Some weeks ago in Shenzhen, I got into the back seat of a taxi, and to my surprise, found the driver watching a douyin video of an influencer speaking in Chinese and then narrating the same phrase again in English. Apparently it was a video that taught viewers how to speak the English language. I have been teaching financial modelling for over 5 years now. But at the first ever class held in July 2018, the delivery was so badly curated that it was clumsy and in my opinion somewhat even embarrassing. I had spent weeks preparing for it, assembling a deck of over 500 slides. In those slides were numerous case studies and valuable content which I had amassed from over 10 years of corporate finance experience. It was by some measure, a work of art . Yet, in spite of those, I received possibly the lowest rating ever for a financial modelling course. Someone in the class even openly remarked, " how can anyone teach financial modelling like that?? " Turns out that being a teacher and a practitioner can be two vastly different things. Being good in your trade does not imply that you are good at transferring that trade knowledge . Having years of industry experience does not necessarily mean that you are a good teacher. Even good teachers need training regardless of their age and background. Just as some aspects of your job sometimes needs to be re-learned or upgraded. I recently gave a one-hour workshop on business and corporate finance in Hong Kong to a group of university undergraduates from the Guangzhou Huashang College (广州华商学院). The workshop was part of a three-day immersion program to get the students acquainted with the prospects of working or studying overseas. The flow of the workshop was basically the same content I had been doing over and over again for the last five years at SMU, condensed into a sixty-minute session, and further watered down for an audience with basically little to no working experience. The catch was that everything was to be done in Chinese , which put me at risk of being reduced to a babbling idiot. It might not sound like a big deal, but for me, this was the first time ever that I had to deliver a class (somewhat professionally) in a second language. Sure enough, being based in HK and Shenzhen over the last three years, I have had to communicate and present plenty in Chinese. I had also done cross-border M&A deals in China during my banking days. However, I always had the benefit of a safety net - coworkers around me who could help fill in the gaps. This was entirely different . The aftermath? Not as bad as I expected. Neither was it as smooth as I wanted it to be. But most of all, it was refreshing. The entire experience was a discovery process and a learning opportunity for them as much as it was for me. The point is: When we are in our twenties, it is conveniently easy to commit to learning. Every lead or project is seen as an opportunity to clock some mileage, hone technical skills and sharpen the sword. Practice makes perfect. There is that insatiable thirst for acquiring more knowledge, which leads to opening many doors in the future. When we move onto the thirties, that mileage elevates us to become subject matter experts, but we also become increasingly narrow and selective in terms of the assignments and projects we undertake. Beyond the thirties and into the forties, companies, shareholders and the people who hire you become more impatient and less forgiving. Results get prioritised and learning often takes a back seat. Amidst many lost opportunities and closed doors, it becomes easy to forget the enthusiasm of the twenties, easy to stop learning: Easy to stop learning a new trade, a new product or service, the workings of a whole new industry, take on a new role at work, a new way of doing things, or even a new language . As for the taxi driver in Shenzhen: If someone older than me with a presumably mediocre income and virtually no university education can bother to learn English in a largely Chinese environment, in anticipation that he might need to use it one day to communicate with his foreign passengers, what excuses do we have for not picking up a new skill when the opportunity arises? Never stop learning.

On 24 June, Singapore Airlines completed the full redemption of all its outstanding MCB (mandatory convertible bonds) that had been issued during the throes of COVID-19. This means that if you had put in money to buy those bonds in 2021, the company returns the entire sum that you had invested, with a pre-agreed premium on the investment, even if you were content to keep it to maturity and have them converted into shares. The Business Times calls this "an interesting chapter of its history". I think it's a good lesson in corporate finance and financial management, and we need more creative structuring like this in our capital markets. The premium for the final redemption works out to about 12.6%, which translates to be roughly 4.0% per year: Had SIA not followed through with the redemption, allowed you to hold those bonds, and converted the face value at S$ 4.84 per share at maturity, the IRR would be closer to 8%, depending on where you think the share price lands in 2031. Now a 4% to 8% annualised investment return over ten years may not seem like a lot if you compare it with interest rates today and also look back on how delicate things were during COVID-19. Some airlines even came close to bankruptcy during that period of time. Cost of capital was high. Buying airlines and all things travel-related were high risk investments, especially if you think about the speed at which SIA was haemorrhaging capital to the tune of S$ 8.8 billion in a year after its band aid of a rights issue in 2020. Even with sovereign underwriting from Temasek Holdings, there was simply no saying when the bleeding would stop. But ignoring the grim backdrop, a 10-year sovereign-backed corporate bond with step-up interest rates of 4 to 6% would have been a highly attractive investment, considering SOFR rates were at approximately 1.5% in 2020. The real pot at the end of the rainbow was swapping those bonds into SIA shares, in which the conversion price was at a big discount to SIA’s share price at pre-pandemic levels. After all, the prime minister had given his soft endorsement, saying that “SIA will be a great way to fly again”. How much worser could it get? What made a significant difference also was that the convertible bond offer was given exclusively to existing shareholders - a creative concoction of debt and equity. If you had missed out on the 2020 rights issue, buying SIA shares off the market would provide another window of opportunity to get in, or double down, albeit at an even lower price. And then you get the bonds as well, which ultimately increases the probability of a successful convertible bond issuance. It’s an ingenious way to market a deal. Most companies will just go on roadshows, paint a rosy picture against a hockey stick chart and promise the eventuality of brighter days ahead. But these MCBs were essentially structured as a “private club”, open only to existing investors, with a ten-year bet on the aviation sector and SIA’s reigning leadership over that period. Looking back, I think the conversion mechanics in the whole deal was arbitrary. The huge equity upside from swapping those bonds into equity at S$ 4.84 per share was probably meant to justify the low cost of debt. If you ask me, I think no one really baked in a scenario to have those bonds converted to shares. Ten years would give SIA sufficient runway to set aside capital to redeem those bonds at any time: Three years tops for the pandemic to play out and the economy to recover, plus another seven years or so to turn around. The worst case? Air travel doesn’t recover and the company’s business model becomes permanently altered. A remote possibility nevertheless, in which case, swapping those bonds into equity wouldn’t really be such a bad deal after all. [Disclaimer: I was a holder of SIA shares and its MCBs.]

