way to the back, and that is the last you’re going to see of that until you earn it through hard work.”
When Li went to study at Stanford University, his father gave him a budget that included money for groceries, school fees and rent but nothing more. So the billionaire’s son worked as a cashier at McDonald’s and a caddy at a golf club. The extra money, he says with a laugh, gave him the freedom to do things “like chase girls.” His friendships were intense; he lifted weights and ate almost every meal with one close friend, who now works for Li. The friend, who asked not to be named, recalls how he once refused Li’s offer to pay for the repair of his Jeep, so Li stayed up all night, employing lessons learned in an automotive-engineering class. “The next morning,” says Li’s friend, “he came to my door wearing a white polo shirt caked with grease and a big smile on his face and said, ‘I fixed it’.”
Li could be obsessive in ways that foreshadowed his future as a business pioneer. After visiting a satellite control room at another college, he talked of nothing else for weeks, says the friend. Between classes, Li pored over The Wall Street Journal. After graduation, Li went to work as an investment banker in Canada. During this period, Li recalls, he took his first flight in first class.
After two years in Canada, Li was summoned home to work in the family business. Like his father, he inspired intense loyalty among employees with his regal generosity. He once tracked down and purchased a WWII fighter plane as a gift for a colleague. Says a former close associate: “The people who are close to him get addicted to him, to his charisma of wealth, success and confidence, to the sense that he knows how to be a prince.”
Richard Li’s first big deal would tag him, unfairly, as a spoiled prince. When Hutchison Whampoa passed up a chance to develop satellite television, Li asked to do it. With $125 million from his father, he founded Star TV in 1990. Through joint ventures with BBC and MTV, Li rapidly expanded and showed a talent for alliances very different from his combative father. “In the old world, if you don’t fight or beat somebody up, then you don’t get anywhere, because the market is mature,” says Li. But in the e-biz world, competitors are just “tiny dots” in a rapidly expanding universe, “working together, not beating each other up.”
Li’s next move made his career. Just three years after founding Star, Li sold it to Murdoch for a whopping profit of more than $800 million. At the last minute he helicoptered onto Murdoch’s yacht in the Mediterranean to seal the deal. But in the Hong Kong business community, some doubted that a 26-year-old could have extracted such a price from Murdoch. Soon, the rumor mill was spinning stories about how Li Ka-shing had sweetened his son’s offer or pressured the Australian tycoon. A source close to the deal insists that the elder Li did not intervene, and that “nobody could have pressured Murdoch.” Still, the tale of the daddy rescue lingers, much to the annoyance of Richard Li. His aides often warn journalists not to say “father” in an interview.
The pressure of the Star deal was tremendous. Reports began to emerge that Li, who can be disarmingly chatty with his rapid-fire delivery, had a darker side. Li would berate a female staffer for bringing guests the wrong brand of cigarettes. He would humiliate colleagues 30 years his senior during staff meetings or in public. By all accounts, he has since learned to tone it down, but is still known to call up staff members in the middle of the night to issue orders. As the former close associate notes, the images of “the spoiled brat and the visionary are not incompatible.”
Li’s mother was always overshadowed, at least in the public eye, by his father. She died in 1990 from what Next, a news magazine, based on police transcripts, later reported was an overdose of sleeping pills. The family said her death was caused by heart problems. The tragedy left the Li men alone: a colleague says Richard has lunch with his father and his elder brother, Victor, every Sunday.
Richard was the independent one. By 1995 Victor was still in the family firm, and Li was out on his own. Yet the taunt of “daddy’s boy” revived in 1997 after his father bought out an unsuccessful property deal in Japan. Richard Li took a few days to regroup in Hawaii, and hatched the idea of the Cyberport. When the government granted him the land without public bidding, local media pointed accusingly at close ties between his father and chief executive Tung Chee-hwa. Soon Cyberport critics found they were under scrutiny by private investigators, and the episode threatened to tar Li as an old-fashioned backroom bully. With no evidence of who hired the PIs, the scandal blew over, only to be followed by another.
The general manager of the Bank of China was quoted in a local paper saying that Li Ka-shing had asked him to grant a loan crucial to his son’s deal. Li denies that he got help from anyone: “I have banks calling and saying I have billions I want to lend you.” No doubt, the Hong Kong press has a tendency to spot Li Ka-shing lurking behind every deal. “That is the frustrating part for us,” says Francis Yuen, deputy chairman of CyberWorks. “I take pride in arranging these loans in a short period of time.”
Li is still recasting his image. When he started investing in Internet businesses last year, he sent ornate calling cards with gilt borders to prospective clients. “I felt like I was being invited to a party,” says one entrepreneur. But after hanging out with the shirtsleeve billionaires of Silicon Valley, Li gave up suits and ties for khakis, open shirts and a backpack. He shaved his head down to an Internet junkie’s buzz cut. After the HKT deal, he thanked all his employees for “splendid and staunch collective support at the moment of trial.” Then he went back to work. “People say I’ve done this with my father’s help,” he says, “but I’ve done it on my own.”
Soon father and son will be business rivals. The elder Li launched an Internet venture, Tom.com, just days before Richard Li made his final bid for HKT. Though the nature of the venture was not clear, his father’s name was enough to set off a stampede for shares. The frenzy could have upset the value of CyberWorks’ stock, notes Li, and threatened his deal. But with HKT under his belt, Li’s assets now rival his father’s billions and threaten to create what he calls a potentially “embarrassing” face-off. “With this deal, we will be the No. 1 mobile service provider in Hong Kong, and he will be number two,” says Richard Li. “Obviously, if we can avoid butting heads, it’s better, but if we do, it’s all business–we compete.”
So the rules of business in Asia are now rapidly changing. The Hong Kong tycoons who once followed Li Ka-shing’s every move are now flocking behind his son into the online world, where the old rules of seniority and financial gravity don’t seem to apply. Richard Li doesn’t worry about an Internet “bubble”–he worries that too many Asians “don’t get” the new economy, and will be left behind. So he keeps pushing, acquiring companies and allies to take on not only older rivals like Murdoch but his own father. “Now is the time to go out, rather than meandering and relying on existing old models,” says Li. “If there is a vision, you should just go out and do it.” All’s fair in the cyberwars.
