The Hong Kong International Airport isn't what it used to be in the old days. No crowds. Only a handful of shops open. Lounges are dead. HKIA used to be a humdrum of travelers, both business and leisure. I used to look forward to the lounges (the Cathay ones especially) as they usually served free flow warm food, drinks, snacks, etc. The Pier at HKIA was a favourite go-to for its refreshing hot showers and Aesop scented shampoo and body wash. After that, I would settle into a bowl of hot wanton noodles from the noodle bar, extra serving of chilli, paired with either champagne or a can of Asahi. At times I would have someone from the dessert counter give me a scoop of vanilla ice-cream, then head over to the coffee bar and ask for a double shot espresso and pour it over to make an affogato . Then I would either get to work on my laptop at the bar area or just get some shut-eye on the couch. I could spend an entire day in transit at HKIA - and people would think I am crazy. Occasionally, I would even travel out of the airport into the city to meet with friends. Macau was also accessible straight from HKIA via a one-hour or so ferry ride. This was the Hong Kong that I was familiar with, at least from the perspective of an airport commuter. So you can understand why I was slightly sad and somewhat disappointed when I saw the nearly empty aisles along the departure gates at HK airport. Aside from the crowd, nothing much about the facade has changed except for some additional seating areas with charging points. These installations beside the travellator are new The city struggles having to deal with conforming to mainland policies (which is totally understandable), but at the same time, facing pressure to open up like the rest of the world, especially Singapore, its closest competitor. It is not an easy task. Every month, business and investor confidence in the city is diminishing. Whether it relates to the perceived lack of freedom, uncertainty around propaganda from Beijing or the draw of spacious living, companies can always find a reason to jettison Hong Kong for Singapore. It is odd for me, speaking as a Singaporean but I actually am rooting for Hong Kong, in a healthy competitive way. Hong Kong is probably the last frontier for China's position as an international gateway. Despite its current sovereign ownership, it's colonial legacy and history is what gives Hong Kong its uniqueness - the ability to harness the vast potential of the Chinese market and combine this with the best (or widely accepted) practices of the West. And if you think about it, this is actually very similar to Singapore. Singapore surely has Southeast Asia as its playground, but Southeast Asia as a market dims in size significantly to China. Its diversity of language and cultures, unlike China, makes it more difficult to penetrate and navigate the ground. As big as China is, its socialist-driven economy incorporating standardization and uniformity is probably one of its biggest selling points. For example, you could hire a Chinese-speaking person, parachute him/her anywhere in China, and can be assured that he/she will be able to navigate the ground with relative ease. But you can't do the same with Southeast Asia. To master the Indonesian market you need a native from Indonesia who understands not only the language but the customs. Likewise for Vietnam, the Philippines and Thailand. The ASEAN bloc as a whole works well together because we collectively thrive on regional common interests. But to succeed in each market independently, we need to dedicate resources specific to each country. Besides, to win in Southeast Asia, you can't afford to focus just on one country. Even the biggest and most successful startups in the region have expanded their footprint beyond their home country. After Indonesia, GoTo has set its sights on Singapore, Malaysia and the Philippines. Despite making a name of itself in Malaysia, Grab has expanded into other key markets such as Singapore, Indonesia and Vietnam. Yet, even as successful as these startups go, Southeast Asia as a region still falls behind significantly in size to China. Over one billion people in China over the last few decades have been reading more, spending more, investing more, and consuming more. And in recent years, the flurry of venture capital and private equity money into Southeast Asia, lifting overall valuations, has just made it increasingly difficult to find a rich exit in a crowded market. Everyone is waiting eagerly for COVID restrictions in China to open up and for trade flows to resume. Guess which city will be the biggest beneficiary of that? It is perhaps simply just all a matter of time. Make Hong Kong great again.