Some random thoughts on hatch day. True wealth. True wealth was never about the accumulation of money but a way of life. There is no point in comparing yourself with those who work 7-day work weeks, or clock 18-hour days earning heaps of money. This applies also to those working regular hours with relatively more ‘free time’ on their hand, and who are earning a fraction of the income. “There is no universal truth in terms of what makes up a good life, only what works for you and allows you to sleep peacefully at night” - Morgan Housel Once the rain is over... Once the rain is over, an umbrella becomes a burden to everyone. That’s how quickly loyalty ends when the benefits stop. Don’t take everything too personally. A lot of what we misconstrue as friendships and good relationships tend to be mostly transactional. Don’t overshare. Not everyone wants the best for you. Privacy is power, and people can’t ruin what they don’t know. Space. Give yourself space. Sometimes all you need is a little more space to think through things and solve your problems - space to breathe, space to take a step back and more importantly, to look at the bigger picture. Nature often provides a good setting for this. Self-responsibility. You bear ultimate responsibility for everything that happens to you. They say don't be too hard on yourself. That's only because most people don't want to face up to the fact that they are responsible for everything good or bad that happens to them. Once you recognise this, you stop assigning blame and focus on just getting to the root of fixing any issues. If something doesn’t work for you, change it, or eliminate it. Spend less than you earn. Run your life for gross profit. That means: spend within your means, and don't buy more than you can afford. Manage your finances based on gross profit, not revenue. Never chase or compare yourself with the high-income earners or those who own a lot of stuff. You don’t know what kind of liabilities come attached with it. The value of experiences. Buy experiences, not objects. Yoyogi Park, Tokyo Restful sleep. If the volatility of tens of thousands of dollars per day keeps you up at night, maybe you shouldn’t be managing money. You either get the job done, or not. In the early days of school, we were brought up believing that you get credited partially by showing your calculations and workings next to the answers in some exams, particularly for math and especially when it is the wrong answer. This was done mostly to encourage students who did not get the right answers, but showed effort in trying. In the working world, right answers are everything. Results drive everything. Stephen Schwarzman illustrates this aptly during his guest address at Yale where he shared his experience working at Lehman Brothers [start watching from 48:20]: "In the real world, there is only one grade for every project... which is an equivalent of an 'A' grade. And the definition of an 'A' isn't the same as in academics. In academics you can get an 'A' sometimes with a 90, sometimes with a 92, a 93... and that's sort of pretty good. In our world, an 'A' is a 100. This was shocking to me, because I wasn't an 'A' kind of person..." - Stephen Schwarzman Don't justify how hard you are trying to your clients or bosses. Stop complaining about how much work you have put in. No one is coming to pat you on the back or give you a gold star for your effort. No one cares, get over it. You either get it done, or not. That's it. What really matters. You matter only to the people who genuinely care about you. If you drop dead tomorrow, your line manager will posthumously say a few words of thanks and condolences, and then proceed to hire your replacement the very next day. You only matter to your company and your colleagues as far as economics go. Be that as it may, so easy to say, harder in practice. Reputation. So much depends on reputation, guard it with your life. Law number 5, from the book “ 48 Laws of Power ”. One of the most important things to a man is his reputation. Negotiation. When negotiating, remember that Nassim Taleb says: "What matters isn’t what a person has or doesn’t have, but what he or she is afraid of losing." Trust your gut. If you do something and find yourself awake and unable to sleep at night, with a nagging feeling in your chest or gut, it probably means that whatever you are doing is posing a threat to something of great importance to you, or is conflicting with your core values deep inside. Whatever that is, stop doing what you are doing. And the next time you do anything, remember that nagging feeling. At the end of the day, you are only accountable to yourself when you wake up in the morning. Be less judgmental. Don’t impose your moral high ground and standards on others in terms of what you think it means to be rich, what kind of work they are engaged in or what they say and do. You don’t know what they have gone through or have to put up with. “Some people were born to sit by a river. Some get struck by lightning. Some have an ear for music. Some are artists. Some swim. Some know buttons. Some know Shakespeare. Some are mothers. And some people - dance.” - Eric Roth (excerpt from the movie " The Curious Case of Benjamin Button ") Fat in organizations. Fat accumulates in organizations because most people work on the basis that it is better to follow instructions, even when it is wrong and get paid, rather than to be right and lose your only source of income. To paraphrase a Chinese colloquial saying: Stakeholders are the ones who foot the bill eventually (Also, see number 40 here .) The value of money. Money buys a lot of things, but the most important thing it buys is the option to walk away from everything.

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 gave say a 7% yield over buying a cluster of houses in another remote part of the country? How did they know that investing $200,000 in the neighbourhood bakery would 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? I think we had relatively simpler lives back in the days. Deals were probably mostly executed as gentlemen agreements or done in the presence of credible witnesses which gave the covenant legal effect. But aside from the law, your word meant everything, and high-level numbers were calculated with no one needing to build complicated financial models. Today we have powerful spreadsheets that can do intricate calculations on valuations and IRRs to three decimal places. We can also write 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. On the documentation side, we 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 excessive information at our disposal have made us so caught up in being faster and overly precise that most of us lose 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 . “ Don’t spend too much time getting the right figure ”, I always said, and I sometimes question the appropriateness in my unorthodox teaching delivery. From my perspective, it always seemed that the discount rate has always been investor driven. Consider this: The primary objective of trying to value any business is to arrive at a decision of to " buy " or " not to buy " Assuming future cash flows are whatever they are, the outcome of using the NPV is 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. And if you had sourced that money from elsewhere, then there is usually a cost to that, a fee of sorts that you need to pay back in exchange borrowing the money (i.e. the interest of debt). Taking all of this into consideration, the overall cost of capital would reflect the expected return on investment plus a premium from doing the transaction that allows you to sleep peacefully at night or make a decent profit out of it. 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.

Do not believe anything ever again. It is getting increasingly difficult to educate our kids with more technology today. “So you ask Google a question in whichever language in the world, what did Google answer with? It said, look, there seems to be 104 million sites on those. You can read all of them and make up your mind what the truth is. It's your truth. 2023, you switch on ChatGPT, you ask it a question, what does ChatGPT tell you? One answer. And that one answer is completely positioned as the truth."[1] Google used to be the default when searching basically for anything in the world. You would type a few key words in the search bar and a hundreds of seemingly unlimited entries would show up, allowing you to choose what are the most appropriate results. You get to decide what is right and wrong with a buffet of choices. Today ChatGPT and a host of other blackbox AI-powered agents that claim to be more "efficient" narrows these to a few easy to view and choose options. Machines might have gotten smarter and more precise in being able to guess what the user wants. But that isn't always necessarily accurate or correct. Humans learn more effectively by making mistakes[2], which improves their ability to appraise a situation or be a better judge of character. Errors and pain build resilience and values, allowing us to make wiser decisions. Some go through it more than others. And wisdom is something that tells you to go ahead or hold back on doing something even if most of the indicators show otherwise. Being able to act resolutely in a seemingly irrational sense is not in the rulebook and big data model of machine learning. Just like the news: That one headline event that took place, will come out in varying undertones when published in the Financial Times, SCMP, Straits Times, the Chinese news or any other platform across the globe. Nearly all media is propaganda. And digital media in its various forms (X, Weibo, Telegram, etc) is simply just a more entertaining way of putting ideologies into the minds of the masses. Just because something is widely reported in the media doesn’t mean that it is necessarily the right thing. A kid that watches Instagram growing up as compared to another watching Douyin will be imbued with very different values and perspectives of how the world works. And with technology pushing the limits in virtual reality, it will get increasingly hairy to differentiate what is real and not real. As adults, most of us have had the benefit of accumulating enough scars to know what's good or bad for us, and therefore make informed and wise decisions. When fed with enough propaganda every day, even adults can be persuaded to bend their will and choices. What more can be said of the impressionable minds of kids? These days, with so many avenues of searching for information on the Internet, deepfakes and curated content being pushed to our devices, how do you then train young people to tell real from fake and discern right from wrong? How do you give them enough life experiences at an early age - and not just what they can read off books and the Internet - without permanently damaging their minds, instilling them to think on their feet independently, so that when they grow up and read the headlines or listen to someone talk, they will pause and ask, "Is that really the case?" "Do not believe anything ever again. Because the idea of asking a question and getting one answer for it is by absolute certainty not true." - Mo Gawdat Limitations. Years ago when I was just a young freshly minted investment banker at a social gathering, one of my older friends casually commented, “I am not young anymore and can’t stay up to work the long hours like you guys, I have to sleep before midnight.” - an unnamed friend who was in the forties then Coming from an environment and work culture where all-nighters were worn like a badge of honor and people grab a few drinks after work before getting home after midnight, this was inconceivable. Perhaps more inconceivable was the fact that fast forward nearly two decades today, I still push the hours. Since then, my work has evolved from being somewhat 90% confined to facing the monitor at my desk in Singapore, to mostly city-hopping, meeting and talking to people, while working out of hotels and on the move. I am not particularly proud of the long working hours and suitcase life, but these were part of the deal when I took on the job. As hectic as it sounds, I enjoy what I do in general. It was only in recent times that the frequency of falling sick had increased to the point that I start to question the limits of my body and ask, “Is it time to really slow down?” No more executive roles. Regardless of how we define and stereotype the characteristics of each generation of youngsters, the unspoken rite of passage that transcends time and industry is: Newbies and those fresh to the job, will first do the number crunching and leg work before being handed more important stuff. It is a proven way for businesses to manage operational risk. Call it modern day apprenticeship. This is similar to how food recipes are handed down across generations, just like the 90-year old uncle who makes the char kway teow that people religiously queue up for at the hawker centre in Singapore. When left to a pair of unseasoned kitchen hands, the quality of the char kway teow recipe gets compromised, because no one makes a better plate than the old man himself who adds just the perfect amount of ingredients in every serving. Execution excellence and mastery are forged and nurtured by simply doing something over and over again, for a very long time. But unlike char kway teow, most white collared roles will not expect you to do the heavy-lifting after a certain number of years. In large organisations, some will even consider it criminal to ask a senior person to run execution. The idea is once you push the forties and fifties, the nature of work tends to involve leading from the benches rather than from the trenches. There is a valid argument for succession and redundancy planning, but the main point was: Provide more counsel and less execution leadership. Managing grunt work is best left to the young foot soldiers. I recalled a conversation last year over a working lunch with an ex-senior partner at a top consulting firm. At the peak of his career, he socialised the idea of retiring into a corporate role to his higher up. This was at the onset of his late forties. The response that came back was, “Just remember, there are no more executive roles after your fifties”. And since then, I have kept this religiously in mind at every turn at the workplace. [1] The Sharjah Entrepreneurship Festival: https://www.instagram.com/sharjahef/ [2] "Making mistakes while studying actually helps you learn better" - Science Daily

