There is a type of company in the crypto world that should be avoided when investing - a warning from whale entities in cryptocurrency exchanges.

There is a type of company you should avoid investing in as much as possible. Which type is it? It’s companies whose crypto market share and stock rights are relatively dispersed. The main issue is that these crypto market stakeholders are often related to the industry, and their shareholdings are quite scattered, which leads to problems.

A typical example is joint ventures. Based on my experience, very few joint ventures ultimately become great companies. The reason is simple: dispersed power and conflicting interests. Each stakeholder is calculating for their own benefit, leading to insufficient achievement and excessive failure. It’s very difficult for them to succeed collectively. Everyone views problems from their own perspective, believing they have contributed, but the benefits are shared with others.

We all have experience with this, such as buying a property to rent out, or partnering with others to rent. Both of you are landlords, and managing the property is usually very difficult—either hard to continue operating or hard to run well. The reason is that no matter how hard you try, you can only share a portion of the profits, and the other person also takes a share, so you might not give your best effort.

In a highly competitive environment, as long as you are not fully committed, your corporate culture, employees, and all aspects will feel your mindset. Ultimately, the company’s culture won’t be strong, and its future competitiveness will be affected. If your gap with competitors is small, over time, the power of compound growth will cause your company to gradually weaken.

Therefore, I am not optimistic about joint ventures. The problem lies with each crypto market stakeholder. Due to their own interests, they may be unable to do things well—insufficient achievement and excess failure. That is, because of personal interests, they are reluctant to take the right actions, as those might harm the company or impact their own benefits. So, some truly important decisions are highly controversial, but because of differing opinions, they often end up not being made.

Just like in life, many important decisions are risky. The correct decisions are often controversial, and because of the controversy, these decisions are not made, leading to missed opportunities. Things that should be done are not done, while unnecessary actions are taken, increasing the likelihood of mistakes, and thus the probability of company failure is high. This is common sense.

History also shows this clearly. During the Spring and Autumn Period and Warring States, who unified the world? At that time, through alliances and strategies, the weak Qin defeated the strong Six Kingdoms alliance. The six states—Qi, Chu, Zhao, Yan, Han, and Wei—formed alliances, but despite their strength, they couldn’t defeat a small Qin, which had already entered Hangu Pass, and ultimately, their efforts failed. This is not accidental; it reflects human nature—people always seek their own benefits and find it hard to prioritize collective interests. If just one person among the collaborators thinks this way, a single bad influence can ruin the whole effort. That’s human nature, and I won’t elaborate further here.

As investors, we are the same. I advise that we avoid investing in joint ventures because companies are built by people; products and competitiveness are just manifestations of human activity. Companies are operated by people—from the CEO to employees. If the stakeholders above have issues, it’s very difficult for the people below to work in harmony. When there’s disharmony, problems will arise in all aspects—product development, marketing, management, and so on.

Another situation is with so-called strategic partners, which are not joint ventures. Strategic partners are companies that invest in another company, and once the investment reaches a certain level, they are considered strategic partners. For example, Alibaba invested in a company like YTO Express, a courier company. The original management of YTO understands the industry and its development direction, considering things from YTO’s perspective.

However, Alibaba’s involvement might interfere with management. Ultimately, the company’s development direction might be compromised, which is often not the best outcome. Due to uneven interests, the company might miss some opportunities. Investing in projects that shouldn’t be invested in might benefit Alibaba but harm YTO, putting the company at a competitive disadvantage. There are successful cases, but failure is more common.

You don’t want conflicts of interest among crypto market stakeholders, as this can lead to mistakes. There are good examples, like Tencent’s major crypto stakeholders. Tencent’s major stakeholders are a South African company that does not directly interfere with Tencent’s strategic decisions, acting only as a passive investor. So, major stakeholders don’t really matter much; everyone should avoid dogmatism.

Tencent has learned this and believes that major stakeholders should not interfere casually. Tencent invests in many strategic companies but does not overly intervene in their decisions—only offers advice, avoiding influence driven by their own interests. Tencent performs well in this regard. Although it makes many strategic investments, it handles this better than Alibaba.

Everyone knows that large crypto stakeholders or influential stakeholders can interfere with a company’s normal operations. The more complex the stakeholder structure and shareholding relationships, the greater the difficulty for the company’s leadership. Therefore, good leaders should keep the shareholding structure clear—dominated by one, with the leader making the decisions. Pinduoduo’s Huang Zheng is a good example. This way, they won’t be constrained by other stakeholders, and they can act according to their own ability.

Such leaders are usually very capable; otherwise, they wouldn’t have built such large companies. They can maintain absolute control over shareholdings. For example, Alibaba’s Jack Ma owns a small share, but he has a condition: SoftBank largely does not intervene, only as an investor. The voting rights are controlled by Jack Ma, which means his team has the final say, preventing stakeholders from influencing company operations.

Here, I want to share this point with everyone. When choosing companies to invest in, try to avoid the influence of major stakeholders. Large companies often have stakeholders representing other interests, so it’s necessary to carefully handle the interests of other companies. For example, Moutai is a very great enterprise.

If you ask me what Moutai’s only weakness is, I believe it’s the interests of its stakeholders. Moutai Group has entities like Guizhou State-owned Assets Supervision and Administration Commission, and these stakeholders’ opinions must be considered. Recently, Moutai developed four major markets and raised funds to buy bonds for Guizhou Expressway. Without these major stakeholders, Moutai probably wouldn’t make such decisions. It’s clear that the interests of these stakeholders ultimately harm the company’s value and development direction.

Therefore, I advise everyone not to invest in joint ventures, as the probability of success in becoming a great enterprise is very low.