Search this site

1992 PSLE. It was the year I took the PSLE (Primary School Leaving Examinations). Some might say I was in one of the top notch primary schools in today's terms. The school had come from humble beginnings, being located in a neighborhood whereby most of my friends stayed in HDB flats and everyone knew their neighbors[1]. I had been fortunate enough to almost always be in the top one or two classes with the best performing students. Back then, my childhood dream had been to be a doctor. So for my PSLE, I aimed for a score of over 260 (300 was the maximum) as that would surely propel me into the best secondary schools. But when the results came back, my score was an astounding 237 - a decent grade no doubt for many, but it fell incredibly short of what I had hoped for. I could not qualify for any of the schools that I had initially shortlisted. I remembered walking along the road to the bus stop just outside the school after collecting the result slip as mum and I re-evaluated my secondary school options. I eventually went to a secondary school that I had never heard of (which later also turned out to be quite a good school)[2]. Despite the turn of events, those years were one of the most transformational periods of my life. Excellent teachers and numerous outdoors expeditions would shape me into a highly athletic, all-rounded and balanced person that good grades alone could not achieve. 1996 Food poisoning. On the morning of my English 'O' levels, I woke up with an extremely sharp pain in my stomach. It hurt so bad that on that fateful morning, I was sent to the hospital. I vaguely remembered the nurse putting me on a drip as I gradually passed out on the wheelchair. I had been enrolled in a triple science route as part of the pre-requisites to study medicine. I had nine subjects under my belt and English was just one of them. But failing or skipping the English papers meant that I had to re-take the entire year of school again, regardless of how well I did for the other eight. Everything was on the line here. By the time I had woken up, I remembered distinctively the clock showing 8:25. It was still in the morning and a man was seated just opposite my bed. As it turns out, he was from the education ministry--the school had been informed of my circumstances and sent an invigilator to the ward. I ended up taking my English papers nearly an hour behind every one else, in a slightly woozy state and with a thick hypodermic needle stuck in my right arm. The couple of days later and some tests, the doctors put the diagnosis as a simple bout of food poisoning, and I was placed under further observation for a week. Interestingly, I ended up scoring an 'A' for all the papers that I sat for during my stay in the hospital. But I still fell short of the overall grade requirements to break into the top five junior colleges. 1999 Career choices. I did well enough for my A-levels to do nearly any course I wanted in university except for medicine. But there is an interesting backstory to this. During my first year in college, I did so badly in my exams that the school principal gave me an ultimatum: Choose biology or athletics. I eventually traded biology for athletics, to which I later obtained school colors as part of qualifying into the National School finals for the 400-meters event and clinching the bronze medal for the 4 x 400 meters relay. I still vividly remember the day we reported back to collect our A-level results, my biology teacher exclaimed with amusement and a hint of sarcastic humour: "Look! This is the boy that gave up biology and scored straight As!" Upon leaving college to serve my mandatory national service, I was offered a prestigious government teaching scholarship to study at some of the most reputable universities in the UK and US[3]. The catch was that I had to commit six years of my life to the public education sector upon graduation, so I passed. A year later when I graduated from OCS (Officer Cadet School), I was also offered to attend a military college in Japan which came with an engineering degree. In exchange, I would have to serve six years of my life in the Singapore army. I declined again. I did not like the idea of working under a covenant and I figured there were possibly more opportunities beyond the government sector after four years in university. Back then I aspired to be an engineer. I remembered one of my teachers in junior college saying, "Go study engineering, it will always be in demand". So I went and enrolled in computer engineering, believing that it would lead me to the holy grail of all professions. 2006 Hello, China. Studying engineering in university proved to be much more difficult than I had thought. I had been toeing the red line one year into my studies. It had been so bad that I was served a warning letter and nearly got booted out. But my life changed forever when I decided to spend a year living and working overseas in China as part of the NUS Overseas College (NOC) program. The NOC program back then had been a relatively new initiative to foster innovation amongst budding student entrepreneurs in hopes that they would return to Singapore and set up companies. It piloted with two strategic hubs in Silicon Valley and Philadelphia, at the same time partnering the prestigious Stanford University and the University of Pennsylvania respectively. The Shanghai hub that was launched two years on would be the program's first foray into China. It came at a time whereby the country was opening up to the world and undergoing market reforms. Being in the pioneering batch of NOC Shanghai, I had been introduced to the glittery world of business, finance and private equity during my internship. Everything that I had initially looked forward to in an engineering career basically vanished during those twelve months overseas as I learned and discovered the monetary rewards of being in finance. So to earn the big bucks, I convinced myself that after graduation I wanted to be in banking, more specifically investment banking. My entry into the corporate finance department at KPMG marked the day I renounced my engineering career forever. Their offices were in Raffles Place, at the heart of Singapore's financial center. I was excited to be in the league of like-minded aspiring fresh graduates, constantly on the lookout to make that transition into a bulge bracket bank with a five-figure monthly paycheck. But I missed that boat when the 2008 financial crisis struck, crippling the hiring plans of the large investment banks across the globe. In the twist of fate, I managed to join a mid-market Korean securities house that was looking to expand in Southeast Asia. I clocked my mileage, put in the hours and late nights, adhering to the rites of passage, before subsequently moving on to BNP Paribas and Standard Chartered Bank to get more exposure as part of a larger and more institutionalized corporate finance set up. 2010 Rinse and repeat. Investment banking turned out to be a jealous and selfish bitch five years into the job, demanding one's personal and social time more than anything else. I had been working up to sixteen-hour work days, eighty-hour work weeks, pulling all-nighters, even on weekends and holidays. One of my co-workers summarized aptly—we were simply trading time for money. The routine was: Wake up, drink coffee, generate pitch books, run financial models, update trading comps, get yelled at by seniors. Rinse and repeat. Over the years I had received several offers to jump ship, some of those include buy-side and corporate development roles that promised a more balanced lifestyle and decent pay check. But all this time inside my head was a voice that kept saying: Just stick to the plan, put up with this for a few more years, and then leave. 2016 Starting up. Leaving banking to build a business from scratch was probably one of the best and worst things that happened to me. On hindsight, it was one of the most liberating initiatives I had done for my career. But nothing would prepare me for what was to come: Waking up every day without having to report to a boss at the office, learning the ropes of HR, operations, finance, legal and sales all at the same time. Not to mention the disappointment of getting repeatedly rejected by prospective clients. But most trying of all was the nagging anxiety of watching your bank account being depleted month after month. No one would be able to understand this without having ever gone through it first-hand—Entrepreneurship would basically test your limits and push you to the breaking point, again and again. Starting up a business was good mental training and personal development. Because your mind would always force you to find a solution no matter how hopeless and impossible the situation seemed. Looking back, I recalled reading in some random article that said: Money shouldn't be the reason why you start a business. It should always revolve around purpose, it should involve addressing a pain point in the industry, or making a better product, or offering a better service. I never explicitly admitted it, but what mostly drove me to start a business was the naive illusion that I could make lots of money, and in a relatively short time. The startup journey made me realize that employees are in fact the richest people in the world. They will all be slaves but they are still rich[4]. But at least I could say to myself that I had tried my hand at least once in starting a business—been there done that. 2021 Hello, Hong Kong. It felt surreal the day I left Singapore. The opportunity came in late 2020 in the midst of the pandemic. A friend had asked if I was keen to put my banking credentials to use in an investor relations role for a Chinese company. The catch was that the position was based out of Hong Kong. I am currently at my fourth year of residing in Hong Kong. In some ways, it feels so much different from it was three years ago. A part of the experience of staying here feels like home and a sanctuary. At times, I would think about how life would be like had I not accepted the offer to be based overseas. Paterson Walk, CWB... where I currently stay. Epilogue The reality is that the things we set out to do in life doesn’t always go according to plan, regardless of how well you planned for it. Nothing is ever so bad or so good as it seems, and the outcome always leads to the discovery of something else. At the time of writing this, I was watching a documentary on CNA about a young man who had just graduated from university and had decided to make a living out of being a hawker as compared to his peers who went into white-collared jobs. He was describing how he started his business, grew and transformed it along the way. Some of what he said relating to the twists and turns in his entrepreneurship journey stuck with me: "You don’t really know what’s going to happen... in five year’s time, it’s very very far. You can have big dreams, and you can plan way ahead, but you never know what’s going to happen tomorrow. Even for this hawker stall, I didn’t even plan to open a hawker stall. My plan was to open a restaurant but things didn’t work out. But I realised that the day I stopped planning is when things started to flow. I think that’s how life should be, just go with the flow. Things don’t work out, pivot, change, adjust.” [1] Contrary to its prestige today, Henry Park Primary School had really been a very normal school. I remembered back then we were still part of an education system that included Primary 7 and 8 for students that needed more time to catch up academically. [2] One thing that really stood out for St Joseph's Institution was the wide spectrum of academic grades, ethnicity, family background and religious beliefs of its students. [3] Had I accepted the PSC scholarship then, life would probably have turned out very differently. [4] Entrepreneurs of course have the potential to be much more wealthy, but no one considers the tail event. Only a miniscule percentage of entrepreneurs make it really rich. For every mind-blowing successful start-up seen on social media, there are at least a thousand others that have failed and don't even show up in the headlines.

Another fintech platform just raised USD 7.6 million in Series A funding this week. “A factory worker who runs out of cash on the 15th of the month should not have to borrow from someone charging 20 to 30 per cent a month to make it to payday. Salary Hero lets that worker draw down wages already earned, through their employer, before the official pay date." Salary loans or payday loans are actually fairly common, especially in many rural banks. On the face of it, the interest rates seem lower than what the ah longs (a.k.a. unlicensed moneylenders) are offering. But the upfront fees—which are often either omitted or lost in the fine print—can go as high as 7 percent. Because these fees are considered to be administrative or one-off, they rarely get categorized as credit income, hence understating the headline interest rate. But when you include all of these on an annualized basis the all-in costs significantly add up. So whenever I see headlines like these, I am reminded that the financial literacy gap is real in Southeast Asia. As a lender, you can't charge a high interest rate and still pass off as being inclusive. But read between the fine print, there are hidden costs and a market for those who are desperate for cash. Just to be clear, what I’m writing here is not an opinion on Salary Hero per se but a broader perspective on the state of SME lending in Southeast Asia. A couple of years back, I spent a considerable amount of time in the Philippines to understand the local market. In this part of the world, lending to the individual or his/her business are usually one and the same. A gig worker travelling down a highway on an electric scooter in Manila. Photo credit: mine I had assembled a small tactical team of local staff to conduct a study of the potential borrower profile. We asked questions around the nature of their business, working capital cycle, funding costs, etc. At the end of the exercise, I compiled the data and reported the findings back at our headquarters in Shenzhen. Based on a fairly in-depth conversation with over fifty business owners, a significant proportion were not averse towards the idea of taking out a loan, even at levels that were close to predatory interest rates. But this wasn't solely a price discovery process. It was meant to be a step towards gaining a first-hand insight into the local market and how it differed from the way small businesses operate in China. Many of the vendors I spoke to were ready to pledge property titles, vehicles and just about any asset of value just to get immediate cash for a client that takes too long to pay. Another vendor also lamented how the billing process was either too tedious or prone to glitches in the invoicing system, ultimately leading to delays in payment. Bottom line: Companies were generally interested in the idea of receiving their cash earlier, even to the extent of paying a small fee. Coincidentally more than a decade ago during my banking days, a somewhat similar observation came up while I had been working on the sale of a notable consumer electronics and furniture retailer. A closer look at the numbers revealed a huge chunk of profit margins made from selling products on instalment plans--buy now pay later. And the consumer demographic comprised largely those in the lower income bracket who were willing to pay more to split the costs over twelve months or more. An advertisement for paying in instalments. Turns out that the retailer was making more money financing the purchases made by customers as compared to simply selling the items. Providing loans to customers turned retail spend into a high margin business. The banks carried a similar product. The business with the highest margins were often credit card and personal loans. The charges for credit cards were set at 2 percent per month. On an annualized basis, this works out to roughly 24%. Personally, I make it a point never to pay for this interest (I don’t carry a credit card balance ever) even though it is a highly profitable business for the bank. Understandably, my relationship manager makes very little effort to speak with me unless it involves me getting one of these products. Underpinning these examples is a very simple behavioural attribute that is being exploited: The expensive loans are tailored for those who consistently spend more than they earn, and who are oblivious to the fees that they pay at every turn. Again, I do not mean to demonise consumer financing plans or credit card loans. But as long as credit risk assessment remains anchored in traditional frameworks and financial institutions continue serving primarily the large clients, there will always be lenders who will capitalize on this dislocation in the market to make money off owners of small businesses. Salary Hero is on a noble mission to "end financial stress for every SEA worker". According to co-founder Prabhav Rakhra, the firm was established “because the financial system in Southeast Asia is broken for the people who can least afford it.” But there is an alternate and darker perspective to this. A broken financial system is not necessarily a bad thing, especially for fintech companies like these. A global workforce survey done in 2025 showed that Southeast Asia has a sizeable population that continues to live from paycheck-to-paycheck. Even in a high income economy such as Singapore, this number is a surprising 60%. Many of the borrowers who can "least afford it" are in fact normal salaried workers going about their daily jobs. When your world revolves around customers that take forever to pay or sustaining an expensive cost of living, this cash flow can provide a critical lifeline, even if it costs. The truth is that a lot borrowers—whether they are trying to fund their spending desires or simply make ends meet—remain clueless when it comes to managing their finances. But change that behaviour and the financial literacy gap closes, potentially upending those who are in the business of supporting these people. So the thing is: Do you fix the broken financial system when the profitability and viability of your business model depends on the system staying broken? This is the paradox when it comes to investing in and charting a growth strategy for micro-financing in Southeast Asia. By solving for financial stress, you eliminate the very need for borrowers to take on subprime credit in the first place. Besides, from a venture capital perspective, how do you justify asking for a high return on equity (ROE) when the success of your investment depends on scaling financial inclusivity and reducing asset yields? One solution could be financing the loan book with cheaper sources of capital such as bank debt. But going down this route has its limitations and will eventually lead to lower yields. Eligible assets funded by the banks will likely be more rigorously selected and subject to tighter covenants, pushing the borrower profile towards the bank's own customers. As the loan book gets increasingly "bankable", fintech lenders will see their pricing power diminish. Paying a 20% interest per month on a loan might sound crazy. But a lot of these people have been accustomed to a lifetime of debt and instalment programs. Taking on expensive credit has become a part of their life. Who are you to say otherwise? Those people can be misinformed. They can have incomplete information. They can be bad at math. They can be persuaded by rotten marketing. They can have no idea what they are doing. They can misjudge the consequences of their actions. Oh, can they ever. Those buying $400 in lottery tickets are by and large the same people who couldn't come up with $400 in an emergency. They are blowing their safety nets on something with a one-in-million chance of hitting it big. That seems crazy to me. It probably seems crazy to you, too. But I’m not in the lowest income group. You’re likely not, either. So it’s hard for many of us to intuitively grasp the subconscious reasoning of low-income lottery ticket buyers. —Morgan Housel