" Everybody should understand the role of trade. Every country does some things better and worse, and worldwide welfare is maximized when every country does the things that it does best, and cheapest, and then sells them to the countries that need them, which do other things and sell them to other people. That's how trade works. The good news is that the Italians make the pasta and the Swiss make the watches. But if we stop world trade, and the Swiss have to their own pasta, and the Italians have to make their own watches, then people in both countries, arguably, will be a little worse off. ” - Howard Marks on Bloomberg TV [1] There have been multiple narratives on why the current US administration is engaging a war on trade. Many say it all comes down to the huge US$9 trillion fiscal debt due this year, which the government can choose to either pay back or refinance. But refinancing is costly because interest rates are high. So the idea is that Trump announces tariffs -> global trade volumes are affected -> costs go up -> earnings come down -> growth slows. Trump creates a synthetic recession and interest rates come down. Some others say it is to bring back the jobs and manufacturing capabilities to the US.  But doing this means uprooting asset-heavy supply chains. Capex is long-term and relocating manufacturing hubs doesn’t happen overnight. Then there are those who think of the tariffs as a political tool. Get companies to pledge loyalty to the US -> local businesses will lobby to get import concessions -> foreign exporters negotiate bilateral arrangements -> US becomes the superpower of the world again. But no matter how you try and make sense of it, the overall state of global affairs today looks something like this: A thread on X recently written by Tanvi Ratna sums this up nicely: There is also much confusion as to who are paying for the tariffs. The tariff is paid by the importer of the goods, who then in theory, passes the increase in costs to the end consumer. But in reality, things aren't so simple. Exporters who are hard pressed to sell may end up having to reduce their prices, hence indirectly bearing the costs of these tariffs. The pricing dynamics get even more complicated when we start looking across the spectrum from low cost items all the way to high value goods. It might be ok to pay a few more dollars for a pair of jeans but the purchasing considerations might be very different for an electric car. Still, there is little sense in trying to predict what a madman is trying to do [2] , what impact his decisions will have in a complex geopolitical system of moving parts, and how this will play out for global trade and financial markets in the near term. Best to simply just go outdoors take a walk and enjoy the breeze. And to draw some wisdom from Vishal Khandelwal : “Quieten the constant chatter in your mind that may lead you to act all the time, do your work and then, please shut up and wait.” [1] Howard Marks on credit yields and Trump's tariffs, Bloomberg TV - https://www.youtube.com/watch?v=KpnUyGM5M-I [2] "Is Trump playing the mad man?", The Economist - https://www.youtube.com/watch?v=wIeTXYRajhw

NYU professor, Scott Galloway[1] says that the worst advice to give anyone fresh out of school is to: Follow your passion. 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/

We recently completed the test run of a new product as part of a market feasibility study. Despite having seen my fair share of feasibility studies in my banking days, I rarely sit on the opposite end—which is having to really think about putting the outcome of the report into action. But this isn’t quite my first stint at building a new product or entering a new market. In 2016, I had to assemble a conference from scratch, from financing to execution, nearly single-handedly. We later institutionalised the platform, calling it the Asia Investment Conference and replicated as an annual production. I later realised that the banks also had something similar that connected large investors to companies (usually public listed ones) that were looking to raise capital. They called this product “corporate access” and housed it under the equities division. The actual process of testing a new product in the market can be incredibly demoralizing. It’s basically rejection after rejection. In the process of carrying out the market study, I must have stepped on so many toes I wonder if we can truly spin this into a commercial venture. According to aero-propulsion engineering, most of a plane's fuel is burned when it is taxi-ing and taking off , not when cruising in mid air. It takes the most amount of energy for a plane to break that initial resistance, to move, to reach escape velocity and to eventually fly. When building a new product or a new business, all the team members must have the ability to overcome that initial resistance. And the truth is: If you are building anything new, you are always going to face resistance .  The team cannot be complainers. They cannot keep lamenting on the fact that this is a new market, a new product, or that there are simply not enough resources and internal / external support to do whatever they need to do. They certainly also cannot be wasting time putting together slides to explain in ten different ways why something doesn’t work, or why it cannot be done. They neither feel victimized nor do they spend time assigning blame.  They just get it done. There is no room for excuses, because that’s the only way to break that initial resistance, that is all there is to it.