For most parts of my banking life, I've worked out of communal spaces in which senior directors sit out in the open and fraternize with the rest of everyone across the ranks. There weren't many physical boundaries. Everyone works out of a common row of desks or cluster of cubicles. When a director needs some stuff to be done, he/she just gets up, walks a few steps over to the analyst's table to talk. It was the same for some of our clients. I recall the Chief Operating Officer of an airline company we were advising sat openly in the center of the entire office. No walls, no barriers, just a table with a desktop computer and stacks of documents. When I asked them why they had arranged the seating this way, they said it was to ensure the key person is readily accessible by everyone in the office, much like the control tower of an airport. So it takes a bit of getting used to when I get to sit in a glass box. An example of work cubicles during my banking days While I don’t see this as a privilege, there is indeed a price for people who sit in a glass box. There are unspoken ‘expectations’. Expectations on capability, responsibilities, and many more. People sitting on the outside usually see those sitting on the inside as ' senior management' regardless of whether they really are. So what makes management a good management? Over the last couple of years, I had been reflecting and discovering through interactions with different people, pondering - what makes a leader outstanding, how do people acquire the necessary management skills, and if business schools really provide any tangible knowledge on this. After all, there are many academic modules covering organisational behaviour and strategy. There are also many case studies drawing references to notable thought leaders and practitioners: Peter Drucker, Michael Porter, Jack Welch, Bob Iger and many others. It is refreshing to read about them along with a wide variety of insights from their accumulated experiences. But the application of their management expertise in reality is much more difficult. Since I started working, I have had opportunities to try my hand at management. I also had many opportunities to observe from a third-party's perspective how line managers and their co-workers try to navigate these. Not all leaders manage their teams well, and most employees never have good feedback about their bosses. Year end performance appraisals for most are almost always never excellent since the bar is either usually too high or the outcomes are assessed on a bell curve with only being able to achieve their targets. At times, I wonder if there are any perfect solutions, and who decides whether management styles had been effective. Just get it done. Perhaps the most important principle is to deliver. Results are basically everything: Revenue and profits. Quantifiable metrics are not only tangible, they are observable and most of the time hard to refute. To contextualise this to military ops: The mission is everything. The spirit is: If it needs to be done, it will be done . And you'll do whatever it takes to get the job done. "Being a leader isn't about ability. It's about responsibility." - Colonel Iverson (The Core) I've seen too many managers try to impress, in different ways. They try to look the part , exert authority, flaunt their past experience or pedigree background. The reality is that most people, especially employees, only care about ability to the extent it affects their bonuses or whether or not they will need to work overtime. Looking good is overrated. Responsibility is not about taking credit but mostly also about the taking the rap when shit hits the fan. You will look stupid screwing up or when someone in your team screws up. But that's part of the job that no one tells you when you become a manager. It's not about taking credit for good performance but also 'taking credit' for the slip ups. Responsibility also means developing the technical and personal aspects of the people around you. By helping those around you, you are indirectly relieving yourself of unnecessary management work freeing up more time for doing the more important things and in the process delivering the point above on getting the job done. The office environment is full of " Do this ", " Do that ". One of the things I like to ask after any meeting or conference call is: " what do you think? ". Because no one, especially in the junior ranks, expects their opinion to be taken seriously. Most of them believe that it is not in their place to make decisions. This mindset, if not managed well, can lead to prolonged apathy at the work place, overburdening managers with decision making, which may not always be the best judgement. This is also how good corporate culture gets destroyed. Employees at the workplace get increasingly disconnected because " no one listens to me any way ." I am genuinely interested in developing colleagues and staff - across all ranks. Money aside, there is no better satisfaction of seeing how someone goes out of his/her comfort zone to overcome their limitations. This can even be as simple as delivering a presentation, facilitating a conference call or even achieving a breakthrough in a seemingly impossible project. It is also very encouraging to see managers get excited brainstorming on a new strategy, daring to experiment with possible solutions, not being afraid to try, and perhaps more importantly, not being afraid to fail or look bad. After all, we are all about just getting the job done aren't we? Management is: Get it done, follow-up, discipline, planning, analysis, facts, facts, facts. It’s [getting] the right people in the room, kill the bureaucracy, all of these various things... ...Humility, openness, fairness and being authentic are most important – it's not about being the smartest person in the room or the hardest working person in the room. - Jamie Dimon, 2020