This week, a prominent law firm that advised Lehman Brothers on the edge of its collapse is on the edge of its collapse itself. I have never worked with Weil, Gotshal and Manges before. But my sympathy goes out to the high caliber folks who had joined the firm in the recent weeks, particularly those who were re-opening the practice in Asia[1]. I can only imagine what it is like to show up at the office one day to find that your role is at risk of being redundant while the company weighs its options of a merger or liquidation. Then again, how does an asset-light business that is billing more than $2 billion a year[2] go under? In most companies, the collapse of the business is almost always attributed to cash flow, a bank run or when someone pulls the plug on capital. Both Lehman Brothers and Silicon Valley Bank were classic examples. Still, I think this is a stark warning for all companies, even those that are publicly listed, well regarded and inundated with cash. To put things in perspective, law firms operate somewhat differently from other large capital-intensive businesses such as commercial banking or manufacturing whereby the departures of a few good men do not sink the boat. No one is irreplaceable. But the legal advisory trade—much like consulting—relies even more acutely on people. And when a $20 million rainmaker walks out of the door, an entire business can be put into jeopardy. Weil's top earner was known to be powerful and territorial, holding enough sway to block recruiting efforts by the firm including a potential hire of an M&A partner from a competitor, even when those who were part of the hiring process supported it. He was also said to have held back on new growth initiatives, discrediting a colleague's proposal to grow the practice in a new area, even calling it an act of disloyalty[3]. I can totally understand that it is a fine balance having to juggle strategy, topline and bottomline, all while trying to keep your best salesman in check. But if a firm's corporate culture shuns ambition and personal growth, or perpetuates an environment that turns talent away, then the ambitious people will simply leave. The ones who remain will end up as mediocre fools who come to work every day lying and hiding behind their flaws, never taking risks, never doing the things that makes them appear weak or end up in the firing list. The end result will be a vicious cycle of employee turnovers, each round worse than the one before. Most companies worry about cash flow and staying afloat. But remember: While you may not run out of money, you can also die by running out of people. References: [1] https://www.legalbusinessonline.com/appointments/weil-hires-skadden-beijing-head-launch-asia-capital-markets-practice [2] https://www.reuters.com/legal/litigation/weil-gotshal-law-firm-plans-dissolve-capping-dizzying-fall-2026-10-28/ [3] https://news.bloomberglaw.com/business-and-practice/mike-aiello-leaves-weil-reeling-and-relieved-in-cravath-move

In 1997, IBM’s Deepblue beat world champion Garry Kasparov in a game of chess[1]. The world was awe-shocked. It was the first ever defeat of a human by a computer. Kasparov accused IBM of cheating. Some said it was a publicity coup by the company. IBM later retired the machine. The breakthrough made the headlines again nearly two decades later when Google’s Deepmind AlphaGo defeated human world champions in separate matches of Go. The feat also ignited strong reactions to how Deepmind had been secretly playing various players online, and training its database to maximize its chances of winning. A subsequent live broadcast of AlphaGo vs Chinese champion Ke Jie had also been blocked in China. So when the Navier-Stokes equations—a million dollar math problem—was solved by OpenAI recently, it was no surprise that it drew similar criticisms from various communities on the study of mathematics and the broader implication on humanity. Computers have once again proven itself to outsmart humans, just in a different way and domain. Death by comparison. Anything reductible to a set of mathematical equations—from rendering complex graphics, moving images on a screen, getting from home to the airport in the shortest time, or a game of chess—is ultimately solvable with computers with enough iterations. The paradox here is the comparison. To pit a human brain against a computer is like trying to outrun a speeding bullet. If the goal rests purely on speed, then there is no outcome whereby a human can reasonably win. Fortunately we live in a reality where the outcomes we care about are almost always never determined by one single parameter. No one feels threatened that a simple calculator can multiply two seven-digit numbers faster and more accurately than any human alive--because speed and accuracy at arithmetic were never really about being good with numbers. What we actually value in a person who is good with numbers is judgment: that is knowing which calculation to run, spotting when an answer looks wrong, explaining the result to someone else, deciding what the resulting number means for decision-making. The calculator wins the sprint every time—but it has never once been asked to do any of the things that actually matter around the arithmetic of it. The “threat” here, so to speak, had always been personal. The backlashes involving the solution to the Navier-Stokes problem occurred because boundaries had been crossed, interests were conflicted and livelihoods are at stake. If artificial intelligence hadn’t dipped its fingers in the lunchboxes of mathematicians, the response from the community might have been quite different. Consider also real-time translation captions generated by AI in Zoom or other video conferencing tools. The feature doesn’t displace any jobs because no one would be employed to translate a casual conversation in real time. At the same time it also doesn’t replace the work of a language interpreter where accuracy is critical and the stakes are high. More importantly perhaps, the technology is not adversarial. An incorrect translation is at worst an occasional annoyance but humans are not “losing” to an AI like Kasparov in a game of chess. Everyone is impatient now. But our ongoing discovery of the speeds and limits in terms of what AI can do might just be a distraction from a deeper and more humanity-related problem. I am no mathematician. I do not know anything about the Navier-Stokes problem more than the engineering mathematics I had learned in university. But what I do know is that we now live in a highly impatient world whereby organizations are building AI agents that can execute tasks faster than a human. And they can do it round-the-clock, effectively satisfying the new age of business owners and consumers that demand everything right here, right now. This fixation on immediate gratification have led us to squeeze every last second in the twenty-four hours we have every day, speeding things up dramatically. Patience becomes a drag and people now prioritize an instantaneous response over time-tested craftsmanship. This comes down to what Fields Medallist, Terence Tao is saying as a "Severe Misalignment of AI in Mathematics" in response to the Navier-Stokes problem being solved by AI. He describes the analogy: “These companies are dumping carcasses of raw meat onto our communal village table and saying: ‘Here you go, I solved your food problem.’ And then they just leave,” It's like we have found a way to make things move faster and work more efficiently, but with the free time we now have we fill it with more stuff. And it's never enough. To be fair, this is not unique to the field of mathematics. Grunt work can be useful. In other aspects of our daily lives—the accumulation of wealth, reading to gain knowledge, working to acquire real-world experience—AI has significantly accelerated the outcomes but never really solving the problem at hand. Take for instance wealth accumulation: Someone who harnesses predictive algorithms to amass huge amounts of money within a short time might solve his financial problems but the same does nothing in teaching him about decision making, risk management and the value of earning a dollar in a day’s hard work. In the case of reading: Digital books provide the mobile convenience that conventional paperback books could not provide. There are even apps such as Blinkist that condense and summarize the contents of an entire book, allowing a reader to digest its essence within fifteen minutes instead of spending the entire weekend buried in hundreds of pages. However, if you are an avid reader like me, you would understand that nothing replaces the joy of reading a book from cover to cover (e-book or paperback), pausing and picking it up again. Also, a huge part of what makes reading enjoyable and valuable is the gradual percolation of ideas, its synthesis into deeply personal reflections and how this eventually culminates into one's mindset and behaviour. In fact, reading is so important that the Singapore government even launched a nation-wide reading campaign this year in September to nurture reading as a lifelong habit. Irish philosopher, Edmund Burke said, “To read without reflecting is like eating without digesting.” And as for acquiring real-world experience at the workplace, agentic AI might build the case for maximising productivity, but it also takes away the grunt work undertaken by newly minted graduates, depriving them of “going through the motion”. This rite of passage, at least according to The Economist, is essential to initiating them to the workforce. "One argument for drudge work is its centrality to entry-level jobs. People who are new to the workforce know very little about the job they are meant to be doing. (The same is also true for lots of people at the end of their careers.) Grunt work has long been a way to fill junior employees’ time while allowing them to learn the basics of office life. Per photocopier ad astra. If AI takes on all the drudge work that has traditionally fallen to the newbies, employers may simply stop hiring them." There is also the argument of balancing cognitive capacity in which jobs that are less intense in nature may lead to the incubation of more creative ideas. Like it or not, grunt work such as processing your claims can also be effective in teaching you ownership: "Much as nobody revels in doing their expenses, they can at least be done. You can press the submit button and feel minutely satisfied (until you are told the claim code is wrong)." The phrase “Practice makes perfect” means we acquire mastery by iterating. This requires first-hand knowledge such as actually doing the work, walking the ground, and going out there to talk to people and learning the nuances of the trade, however mundane and time-consuming it may be—something that agentic AI misses. Many desirable outcomes in the real world require repeated iterations and the necessary passage of time. Development in AI doesn't necessary need to slow down. It is also not only about placing appropriate guardrails around privacy and personal information. It is about how the world would look like in the future with so much dependency on AI. In Nick Bostrom's book Deep Utopia: Life and Meaning in a Solved World, he theorizes what life could possibly look like if AI turned out to be capable of solving all of our problems. Would human labour become obsolete? Would there still be meaning in doing anything we do? Would there be any point to human existence? Without appropriate human iteration (and intervention), we risk creating a knowledge ecosystem that is highly transactional and built on potentially fragile foundations. And God forbid we rely solely on deep research using ChatGPT, Claude, Deepseek or any other computer model to conduct a market feasibility study, design a new product, run negotiations or worse still, make our most important decisions in life.

Whenever I approached the close of my financial modelling course, I always did a simple roll-call to call for feedback from everyone in the class. This time, instead of recycling this common practice, I decided to try out a different approach by using Mentimeter and getting everyone to input three keywords on how they felt about the last two days, and this was the result: A million followers can't be wrong. One of the key aspects of financial modelling is being able to accurately project cash flows. This has consistently been a perennial question that comes up - "how do we do it?", "How do we know that the numbers are reliable?", and of course the occasional remark from the seasoned industry veteran: "the assumptions are too conservative, I think it should be much higher!" Subject matter experts and experienced professionals who have been in the game for a long time play an influential role in terms of how we rely on an estimation of the future. In today's context - given the speed and digital pervasiveness of information - the loudest person in the room can also sometimes be easily misconstrued an industry thought leader. To quote Colonel Hans Landa from the movie Inglorious Basterds: “Facts can be so misleading, but rumors, true or false, are often revealing." Before we had the TV, email and newspaper, people relied on word-of-mouth as their primary source of information. Casual banter amongst households within proximity was how we passed the word around. There was usually nothing lost in translation and no one usually questioned its legitimacy. That playground of information is so different today. Part of how we receive information today has evolved to include social media channels, such as Twitter and LinkedIn. We no longer need to hear information directly from the proverbial horse’s mouth. It is incredibly easy to be swayed by the opinions of the majority, albeit online or offline. After all a thought leader with a million followers can't be wrong right? But the key is in "carefully curating our sources of knowledge so that we are able to get down to what is true regardless of how many other people want to believe it. And that means doing the work.” Luke Burgis says, “Be wary of self-proclaimed and crowd-proclaimed experts. It’s less likely that experts will be mimetically chosen in the hard sciences (physics, math, chemistry) because people have to show their work. But it’s easy for someone to become an overnight expert on “productivity” merely because they got published in the right place. Scientism fools people because it is a mimetic game dressed up as science." The process is more important than the outcome. In my opinion, projecting cash flows requires more imagination than hard core quantitative and technical skills. Valuation and financial modelling is in reality part art, part science. In fact I would even go further to say that a large part of it is art, since the desired outcome is almost always based on creatively imagining what the future beholds. The narrative, so to speak, is as important as the numbers. As Yuval Harari puts it: "A person who wishes to influence the decisions of governments, organizations, and companies must learn to speak in numbers. Experts do their best to translate every idea into numbers." And so, the process of constructing a financial model tries to achieve this. I often get asked if I could provide excel templates for a variety of sectors that people could use to just work off, punching in the inputs to generate the valuation output. Unfortunately, I don’t think it works that way. The real value in any financial modelling exercise is not the result it produces, but the mental exercise that you have to go through in order to produce a functional three-statement spreadsheet of intricately connected moving parts. This is probably the same parallel why people run marathons - not to get from point A to point B but more so the journey, the process of having gone through first hand and pain of completing 42.195km and that personal feeling of having achieved something at the finish line. That sensation means something different to everyone. The financial model is then a representation of what you think of the business and possibly how you see it evolving over time. In the hands of another person, the assumptions and results might look very different. As Warren Buffet once said: "Forecasts may tell you a great deal about the forecaster but they tell you nothing about the future." The value of a digital monkey. Going back to the narrative, the valuation exercise seems to be always all about that magic number and the story behind that number. It is easy to play around with numbers, crunch the numbers and as a lot of bankers say - massage the numbers. Data is widely available nowadays with the Internet and relatively cheap access to some proprietary information. Stories on the other hand are a reflection of the founder/CEO’s ambition or the company’s vision of the future. In the digital world, social media has also increasingly found its role as a facilitator of information (reliable or not), and does an incredibly good job of amplifying stories. Just look at GME's share price performance... This boring brick and mortar retailer was reportedly shuttering stores in 2019 and went into a semi-crisis when revenues plunged in 2020. Yet, its share price defied everything the numbers were saying, becoming a cultural sensation on social media. If you looked at Lehman Brothers' balance sheet back in 2008 they actually had "one of the strongest capital and liquidity positions the Firm has ever had". But the story unfortunately went sideways, souring sentiments very quickly, resulting in its shocking collapse, disregarding whatever the snapshot fundamentals and numbers were showing. Cryptocurrencies and NFTs are also classic examples of how story-telling has manifested in valuation. There is almost no means of proving why a digital image of a monkey could be worth thousands of dollars. There is also no real use for a digital monkey, and therefore, no way of doing a meaningful DCF valuation. NFTs are simply worth what they are because people say so and because people want it. So, you can’t model sentiment and emotion in a spreadsheet. You also can't do an analysis of the cost-benefits on waging war for national security. Neither can you put a price tag on human relationships. The numbers simply won’t stack up. "The concept of economic value is easy: whatever someone wants has value, regardless of the reason (if any), and its value is higher the more it is wanted and the less there is of it." - Per Bylund Storytelling for what it is, is a persuasion exercise to galvanise interest and sell something - an idea, a product, a call to action. But it remains effective only to the extent others believe and identify with it. Any story becomes instantly more believable if there is sufficient information and that the anecdotal evidence provided is relatable by the other party - which explains also why investor targeting strategies are different for retail punters and large institutional buyers. Without connecting the numbers to a story, projecting cash flows simply becomes an emotionless exercise of numbers.