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

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

Competitive rivalry A lot of professionals in the venture capital and mid-cap private equity space seem to be bad-mouthing each other. I attribute this to two reasons: Either a misplaced sense of pride or the intense competition in fundraising. The state of venture capital Venture capital investing looks like a game of ego. Every week I see numerous congratulatory posts relating to successful investments or fundraises on LinkedIn. It's all good. But a lot of folks seem to be either ignoring or oblivious to the long line of investors that has silently accumulated over the years and who are now queueing up for the exit. Someone recently told me that the DPI (distribution to paid-in) for VCs in Southeast Asia had apparently been only four percent in the last ten years. If we assume 2014 as the vintage year for which hot LP money started to pour into Asia and an average fund life of 10 years, this would indicate that the harvesting period has come due. But the hearsay of 4% DPI would suggest that 96% of capital deployed is still stuck, waiting to be sold, written down or written off. I haven’t been able to verify this. A lot of wealth is sitting in this part of the world[1]. Yet at the same time, a lot of VC money also wants to get out. Those who put their capital to work 7 to 10 years ago in early stage ventures are still waiting for their payday. GPs and founders face an incredibly tricky job of having to re-direct this flow of money somewhere, or to someone else, just to avoid a meltdown of the startup ecosystem and perhaps more importantly, repercussion from the broader investor community. Maybe they aren't really clueless. They just don't want to look bad by admitting that valuations had been overstretched in the earlier rounds of fundraising. Recession. China is probably already in a recession - a contraction in economic growth, decreasing FDI flows, and stark unemployment. The financial behemoths such as JPMorgan, UBS and Nomura had also ‘downgraded’ China equities recently. Of course no one is publicly admitting it yet, because no one can verify the data and information[2]. But let’s not rock the boat now… The smoking gun here are the unemployment rates in Shenzhen, one of the country's core economic engines. I don’t see the economy getting better, not at least in the near term. The balance sheets of individuals first need to be fixed before companies can be fixed. That means prioritising job creation, spurring disposable incomes and sustainable consumption. The upcoming Single’s Day sales in November will be a bellwether for things to come. Tech jobs in China. Many youths in China are retreating to the countryside in search of jobs and a more meaningful pace of life. The economy seems to be backtracking on being an innovation and manufacturing powerhouse, and losing ground as one of the go-to destinations for business expansion. A documentary on CNA reveals the state of affairs in some of the leading tech giants: "Everything that could be done has already been done. At this point, the work mostly involves minor fixes. Or we repeatedly work on the same functionalities. You might create one version today, then scrap it and create another version tomorrow, with only very subtle differences between the two. The improvements might be minimal or even negative. That’s the kind of work we are doing now. It feels like there are over a dozen teams all working to enhance and fix a small issue. How much significance does that really have?” - a tech professional-turned-farmer in China Founder's mentality. One thing that founders dislike more than incompetency is hearing that “it can’t be done.” "Potato, potahto." Wealth is created both by selling hot potatoes and selling 'hot potatoes'. You make money by either selling products or selling stories. It is easy to get carried away by confusing stories with products. The work of bankers. Most of the bankers I meet today don’t know the half of what they are talking about (sorry if this offends). Whether it is wealth management products or advising on strategic decisions involving raising capital, bankers ain't got a clue. They mostly talk about the general market sentiment at meetings (nothing that is not already in the news), talk about corporate strategies using different words, and then take a slice from the proceeds of the fundraising. Aside from the infrastructure backbone that banks provide to facilitate huge flows of capital, the proprietary insights and value-add in arranging investor meetings seem to be either marginalised by fact that companies themselves can get access directly to the investors, or are otherwise non-existent. I would run deals very differently if I ever went back into banking... A pipe dream. Getting listed on the SGX looks increasingly like a pipe dream. As much as regulators and industry groups have committed to spending the next 12 months discussing the way forward, there are some very fundamental issues that needs to be addressed, listing costs being only one of the factors. Following roughly two decades of successful REIT listings, investors trading on the SGX have gotten used to yields. Anything that doesn’t sound remotely like a fixed income product just isn’t attractive. Companies that raise capital via issuing new shares in Singapore simply do not offer the same outsized returns investors can be getting in other high growth markets and structured investments. The biggest selling point for any stock exchange therefore is liquidity. To solve for this, the 'tap' needs to be flowing. A cut in interest rates to “push” money from safe havens out into the open seems like one of the most direct way to solve for this. Beyond institutional participation, we need punters, speculators, aunties and uncles. Singapore already has the Sands and RWS casinos. For what it is worth, we now need to turn our exchange into a vibrant online marketplace that allows people to make 'bets' on the shares of companies. I use the word 'bet' loosely: When retail investors trade shares, we consider them to be punting. But when an institution trades, we say that they 'invest'. We use the proverbial labels "stupid money" and "smart money" to describe the two. The stereotype here is that the market believes risk can be assessed and quantified using statistical and mathematical models, accessible by "accredited" investors. When something goes wrong, it's bad judgement on the part of institutional investors, but comes off as gambling for retail investors. A proper functioning stock market requires the participation of both retail and institutions - that is why the exchange mandates publicly traded shares to be in the hands of at least 500 shareholders. Regulators and stock exchanges around the world can't say this, but the reality is "smart" money needs "stupid" money to create liquidity. The sophisticated models and assessment of returns that we 'worship' so much are built on a large stochastic universe of individual investors. In order to galvanise liquidity, greed, at this point, seems to be good. Selfish interests. Everyone has their own selfish interests at the deal table whether it is running a $100,000 company or a billion dollar company. It is always the same: Everyone thinks they know it all, everyone wants you to listen to them, to do things their way, and to top it off, some even want your money. Clarity is king. When looking back on my professional career over nearly two decades, I realised that most of my younger days were characterised by long hours of churning models and slides with very little time for critical thinking and in-depth analysis. This proportion changed over the years of course, but I wished that I had spent more time thinking and synthesising ideas. The clarity of mind, even when you are not doing anything, is always better than blind productivity. How to legitimately lose money. A lot of people don't realise that the covenants involving raising equity are very different from debt. The science around risk-reward for both equity and debt is well documented. Equity holders are generally willing to risk all their capital in exchange for a share in future profits, while most debt holders prioritise capital preservation in exchange for lower returns. Both involve an obligation by the parties involved to perform, or not to do certain things, but fundamentally with debt, there is an implicit expectation that the investment can, and will almost always be recovered. It pays to keep this in mind when contemplating any investment: Companies and founders who are asking you to invest equity (as compared to a loan) are not just trying to up-sell you on the huge returns, they are also asking your permission to legitimately lose that money. [1] McKinsey also has an interesting report that details this flow of capital to Singapore particularly from family offices: https://www.mckinsey.com/industries/financial-services/our-insights/asia-pacifics-family-office-boom-opportunity-knocks [2] The Economist: “The Chinese authorities are concealing the state of the economy“, https://www.economist.com/briefing/2024/09/05/the-chinese-authorities-are-concealing-the-state-of-the-economy

