'I'm Not Cold Enough'

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He's young, he's rich and he's the son of Hong Kong's most powerful tycoon, Li Ka-shing. But last week, Richard Li emerged from his father's shadow by successfully staging Asia's biggest corporate takeover: his 10-month-old Internet start-up, Pacific Century CyberWorks, beat rival Singapore Telecom for control of Hong Kong's dominant telecoms company, Cable & Wireless HKT. Richard Li spoke with TIME reporters Isabella Ng and Maureen Tkacik on March 2. Here is the extended online interview:TIME: Who initially came up with the idea of taking over Hongkong Telecom?
Li: It was over Chinese New Year, and I was overseas looking at other investments. My colleagues were back in Hong Kong looking at the numbers. Anyway, I never dismiss ideas unless they are really far-fetched but quite frankly, I was saying to my colleagues, 'Yeah, right. This is so big, so large, it cannot be done.' But I played it cool and said 'O.K.' We had been looking at something similar overseas, though it was quite a bit smaller, about a quarter in size. So I decided to abandon my trip and go back. The concept for the deal was not started by me. Our company has a very horizontal model, and it's not top-down. We are a team.
TIME: Was it Francis Yuen (deputy chairman of Pacific Century Group)?
Li: No, it came from our team.

TIME: What's HKT's appeal?
Li: The people, the broadband experience, the cellular operation--which is important, because 3G [third-generation] mobile is the future of the Internet. It is so important now to merge content with 3G technology. To me, this deal represented the marriage of the head, with the arms and the legs and the body. We had the head--a pretty big head--but our legs and our arms have been underdeveloped. We've thought out things pretty deeply and that's very important. But we now have the body--the internal management infrastructure--with HKT. The objective was obtaining expertise and human talent--engineering talent and management talent--that we can leverage off.

TIME: Will this deal change the direction of Pacific Century CyberWorks?
Li: No, but there's a lot of hard work ahead. But I'm lucky because my colleagues are very motivated--they're also very well rewarded.

TIME: So they make lots of money?
Li: We've got over a billion dollars in our budget now.

TIME: Did you discuss the deal with the Beijing government?
Li: I did have one breakfast with the chairman of the Bank of China, but the deal was actually done before that breakfast.

TIME: A lot of people are saying that you will chop HKT into little pieces and sell them off. What are you going to do with the company?
Li: There are a lot of good companies here developing content. At the moment well over 50% of our content--the development and the packaging and everything--is done overseas in London. At the end of the day, one needs local content. And the largest html team is at HKT. So that's what we will take advantage of first. After that, any sell-offs will have to be decided once we get our management team together.

TIME: Everyone in the industry seems to get starry-eyed talking about what great deals you make.
Li: I don't know if I think of us as dealmakers. I truly think our venture side is great; we're always finding ourselves out of breath. But now that we've got some human infrastructure, that came with the deal, I think it will be better. Doing ventures is great--I'm talking economics now--if you've got a rising market. It's wonderful. If I hadn't got HKT, I would have been just as happy. Because there's a price for everything. And to overpay for something is awful.

TIME: You have no operating profits. You've been listed for 10 months. How did you persuade Cable & Wireless shareholders to accept your stock? Was it your billion-dollar share placement?
Li: Did we want to show off and say, 'See what we can do?' The answer is, well, probably yes. We were told by the bankers that the demand was high enough that we could do two placements instead of one, and I wish we'd done two, quite frankly. But we really wanted our shares to be in high demand and then trade up. If the shares are not widely traded and can't attract the interest that makes them go up and down all the time, you can't raise money. What I wanted to show the seller was that we did have that, but it was also to show off a bit. But another thing: this deal will take three to four months to close and there's still unforeseeable circumstances that might make it implausible. Everyone is assuming the deal has been done, but there's still a risk that it can be undone.

TIME: SingTel is clearly the loser in this deal.
Li: I wouldn't put it that way.

TIME: Well, the temporary loser.
Li: O.K., I'll put it that way.

TIME: What would you tell SingTel's Lee Hsien Yang?
Li: We're interested in any transactions which would benefit our shareholders. There are no bad feelings at all. The same thing with News Corp. A lot of people said, 'Aren't you mad that News Corp. made a deal with the other side? Don't you want to purge HKT's agreement with News Corp.?' Of course not. Anything that is mutually beneficial for our shareholders is fine.

TIME: Is this a victory of Hong Kong over Singapore?
Li: No, not at all. These are truly global transactions. But the number of quality start-ups in Hong Kong has shot up. We are way ahead of any Southeast Asian country, and I would dare to say that we are on par with Japan. But I realize now one thing that I overlooked about Hong Kong was the depth of the financial markets. That, combined with management and technological know-how. And you know, if you don't have funding, eventually you fall flat on your face. If you look at some of the smaller capital markets in Asia, when they want funding they either come here to Hong Kong or they go to California, the mecca of the Internet, because they can capture the liquidity and then move on and do what they want to do, which is develop a business. And the reason why Japan is so far ahead is because their market is so big.

TIME: What was the first thing you did when the deal was struck?
Li: Well, I had a good night's sleep...

TIME: That's how you celebrated, you slept?
Li: Well you know the worst thing to deal with is uncertainty. We suspended shares Friday, we thought we had the deal done on Sunday, but then by Monday it still wasn't official. Some dealer in London then called me up and told me it had gone through--and even then I didn't believe him...I slept.

TIME: What's your business philosophy? How would you describe your empire?
Li: I wouldn't call it an empire, but if I die one day on the tennis court having left some brand name, and underneath that brand name is innovation and goods and services that make people feel, like--wow!--you know, I paid that much money and it really improved my life, and at the same time I've left some sort of sustainable management to keep it going forward, then I'll be a happy man. I want to create something like Sony. Not in terms of manufacturing products but creating something that is innovative, makes money, improves peoples' lives...PCCW is really a team. I challenge anyone in Asia to find a team like ours. We want to have more talent under one roof than any brand name.

TIME: Who are you trying to emulate? Jerry Yang? Bill Gates, Winston Churchill?
Li: Someone like Akia Morita (co-founder of Sony)

TIME: You are known as a cold, unemotional dealmaker.
Li: I've been told I'm not cold enough. I think my colleagues are, so that's good.

TIME: On a lighter note, do you have a private jet?
Li: No, but I've had a plane for a long time.

TIME: What do you do in your spare time?
Li: I like jet skiing.

TIME: Where's your favorite place in the world?
Li: I've spent a good part of my life in Silicon Valley, California, and I really like that place.

TIME: So is that where you will retire?
Li: Probably not. Perhaps in my mid-'40s I'll take a sabbatical and go back to school there for a few years. It's a good place for it. California is enormously competitive, it keeps the mind going.

TIME: Did you really once flip burgers at McDonald's?
Li: No, I was a cashier. I was also a caddy. As a teenager I was given a very small allowance but you need some extra money to chase women, you know?

TIME: That apron must have really been a turn-on.
Li: Hey, when you're getting paid, it doesn't matter.