Remember how people used to queue for Hello Kitty toys at McDonalds? Consider this: You are queueing in line for that limited edition item and suddenly realize that it'll be sold out by the time it reaches you. The thought of walking away empty-handed drives you to think of other ways, including negotiating with the folks in front of you. But everyone respects the unwritten rule of the queue - first-come-first-served, get in line and wait for your turn. Desperate and frantic, you decide to go bat-crap crazy and threaten to burn the whole store down if you don't get your toy, putting the entire queue and McDonalds store in jeopardy. Suddenly the store manager comes over to appease you, bringing you to the front of the queue, effectively guaranteeing a reward for your troubles. Make enough noise, create enough damage and you'll get something. For years, practitioners in the industry have been taught, have understood, and have accepted that equity holders stand behind debt holders in the queue to redeem cash flows of a business. These are the rules of the game relating to the priority of how cash in a business would be distributed, if and when assets are being liquidated. It's a basic principle codified in financial markets theory. But that rule seemed to have changed forever when Credit Suisse decided to write off a huge chunk of their AT1 debt last week and facilitate any residual payments to shareholders. According to the Financial Times: "Protectionism, geopolitical self-interest and state intervention, in other words, seem to have over-ruled free-market principles." Senior debt letting common equity know who's in charge (Source: Twitter) By allowing the "free market principles" to take reign and go its natural course, the Swiss government runs the risk of embarrassing a certain influential Middle Eastern shareholder who recently invested in Credit Suisse, and in the process, taking the rap for the bank's current state of affairs. Investors and onlookers would ask, "why bother even doing a capital raise in the first place only to write it all off within months?". There would be a crisis of confidence in management, possibly wider overhanging doubts over stability in the region, including the country's position as a global wealth management hub. And then no one would put money in Switzerland anymore, a cost possibly too high for the government to bear. When the reputation of your country is at stake, all concepts of equity and debt gets thrown out of the window. Bottomline: Rather than adhere by the rules governing capitalist theory, it is far better to offend those who can afford to be offended than to risk a systemic meltdown. Of course extreme situations call for extreme measures. Under the normal course of business, every one is happy to stand in line and play by the rules. Decent wages for decent work, a fair share of the pie for a fair amount of effort invested. Most investors who walk into a share agreement try not to think too much about a material adverse outcome. But when the house is on fire, everything is up for grabs and all stakeholders - equity and debt - will scramble for the exit. I think the uncomfortable truth today, that no one talks about explicitly, is that: rather than fight a war using conventional arms, political decision-makers around the world have found a way to weaponise the workings of financial markets and monetary policies to drive their own agendas, in the process distorting how we perceive value. Any country in world can 'own' another country by simply imposing trade sanctions, ridiculous tariffs, and in extreme cases, confiscate assets - assuming one country is heavily reliant on the other for the import of certain critical goods and services. By creating dependency, you are weakening the bargaining power of the other party, and lesser bargaining power generally comes with lower value. Nassim Taleb also talks about this in his book under the section: "How to legally own a person": "Every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom. How do you own these people? First, by conditioning and psychological manipulation; second, by tweaking them to have some skin in the game, forcing them to have something significant to lose if they disobey authority—something hard to do with gyrovague beggars who flout their scorn for material possessions. In the orders of the mafia, things are simple: made men (that is, ordained) can be whacked if the capo suspects a lack of allegiance, with a transitory stay in the trunk of a car—and a guaranteed presence of the boss at their funerals. For other professions, skin in the game comes in more subtle forms." For good or for bad, sovereign risk has become even more closely intertwined with equity risk. When you buy a stock or a bond, it is no longer as simple as taking a view on profitability, future cash flows and room for improvements, but also the strategic importance of a company's position in the ecosystem. DCF does not capture all of that. In fact, no amount of number crunching and analysis allow for an accurate appraisal of any company's fair value today, primarily because the free market is no longer free. Instead of willing buyer, willing seller, markets today are to a good extent, influenced by statecraft, driven by the common interests of various governments. The treatment of Credit Suisse's AT1 bonds has also further demonstrated and reinforced how loosely-held and trivial the definition of equity and debt can be when push comes to shove. For what it is worth (as it has always been), value will forever be driven by the willingness of another party to take the asset off your hands at their own free will.

“All I ever wanted was the freedom to make my own mistakes.”[1] Toxic dumbness. Years back when IJK was established to enter the advisory business, there was a whole bunch of M&A and capital raising deals thrusted on to our plate by an older person who offered to mentor us on our startup journey. He had been our deal originator, only because he had claimed to be a big-time investor and presumably had access to many people in high-up places. For now, let's just call him the mentor. Despite being in the advisory business for nearly ten years, I was relatively new to finding deals. I had been chiefly involved in execution for the most part of my career. I was good at it, but origination was something of a different skillset. The mentor had introduced numerous companies that would serve as IJK's potential clients. It was a buffet of large and small firms either trying to get into new markets, in search of capital or who were simply just trying to look for customers. It was a non-exhaustive list. Every one we met was a prospect and we spent a considerable amount of effort evaluating each deal. We had a loosely systematic way of filtering and deciding whether or not to proceed. For certain opportunities, we were told that some 'favours' had to be done such as buying meals, hosting prospects at conferences, or even meeting their stakeholders, brokers or associates who were going to be a party to the transaction. In some cases, the favour also included sitting in a classroom for three consecutive days serving as a teaching assistant. The mentor assured us that this was all part of the process. Whenever we held back on moving ahead to commit additional resources for a particular deal that we felt to be too uneconomically profitable, the mentor would say: "When starting up, sometimes you just have to do the things that you don't like to do." But our deal pipeline had been so full—full of long shots and losers. Objectively, many projects had a low probability of closing, largely because they involved clients that likely couldn't pay, or the timeframe was simply too long and cumbersome. But a lot of times it had been very subjective. After all, what do we know about origination and politically-driven handshakes having mostly been involved on the execution side? In the spirit of teamwork, cooperation and good faith, we continued to listen. But in reality we were starting to bleed cash, and we never had any real decision-making authority to kill the deal or disagree with the mentor to proceed with what we felt in our gut made more commercial sense. It was only over a year later that I had begun to realize the ironic and toxic dumbness of it all: The idea of starting an advisory business had been ours, we were prepared to bear our own costs, but somehow ended up suffocating under a blind workload and executing a totally different agenda that belonged to someone else, just to heed conventional wisdom. We were told that the rites of passage of starting up was part of the process, that was—to do the things that we didn't like to do. No longer the owner of my own business. I could not pinpoint exactly when it started to dawn on me, but one day amidst the frenzy of calls and meetings, I woke up subconsciously dragging my feet out of the house, and feeling the familiar morning anxiety of arriving at the IJK office before 9:30am. I had also been checking my emails and text messages in the same way I used to check my Blackberry on a typical Friday evening, hoping not to get a nasty email from the ‘boss’ to turn around a slide deck by Monday or hop into a weekend update call. And in any job, the moment you start counting down to Fridays or dread Monday mornings, you are basically f**ked. One day I decided to re-examine the leads I had on hand: Aside from a few small opportunities, I had no full context to most of the other projects, no direct access to the source at a higher level, no tangible resources to mobilise. Perhaps more importantly, I had no autonomy in dictating any of the commercial terms or the execution process. At every discussion, I found myself mostly on the receiving end, listening to fluffy ideas and being fed with lofty dreams, all the while being told to follow up on execution in the background. I was stuffed to the neck with work that wasn't mine and simply churning slides and spreadsheeting numbers. The truth turned out to be that a lot of our deals didn't have any commercial mandates tied to it. The mentor had opportunistically exploited the entrepreneurial ambitions of two young folks to help run execution while he played the role of senior figurehead and rainmaker. He didn’t had a clue on how things on the ground worked and demanded we did things to uphold his business relationships. A lot of those errands ended up being done out of goodwill, in the blind hope that would one day convert into a billion dollar payout. Worst still, we later discovered that he had been a charlatan selling an allegedly falsified track record in private equity and fundraising to the people that we had met over the years. We were being played. And as the proverbial Chinese saying goes, I was being led by the nose. In that whole process, I think no one really considered what I wanted for myself. The whole experience felt like doing corporate finance work all over again except that my bank account was drying up faster than I could replenish it. When as the dust finally settled, everything started to clear up: My intention of starting a business had been to unshackle myself from a corporate job, but I ended up in a situation whereby I was working on someone else’s projects and providing the ‘weekly reports’ on a regular basis. Suddenly I was an employee all over again. This reality hit me really hard when I ran this through my head and played it out right till the very end— I was no longer the owner of my business, whatever the form it had evolved into. The reality was that: I had no say, no control, no money, no visibility. I had all of the downside and none of the upside. That whole process taught me something important: In any moment of vulnerability, if you are not careful in protecting your dreams, someone else will show up and make you build their dreams for them. Vulnerability can create a blind spot which can lead to becoming overly trusting and cloud decision making—much like a drowning man clutching a straw. Of course not everyone is a charlatan, but you can be sure that there is definitely a personal agenda involved. Everyone is just trying to validate their own narrative based on what works for them. Sometimes the interests of all parties are aligned, but most of the time it isn't. Humans are complex organisms. What works for one person may not necessarily work for another. And if you are not careful, you can easily fall into someone else’s dark agenda. What matters. In any start up with more than one shareholder, it is almost inevitable that decision-making and relationship dynamics get entwined. Everyone brings a set of different resources to the table--some bring sweat, some bring relationships, some open doors, others bring influence. But regardless of what you bring to the table there are always some fundamental rules to abide by. Integrity and transparency above and before economics, always. Respect the capital i.e. everyone has the right to their opinion, but only those with skin in the game get to decide. In any deadlock or impasse, refer to point number 2. Whenever you feel that you are getting the short end of the stick, refer to point number 2. If you find yourself doing the things that you don't like to do, refer to point number 2 Everything fundamentally defaults to point number two–money talks. You can be well credentialed by bringing grey hairs and sweat accumulated from years of experience, or show off selfie photos with the big shots. But none of that really matters unless you put money on the table. That is all there is. A few friends who knew our story often likened it to a Netflix drama serial--exciting and gripping to hear. Beyond the stories, my co-founder at IJK and I share even more dramatic episodes and sleepless nights that we had gone through. But there is a fine difference between being the actor in a reality TV series gone wrong, and watching the show from the safety and comfort of the living room couch. I think people don’t really understand this. Given the fallout from the aftermath of things back then, I should have been panicking and thinking about what lies next. But even in those dark moments, there had been a quaint inner peace coming from taking responsibility of all the good and bad decisions. I was dry, but I felt liberated. Perhaps all I really wanted out from starting a business was the freedom to do what I wanted, including the freedom to make my own mistakes. [1] Adapted from the HBO series "Game of Thrones". Mance Rayder, leader of the Wildlings, the free folk.