Three years into venturing out on my own, I acquired a new-found respect for many areas in the day-to-day operating of businesses which are presumably overlooked by most people. These include back office functions, human resources, payroll, corporate communications, financial reporting, legal and compliance, sales and marketing to overall general management. A lot of work goes into the creation of a business and even more effort goes into just sustaining it. I believe that all founders go through that same process, though everyone's experience is slightly different depending on product and business size. For some it could be fundraising, human resources, or developing sales channels. I found it useful at this juncture to summarize a few important aspects of the process as a timely reminder. Cashflow. You have to be really ready to be comfortable with very little cash in your bank at some point of time. Everyone’s financial background is different, just make sure you evaluate and prepare yours accordingly. Do something everyday. When you find yourself lost, just keep moving - meet people, read stuff, explain to friends what your business model is about. As long as you move, you’ll learn and get something out of it. When it comes to matters involving shareholding, always respect the money. It can be tough to quantify who contributes more at the onset of any start up given everyone's level of experience, age, capabilities and financial situation. One way to do this is to have everyone commit to an agreed amount of capital to put into the company and split the shareholding based on contributed capital. Even if one party had 20 years more experience over the other doesn't mean the more experienced party deserved a larger portion of the pie. Last drawn pay is irrelevant, only the economics and spirit of the equity injection matter. Take for instance the founding of Blackstone: Pete Peterson and Steve Schwarzman both put in $200,000 of their money and split the shareholding equal ways, even though Pete was held a more senior position in Lehman Brothers. Really have a shareholder agreement. Even a simple one is good, because that gets everyone committed to the business (at least statutorily). Do up a budget. THe idea here is to have some idea of how much expenses will be incurred each month. Everyone usually has some idea of how much is required but once this is inked on paper, it becomes crystal clear in terms of where the largest expenses are going, especially when it comes to manpower, tech spending and travel. Banking and money matters. Where bank and money matters are concerned, as far as possible always rely on joint signatories for check and balances. "Cheerleaders" are good but the will to execute is more important. It is absolutely critical to maintain a encouraging and positive mindset when starting a business, but also equally important to differentiate those who "cheerlead" vs those who actually do the work. The will to execute is probably more important, sometimes even more so than simple idea contribution. Everyone in the boat must paddle. All co-founders must be technically strong and have skillsets which are ideally complementary. No passengers allowed. Resolving disagreements. In pushing a point across or in any disagreement, no one should ever counter an argument by saying “I don’t need this”. Co-founders may never agree on everything, but when the decision is made, everyone must remain fully commited to execution. Trust is important. There is trusting in a person's integrity and also trusting in a person's ability to deliver. Both are important. Trust through years of friendship should not cloud judgement in trusting a person's execution or their ability to deliver. Change and growth. Be fully prepared that your idea and vision of your start up will evolve and change significantly along the way. This is mostly a good thing. Just be mindful and open-minded of the possibility that you could end up with a business that is quite different from what you had set out to do. Share options. Dilute no more than 20% of the company. Founders always need more skin in the game. Then comes the how and when to give share options: Reward those who have contributed to top-line and growth of the business. Here are some suggested guidelines: (i) Contribution to the business top-line (revenue) (ii) Where revenue is irrelevant, evaluate based on overall execution support Never give away equity. Not even to buddies who cheerlead you, period. See point above on respecting the money. Talent. Identifying, sourcing, acquiring and motivating people are ultimately key in growing and sustaining the business. As business owners, always: (i) Lead by example, be hands-on and show the way (ii) Invest in your strongest staff: train them professionally but also develop them personally as individuals (iii) Hire for attitude over aptitude (iv) Always be upfront and honest in your communication All employees will leave the firm one day, but the social goodwill generated during their time at your firm will be intangible and will go a very long way in establishing both you and your company's reputation. Beautiful presentation decks do not win deals. Good ideas, actionable strategies and the executing the plan builds credibility. Good decision making achieves multifold benefits. In making any decision, try to see if it can achieve multiple purposes. Don't undermine the importance of a healthy digital footprint. Anyone who tells you not to publish your background on LinkedIn is smoking you. In today’s digital age, a website, a corporate LinkedIn page and proper email account is almost synonymous with legitimacy. Corporate "mileage" or existence can also be a fairly strong indicator, register your company as early as possible. Stay positive and be comfortable with uncertainty. Complain less, do more. Be comfortable with uncertainty. There is always a possibility that an idea will not work, but if you fail, fail fast and pivot quickly to another strategy that works. Failure is an opportunity to learn. When you make a mistake, just get up and just move on. Otherwise, you may never grow as a person. Failure makes you a humble person, adversity builds character, and makes you a better person. Never victimize yourself. Our strengths and weaknesses are all shaped by our experiences and our will to do things. No one will bail you out from your self-pity and self-limitations. Be solution-oriented. Instead of close captioning the problem at hand, think of ways to solve the problem, then execute it. Make time for sanity, whatever the definition of sanity is to you - chilling over coffee, taking time to travel, spending time with family, etc. No one should work 24-7. At the end of the day even if you make it at the expense of the things that matter most to you, think about it: is it worth it? Keep in mind that everyone draws a pay check is fundamentally an employee. An employee’s mindset is different. Remember this always when you manage staff, work with partners, negotiate with clients and even raising funds from investors. You can learn a lot by working on the day-to-day mundane stuffs. You learn a lot when registering a business, making payments to mandatory employee provident funds, pay suppliers, write invoices and chase for payments. Trade receivables is a very real thing. Working capital and cash collection are some of the most important aspects of any business. When you are on the paying side just remember not to spoil market and always pay your suppliers on time. Take responsibility for your decisions. Good or bad, you are always responsible for the outcomes of your actions. Never look desperate. When fundraising or getting customers, never ever be desperate. Prospective investors and clients can smell desperation. The world works in ways more complex than you can think. Don’t believe everything you see and read. Teamwork is everything. There are no heroes in starting up.

Singapore Airlines posted record net profits for its full year ending 2023 results - "the highest in its 76-year history". This shouldn't be surprising given the effects of inflation over multiple decades and the fact that people tend to be more well-travelled these days, both for leisure and business. Still, it is a spectacular achievement on all fronts, for both the company and shareholders, considering how air travel had been severely impacted by the pandemic. Doomed for bankruptcy. Just think about it: Not very long ago, most airlines had been doomed for bankruptcy when COVID-19 brought air travel to a standstill. People were even mocking at the idea of ordering takeaway cabin food at home, selling SQ-branded merchandise and even flights-to-nowhere . All these seemingly whimsical initiatives were targeted at keeping customers engaged and satisfying the insatiable demands of wanderlust travelers, but most of all, I think it was meant to generate some cash flow, if any. Those flights-to-nowhere were subsequently scrapped due to environmental criticisms from the public but that didn't stop SQ from offering customers a unique dining experience aboard the A350 aircraft (on the ground of course). When the going gets tough, it's not only the bootstrapping start-up companies with the least bargaining power who have to creatively pull ideas out of their a**es. Big companies need to do this as well. When the world surprises the hell out of you and leaves you at the mercy of cash flows, anything and everything goes. Apparently what doesn't kill you makes you stronger. Looking back on the last three years, it might be easy to conclude that there is a simple recipe for surviving the pandemic: Stick around long enough, don't die in the process, and things will get better. But simply sticking around understates the numerous organisational and technical complexities that firms have to go through. In the case of SIA, this means re-allocation of manpower resources, deciding which planes to put in long term storage and the costs involved in such an operation (both the tangible and opportunity costs), as well as the means to raise sufficient capital to tide a possibly longer than expected winter . When you are neck-deep in a sticky situation it can sometimes be difficult to see how the longer term picture can play out. Check out these depressing headlines from 2020: Even ECB President Christine Lagarde then in mid 2020 said that the pandemic was probably "past the lowest point" and cautioned that any rebound would be “ uneven ”, “ incomplete ” and “ transformational ” - hinting that some industries such as air travel and entertainment might never recover. Everyone at that point of time certainly has a view on how things could pan out but when the central bank says something, you listen. Timing is everything. Yet even as the effects of the pandemic started to ease, very few companies emerge well from this period of crisis. This is not about hiring competent management to fix operational inefficiencies but the ability to weather a sudden economic shock. Moments like these test the effectiveness of a company's business continuity plan. Fortunately for Singapore Airlines, it also has a unique political and financial backing from state-run Temasek Holdings which not many other firms have. To some extent, SQ is Singapore and Singapore is SQ. This leads to another less obvious factor that has contributed to SQ's record profits. Six months was all that stood between SQ and its closest competitor, Cathay Pacific . That window was sufficient to give any well deserving airline a good head start in cannibalising market share along major competing sectors. If you compare SQ's FY2023 financial performance with the pre-pandemic periods in 2018 and 2019 , operating expenses including staff and fuel costs were almost at the same levels, implying that SQ had likely returned to nearly full operational status. CX on the other hand struggled with mobilising its fleet and dealing with the stubborn re-opening of Mainland China, one of its major revenue contributing segments. When life returned to normal, the dislocation in the supply and demand of air tickets, coupled with the tactical re-opening of Singapore borders six months earlier than Hong Kong / China, was probably what gave SQ the additional bump in profits. Had the Singapore government been slightly slower in its re-opening, we might have missed the boat on capturing tourist arrivals, the perennial fintech festival and numerous MICE events targeting business travelers and conference-goers especially towards the year end. Of course nothing is permanent. Supply pressures will eventually abate which should ease demand and bring down air fares. Unless Cathay Pacific screws it up big time, consumers being consumers will always seek out a variety of airlines to choose from. The key is whether SQ can continue to keep costs under control or will it get complacent from here on. No one likes to be caught with their pants down when a financial crisis hits, but there is no saying for sure when the next one will happen. In an interview with Charlie Rose in 2013, Mike Moritz said of Sequoia Capital: " I think we've -- we've always been afraid of going out of business. ...and so we've worked hard on trying to figure out how we make Sequoia Capital endure. And I think that's been the reason why we've been able to do what we've been able to do. Because we've assumed that tomorrow isn't like yesterday. We can't afford to rest on our laurels. We can't be complacent. We can't assume that yesterday's success translates into tomorrow's good fortune. "

