Social media had only really started to take off some time in 2009.
In the 2020 TV documentary The Social Dilemma, the show talks about how creators of social media encourage and nurture the addictions of users to help companies make money. But the impact of social media went beyond commercial exploits. Over the years, it also subtly cultivated a deep and unhealthy sense of emptiness.
Luke Burgis talks about this using the story of a man with his martini in his book, Wanting:
Social media has successfully helped billions to overcome geographical boundaries, bringing people together or re-connecting friends who have lost touch with each other over decades. It has also allowed us to keep up to date with what is going on around the world such as browsing someone else's holiday pictures on Facebook or reading about a friend closing a multi-million dollar deal with several well-known investors.
We have been given the privilege of gaining access to more information, but this has also on the flip side, amplified and nurtured the feelings of envy, insecurity and greed, subtly creating a false impression of what we deem to be important or credible.
By acknowledging what drives these feelings could help us better understand why so many companies and founders choose to believe that they read, to inflate their corporate identities and "social circles", probably in hope that some investor will come along and bite the bait. This is manifested in corporate websites, social media snippets, such as trumpeting about a media interview, or showcasing participation in high profile conferences.
And so, we've been led to believe that: If something is sensational and disseminated widely enough, it often the "truth". Even better if someone prominent says something about it (see BN Group). But curating a healthy media presence is one thing. Bullshitting in order to feed your ego is another.
"It’s easy for someone to become an overnight expert on 'productivity' merely because they got published in the right place" - Excerpt from 'Wanting'
Remember the reality TV show Shark Tank? Kevin O' Leary, aka Mr Wonderful, recently revealed taking a $15 million 'deal' from FTX to be its spokesperson. Never mind whether or not Mr Wonderful was a cryptocurrency-skeptic-turned-ambassador. In today's world, it seems that at the right price, people are willing to say enough bullshit to endorse a product or a company, regardless of whether they believe in it or not.
This strategy has been effective in the business and investment world, social media just made it better.
People who consume bullshit will believe in bullshit. Feelings of envy and FOMO often drive people (and investors) to make foolish decisions.
One of the biggest fears of any VC is to be left out in a multi-bagger deal. Some compensate for this through 'diversifying' their portfolios. Those who have staked their money have a vested interest. They want to make sure they don't look bad doing the deal, and therefore will do anything to ensure that the equity story holds up, at least long enough until they exit.
This is the state of fundraising in the world today. This is the reason why we have so many asset bubbles.
In light of the many recent frauds, scandals and apparent lapses in due diligence, investors have started to increasingly become more discerning about who they deal with, what they read in the media, the kind of information they are fed with, and perhaps even more importantly, where they put their money. If they haven't, they should.
The era of bullshitting is over. Companies and people need to wake up to reality and stop the proverbial fake it till you make it, "over-packaging" their products and services, and start getting real about talking about fundamentals and their numbers.
"In the end, I am a teacher; that is really how I see myself." – Jorge Paulo Lemann
When we think about teaching, instructional delivery is almost always the first thing that comes to mind - The typical classroom or lecture hall setting whereby a professor or a lecturer pulls up a set of powerpoint slides and speaks to the class.
Giving a two-day lecture on financial modelling has always been an enjoyable session for me - the interaction, debates and sharing of anecdotes. One of the biggest highlights personally is to see someone complete his/her financial model (plugging the ending cash from the cash flow statement into the balance sheet) for the very first time.
Doing up a financial model might be considered rudimentary for some of you seasoned bankers out there but it is a big thing for someone who is either not trained in corporate finance or struggling to put together an investment thesis at the workplace.
But my teaching engagements go beyond the classroom. At the work place, I am also the go-to person when it comes to troubleshooting excel files and powerpoint, explaining a financial model to an analyst or investor, or when someone needs a slightly older person to be present in the room or to do the presentation in English, etc. Aside from that, I've also been a listening ear to many of our colleagues at the office, from the senior and mid-level folks all the way to the rank and file. I've even been called to help in a situation whereby someone had called our front desk complaining about an imposter who offered him a job at our company.
In August, we closed a landmark financing transaction with a highly reputable investment firm.
The process was lengthy - mostly because we had very sucky lawyers - but also because it involved a deal structure that no one else had done before. Parts of the term sheet were tricky and the closing was even more convoluted. One treasury analyst (协办) in my team had the 'privilege' of assisting me on the deal. Joke was that I had brought her aboard a pirate ship (带上贼船), unleashing an incredible amount of documentation in the process, spanning at least seven inter-connected agreements. The deal was eventually closed and some weeks later, she resigned for better opportunities and left this note:
During that same period (with a separate team), I was also running multiple conversations on getting our first-ever "ESG financing" framework accredited by a international ratings agency. Although we had paid a fee for doing so, the negotiation process was tough. The ratings team sitting in Europe didn't have a clue on the overly long payment cycles experienced by public hospitals in China, and how supply chain financing for pharmaceutical companies delivering medical consumables actually resolves this critical financing bottleneck.
When we finally obtained the official second party opinion (SPO), I counted over 100 threads in the email exchange. It was not only the first time we had ever published a social and sustainability-linked financing framework and received a vote of confidence by an internationally reputed ESG ratings agency, but more importantly, this was one of the key CPs to drawing down on a RMB 500 million syndicated loan facility.
In situations like these, I find my teaching methods taking on a more practical element. I am no longer working within the 'harmless' confines of the classroom where I can freely talk about structuring, negotiation and valuation. My actions have tangible repercussions on the outcome of the deal, and at every step, people are watching.