The world was a very different place in the year 2006. We had just emerged two years out of SARS (Severe Acute Respiratory Syndrome) when I finished my final exam papers. My engineering thesis—or Final Year Paper as they called it back then—had been a weather app installed on the Nokia 6600 running on a 2G network[1]. This was even before 3G cellular became mainstream. Shortly after, and to much surprise, I got in touch with a fledging IT consulting firm that was run by two French dudes through LinkedIn. The company then had been engaged by Philips TV to develop a software prototype that would work across their global institutional TV division, catering to the hospitality and healthcare sectors. The job advertised was for a software engineer role that needed to be filled urgently[2]. After a couple of offline conversations with the founding team and some deliberation on my part, I took up the offer and showed up for work while the rest of my peers were still in the middle of their graduation trips around the world. At that point of time, this was how my work desk looked like: My work desk at my first job ever I had been a fast learner and picked up stuff quickly by working closely with the Chief Engineer. Two weeks into the job, I had gotten really proficient at writing code—good enough for a prototype demonstration to the Philips CEO when he visited Singapore. But I ended up leaving less than six months into my role. I needed to get out. My motivation was driven by: The fear of being stuck in an engineering job, working from 9am to 5pm everyday for the rest of my life, and perhaps more importantly: The want of earning more money by getting into a banking job. That was primarily how banking and the world of corporate finance appealed to me then. I had been told that fresh graduates were taking home S$8,000 a month. No other career offered that kind of money, definitely not in my field. But I hadn't been lucky. My grades were less than mediocre and my credentials were clearly in the 'wrong' field of study—I was trained as an engineer and not an accountant. I didn't know what a Bloomberg terminal was, didn't know how to calculate a series of discounted cash flows or the definition of enterprise value. I certainly wasn't cut out for investment banking. Needless to day, I failed to get any interviews for my S$8k per month dream job but with some luck and the help of a school senior, I eventually managed to leave my job in IT for a junior role within the valuations team of a large accounting firm. My cover letter in 2006 I was over the moon when I got my offer letter. It was also going to be a tall order coming from a totally unrelated background. But being thrown into the deep end of the pool doesn't describe enough how I felt when it eventually got down to doing the job. Trial by fire. I will probably never forget my first day of work. KPMG's office then was situated in Hong Leong Building just next to Lau Pa Sat in Raffles Place. One of the partners' secretaries met me at the lift lobby at the ground floor to bring me up. As I walked out from the lifts on the 23rd floor, she swiped her security card and showed me through the glass doors where I saw my new colleagues. There were probably over twenty well-dressed people, most of them wore white shirts, some had a suit on, others with ties but they all looked smart. All of them had their own cubicles and seated according to hierarchy, that is: Those seated closer to the front were noticeably younger, while the more senior ones sat behind them, almost as if overlooking the shoulders of the junior analysts. Some were fixated on their desktop screens, others were discussing stuff. The mood was mildly tense with an air of unspoken urgency enveloping the entire room, almost like a trading floor without the running tickers on display at the top. I wasn't given a desk of my own. Apparently the firm had over-hired due to the overwhelming number of assignments and the only space they could put me up was a elongated desk along a narrow walking space next to the printer where two other new colleagues sat. I later learned that one of them held a Masters graduate from the prestigious Yale University while the other guy was an audit senior of five years who had been seconded to the corporate finance team. All eyes were on me as I turned left and walked to my space. Here I was shoulder-to-shoulder with these folks, a finance newbie and under-qualified colleague with essentially nothing to offer except my enthusiasm and time. Despite being a fresh graduate like most of everyone else, I had finished my studies a year later than all my engineering peers, thanks to an additional year that I spent overseas in Shanghai. This made me two years older than the guys who had graduated from accountancy and four years older than their female peers. In short, I was the "uncle" of all the analysts in the team. And for the longest time, no one could understand why I had chosen to take a 33% pay cut from my job in Philips to venture into the unknown from a zone of comfort and familiarity. Many times, I even had to clarify where I worked at previously: "Not Phillip Capital the securities house - Philips, the electronics company..." It was also much later into my role that one of my colleagues revealed to me that they were all wondering why I had left engineering to "steal" their jobs. Turns out that it was with the combination of a bit of dumb luck, a vacant junior position created by the timely departures of a few analysts, and sheer persistence that landed me into a corporate finance role. Truth be told, I was incredibly scared during my probationary six months. I had come from a working culture that involved going to an office in a techno-park to write code five days a week, to a place that required retrieving stock prices on Bloomberg while discussing which companies were raising capital, or running a sale process to a consortium of private equity investors. The closest I would ever get to writing code was visual basic in Microsoft Excel. Other than that, I was a fish out of water. I was so afraid that my line managers would deem me unsuitable for the job and ask me to leave. However, what they did do was make a bet that I would voluntarily leave within those six months. This incident was later unwittingly and awkwardly revealed by a stranger who had crashed one of our team drinks. I don't remember his name anymore but I still remember him as he excitedly told my line manager: "Hey! You lost your bet. He's still here!!" It was just one of those things people in banking like to do. It can come off as condescending and insensitive, but on hindsight, I realised that you pretty much got to have thick skin in order to survive in this role. I later also learned that the world of investment banking wasn't simply about getting through the gruelling late nights and number crunching. A huge part of the job was also about the harsh and toxic environment that one has to be prepared to put up with for many years to come. Eighteen months passed, I closed a few landmark projects for the team, got promoted twice, and eventually got accepted by my peers at work. The rest is history. No shortcuts, no straight paths. "I don't have any accounting or finance background, how do I get in?" Today, I get a lot of questions on how to break into a corporate finance career whenever I teach at the Singapore Management University. Ironic as it seems, I think young people today have relatively much better credentials, working knowledge and access to investment banking than I had during my time. That said, today's environment is also significantly more competitive than it was back then. There are just no guaranteed pathways to any job. My attempt to learn about how the financial markets work was primarily done through punting in stocks. I rode through the bull market, which peaked shortly in 2007, and then it all went downhill towards the end of 2008 and early 2009. I dabbled into the markets not to make money, but more so to experience first-hand how it was like to invest, trade or punt. Any profits I made were offset by the losses, all of which I treated as "school fees" for learning the trade. And it wasn't much anyway given that I had just graduated. Younger people today are presumably more investment savvy and have even more access to investment and trading platforms--so I guess no excuses for not learning? Ultimately, I don't have a straight answer for how to get into an investment banking role. The willingness to work hard beyond the stipulated 8 or 9 hours a day was definitely a plus, but beyond that, it had been challenging to also prove how you could get the job done eventually or the value you brought to the team. For most of my peers coming from the finance and accountancy sector, it was mostly due to the fact that they were familiar with navigating the culture, and having done similar internships before. In my case, it was largely attributed to my posturing as the go-to-coffee-boy, doing the work that no one wanted to do. If I were to narrow it down to a single factor, most of this was probably being at the right place, right time and meeting with the right people. That said, everyone has a different trajectory. 2006 had been a somewhat a unique year characterised by an employees' market in which banks had been actively poaching from the accounting firms, who in turn perennially hired fresh graduates from the universities. In a bull market where there is high demand for staffing people on deals, this naturally created a vortex of talent, in which I had been lucky to get dragged into that whole process. Revisiting "the want of money" Bankers during those hey days were also raking in deals, notably from the many S-chip listings that were highly popular during that time. Some of these people were even taking home multi-year bonuses. I remember reading about executives from one of the local banks taking home thirty six months of bonuses. Even if you disregarded how mediocre his monthly base pay could be, the absolute quantum was still a lot, and getting three years of your salary in one lump sum payment still sounds crazy on all levels. It was also common for performing bankers who got less than a year pay in bonuses to jump ship just because they felt they weren't compensated enough. What a crazy world. Just imagine: What people in investment banking typically earn in one year was the equivalent of what everyone else makes in 3 to 4 years. This also implies that after working for anywhere between 7 to 10 years in investment banking, you could possibly retire for the rest of your life if you don't lead an extravagant lifestyle. It makes everyone else's job look like a joke. What kind of crazy world is that? Fast forward nearly two decades, the frenzy of hiring and huge bonus payouts have significantly subsided. But the brutality of the work environment probably hasn't changed. Many fresh graduates today continue to worship the altar of corporate finance, chasing the money and prestige of being accepted into the bulge brackets. It is important to realise that there are many careers out there which pay decently well (but may not pay as "fast and furious"), if you stick it out consistently. It is obscene that bankers are paid so much for the work they do compared to most other careers. "It's unacceptable that chocolate makes you fat, but I've eaten my share..." Therefore easy for me to say "do whatever makes you happy" or "be open to other well deserving jobs" when I have personally gone through and benefited from the system. No guarantees At the end of the day, everyone has to make peace with whatever career you have landed into. Many of my engineering-schooled friends are doing very well today, even having not gone into banking roles. Some are in sales, business development, entrepreneurs, etc. After all, not everyone who lands an investment banking career is guaranteed to make lots of money and the promise of working on exciting deals. Most of the day-to-day work in investment banking tends to be iterative (and sometimes even borderline mundane). These include stuff such as research, spreading numbers and window-dressing a company's profile. As a junior or mid-level banker, you'd be lucky to get involved in and be a spectator in deal negotiations. Be realistic, you won't get to be portrayed a hero or a rockstar deal-maker. This is not the movies. However, you will be paid well and most likely be a target of envy for most of your peers who are probably earning only a fraction of your salary. By the time you reach director or managing director level, chances are that you will feel the mighty burden of revenue targets and also deal with the complex politics that come as part of the job. Hopefully during this time, you stay grounded and haven't gotten too used to a lavish lifestyle that will put you in golden handcuffs for the rest of your life. More important than the prestige that comes with investment banking, you really have to love what you do. The dots really do connect backwards. It is not so much about simply earning the big bucks, but whether you also appreciate the dynamics of the job and find a way to sustain yourself in that line of work for an extended period of time. As I look back on my cover letter dated in 2006, I recall of how starry-eyed I was when I applied for a role in investment banking. I had been lucky, yet, at the same time, it also reminds me of how far along I had come. I had applied for the money, saved some, spent some, invested some and lost most of it. I'd gained knowledge of the subject matter, technical skills and the experience, including the network of people, intangible resources built over the years, and spat out by the system. But. No regrets. [1] A somewhat chronological lineup of all the Nokia phones ever made: https://www.telegraph.co.uk/technology/nokia/8465809/Nokias-classic-mobile-phones-in-pictures.html [2] An interesting side story: I only found out later that I was a replacement hire for a young Irish guy who had taken up the job in a part-time capacity. He had blonde shoulder length hair and showed up to work every day in surf shorts and slippers--much like a hippie. The job role opened up only because he had to go back home to the UK. I also found out how underpaid I was a few months later when I eventually left. The firm tried retaining me with better staff benefits and a huge pay increment to 3k but I still left either way. My replacement turned out to be a more senior hire with five years experience under his belt and that they were paying him 5k! Nevertheless, both of them were very capable and professional. Perhaps, one of the most important lesson that I had learned was: You can have great credentials but ultimately people care only about whether you could can deliver on the job.

Follow your passion. NYU professor, Scott Galloway[1] says that the worst advice to give anyone fresh out of school is to: Follow your passion. Anyone telling you to follow your passion is already rich. The person telling you to follow your passion probably made billions in a boring industry like iron ore and smelting. The more boring an industry, the greater your return on capital. And the monetary rewards, prestige, the recognition of being a subject matter expert, is what makes people passionate about what they do. "No one grows up thinking: "I'm passionate about tax law", but the best tax lawyers fly private jets and have a much broader selection of mates than they deserve. And they get to do interesting stuff, which by the way, makes them passionate about tax law." Why things don't work. Nobody is trying to fix the problems within the organization. They are simply just trying to make (or milk) enough money so that the problems don’t matter to them anymore. Success is the greatest imposter. "In life, business, or martial arts, winning is a falsehood. It seduces smart people into thinking that they are invincible. It tricks good people into believing that they are infallible. And it robs all people of reality and truth. Don’t believe the hype. And don’t eat your own bullshit. Or you will lose everything. The only antidote to the poison of success is humility, hunger, and gratitude. Stay humble. Stay hungry. Stay grateful. And outwork everyone." - Chatri Sityodtong It's relatively easy to be humbled when you have been beaten or when you have failed. But staying humble when you are ahead and winning is a much more difficult task. Solitude. Many people still do not understand why early morning coffees and hotpot alone mean so much to me. "Solitude is dangerous. It's very addictive. It becomes a habit after you realize how peaceful and calm it is. It's like you don't want to deal with people anymore because they drain your energy." - Jim Carrey Simple brand-less self-worth. MUJI was born in an era characterized by the rapid globalization of Japan, a booming pop culture and the yearning for a unique identity. This gave rise to the emergence of bold and somewhat psychedelic advertising which targeted consumers who favored branded and lavish goods. Contrary to the global brands, MUJI adopts a non-aggressive "no-brand" marketing approach. Far from lacking any product identity, it champions the idea that quality should speak for itself, eliminating the need for flashy logos or advertising campaigns[2]. But MUJI wasn't just about selling affordable quality merchandise, it was selling minimalism. While the rest of the world thrived on an insatiable appetite of wanting more, MUJI strips away this extravagance, reducing it to functional simplicity. Waste not, want not. "In the MUJI concept, design intervenes in the making of things. This counters the rest of the world, which runs on the fuel of capital and appetite. Japan, looking upon the world from its detached location at the eastern end of Asia, has built an aesthetic that is infinitely attractive to human rationality, not within luxury and extravagance, but simplicity." True minimalists often live in perfect balance with their surroundings and have an acute sense of self-worth. They avoid the excesses, and seek neither external validation from association with a brand, nor do they care about how the world looks at them. Prada charges over a thousand dollars for a bag, for which you can get for probably fifty bucks directly from a factory in China or somewhere else. Christian Dior designer slippers are priced at about sixty times more than the popular Havaianas, which are ten times more costly than your regular flip flops. If you step back and think about it: Almost no one will spend an inordinate amount of time looking at your footwear under normal circumstances, so why the need to splurge? Designer and luxury stores are not selling expensive items. They are really selling self-worth to people who do not have any. The illusion of freedom. Slaves used to work all day, everyday with no pay. But they had free food, water and shelter. Today, we work all day, nearly every day and get paid. But with the money we make, we spend on food, water and shelter. In both situations (past and present) we are still slaves. The only thing that is different is the illusion of freedom. Being rich. Some of the most well-off people I know aren't bankers, lawyers or doctors. "Doing well with money has little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to smart people. A genius who loses control of their emotions can be a financial disaster. The opposite is also true. Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence." - Morgan Housel You are free to leave, but you are also free to starve. Almost everybody spends most of their life living in a totalitarian system. It's called having a job. "When you have a job, you are under total control of the masters of the enterprise. They determine what you wear, when you go to the bathroom, what you do – the very idea of a wage contract is selling yourself into servitude. These are private governments. They're more totalitarian than governments are. They can't legally murder you but they can control everything that you do. Yes, you are free to leave, but you're also free to starve. You have a choice between starving or selling yourself into tyranny." - Noam Chomsky [3] People prefer fiction over the truth. It's getting more difficult to get access to reliable sources of information. “The vast majority of information is not the truth. A key misconception - especially in places such as Silicon Valley - is to equate information with truth. Most information is junk. The truth is a very rare, costly and precious kind of information. To write a truthful story, you need to invest a lot of time, effort and money into research, and fact-checking. Whereas fiction is very very cheap.” - Yuval Noah Harari You can make a hundred mistakes and do no wrong. In 2016, Jared Kushner came across a book titled "Death by China" as part of an unwitting research on the Internet. The book was authored by Peter Navarro, an economics professor who would later end up being Trump's advisor for economic policy during his presidential campaign. Five years on after being voted in, Trump is defeated in the 2020 presidential election. The US Capitol is attacked by mobs resulting in the deaths of at least nine people and hundreds of injuries. Among those who allegedly coordinated the coup was loyal Trump supporter, Peter Navarro. When summoned to court, Navarro refuses, and is eventually sentenced to four-months in jail for contempt. In a turn of events, Trump “resurrects“ from the shadows and into his second presidential term in 2025[4], re-hires Navarro back into the administration, and makes him trade advisor. Navarro is widely credited as being the "architect" of Trump's tariffs, which has been the subject of much controversy in terms of how the rates had been calculated. This is a guy who has had a soft job offer from the President while serving jail-time. Trump was quoted as saying, "I would absolutely have Peter back." This is also the same guy who invented a fictional expert in his book "Death by China", that had been picked up by Jared Kushner nearly ten years ago. Navarro calls this fictional character "a whimsical device and pen name used throughout the years for opinions and purely entertainment value, not as a source of fact." It just goes to show that you don't need brains and talent to get into the highest ranks of government or senior management. You can manufacture a tall story, openly defraud the public, talk rubbish, even go to jail, and yet still come back unbowed, unbent, unbroken[5], providing counsel to the most powerful people in the world. You can make a hundred mistakes and still do no wrong -- as long as you are in the right social circles of influence. Sometimes, who you know is more important than who you are. [1] Scott Galloway's video clip on "the worst advice given to young people": https://www.youtube.com/watch?v=1feBz5ifT-U [2] Yuko Kikuchi, Japanese Modernisation and Mingei Theory, Cultural Nationalism and Oriental Orientalism, https://www.routledge.com/Japanese-Modernisation-and-Mingei-Theory-Cultural-Nationalism-and-Oriental-Orientalism/Kikuchi/p/book/9780415405829?srsltid=AfmBOopQ_vV76QWQout87cBKasyWwgeN4FQHIx7FHmkE-7tqpsqZ5smD. [3] Noam Chomsky's ideologies have somewhat generated public controversy. This is an editorial article on his life at 96: https://theconversation.com/noam-chomsky-at-96-the-linguist-educator-philosopher-and-public-thinker-has-had-a-massive-intellectual-and-moral-influence-232698 [4] Peter Navarro: the economist who has outsmarted Elon Musk and has the ear of Donald Trump https://www.theguardian.com/us-news/2025/apr/21/peter-navarro-the-economist-who-has-outsmarted-elon-musk-and-has-the-ear-of-donald-trump [5] To borrow a phrase from the title of the film series "Game of Thrones" (Season 5 Episode 6) https://www.imdb.com/title/tt3866842/