It feels weird to say I'm traveling 'back' to Hong Kong after a business trip. I have spent the majority of my time here for the last 2+ years and there's a certain feeling of familiarity. Yet it feels nothing like going back home in Singapore. It's not a bad thing, just different. Beijing International Airport Whenever I travel, I often think about what it would be like to live in the visiting city. Not for a few days, but for months, and even years. Universities nowadays offer abundant opportunities for students to do this in the form of student exchange programs. It's an invaluable experience of learning to be independent and making more friends. Yet there is a subtle difference. With exchange programs, there is always a finish line. Exchange programs are pretty much like extended holidays with a simple commitment to set aside some hours for study, take an exam at the end of it all, and then go back to the comfort of home with an album full of instagram-able stories. Most who work overseas don't have a clear finish line, unless of course you have been sent there on a secondment with a visible plan of returning after a certain number of years. Unlike school, there is a commitment to deliver and perform in a largely unfamiliar environment. And if your familial and social support is back at home, there is sometimes also little to look forward to at the end of the day. The various circumstances, both external and internal, faced by those who venture abroad, are what makes them more tough and resilient, each in their own ways. People who have been born, bred and work in their home environment, or have assimilated into the indigenous fabric of society with their families may find this difficult to understand. This year marks my third year in Hong Kong. The experience of relocating in the capacity of a working professional, as I sometimes describe to colleagues and friends, comes down essentially to four things: Getting used to living apart from loved ones for an extended period of time Learning to use a second language as the lingua franca Embracing culture - both in the social and business setting Adapting to a new corporate environment or business function Some people adjust very quickly. Young folks and fresh graduates in particular, are almost like sponges , soaking everything up around them when thrown into a foreign place. When you relocate as an experienced hire, the slate is not empty and the "soaking" tends to be a bit slower. But in any case, anyone who has lived overseas for an extended period of time inevitably goes through at least one or more of the above. Each overlapping the other, each influencing the other. Everyone navigates this differently. Whether you are a budding professional or a seasoned hand, whether you are living overseas or starting work in a new environment, one of the most effective ways to get the most out of living in any foreign environment is to fully imbue yourself in the local life. In short: The faster you acclimatise to all aspects of your surroundings, the easier life becomes. " Comfort of home " is the term most people use to describe the country that they were born in. I might live out of a thirty-square-metre space without a kitchen stove or windows that open, but when traveling back from Beijing, Hong Kong is pretty much as good a home as is Singapore. 入港两周年 PS: This week officially marks two years of me residing in Hong Kong.

"This is the nature of capitalism, get over it." - Kevin O'Leary Even after spending nearly two decades being in finance, I don't think I appreciate how capital markets really work. It's not about the math behind how stocks are being valued but rather the behavioural science (or art) behind how they are priced. The housing market crash and financial bailouts in 2008 gave way to a crisis of confidence in the global financial system. A few banks had gone under and jobs were lost, but what followed shortly was also a re-configured mindset towards greed and risk taking. The printing of money to arrest economic decline made a lot of people lose faith in traditional financial markets. As a result, cryptocurrencies such as bitcoin became increasingly popular as investors started to look for an alternative store of wealth. Cryptocurrency and digital assets were meant to be a good thing as they were meant to be digitally secure and essentially "un-fraudable ". But human nature would eventually catch up. Bet on anything In 2022, a series of unfortunate events led to the downfall of SBF , which had been the poster boy for advocating cryptocurrency. FTX, once touted as one of the world's largest crypto exchange used to be valued at more than the NASDAQ . The firm's bankruptcy was a rude wake up call for crytocurrency enthusiast and investors. Look, I'm not dismissing the credibility of crypto assets and bitcoin. But think about it: All the digital tokens that changed hands on the platform had to start from somewhere--cold hard cash from the existing fiat system. Those who trade cryptocurrency ultimately believe that at some point of time in the future, those tokens can be exchanged for cash, ideally at a higher value. This is not very different from trading of stocks, listed options and contracts for difference. This is a secondary market trade . Money in a secondary market trade doesn't flow to the company for expanding its business, innovation or research. It just circulates among investors, punters and speculators, creating a lot of liquidity for those who make money from this flow. Anyone can make a bet on anything and the secondary market is the world's largest legalised gambling den. It is far easier to sit on the sidelines and make bets on which is the winning horse than to build a something real. You can make a bet on the possibility of a business milestones, profit targets, the release of a new product--basically almost any event trigger. And people further make bets on those bets through structuring warrants, put and call options, CFDs, products that don't require people to come up with capital, just enough cash to buffer any unexpected losses. It's just comes down to finding enough buyers and sellers on both ends of the trade, effectively making the market. As long as those in the game keep the ball rolling and no one gets hurt, prices will continue to hold up. All market crashes are primarily due to a crisis of confidence and a whole lot of people just wanting to get out of the trade. Telling stories " Entrepreneurs must be powerful storytellers to win early stage support " A paper written by IESE in 2023 talks about the dark side of entrepreneurship whereby both founders and their investors inadvertently drum up the value of their business even with the best intentions of fundraising and getting a business going. The pressure can sometimes lead to well-meaning people falling victim to an unhealthy culture of hype and overpromising. Assume that a company receives a huge order from an important customer which potentially leads to a significant increase in its revenue. It doesn't have sufficient manufacturing capacity so it raises money from investors in which the proceeds are used to buy or build a new factory, thereby solving for production capacity. Investors do the cost-benefit analysis and math behind this story and decide how much to put in. With this new factory in place, the business is now able to solve for its revenue backlog, translating to more profits for all stakeholders which consequently increases the value of the business. This story, if told properly can be sensationalized into positioning the company as a winner in the market and everybody likes winners. Bankers sell lofty dreams about the future of the business in order to further drive the company's perceived value. Product deliveries and execution start taking the backseat. This is how modern-day capital markets management looks like for many companies. Share prices driven by narratives rather than fundamentals. More people are telling stories than building businesses. And if everyone is telling stories then who is telling the truth? Cryptocurrency and financial derivatives do not build products. Aside from contributing to liquidity in the markets (which once again, benefits mostly the intermediaries), there is no value created in the real economy. There aren't enough merchants around the world today that would accept bitcoins or tokens in exchange for goods and services, and cryptocurrency isn't backed by an underlying business. Many bank accounts still do not support wallets that you can transact virtual assets on a day-to-day basis. You can't even take out a loan using cryptocurrency as collateral. And so regulators around the world are still wrapping their heads around how they should deal with this asset class. Call it an "educated guess" or decorate it with probabilistic calculations backed by detailed analysis. The truth is in today's market, the movement of share prices are no longer driven simply by fundamentals. Buying a stock or crypto is effectively a speculative trade. There will always be winners, losers on both sides, and people in the middle profiting from it. As long as there is sufficient regulation and no one creates an economic hole too big that it swallows the entire house, the show will go on. People will continue to gamble, this is the nature of capitalism. No one calls fraud when things are smooth sailing and the pie is large enough to be shared. It just takes one bad egg, one wilful misstep, to screw everything up.