Middle-to-senior management roles (much like my typical classroom lectures on financial modelling) are often like stage performances: As long as you don't screw up big time, you can always afford a few slip ups, which is perfectly normal, but the show has to go on.
Look, most of the time, you work for money and are subject to the obnoxious KPIs placed on you because of your position. But once in awhile, your job gives you a unique opportunity to make a difference. That difference is sometimes not measured in the millions of dollars you bring in for the firm or the big bucks you bring home at the end of the year, but the impact that you make on the people around you. The difference could range from anything as simple as fixing the alignment on a powerpoint slide, fixing a financial model, helping someone negotiate through a transaction bottleneck or simply changing the mindset and perspective of a particular person.
It is often said that we can't let our jobs define us. But how we do our jobs, and behave with our colleagues and clients ultimately determines the kind of person we are.
It has been a relatively productive two weeks in Singapore.
Most of the conversations I have had ranged from my life in Hong Kong to opinions involving the current state of affairs in China. A few common themes consistently came up and I thought it might be a good idea to summarise them here.
China will open up... eventually.
There is no denying that supply chains, the over-leveraged property sector and the broader economy has been impacted. This has likely resulted in a slowdown of the economy (hard to verify if any of the public disclosed figures can be relied on).
There's a lot of noise involving the recent protests, possibility of further lockdowns, speculation over when travel will open up etc. No one really knows. The concern over handling foreign infections is understandable given that China has over a billion people. Just imagine the toll on healthcare infrastructure if a billion people went to the hospital at the same time. That being said, we can be sure that China will eventually open up. Its interest for doing business with the rest of the world remains intact. There is no way to prove this, it's just a matter of time. However, given the elevated cost of funds in today's environment, time unfortunately also means more money.
A changing demographics and mindset is shaping the new world economy.
Persistently high youth unemployment rates might pose a longer term problem for the economy. 躺平 has obviously been one of the catalysts, but the contraction of jobs supply is partly also due to the crackdown on big tech and edu-tech over the last year, the imploding of the property sector, and the more recent cost-cutting measures observed in various household tech giants such as JD.com and Sea. There is also less motivation (or greed depending on how you look at it) to excel in life.
Call it the successful result of pushing for common prosperity (共同富裕) or simply renouncing the lofty desires in life (看破红尘). Young people are increasingly comfortable with getting by doing the minimum. This is a generational paradigm shift that is taking place not only in China, but many parts of middle-class Asia as well.
The beliefs and values of those born before the 1980s have been mostly shaped by the need to have a good education in order to secure a well paying job. Having gone through the dot-com boom and bust, the Asian financial crisis, globalisation, etc, hard work has been taken to be the 'holy grail' for being successful - success in life being largely defined as having a high paying job, even at the expense of sacrificing personal time and working long hours. Hard work correlates to wealth, which buys a roof over the head and some financial stability.
And the results have been evident over the last 5-10 years as seen in higher income levels. Economists in Asia have previously also touted the emergence of Asia's middle class, in which the rising affluent population (especially the Chinese) were expected to spend more on lifestyle and luxury.
In a recent weekend coffee catch up with a friend, he mentioned an interesting observation: Setting aside the affordability of buying a home, it is actually a lot easier for young people today to get by. In Japan, Korea and China for example, there are tons of convenience stores for getting decent hot food and supplies. There are shops like Uniqlo and MUJI for clothes, and "dollar stores" such as Daiso and JHC for incredibly cheap household stuff. If you are willing to forgo the luxurious brands, you technically don't have to dig very deep into your wallet to live comfortably.
It is actually very easy for people to 躺平 and give up on the ”high life".
From a capitalism point of view, this is obviously bad for the country because growth has traditionally been associated with increased spending, and not about being contented with living the simple life. And while US and the rest of the world are hiking rates to fight inflation, China by contrast is doing the opposite. By cutting domestic rates, the Chinese government is probably adopting the age-old "inflation targeting" monetary policy to rejuvenate economic growth and avoid stagflation.
A new new normal.
The narrative on the outcome of China's recent party congress meeting is obviously extremely divided, you either love it or hate it. Some of the peers I spoke with see XJP's next 10-year rule as an iron-fisted style of governance. While it might appear as if too much power is in the hands of one person, this continuity also implies a certain stability in policies, which can be a good thing in today's volatile markets. The so-called 'strong fisted' ruling also means that privately owned enterprises who work more closely with state-owned-enterprises could be seen as a more 'friendly' party aligned with national policies under the current regime.
"I believe China is currently in the range of 3 to 5 percent growth, and headed rapidly to zero" - excerpt from Politico.com, January 2016
In 2016, when the term "new normal" was first introduced at China's 13th Five Year plan, there were several opinions hinting that one of the world's largest economic engine was rapidly grinding to a halt, including the possibility of a catastrophic outcome.
But an article published in Fortune put this into perspective: "The slower growth rate is a sign that China’s enormous economy has passed the startup stage and is beginning to mature. While this is certainly a new environment for investors to wrap their hands around, it doesn’t equate to economic Armageddon." China and most of the global economy continued to thrive in the three years that followed, right up to the pandemic in early 2020 which took the whole world down.
What doesn't kill you makes you stronger.
Maybe that could also be what the world needs right now: To be less pessimistic and gradually learn to embrace a second new normal of a controlled (or regulated) market economy rather than a free market economy that is jacked up on steroids.