Recipe for an average life. "A few hours of distraction everyday is the most common recipe of an average life. Assume you don't have much time, and focus. The years are short even when you clearly know what you want to do. Cut the noise and get things done. - Orange Book "If you know how hard it was and how long it took to build my little universe of peace and happiness, you would understand why I am so picky about who I allow in my life." - unknown Faith in people. “Better to give talented (unproven) people a chance, and endure a few disappointments along the way than to not believe in people at all. - Jim Collins Decision making. "The more the state plans, the more difficult planning becomes for the individual. - Friedrich A. Hayek, economist Almost all of life comes down to being able to think independently and make decisions. No governing body can act in the best interests of everyone. If you don't set your own goals, you will be given one. The importance of being "pigs". Lei Jun shares a whimsical anecdote from Xiaomi’s early days: "90% of success is attributed to luck (being in the right place at the right time). When a typhoon is approaching, even pigs can fly. Xiaomi didn't succeed because it was a great company or that I was incredibly capable. We were merely pigs in a vortex of a typhoon. So if we want to succeed, we must adopt the mentality of being 'pigs at the centre of a whirlwind'." - Lei Jun, CEO and co-founder of Xiaomi [1] The wisdom of Pooh bear. Pooh Bear, there's one thing we didn't do today. And what thing might that be? Hmm... Nothing. Nothing? Christopher Robin, what exactly is "doing nothing"? Well I'm told it means going along, listening to all the things you can't hear, and not bothering. It's when people say, "What are you two doing?" and we say, "Oh, nothing"... and we do it! This is sort of a nothing thing we're doing right now.I wish it could last forever. Well then we must do it again tomorrow, and the tomorrow after and the tomorrow following that! - Christopher Robin and Pooh bear from the movie Winnie the Pooh John C. Maxwell once said in his book, The 360° Leader: "The greatest enemy of good thinking is busyness." Are you truly free? "We are slaves to the opinions and words of others, slaves to what we see, slaves to the work that we do. Our self esteem is highly dependent on the opinions of others. If others disapprove of us, we are disappointed and become doubtful about ourselves. And that is why we can never be truly free." - Jet Li, actor and martial artist [2] A choice of response. “When we are no longer able to change a situation, we are challenged to change ourselves. Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom." - Viktor Frankl, Holocaust survivor and Austrian psychologist Use the difficulty. One of Michael Caine's life philosophies was drawn from a stage rehearsal as a young actor: “...and they got carried away and started throwing things, he threw a chair, and it lodged in the doorway. And I went to open the door and said [to the producer], ‘I'm sorry sir I can’t get in. There’s a chair in my way.’ He said, "What do you mean?" I said, "There's a chair there." He said, ‘Use the difficulty.’ So I said, ‘W-What do you mean, use the difficulty?’ He said, ‘Well, if it’s a comedy, fall over it, if it’s a drama, pick it up and smash it!’ Now, I took that into my own life. There is never anything so bad, that you cannot use that difficulty. If you can use it a quarter of 1% to your advantage, you are ahead, you didn't let it get you down. That's my philosophy, use the difficulty." - Michael Caine, actor and war veteran [3] [1] Excerpt adapted and whimsically translated from - https://www.instagram.com/reel/DG2l0X6Ry10/?igsh=bjV1NGc1YWNkeXJo [2] Translated and slightly adjusted from the Mandarin version. Jet Li's anecdotes are largely influenced by his faith in Tibetan Buddhism. Full video (in Mandarin only) from the Tzu Chi Culture and Communication Foundation - https://www.instagram.com/tzuchicultureandcommunication/reel/DGh6jRhJcPs/Watch [3] From Michael Caine's interview with Michael Parkinson - https://youtu.be/t-7xyd5_IfY?si=qkx-E_wvwyQizdjB

Un-investable is all about the perception of risk. Earlier this year in Singapore, I was having a conversation with someone from a bank about the creditworthiness of large state-owned-entities in China. Surprisingly, he actually saw this as a “high risk” business. If the counter-party had been one of the more familiar titans of the finance industry, that sentiment would have been very different. Apparently many still think that the business environment in China is still rampant with corruption and fraud. These same risks that investors are concerned about exist in many other countries as well, including the developed ones. Just take a look at 1MDB, Wirecard and Theranos. A company sergeant major during my national service days once said, “Soldiers all around the world behave in the same way once they put on their helmets and the uniform.” The helmet reminds everyone that: at the very core, we are essentially the same. Similarly, a blue-collared production line worker sitting in China, Philippines, Italy, the US or anywhere else in the world operates, say a machine, in more or less the same way. Because he is human, he experiences both good days and bad days. And on bad days, the quality of his work might be sub-standard. But at the end of every work day, he tries to get off punctually, goes back to his family, and starts his routine again the next day. You might attribute any quality defects to the fact that the product was manufactured in a relatively low cost location i.e. if something is lousy, it is easy to dismiss that it is cheap and “made in XXX”. After all we have been conditioned to conveniently draw trivial correlations between price and quality. Without this bias otherwise, you could have just as easily blamed it on the merchant who sold you the product. But corruption, fraud and quality control are smaller problems in the bigger context of things these days---Earlier this year, JPMorgan allegedly issued an “un-investable” call on China equities as a reflection of its unpredictability and geopolitical risks. All businesses need to embrace policy. Companies that end up on the wrong side of propaganda run the risk of getting cancelled, as can be seen from H&M’s business in China. But being cancelled goes against our ideologies and learnings of the free market, which is: identifying an environment with favourable supply-demand dynamics and taking scientifically calculated risks in raising capital to make money. State intervention is non-existent. For most places in the world, the market economy is the truth. In China, the authority is the truth. There’s no right or wrong. Most of us have simply been brought up imbued with the ideologies of an open economy that we become averse to a scenario in which autocratic intervention could make or break a business. We fear what we do not know or what we cannot control. And because of this, many companies write this off or cast a huge premium on country risk. Think for a moment how different the risk models and perceptions towards raising money (such as the weighted average cost of capital) would be for a domestic investor or owner of a Chinese company vs a foreign company. The assumptions driving the decision to invest should ideally be localized and go beyond the scientific calculations that we have been taught. Instead we consistently fall back on conventional wisdom (which are mostly capitalist-centered) defining what constitutes a 'mature' or 'stable' market return. For example, a common risk management strategy in the West involves diversification i.e. as long as we have enough eggs in the basket, we can always afford a few bad ones. In China, risk management is less of a game involving statistics but more about developing, embracing the ecosystem, staying in alignment with policies, and in the process, minimising (or sometimes even zero-rizing) the incidence of 'bad eggs'. This is inherently a very different way of doing business and ultimately a very different perspective of risk. In a slightly similar parallel, while modern Western medicine adopts a targeted approach towards treating afflictions and eliminating the ‘bad parts’, Chinese medicine tends to be more holistic, treating the entire system, including the patterns of symptoms. Because the fundamental perceptions and understanding of risks are different, many investors struggle with using scientific methods to quantify returns. Shan Weijian summarized this aptly in an interview last year: "Investment is a risky business, and China as a market, is not for the faint-hearted." On closer look, most of the policies are probably not meant to be autocratic or unreasonable. They exist to maintain a certain social stability, encourage economic activity and safeguard certain national interests - as with any sovereign state. Of course the whole inner workings of global trade are made up of many complex moving parts. But at the end of the day, these are just the rules of the game, and risk is just a measure of how well you think you can play that game. Starting a business in the US almost seems like fortune favours the bold. In China it feels more like: You better do as you are told. A very different image of entrepreneurship and doing business is portrayed in the West. Many of these are frequently sensationalised with stories of school dropouts creating billion dollar businesses, founders working out of a garage, cavalier businessmen who buck the trend, sidelining authority to grab resources on a level playing field, and numerous books celebrating corporate bravery. My first-hand experience in appreciating this difference was about 18 years ago when I embarked on the NUS Overseas College program in Shanghai. The idea of the program back then was to replicate in China, the “success stories” of entrepreneurship in the US - championing research & innovation and commercialising it. China at that point of time was less interested in leading the charge on technology and chose to prioritise large scale infrastructure investment and market reforms around reining in foreign investment. Some of the best businesses at that time weren’t centred around tech but the seemingly more boring and less sexy sectors. It was a very different economy and no one in the cohort had the slightest clue of how to adapt the program objectives to such a market. We were all learning along the way (摸着石头过河) from attending business meetings, fraternizing with colleagues, all the way down to getting visas and negotiating the rent on the apartment. We would later on also learn that the strategy of navigating in China (which probably still applies today), wasn’t so much about being the smartest guy in the room but more about handshakes and being able to connect the dots. Ideas and intelligence are nothing without endorsement. As such, individuals and high achievers who are used to thriving in a merit-based world and expect to use their minds to blow everyone off their seats will often find themselves stumbling in such an environment. Also, all the most important decisions are made centrally. There is almost always either a single decision maker or a small trusted circle of influence (almost mirroring the CCP style of governing) or if you like, using different share classes in a more western centric context. Language is culture and culture is language. Being effectively bilingual might be sufficient, but being able to speak the language does not automatically imply that you can assimilate into the culture. As with many cultures, there are almost always subtle undertones in both casual and professional banter between people, which is why as effective as Zoom and video meetings go, nothing can truly replace the relationships built with in-person meetings. Most of us would later on in our jobs apply these valuable learnings when we took on regional roles or help overseas and local companies in their expansion within China. Starting and running a business wasn’t the same as how most of the world saw it being done in the case of Facebook, Google, Apple or Amazon. The venture capital ecosystem in China didn’t really take off until maybe 10 years ago and the check sizes weren’t that large as well. Most of the time, it takes years for a company to grow, often staying in plain sight, having the right handshakes, playing by the rules of the game, and perhaps more importantly, having very very deep pockets. As you are reading this, the geopolitical and macroeconomic landscape is still constantly evolving, and we are still learning. There is certainly much more transparency today as compared to before, but the perspective of risk will continue to be an ongoing education process, and many investors and corporates seeking to do business in one of the largest economic powerhouses in the world will eventually need to find a way to balance expectations and reality.

In recent years, I send and receive nearly no birthday, Christmas or new year wishes over the festive period. This is a huge contrast to somewhat ten years ago whereby I still exchange many text greetings through the phone and social media. I am not trying to be unsociable, I have not gotten dark, nor am I complaining. There is an unspoken peace that comes with a quiet morning on public holidays. Besides, most of these text messages are usually transactional agendas hiding behind a "how-are-you-doing-in-life" coffee chat. The truth is that social gatherings bore me these days. According to American author Mel Robbins, "When people come and go in your life, 99% of the time it’s not personal." Most of the time, this is attributed to proximity, timing and energy, which are pillars to social interaction. When you were small, most of your growing years were spent in the same neighborhood with friends who went to the same school and mostly did the same things. It is therefore not surprising that many of our fondest and purest memories are during our school-going days. But when you hit your twenties and beyond, everybody starts to embark on different timelines—some are pursuing jobs, going to graduate school, or getting married. Others are moving between cities. Everybody's proximity and timing are now different. You can have fantastic camaraderie with somebody today and then lose contact later when you no longer have those shared experiences. You could be best beer buddies but if you decide one day that you are not drinking anymore, the energy is off. If one of you decide to get focused on fitness, the energy's off. If your political beliefs diverge, the energy's off. It is not personal, the energy is just off. I had renounced posting on social media for many years now, keeping only my LinkedIn profile intact to upkeep a basic digital identity. Some folks think I have gotten dark. For me, it is just a progressive realisation. Everyone has moved on and are located in different cities or in various stages of their lives in which priorities are different. After two decades, the playbook of life has changed for everyone. I have also become increasingly less empathetic and less patient with people who add unnecessary drama to their lives. I find myself also increasingly disgusted with those who are consistently comparing their net worth to others, name-dropping in social circles or make their circumstances and situation your responsibility to solve. I understand that humans are inherently social and community-driven animals. We bond and find comfort in talking, laughing and sometimes subconsciously ask for advice in the hope that it may guide our decisions. I enjoy a good banter now and then, but the anecdotal truth—at least from where I’m standing—seems to suggest that those sitting on the opposite end of the table aren't always looking for a genuine personal opinion. Most of the time, they are either trying to upsell you on something, get you to agree on their point of view, or just to show off. It gets quite tiring, and I try to avoid settings like these. No amount of explaining or words will change a conclusion that someone has committed to keeping. I am not trying to be unfriendly. Some have called me a cynic. I think I am just more selective nowadays on where I focus my energy. These are realisations distilled from having worked in the rat race and running a startup over the last two decades. They are simply moments of clarity. “Firstly, imagine you finally achieve your life wealth goal. Really think about it. Now imagine everyone you know in this dream has 3 times more than you. If this makes you instantly want to make more, know that you make money for other people, and not yourself. Deep down, you are in fact trying to buy status, not freedom. Because status only has one price:"more than everyone or someone else. And that is exactly the price of the only thing you want to buy.”