At twenty, you don’t get the life you deserve, you are just the product of the environment you were lucky or unlucky to have. Then, as you get older, and enter your thirties, forties, and beyond, you notice how much agency you actually had on your life. Maybe you moved abroad, learned another language, another culture, another mindset, and became an entirely different person. Maybe you decided you had nothing to lose, and invested all your meager savings into the bet of a lifetime, and it worked out. Maybe you changed all your habits, and realized that you could be much healthier, smarter, stronger than you thought, if you simply maintain a better diet, a better training, a better sleep, a better routine. Maybe you fell in love, and realized that a great marriage was about so much more than physical attraction and intellectual compatibility: if you find yourself walking alongside with a kind, thoughtful, honest person who loves you back, you actually won the lottery. Maybe you met some great people during your journey, shared with them parts of your journey, overcame difficult challenges together, finally understood the real meaning of “friendship,” and that some people are worth trusting and making sacrifices for. Maybe you also had health issues, lost a few precious people that you loved, understood the fragility of life and the pain that comes with truly loving someone else, but also finally gained enough wisdom to appreciate the simple things in life, that are free and in abundance. It’s a long journey. The best and the worst things will happen to you. You can choose to act like a victim, or you can choose to respect yourself and be more resilient, mentally stronger, overall better. In the end, you will look back, you will connect the dots, and it will all make sense, that you got exactly what you deserved. Note: Read the above off X (Twitter), Orange Book

After two years, I thought it was timely that I should spend some time to consolidate and reflect on the takeaways, the hits and the misses at the end of the year. At the point of writing this, nothing actually came to mind. So I ended up spending the new year in a relatively low key fashion. There was no celebration, booze, chugging of beers, fanciful dinners or gatherings to speak of. All I did was head up to the open-air rooftop of my hotel at approximately 23:50 in anticipation of the fireworks overlooking the Hong Kong city skyline. Even after the clock struck 00:00, there was also no massive display of fireworks, not in Hong Kong, not from where I stood. On the roof of Harbour Grand hotel on New Year's Day. This was how I enjoyed crossing into the new year--the serenity of breathing in the cool fifteen degrees outdoor air, and the peaceful anticipation of a quiet morning the following day. Some might even call it a short reprieve from the shit-storm of work awaiting in the first week of the new year. During my investment banking days as a junior analyst, a VP once asked me about what I did for my weekends. I gave the politically-correct answer of telling him that I was too busy catching up on work to be able to plan for anything else. It was true anyway. Whenever anyone asked me about my banking days, I always told them that we worked seven day weeks, had after dinner drinks at 9pm, went back up to work around 11pm, got off past midnight and then back into the office the next day at 930am. That routine changed slightly as we grew into our jobs with travel increasingly becoming a part of it but the hours never really changed. Aside from the mandatory two-week compliance leave that we were entitled to, there was hardly any downtime, and hardly a moment to "switch off". This daily cycle can put a toll on you, both physically and mentally. I recalled one of my colleagues popping pills to regulate this blood pressure because he was getting increasingly affected by the incessant badgering, the non-stop phone calls and the never-ending refreshing of pitchbooks and financial models. " No matter how caught up we are at work, we must learn how to block things out when it is time to rest. Otherwise, you won't last in the job. " - was what the VP said to me. Stress doesn't discriminate between blue-collar and white collar jobs, it doesn't care for how much you earn either. It could take the form of overtime hours, a nasty boss, an unreasonable client, unhealthy working environment, etc. Everyone deals with the vicissitudes at work differently. Some say this deprivation of normality over long periods of working in a high pressure environment leads to the dramatic overcompensation of splurging on extravagant stuff. That is probably true for some people. But despite what the rest of the world says and thinks, I think one of the positive side effects from an investment banking job isn't just about the money, but also the fact that one can take on tremendous pressure under nearly any situation and still maintain some form of sanity and human decency on the job. However, there are those who have made it through and gone to work for the corporate isde or buy side, but they never really left the job. You can graduate with flying colors from an investment banking role and still stay rooted in a toxic mentality. These are the same people who measure success through lofty titles, name dropping and the size of their paychecks. You can always detect these people based on what they choose to talk about with you. Are they genuinely interested in your life or simply just trying to find out whether you had a bigger bonus than them last year. Just recently, I re-connected with an ex-colleague over WeChat. To my surprise, after a few text exchanges, he started asking where I was now, if it paid well, as well as other stuff related to corporate designations and how he was working with some important people in the inner circles. I did not write him again. And so, there will always be nasty people to meet and unpleasant experiences, but there is also the mindset we take with us to deal with it. We can continue to complain about working on weekends, how much of a pile of work awaits us on Mondays, how we are not commensurately comp-ed to our peers, how much we are sacrificing personal, social and family time for work, or how sucky the markets are. Endless worries. Life will forever be a struggle, but to some extent, we are almost always in control of the decisions we make and always have the choice of deciding how we want to let the little things shape us and the way we move forward.

For many, it is that time of the year again for festivities and holidays. It is also the time of the year for the white-collared community to take stock of the hits and misses for the year i.e. performance appraisals. Simon Sinek says that " you can’t incentivize performance, you can only incentivize behavior ". But what happens to an organization if you reward the right behaviour and fail to deliver on results? Embracing the philosophy of ' survival of the fittest' might be a company's best mission statement for staying afloat, but should they reward good behaviour at the expense of performance? Goldman Sachs has a 'culling' ritual annualy whereby it terminates the lowest-performing five percent of its workforce. This sounds brutal but this practice is probably one of the main reasons why the investment bank has successfully kept its edge over the rest of its competitors. In the book "Dream Big", Jim Collins also talks about private equity firm 3G Capital's corporate culture: "The very best people crave meritocracy, and mediocre people fear it." Generally speaking those who are guilty of cruising their way to passive retirement in the organization should be eliminated for the greater commercial good of the company. Yet this is not always so. Large companies often have blind spots and loopholes within their hierarchy for lazy people to hide away. At times, it can also more costly to replace a long-serving employee who has been too familiar with keeping up with the firm's day to day operations. But trimming the fat is a crucial aspect for staying alive. And in all of these scenarios, the firm pays the ultimate price in terms of profitability and efficiency. For those on the lower percentile of the bell curve, it can be easy to feel victimised when you don't get credited or rewarded for your effort and work. Performance appraisals have never been straightforward and there are many softer dynamics at play at the workplace. It could be a certain line manager deliberately picking on you due to one missed deadline, that phone call or message that you did not reply on time, or even just optically not trying hard enough. Sometimes the way things work or don’t work within the company is not entirely your fault. The larger the company, the more complex and inter-connected these workings are, and some problems are just un-fixable. The reality is everyone is entitled to their opinion. Just remember that the ones who have real skin in the game (those who have something to really lose when things go bad) have the absolute right to ask questions and demand for results - even if they sound unreasonable. Don’t beat yourself up too much. But remember, as an employee, also don't be too quick to give yourself more credit than you deserve for your achievements at the workplace.

"In the end, I am a teacher; that is really how I see myself." – Jorge Paulo Lemann[ 1 ] When we think about teaching , instructional delivery is the defacto thing that comes to mind. This is probably the most familiar setting in which a professor or a lecturer pulls up a set of powerpoint slides and speaks to the class. Giving a two-day lecture on financial modelling has always been an enjoyable session for me - the interaction, debates and sharing of anecdotes. One of the biggest highlights personally is to see someone complete his/her Excel financial model (plugging the ending cash from the cash flow statement into the balance sheet) for the very first time. Doing up a financial model might be considered rudimentary for seasoned bankers but a ginormous task for someone who is either not trained in corporate finance or struggling to put together an investment thesis at the workplace. But my teaching engagements go beyond the classroom. At the work place, I am also the go-to person when it comes to troubleshooting excel files and powerpoint, explaining a financial model to an analyst or investor, or when someone needs a slightly older person to be present in the room or to do the presentation in English, etc. Aside from that, I've also been a listening ear to many of our colleagues at the office, from the senior and mid-level folks all the way to the rank and file. I've even been called to help in a situation whereby someone had called our front desk complaining about an imposter who offered him a job at our company. In August, we closed a landmark financing transaction with a highly reputable investment firm. The process was lengthy - mostly because we had very sucky lawyers - but also because it involved a deal structure that no one else had done before. Parts of the term sheet were tricky and the closing was even more convoluted. One of the analysts in my team had the 'privilege' of assisting me on the deal. Joke was that I had brought her aboard a pirate ship [ 2 ], unleashing an incredible amount of documentation in the process, spanning at least seven inter-connected agreements. The deal was eventually closed and some weeks later, she resigned for better opportunities and left this note: Over that same period (with a separate team), I had also been simultaneously running another workstream involving the accreditation of the firm's first-ever ESG financing framework as part of a syndication loan deal. The negotiation process had been tough because the ratings team sitting in Europe didn't have a clue on the workings of how pharmaceutical companies and hospitals in China worked under the public healthcare system. By the time we eventually obtained the certification, I counted at least a hundred email exchanges. In these situations, I find the process of teaching taking on a more practical aspect because the discourse is no longer within the harmless confines of the classroom whereby I can talk freely in hypotheses. My actions and words have real commercial repercussions on the deal, and often come with bearing the responsibility for the outcome. Middle-to-senior management roles--much like my typical classroom lectures on financial modelling--are often like stage performances. As long as you don't screw it up big time, a few slip ups are perfectly normal, but the show has to go on. Look, most of the time, you work for money and are subject to the obnoxious KPIs placed on you because of your position. But every once in awhile, your job gives you the unique opportunity to make a difference. That difference is sometimes not purely measured in revenue dollars or cost savings for the firm, or the bonus at the end of the year. Sometimes it is about the intangible impact on the people around you--fixing the alignment on a powerpoint slide, troubleshooting a financial model, or simply giving counsel to someone junior in the negotiations of a transaction. It is often said that we can't let our jobs define us. But how we do our jobs, and behave with our colleagues and clients ultimately determines the kind of person we are. [1] As quoted by Jorge Paulo Lemann from Jim Collins https://www.jimcollins.com/article_topics/articles/Dream-Big.html [2] Literally translated from the Chinese saying dai shang zhei chuan "带上贼船"

I always had interesting conversations around the assumption and concept of terminal value (TV) in the valuation and financial modelling classes. The above formula on estimating the terminal value of a company is an extension of the Gordon Growth Model - an economic model developed by Myron Gordon , a professor from the University of Toronto, a key assumption being that a company lasts forever . The ecosystem of companies and their life-cycles today are very different from 40-50 years ago. Take for instance Nokia--the phone company only had a seven-year life cycle. Research In Motion, the company behind the Blackberry lasted for no more than two decades. General Electric is probably one of the closest example of how a company can last for many decades before being dismantled into three separate segments in 2021. But I think most companies today don't enjoy that kind of legacy. Many corporate decisions are made based on five and ten year plans. Although some founders have a longer term view of how they envision the business to be, these are mostly aspirational, some might even say crazy. To make a call on a business over a 20-year horizon is almost unfathomable to the human mind. Most of us can't handle outcomes lasting beyond a few decades. To tie up the loose ends in when it comes to valuing businesses, economists simplify this using mathematics. But in the process, they disregard the ups and downs of businesses, which is a practical consideration for fund managers who need to allocate capital under a finite time. After all, the terminal value is ultimately driven by being able to liquidate the underlying asset at the right time. The perpetual growth model also ignores the effects from secondary markets--investors and individuals who are prone to speculating on a company's price tag. This opens up an alternative scenario whereby an alternate scenario exists to allow investors to flip their positions to another party for a quick profit. The key here is communicating the right narrative to potential buyers. Because of this, telling stories become even more important especially when it comes to visualizing how a company performs beyond the typical five-ten year timeframe. After all, calculations involving terminal value have shown that 60-80% of a firm's total value is attributed on the discount factor rate and assumptions around the perpetual growth rate, This seems very paradoxical given that we spend a significant time rigorously validating the company's revenue and free cash flows over the initial forecast period, only to chuck most of the terminal value into a mathematical black box . The 2% growth rate which has been widely applied in terminal value calculation were originated in New Zealan d at a meeting with various central banks in 1989. According to the then central bank chief this was “ a chance remark " and that the figure was " plucked out of the air to influence the public’s expectations ”. The US would later incorporate this into their policy goals to balance economic growth, wages and unemployment among other things. However, if you try and communicate this with someone sitting in China or parts of emerging Asia, no one would have a clue what you were talking about. Most people in Asia simply don't care about what the long-term growth rate assumption is for arriving at a company's terminal value. During my earlier days in banking, we would get into healthy debates around the weighted average cost of capital ( WACC) and the terminal value . Some of those discussions were also deemed as a test of your corporate finance knowledge. But most of the time, it was because a credible fair value estimate was required as part of the report deliverable. In the real world, there is no such thing as a fair value . There are no right answers for arriving at the WACC. There are only astute decision makers and those who are afraid to get caught on the wrong side of the outcome. Calculating the cost of capital or terminal growth rate with precision is only crucial either from a financial reporting point of view or only if you expect someone important to be challenging these assumptions specifically. When it comes to estimating the discount rate for valuing a business, perhaps the more appropriate question is: What kind of returns are you expecting ? It sounds like "plucking" a number from thin air, which is technically not incorrect when you think about it. If you are an investor considering whether to put money in a early stage start-up, this could be anywhere north of 35% to compensate for the high probability of failure. For private equity firms, rates of return could be between 25-35% whereas large institutional investors might expect 9-15% with public equities with a nearly zero tolerance for failure. Simply put: The discount rate is mostly investor-driven - which if you think about it, very similar to the CAPM (Capital Asset Pricing Model). The only difference with the CAPM is that it reflects the assumption that investors to be fully diversified in the equities market. Investors who use their own yardstick for the discount rate and can't get to the valuation they want, generally try to re-validate the cash flow projections or find alternate ways to grow the business in order to make a case for the investment. So don't get too caught up with economic and valuation models. They are only meant to be guidelines for operating in the real world. And as the dynamics of the real world change, so must our understanding and application of corporate finance.