I crossed the mid-point of my economic life some months back. The term 'economic life' can be loosely defined as from the point of time one steps into the working world to the point at which one retires. The exact points vary depending on where you live, cultural nuances and personal choices. According to the conventional wisdom of society and mainstream media, spending twenty years on the proverbial hamster wheel means that I am in the prime of my life. From an alternate darker perspective, governments and organizations probably see an obedient, housebroken dog[1] that can be plugged into the system to make money on a tightly-controlled leash. Bankers love these people. It presents an extremely lucrative opportunity to monetize a further twenty years of revenue through management fees on their investment assets or interest from those who live delicately under the crushing weight of their mortgages. I recall a former co-worker in banking who used to describe our jobs, he said: “You are basically trading time for money.” And time, being a non-replenishing commodity, increasingly becomes more important than money as one gets older. After twenty years on the hamster wheel, I had realized we spend most of our time just learning how to game the system, living life by "passing" each level in the game, collecting coins to reach the end point. In fact, we had started to do this since our school days. Here’s the thing: The pathway to being an good student isn’t acquiring knowledge, but to excel at exams, and excellence is mostly marked on a bell curve. To get on the right end of the bell curve, one simply needs to be good at predicting which questions will come out so that you can maximize the probability of getting the highest grades. In the exam hall, I am concerned only about my score relative to everyone else, and not whether I had enjoyed the learning process or whether I could apply what I had learned. I used to know people who had graduated with distinctions in the field of Computer Engineering, but were clueless on how to troubleshoot their network router at home. On the other hand, there were also those who weren't credentialed with a CFA or an MBA, but were excellent at managing teams or building a great product. The point is: You can succeed at the workplace by gaming your way into having a lucrative career--simply learn and exploit the dysfunctional aspects of an organization, give a false impression of capability and suck up to the right people. According to Paul Graham[2], "There will always be a certain amount of fakeness in the work you do when you're being taught something, and if you measure their performance it's inevitable that people will exploit the difference to the point where much of what you're measuring is artifacts of the fakeness." Most people who are in a white-collared role are mostly faking their way up the corporate ladder. That was how many of my former co-workers who were terrible at their jobs managed to stay hidden in the blind spots of their organizations every year. You can also succeed at fundraising by trying to learn the techniques for convincing large celebrity-like investors to endorse the business, or using fanciful slide decks to tell stories. There is nothing wrong with drumming up a sales pitch for a product, but some firms (both on the buy and sell sides) have gotten so lost in telling stories playing the fundraising game that they fail to realize customers and revenues are the key fundamental factors in driving the decision to invest. The cardinal principle in any corporate fundraising had always been to solve for operating cash flow first, then addressing cash flow from financing. But in recent years, it seems that knowing how to manufacture a good equity story has become the yardstick for measuring performance that so many companies out there do it the other way around. We have spent nearly our whole lives learning how to game the system just to beat the competition and look good. And when you have been brought up most of your life learning how to game the system, the metric for success becomes defined as beating someone rather than curating the life you actually want. Incidentally, those who succeed in the competition are often the same ones who are suffocating those who are succeeding by doing what they love at their own pace. Some of us feel the pain of our own stagnation by looking outwards at everyone else progressing forward. But looking inwards, you realize all that resentment and envy stemmed from an unhealthy sense of competition. There is nothing wrong with being ambitious, but the race for returns and big money has transformed most people into lifeless souls trying to step over each other at all costs. Not all of us wants to outrun a ghost. Some of us just want to slow down and breathe. I would like to end with something actor Daniel Day Lewis said about his career during an interview with Rolling Stone[3]. How he described the final days of his film career was something I somewhat resonated with. “The work was always something I loved. I never, ever stopped loving the work. But there were aspects of the way of life that went with it that I had never come to terms with — from the day I started out to today. There was something about that process that left me feeling hollowed out at the end of it. I was well acquainted with it. I understood that it was all part of the process, and that there would be a regeneration eventually. And it was only really in the last experience [...] that I began to feel quite strongly that maybe there wouldn’t be that regeneration anymore. That I just probably should just keep away from it, because I didn’t have anything else to offer.” [1] To borrow a phrase from Nassim Taleb's book "Skin in the Game". [2] Most of what I had written had been a personal reflection after reading Paul Graham's essay on "Before the Startup" (https://paulgraham.com) [3] From an interview with Daniel Day Lewis on his retirement from film-making. (https://www.rollingstone.com/tv-movies/tv-movie-features/daniel-day-lewis-son-ronan-anemone-interview-1235420815/)

Education. "I hereby sincerely apply for a job." We go to school not to learn how to write a resume, but to study. And we study so that we can solve problems within the real world. Consider this: Before going to school, identify a problem in the real world. Then go to school, study the problem and then think up of possible solutions. Draw up a plan of how to solve the problem. After graduating, go back into the real world and actually solve that problem. In that process, you have now created value, and can get someone to pay you for doing that. Instead, we live in an education system that entices people to collect certificates and degrees. And the best thing that you can say after getting a certificate or degree is: “I work well under pressure, I am a team player, I hereby sincerely apply for a job”. From a purely academic standpoint, you are qualified to gain employment. Beyond that, nothing else shows that you can actually get stuff done. This is how we end up with so many graduates and postgraduates today who are simply looking to just get a high monthly salary rather than solving real world problems. "Back in the old days..." 你的苦不值得被承认[1] Older people tend to conveniently project their experiences on younger people. Those who say that "we had it much worse off back in the days" are not trying to comfort you on the struggles you are facing today, neither have they given you any practical advice on how to go about dealing with them. Instead, what they are really doing is comparing who is worse off, and subtly hinting that what you are facing now is nothing compared to what they had gone through many years before. The truth is: Everyone goes through their own personal struggles. There is no basis for saying who has had a tougher time. Bringing up unhealthy comparisons to the past will only cause those who are currently struggling to feel more helpless. Staying humble. ...is not just about NOT showing off. Many people think that humility means keeping quiet and not bragging about how good you are. But being humble is not just about restraining yourself from showing off. Being humble is about being consciously aware that you are never good enough, that you are never the best, and that there is always room for being better - only if you are are willing to let your pride down and take the criticisms of others. The art of receiving feedback (especially negative ones) therefore becomes a very important element of being humble. When someone provides you with feedback, just listen and not rush in to justify yourself. If your higher ups give you negative feedback, it simply means that your execution had been ineffective. If subordinates give feedback, this is merely observation on their part, albeit right or wrong. Humility is about taking responsibility for the outcome, not about who’s looking good or bad. At the end of the day, the results are all that matters, not the process or delivery. Justifying yourself (especially in any negative outcome) will only demonstrate your need to always be right, and nothing good ever comes out of proving that you are right all the time. Treat everything professionally. Take nothing personally. [1] As seen from: https://www.instagram.com/reel/DIgSPPoxQcS/?igsh=dHV2eHJnN2YzMzJj

When I arrived in Hong Kong in May 2021, I spent over two years of living out of a suitcase in a serviced hotel. Aside from the weekly room cleaning and makeup, home had been basically a 33 square-meters room and a view of the harbour overlooking TST. There was the occasional frustration that I could not have ice cream in the room because the refrigerator wasn't cold enough. I also could not make my favourite gyudon from Don Don Donki as it was impossible to store any frozen food. There also wasn’t a stove in the room. I was lazy to get a portable one and furthermore, room regulations prohibit any sort of cooking indoors. So last December, instead of calibrating my Hong Kong stay in 4-month blocks, shuttling in between flights to Singapore, I decided to take the plunge and sign a 12-month lease at a small cozy apartment located at the picturesque Fashion Walk locality at Causeway Bay. I could now indulge in my favourite Japanese beef bowl, have home-cooked pasta, and of course Haagen Daz rum & raisin. And then in an ironic twist of events, after 8 months into my lease and over 3 years of calling Hong Kong home, I got re-stationed to Singapore. Immigrant mentality Glen Llopis writes about how having an “immigrant mentality” enables one to advance their careers. The idea is that: people who are constantly in a state of uneasiness and on their toes tend to “fight for opportunity” and embrace innovation which pushes them to thrive at work. I have always found myself in an uneasy profession. Investment banking and the advisory business by nature is perpetually dynamic. If you are not working on a deal, there are always endless pitch books and RFPs to put together. Constant work, bosses and clients keep you on your toes. But I did not have the best track record of staying put in a job for a long time. Call it a millennial attribute. That said, every jump I made usually came with a significant pay rise. And after a few good hops across a 12-year period, you inevitably hit a ceiling. Because there is only so much more any company can pay you. Taking this into perspective, my overseas stint away from Singapore can be considered one of my longest unbroken tenure at any full-time job. Living out of a suitcase. Whenever anyone asks me about my time in Hong Kong, I give the customary “I am living by the month” reply. Most people take this as an indication that things are shaky and I don’t plan to be in Hong Kong or China for long. But trust me, I’m just conservatively managing expectations. There have been counter-arguments to the cause of living like an immigrant, such as the lack of societal integration, disconnection to the past, limiting beliefs, etc. These factors don't really bother me. Aside from the fact that I still can't speak Cantonese and having to deal with accommodation which is always in a temporal flux, I feel quite settled into the city. In Singapore, I have a mortgage but never had to really worry about rent. In Hong Kong, aside from the lack of having timely access to frozen ice cream in the room, I consistently weigh the hefty costs and duration of how long to sign the lease contract on the hotel room (that is before my transition to a proper apartment last year). When a huge part of your life involves living out of a suitcase, it becomes very normal to be mentally conditioned for sudden changes, to expect the unexpected, and live month to month. I know a lot of people with family commitments and financial obligations don't live and think like that, but everyone's circumstances is different. A realist. "You're on a roll, kid. Enjoy it while it lasts, cos it never does." - Lou Manheim [1] At one point of time, my performance KPI at work was linked to the company's share price. Fortunately it had been a 'bull market' during that period, a lot of hype around China's tech landscape, and riding on the wave of the fintech frenzy, the company's share price surpassed expectations. I do not take full credit for this. I am aware that the movement of share prices in capital markets are due to many factors beyond control and rational logic. On the other hand, I also did not want to find out what the alternate outcome would have been if the price had gone in the opposite direction, leaving me with a nasty report card at the end of the year. So, the principle has always been very clear and simple to me: You are good, but only as good as your last trade [2]. The wind can change at an instant, tear away your sails and send you down a waterfall faster than you can imagine. If you are in your twenties, fine - you can say that you are hardworking, you could be smart, and you can pick yourself up, grabbing onto the next employer who is willing to groom you, a diamond in the rough. In your forties and beyond, the dynamics change. Companies want someone who can "hit-the-ground-running", and experienced hires are relatively inert to change. Furthermore, there are so many diamonds to choose from. The wait to hop on the next boat is longer. I’m not being a pessimist, I’m just a realist. And being a realist keeps me grounded. Pain is a good teacher. "There are two kinds of pain in this world. Pain that hurts, and pain that alters". - Robert McCall [3] I think the ‘great COVID bull run' on equities that took place between 2020 and 2021 probably also had something to do with my immigrant mentality. I had been fairly successful in trading options, but also ended up losing a lot when I failed to properly “hedge” my positions. In short, I learned: Everything could go as quickly as it came. It was a painful experience that altered my philosophy towards investing, creating a self-defense mechanism, to avoid similar situations in the future. And recognising that everything can change overnight or in a span of a few days have led me to constantly live on my toes. It might be true that I had done very well for myself in Hong Kong and Shenzhen, did a lot of good work, and embraced the environment, culturally, linguistically and commercially. I had also “out-lived” a lot of the friends and co-workers that I had gotten to know at the firm. I know a lot of people who get incredibly excited and feel a great sense of accomplishment from closing a landmark project, or being chiefly responsible in negotiating a good deal, or spotting that transformational investment opportunity, or getting a huge bonus at the end of the year. There is nothing wrong with feeling important and celebrating these achievements. But I will always be aware - aware that I’m just one bad trade, or one screw-up, one step away from losing it all. [1] Lou Manheim, one of the seasoned traders from the movie "Wall Street" [2] A phrase from Nassim Taleb's "Hidden Asymmetries in Faily Life". [3] From the movie, "The Equalizer 2"

I spent a random morning with my niece last week art jamming. I am not particularly into painting but there is something calming about sitting in a quiet room for three hours just throwing random colors on a white canvas. The last time I recalled using acrylic was probably in primary school. In fact I don’t even remember what I drew. My niece is eight-going-on-nine and totally fascinated about drawing just about anything. The studio was located on the 4th floor of a quiet Orchard shopping mall next to an upmarket cafe that had all day breakfast and an expensive looking decor. Both were under the same establishment. Art jamming lasts for three hours, which is the approximate duration it takes to complete one painting. Each person gets one complimentary drink from the cafe and one canvas board to paint on. She took the ice chocolate while I had the sour plum ice. Towards the end, we ended up getting one additional board before heading off to have some fish and chips for lunch. The great thing about painting (or maybe art in general) is that regardless of age or experience, there is never really an ugly picture. While some art collectors might try to put a price tag on a piece of work, this is usually tied to the reputation of its creator or that it has some cultural significance. Otherwise art is just art—it is original and highly personal. You just go with the flow and draw whatever comes to mind without any expectations or the faintest idea of how the end product might look like. For someone like me who has been trained for many years to think in terms of net present value and quantifiable outcomes, it can be incredibly contentious as to whether I did anything productive at the end of the three-hour doodling session. Besides contributing to the shop’s overall top line, our paintings were certainly far from commercially sell-able or “exhibition-ready”. And then after lunch, as we were walking to the MRT station to part ways, she looked up and asked, “Can you ask mama if I can come over to play and stay over again tonight?” Paul Graham has an interesting anecdote about how to measure the “shortness” of life, especially when it comes to spending time with kids[1]. “If Christmas-as-magic lasts from say ages 3 to 10, you only get to watch your child experience it 8 times. And while it's impossible to say what is a lot or a little of a continuous quantity like time, 8 is not a lot of something. If you had a handful of 8 peanuts, or a shelf of 8 books to choose from, the quantity would definitely seem limited, no matter what your lifespan was.” Interacting with young children makes you wonder how much of time has passed, and also how much is left. And it will probably be just a few more years before my niece stops asking for sleepovers and starts wanting to hang out with her own circle of friends more than with me. It can be difficult to conceptualise the shortness of life. But when you think of time in countable units, everything suddenly seems finite and few. It makes you also think about how much of your daily life can easily be consumed by simply doing stuff that you don’t like to do, or doing things that disagree with your core values. These days I usually wake up without the alarm from the phone sounding off in my face. In fact, I seldom leave my phone by the bedside overnight nowadays. I rarely check my messages with the same frequency I did in the past. I am even half thinking of jettisoning my Apple Watch that logs my steps and sleep down to the last digit. That precision is a constant reminder that we have become excellent at measuring everything but know the value of nothing. At 730am, I make my coffee at home, toggling between the usual dark roast beans I get from the local merchant and burgundy-infused ones from Yunnan. After months of practice, I am glad to say that my flat white is more perfect than the ones I get from the cafes outside (I use two shots of espresso of course). If I am overseas, I usually find the cafe that opens the earliest and am usually one of the first in-store customers that show up for the first cup of joe. The value of an empty morning is priceless. Mornings are when my mind is the clearest. Most mornings are reserved for coffee, reading and thinking about stuff. Other times it is reserved for sitting in a quiet space for three hours throwing colors on a white canvas with the people you love. Life is short, never mind what the rest of the world says. There is no pride in being stuck in a perpetually busy state. Pay attention to only the things that matter, prune the bullshit, and start doing the stuff you want to do today. “When someone contradicts you, they're in a sense attacking you. Sometimes pretty overtly. Your instinct when attacked is to defend yourself. But like a lot of instincts, this one wasn't designed for the world we now live in. Counterintuitive as it feels, it's better most of the time not to defend yourself. Otherwise these people are literally taking your life.”[1] [1] From "Life is short", Paul Graham, https://paulgraham.com/vb.html

Accountants, investors, and many large corporates around the world use the discount rate as the go-to metric for pricing any asset that has elements of uncertainties in its future economic value. In the context of business, discount rates simply provide a guide for analysts in terms of determining what an appropriate investment value should be, that is, based on a series of estimated future cash flows. It broadly takes into account the perceived risks in execution as well as the opportunity costs of deploying that capital. But perhaps more importantly, it represents the expected return of the investor. The bigger picture "The complexities exist to give bankers and lawyers a reason to exist." I often thought: How were business deals discussed and negotiated decades ago before the invention of computers and spreadsheets? How did investors made the call for investing $10 million in a particular real estate that yielded 7% rather than buying a cluster of houses in another part of the country? How did they decide that investing $200,000 in the neighbourhood bakery could generate a return of 15% over the next three years? How did shareholders split equity—did they have drag and tag clauses, used term sheets and signed MOUs? Probably not. I think we had relatively simpler lives back in the days. Deals were most likely executed under 'gentlemen agreements' i.e. in good faith trusting that the othe party will honour their word, or done simply in the presence of credible witnesses which gave the obligation its legal effect. But aside from the law, your word meant everything. And so high-level numbers were calculated without the need to build complex spreadsheets. Today we have sophisticated models that can do calculations on value and IRR down to three decimal places. If you like, we can also embed code in spreadsheets that precisely calibrate 10 years of projected cash flows to comply with a DSCR[1] of exactly 1.3x, no more no less. By embedding programming code into spreadsheets, you can even automate certain calculations to value stock options, run scenarios for valuing start ups, do debt sizing, etc. I used to know of certain people in project finance who took a lot of pride in their models just because it could generate the desired outcome using Excel macros by the click of a button. On the documentation side, we now also have chunky shareholder agreements accompanied by pages of legal jargon comprising disclaimers, indemnities and warranties. Sometimes I feel that the complexities are there only to give bankers and lawyers a reason to exist. And the burden of technology and all this excessive information have made us so caught up in being overly precise and faster than the next guy such that we end up losing sight of the bigger picture. A numbers game. The presentation and analysis of numbers in huge quantities mean something. At every session of my Corporate Finance and Investment Banking Bootcamp class, there is almost always a newfound perspective and opinion on how we go about applying the discounted cash flow analysis to valuing businesses. I consciously hold back diving too deep into explaining the discount rate, or the weighted average cost of capital. I always say, “don’t spend too much time getting the exact figure” which sometimes makes me question the appropriateness of my unorthodox teaching methods. From my practical perspective, it always seemed that the discount rate was always investor driven. Consider this: The primary objective of trying to value any business is to arrive at a "buy / not to buy" or "sell / not to sell" decision. Assuming future cash flows and discount rates are whatever they are, the outcome of value using the NPV, is almost solely driven by how much you want to make from the deal: If you want a higher return, you pay a lower value, and vice versa. Framing it like that sounds like stupidly obvious common sense. But if you had funded that business ising money that was sourced from elsewhere (which happens to be the case for 99.99% of companies) then there is usually a cost to that—a fee of sorts that you need to return to the other party in exchange for borrowing the money i.e. the interest on debt or dividends to equity. This overall cost would include an add-on which reflects any opportunity cost of being able to put that money elsewhere say in a risk-free government bond or another business. That’s all there is to it, really. In reality, there will always be mis-priced deals whereby investors end up paying more than they should, and also business owners selling themselves short. Given the relative transparency in terms of how much banks charges their clients on taking out a loan, a big part of what drives any asset pricing really comes down to the cost of equity - a mathematical estimate calculated based on something called the Capital Asset Pricing Model (CAPM). The objective of the CAPM is to ascribe a commensurate return on equity based on the underlying risk of the asset. This is essentially driven by two things: Establishing a baseline (equivalent to a default-free risk) and; Adding a risk premium, which involves market volatility and taking a view of how borrowing increases risk in a business. Since volatility in share prices results in uncertainty, and uncertainty generally equates to risk, CAPM tries to transcribe volatility to risk. In chemistry, volatility is the tendency for something to evaporate under normal temperatures. In the finance world, volatility indicates the tendency of something to change rapidly and unpredictably, to deviate from the norm. Hence, beta in CAPM is simply a regression analysis to understand how far a company's share price deviates from the performance of the overall market. Within the boundaries of the CAPM model, we attribute this solely to the company's leverage i.e. A firm that borrows more to fund its business is deemed to be a higher risk than its peers. But there are so many things that can affect the share prices, and leverage is only one of them. Furthermore, we are determining a return on equity based on a series of random events looking back over three to five years. First there is the conventional saying of: What happens in the past does not imply that it will happen the same way in the future. Secondly: The speed at which information travels across the world and its accessibility today is very much different from what it was more than 30 years ago. The retail and institutional investor community, which plays a huge role in influencing the movement of share prices, is also significantly larger than it was back then. Therefore CAPM essentially is a game of numbers. Living in an evidence-based, data-driven world, we believe that numbers, when presented and analysed in huge quantities, mean something. To make sense of a chaotic market "There is more art in valuation than science alone can justify." Recently, a hedge fund manager wrote a paper about the "less efficient market hypothesis"[2], suggesting that capital markets today are not what they used to be. A multitude of factors today influence the movement of share prices - social media apparently being one of the biggest culprits. Not to mention low interest rates encourage punters and traders to gain access to cheap financing just to take huge speculative bets on companies they have no clue about[3]. It is probably getting so difficult to make sense of the stock market even with the abundance of information. So difficult that many investors have basically given up and turned to the trillion dollar ETF market which only became popularised over the last 20 years. Funds today can simply invest into a basket of stocks and just ride the trend. Besides, the idea of ascribing a single variable to a complex system of moving parts for valuing a business just seems absurd. Seth Klarman writes in his book "Margin of Safety": "I find it preposterous that a single number reflecting past price fluctuations could be thought to completely describe the risk in a security. Beta views risk solely from the perspective of market prices, failing to take into consideration specific business fundamentals or economic developments." Here's the interesting thing: Establishing a discount rate using the weighted average cost of capital in deriving the fair value of an asset is mostly aimed at bridging any expectation gap between a buyer and a seller. This is simply an attempt at using history and science to convince the other party that they are looking at things the wrong way. In reality, a lot of deals are done based on impulse, greed, competitive tension, fear-of-missing-out, herd mentality and in some cases bad judgement. There is more art to valuation than science alone can justify. And it doesn't get better. The onset of COVID in 2020 had led to the emergence of meme stocks - something quite non-existent not very long ago - supported by an entire community of keyboard warriors with nothing better to do than ride on the trend of social media influencers. “For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.” - Warren Buffett So much for relying on math to make sensible investment decisions in a largely chaotic world. Where do we go from here? Don't get too caught up with the discount rate when it comes to valuation. If your objective is to impress the other party through a demonstration of knowing the inside workings of the financial markets, then go for it. But in my experience, most people sitting in this part of the world don't care much for CAPM and WACC. The ways investors and businessmen perceive value differ across sectors and geographies. Take for instance in China, where size is everything and winner takes it all, businesses will not think twice to burn cash through their balance sheets at the expense of grabbing market share. Profitability without scale is useless. But Southeast Asia can be somewhat different. The gameplay is a race for profitability - a simple function of maximising top-line and optimising expenses. Value is created by achieving profit break-even in the shortest possible time, fixing the cost structure and searching for dislocations in prices to arbitrage the market. Considering the difference in cultures and market dynamics across countries in this region, it is only logical and prudent that investors put more focus on earnings quality over size. Yet, most of what we learn about finance in the comfort zone of our classrooms are originated largely from the observations and statistical findings of financial markets in the US, which operate nothing like Asia. CAPM, for all its robust mathematical foundations, hadn't been able to capture the impact of black swan scenarios such as SARS, the 2008 financial crisis or COVID-19. I do not discredit the theories of finance. They have been after all backed by empirical data over long periods of time. As chaotic as the world may be, leaders of organisations cannot be seen to make decisions without relying on some form of credible evidence-based analysis. But the rules of capitalism that work well for an efficient, mature and functioning capital market, are sometimes irrelevant in other economies where there is information asymmetry and deals are done differently. Coming from a practitioner point of view, we should avoid being too numerically precise but instead be more commercial when it comes to valuing businesses. Unless someone higher up or sitting at the dominant end of the negotiating table says so, valuation is always just a number. Ultimately, it is the folks with the cash who decide what the magic number is, calibrated based on however much they want the returns to be. Value sits with the beholder of cash, who are you to say otherwise? [1] DSCR = Debt service coverage ratio. Calculated as cash flows divided by debt service: a metric that measures how much cash flow buffer a company has to cover its interest and principal repayments. [2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4942046 [3] Check out Mark Minervini's interview on CNBC as he gets asked about the companies he invested in. Simply hilarious.

I recently finished lecturing a couple of corporate finance and financial modeling courses curated for working professionals. The most common feedback was either that the pace was too fast or it was challenging to keep up with the accounting math. Coming from an engineering background where math is like an innate skillset, I try to keep the logic as simple as possible. Looking back, sometimes I wished someone had shared these with me earlier right from the start when I embarked on my investment banking career. If you are looking for a layman's explanation, this article effectively summarizes everything you need to know about investment banking and corporate finance. (1) Decision-making. All of corporate finance effectively comes down to decision making. And when it comes to decision making, there are essentially two questions to ask: - To invest or not to invest? - Where do we get the money? And to determine if a right course of action has been taken, we need to have some form of measurable outcomes. (2) Investing decisions. "To buy or not to buy?" The decision to invest is all about cost-benefit i.e. do the future benefits outweigh the costs to get there? Valuation and return on investment are the go-to metrics of how companies evaluate investments. NPV (Net Present Value) is used to measure the value of an asset based on future cash flows. IRR (Internal Rate of Return) calculates the return on an investment based on an initial outlay and future cash payouts. However, one cannot make sense of value without considering where the money is coming from, which leads us to the next point. (3) Financing decisions. "Where is the money coming from?" There are only two ways you can fund a business--equity or debt. Lenders care about profits only to the extent it affects their ability to receive a repayment on the debt, but for equity investors profits are really what matters. Both equity and debt have strings attached. Equity requires you to share any future profits in the business. Debt requires you to ensure that the investment is made whole with an agreed fixed payment of sorts. Unlike equity, debt prioritizes wealth preservation. To do so, lenders will ask for all sorts of comfort and security over what businesses can offer to ensure that their capital will not be jeopardized. The banks call this collateral. They will also create boundaries around what borrowers can do and cannot do. These are called "red lines" or financial covenants. Crossing the lines gives the bank the right to ask for an early repayment on the debt. Using the analogy of a queue, debt holders stand in front and equity holders stand behind. Because of where they stand in queue, equity is almost always more costly than debt. This is a simple risk-reward logic and are also the irrefutable rules of the financial markets i.e. If I stand further behind the queue, I expect a bigger payout. NPV and IRR—the decision making tools in corporate finance—therefore involves weighing the cost of capital against the potential returns of investing in a certain project. (4) Everything is relative. Nearly all of business valuation involves some form of comparison. Interest rates set by central banks all over the world are a widely accepted benchmark for a rate of return on capital with minimum risk. Therefore, any premium above the benchmark rate comes from how financing institutions are perceiving risk i.e. there is no reason why an investor would put their money on the line for a business if there was a similar and less risky alternative elsewhere. In other cases, rates of return are used to also drive and influence policy making. For example the widely accepted long-term target inflation rate of 2% came about from a meeting of central banks in New Zealand dating back to 1988[1]. According to one person, “The figure was plucked out of the air to influence the public’s expectations”. To quote Eugene Fama[2]: “I’d compare stock pickers to astrologers, but I don’t want to bad-mouth the astrologers.” Everyone who makes a living in finance thinks they know it all. But there are no correct answers, only comparisons which arise from differing points of views. (5) Storytelling According to archaeologists, cave paintings that date thousands of years ago indicate storytelling was an important aspect of how humans communicate and evolve. Listening to stories causes the brain to release oxytocin which is associated with empathy and cooperation. People are drawn to stories because they can relate to them. Stories shape our beliefs, and beliefs drives the way we make decisions. For what it’s worth, story telling has become an important part of finance. The narrative helps investors make up their minds about whether a business is good or bad[3]. Since no one can accurately predict how things in the future are going to turn out, history becomes a convenient fallback, society rewards good storytellers, and people being humans, do love to listen to a good story. (6) Simplicity Finance doesn't need to be complicated. Even stuff such as financial modeling and complex structures such as leverage buyouts (LBOs) isn't as complicated as bankers make them out to be. Take for instance, LBOs similar to buying a house on a mortgage--the bulk of the purchase is typically funded with a huge bank loan comprising between 60-80% of the property price. The difference lies in how the debt is serviced. With buying a house, the cash flows come from rental income. In a LBO, cash flows come from operating the business. Assuming the value of the asset remains the same, the value of ownership (equity) naturally increases as debt gets paid down, enabling the home owner (or equity holder) to realize its return on investment. That’s all there is to it. When you think about it, a lot of what goes on in corporate finance are actually very relatable to what we do in daily life. It pays to remember that most of what we learn about how financial markets work and and business valuation were originated from the West, largely because the US and the dollar led the charge on how capital is being raised since the history of corporate finance as we know it. Since then, a number of things have changed. The world became more globalized, investors at all levels have better access and knowledge to putting money to work, information is now more pervasive with technology and social media. There is also a huge supply of capital seeking new avenues for returns. A number of global events that took place over the last few decades had also dramatically shaped the way we apply the frameworks of corporate finance such as estimating growth, calculating risk premiums, deriving cost of capital and using valuation multiples. As a practitioner, it is important to take these nuances into our approach when looking at businesses. Here are some real life examples: One billion people. How do you forecast cash flows in the world’s fastest growing economy? In early 2000, China opened up, embarking on huge market reforms that put it on the global economic map. It became one of the hottest investment destination and everyone wanted a piece of the pie. I was fortunate to have witnessed first hand how businesses had successfully produced insanely affordable smartphones, put them in the hands of even the poorest people and connecting everyone in the country. China also leapfrogged the entire credit card economy, going from cash to cashless transactions. Putting the two together meant that one billion people now had the power to spend on just about anything at the convenience of their fingertips. Double digit growth is not out-performance, it is the norm. If you truly understand and appreciate this, trying to project cash flows and using DCF in China at that point of time will fiercely challenge your understanding of local market dynamics and the assumptions around growth rates to derive the value of a Chinese company. “Mature market” risk premium. Given the state of world affairs, are countries such as the US still a “mature market”? The financial crisis in 2008 that kicked off the collapse of Lehman Brothers and subsequently the dissolution of pure-play investment banks, also led to the over-printing of money in the US. Since then, liquidity has been the go-to playbook for solving any financial crisis. For a long time now, the US market has always been positioned as the baseline for what constitutes a mature market, along with other high-performing financial capitals of the world. Today, whether the US will continue to honor its USD 30+ trillion debt obligations will not only test the strength of the US dollar and the credibility of its treasury bonds, but ultimately also our textbook definition of what makes up a “mature and stable market”. If the LIBOR, the London Interbank Offered Rate (which at one point of time had been used as the benchmark for setting interest rates all over the world) can be abolished[4], we must accept the very possibility that our understanding of what defines a stable market return could already be outdated. AT1 bonds. Geopolitics continue to have a big influence on financial markets, so does debt still stand in front of equity? The default on the now defunct Credit Suisse’s AT1 bonds in early 2023 also raises disturbing questions on our conventional understanding of how debt and equity works. For example, is debt financing really less risky when an important strategic shareholder owns part of a business? When countries start to weaponize economic and financial policy through bailouts, tariffs and sanctions, do companies and investors continue to apply the weighted average cost of capital ("WACC") to quantify and justify their decisions? Exorbitant valuation multiples Investors are paying exorbitant multiples for AI companies. Elsewhere in the world, an investor is paying 100 times on sales for Zhipu, a large-model AI company that recently debuted on the HK exchange but has no earnings yet. There is no decent financial model that could justify a company being valued at 100x sales. But as Lee Kai Fu[5] once said of the AI bubble in these companies, “If you believe there is 2x, 3x, 5x growth for the next three years, it is going to justify that valuation at some point. The bubble is merely that it has gotten ahead of itself, not the likelihood of growth in the future.” The all-time historical high of a price-to-sales ratio for the S&P 500 and the NASDAQ was approximately 3.4x and 7x respectively. Even tech darling Nvidia only touched 30-40x at its recent peak. That makes it highly irrational to think that any business could be valued at 100x price-to-sales. Put that into your model. ——— There are no correct answers to any of the questions above. One thing that is for sure is that there are definitely are a lot more events taking place in the world that has transformed the way we look at businesses. In short, the rules that we used to learn in books, the rules that govern how financial markets supposedly work, are different from what happens in the real world, and it will continue to stay that way. Finance teaches us that value - especially intrinsic value - is the sum of the present value of all future cash flows. Reality however often tells another story. It is necessary to still know how the math works on paper, but acknowledging and understanding this difference is perhaps the most important lesson in corporate finance. [1] "Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel" - The New York Times. [2] Lunch with Eugene Fama - The Financial Times. [3] In my opinion, relying on IRRs, MOCs and DPIs to assess and determine the performance of a company or a fund manager violates one of the cardinal rules of investing: History is not the best indicator of the future. Also, good bankers do not always make good investors, good investors do not always make good operators of businesses and managing capital is fundamentally different from running a business. An investor is only as good as his last trade. [4] In 2012, it was first discovered that banks were colluding to manipulate the benchmark interest rates to profit from trading and mask the troubles that banks were facing following the 2008 financial crisis. It was fully phased out in the middle of 2023. [5] "Sinovation Ventures Lee Kai Fu on The China-US AI Race" - Bloomberg.

Tectonic level changes "Do you know how big is a billion? Just imagine every person tossing a coin at you at the same time." This was how one of my flatmates used to whimsically describe the scale, the 'massive-ness' of China and its potential market opportunity when I used to live in Shanghai in 2004. Some weeks back, Mark Mobius, a seasoned investor renowned for his bullishness on emerging markets and China said that he "cannot get his money out". Mr Mobius' experience might have just come down to a technical glitch in his personal bank account but the media obviously loves to blow this out of proportion to create headlines. Capital controls have been existent since China's opening up and market reforms decades ago. Companies and investors who were first movers into the country know and understand this. There are many ways in which flows of capital are designed, structured and moved in and out of China - the VIE model, SAFE registration, and designated cash pools. That said, earlier this year, regulators in China also published an article guiding the application and use of long-term foreign debt in China. Among other finer details, it states that the process has become more substantive rather than procedural--more explicit approval is required for companies in China wanting to bring in foreign debt. In simple terms, there are no more “FYIs” when it comes to moving money in and out of China. To complicate things further, the SOFR rate which sets the benchmark for most USD-denominated lending had risen dramatically over the last twelve months, in quite the opposite direction to the China’s benchmark lending rate. The macroeconomic forces at play—both global and local—seem to be discouraging the flow of foreign capital to and from the country. There is a nagging feeling that the narrative on China, in spite of its huge market, has been changing at the tectonic level. The new playbook. For years, fund managers have profited from arbitraging risk premiums between emerging and mature markets of the world. The principles of investing are simple: Money should go to where it has the lowest risk (note that familiarity with markets drives risk as well) The lower the odds of something happening, the higher the expected return i.e. Tails drive everything. Therefore, the playbook reads: Borrow USD to invest in the emerging markets of China and the rest of Asia. This is the classic version of the carry trade done at the global level. Lately that playbook has somewhat changed: Emerging from a pandemic-induced recession, one would expect the central banks to maintain its low interest rate policy to drive economic growth. But they had been slow in addressing the rapid bloating in asset prices which subsequently peaked in 2022. China, on the other hand, which had been closed out from the rest of the world due to geopolitical tensions decided to go in the opposite direction. Short-term dollar-based deposit rates today have elevated to roughly five percent, which meant investors get a relatively decent return for not doing anything. Not very long ago, a five percent return was the benchmark for investing in a 'stable market' and not doing anything with your money yields anywhere from 0.3% to 0.5%. Under this new playbook, many fund managers are finding it incredibly difficult to justify their dollar-based investments in emerging markets. For China, there is an added wrinkle of politics at play. Last year, the Chinese government announced slashing the compensation for senior executives at Chinese investment banks. State-run financial firms and regulators were not spared either as part of the reforms highlighted at the recent two sessions. Even Bao Fan, the deal-making rock star of many tech darlings in China and chief of brokerage firm, China Renaissance, went missing only to re-surface some weeks later with news that he was assisting the authorities with investigations. The anti-corruption narrative obviously doesn’t go down well against the already gloomy broader macroeconomic backdrop and simply reinforces China as an “un-investable” market. Faith. Some believe that all of this started in Shanghai after Jack Ma's controversial speech in 2020 and also part of China's push for common prosperity. Either way, all of this seems to be the un-intended consequence of doing well or achieving outsized returns. If you are facing high cost of funds and still have to contend with limited returns in a regime that is unpredictable, largely state-controlled and “anti-greed”, it can be really challenging to convince asset allocators to put more money there. The billion-people story which used to be a highlight also doesn't sell as well as before. Embracing policy is a choice for investors offshore but a necessity for firms operating in China. That said, ultimately one just needs to be a believer--a believer in the policies and directions set forth by the incumbent few who are in power, and possibly a lot of faith, something which happens to be incredibly difficult to come by these days.

"There's nothing for you in Singapore." - an unnamed friend During the initial years of starting IJK, we had contemplated re-locating me from Singapore to Shanghai. It would have been a huge move. It had also been a natural and strategic option. China was a huge market and we thought we had what it took to succeed in that market. But China has been relatively outside my comfort zone, not only in terms of the language but more so because the resources that I had mustered over the last ten years at that point of time were all within Southeast Asia - The connections, relationships and appreciation of the culturally diverse landscape. In short, I felt that I knew relatively better how to navigate in Southeast Asia as compared to China. But China as an economy was the largest in Asia compared to the playing field in Southeast Asia. It was hard and impossible to ignore. I made that decision not to re-locate, staying put in Singapore while spending the next four years shuttling in and out Shanghai and many other cities, making stopovers in Hong Kong. By early 2020, our startup journey had taken us to Moscow, Saint Petersburg, Seoul, Riyadh, Astana, Budapest...the list goes on. As for the adventures we had over those 4 years, those stories are for another day. I never posted any of those trips on social media. We had travelled to many exotic places and I got to know many people whom I would have not met if we never started this business. More importantly for me, I succeeded in breaking away from the comfort zone I was in as an investment banker, the typical grunt of an employee. While I had picked up most of my accounting knowledge, financial modelling and structuring skills in a formal professional setting, I really only learned how to set up meetings, present ideas and sell when I became a business owner. These are lifelong skills that cannot be taught and follow you around for a long time. Look, the point here is not about the fancy globetrotting or the invaluable lessons learned. There is also no success story to tell. At the risk of being overly blunt and transactional: The business acquaintances and relationships acquired only make sense if you can convert them into fees at some point of time. The cash flows (if any), only sustain you for a finite period, and then you have to look for the next elephant to bag, and the next, and so on and so forth. The truth is we paid for many of these business expenses without getting anything in return. Many people choose to interpret and believe what they see on the outside. It’s not as good as it sounds. There is no glamour in running your own business. It is more like living life in a constant state of uncertainty. And when you are in a constant state of uncertainty, it gets difficult to plan for anything long term. Then at the end of 2020, in a twist of an opportunity, I made the decision to relocate to Hong Kong, taking that uncertainty into a whole new dimension. Over these last two years, many friends have asked me how I cope with living overseas for an extended period of time away from home. All I can say is that it is not as easy as one might think, even for those who are accustomed to frequent traveling for business. When I think about it, the people who travel and live overseas for work generally comes down to three buckets: Those who relocate early on in their lives either for study or upon graduation; Those in their mid-careers who relocate for work as a temporary arrangement and; Those in their mid-careers who relocate indefinitely. I have many friends in the first bucket. They had gone over mostly upon graduation and have called those cities home. Those I know have stayed overseas for easily more than ten years. They had built their social ecosystems and familial support there and did not have to uproot anything back home or had little to nothing to give up. For them, life started overseas. Those in the second bucket are slightly older and had more work experience. They had gone overseas midway into their careers or got seconded as part of a project. In nearly all of the cases I knew, there was always clear visibility in terms of when they were going back home, be it two years, three years or five years. There was always a finish line--something to look forward to so to speak. Then there are those in the third bucket. I know of very few people who are in this bucket and they are mostly in C-suite positions. I sometimes wonder how they do it. How they manage their families at home is a miracle in itself. You can only truly empathize with this if you are in this bucket. The thing is: When you already have a life back home, relocating overseas for work indefinitely is much harder than it sounds on paper and what you hear from others. A lot of people take it for granted because they either feel that the remuneration package makes up for that inconvenience or they simply just think they are adaptable enough. But when you take a step back and really evaluate the circumstances that could potentially impact you - the distance, the unfamiliar environment, the lack of social and familial support, there is always a chance that you over-estimate yourself. Money can only go so far in compensating the inconvenience and logistics of relocating overseas, but how does one psychologically prepare for and cope for the change to a new environment?