Many years ago, after completing a USD 2 billion cross-border deal, I was invited to share some of my takeaways (confidentially of course) from that transaction in a university setting on a Saturday. As the main execution person on the deal, I had to take point on steering most of the conversations that took place - from translating, managing emotions on both sides of the table and proposing negotiation strategies. I vividly remember on one of the nights (I think it was probably around 1am) when we were sitting in the client's office finalising the deal documents, we had received a competing bid on the deal and had to make a decision whether to jettison everything. In that Saturday sharing session, I remembered that one of the biggest takeaways I'd mentioned was: If both sides are motivated to get the deal done, it will be done. Everything else doesn't really matter. Nearly seven years on, complexities in deal execution still never cease to amaze me, that is probably why investment banking had been such an interesting career. Here are some additional learnings that I've consolidated below: (1) An issue only needs to be dealt with as long as the biggest stakeholder and/or someone important thinks so. (2) All transaction processes have unprecedented bumps and disagreements of sorts from fees to valuation, but a good negotiator knows how to play both sides of the game . (3) The drafting of most agreements is effectively a process of managing risk , less so of governing commercial interests, especially when everyone is convinced that the pie is big enough to be shared equitably. People only start to fall back on and scrutinize these documents when shit hits the fan. They are really just a formalised set of what-ifs and everyone hopes they won't ever have to re-look at these contracts when stuff blows up. (4) Following on the above, the essence and spirit of most agreements are in reality like guidelines . If no real harm is caused, any violation could simply warrant a slap on the wrist. The contract basically gives either party the legal right to punish the other party if real harm has been done. At the very bottomline, it’s all about whether interests are being thrown into jeopardy and the money, really. (5) MOUs and term sheets - while legally non-binding in nature - are important. They are an essential framework to help guide the drafting of the final legal documents. When done properly, they eliminate ambiguity and misunderstandings, enabling both parties to save a lot of time in the documentation phase (which ironically, is not in the interests of lawyers who are billed on time). That said, there will inevitably be blind spots in the negotiations. The proverbial devil is always in the details . (6) Engage a lawyer that: doesn’t think like a lawyer can dumb down complex legal concepts is able to articulate the consequences of certain nuances within the agreements can provide constructive solutions to resolve conflicts (7) Home-ground advantage has a cost. When you are holding the pen on drafting, expect to incur higher costs - both on expenses and time. That said, you do have some upper hand when it comes down to dictating the overall flow and structure of the agreements. (8) On the point of flow and structure, depending on which side of the table you are sitting, the drafting of nearly all documents generally comes down to two approaches: “ You can do everything , except for the following... ” “ You cannot do anything , except for the following... ” (9) Some lawyers provide maps (legal opinions), some lawyers will be your guide and chaperon you for the journey (legal advice). You will need to decide whether you need a map or a guide. Legal opinions don’t protect against anything, it serves only as an ‘expert opinion’ on outlining the risks and enforceability of key aspects in the transaction. Decision makers who cannot navigate the nuances in a cross-border deal or have no meaningful way of controlling the risks in a deal fall back on the ‘tightness’ of a legal opinion. Good legal advice on the other hand will tell you where the pot-holes are, the hidden corners, why you should take certain routes instead of short cuts, etc. It goes a step further, implementing the mechanisms to clearly define and safeguard relevant risks and commercial interests. (10) The closing phase of any documentation process is almost as important as the drafting and negotiation phase.

A convertible instrument is both a liability as well as equity. Accounting for it as a liability requires us to look at this instrument in the form of debt . To value debt, we discount all future interest payments and the principal repayments using the coupon rate to arrive at a present value . The present value of these cash flows are lower than the face value of the size of the CB because of the discounting effect. Hence, the difference between this present value and the face value of the CB is gives its corresponding equity value . But why bother splitting up the liability and equity components? Say a fast growing company is looking for additional funds to expand its business. The owners do not want to raise equity because they prefer not to dilute the shares of the company. One option would be to borrow a loan from the bank, and for simplicity, let's assume that the bank quotes them an interest rate of 12% . Plain vanilla bond @12% interest rate Alternatively, the company could also raise this money by issuing a convertible bond , which allows the company to offer fixed interest payments, while providing flexibility to convert the principal into shares of the business. Investors can enjoy fixed income from the CB's interest payments (the debt portion) while getting potential upside should the company do well (the equity portion). Comparing this structure with the 12% cost of funding of the plain vanilla loan, how should investors price the CB? Because the company is allowing investors to potentially benefit from having a share in the business, there has to be some trade-off when comparing this funding option to a simple loan. And it only makes sense to issue a CB only if the interest rate is lower than 12%, right? Ok let's assume the CB is priced with an interest rate of 8%. Before the loan gets repaid or converted, the way both debt and equity components at the onset could look something like this: Convertible bond priced at 8% but with equity upside To correctly value both the CB's equity and liability at the onset, we first treat the debt component in a CB like a plain vanilla bond, using the 8% interest payments as cash flows but discounting it with the 12% interest rate of a nominal plain vanilla debt : So at the onset, the value of the CB's equity would simply be the difference between the the issue size of $1 million and the present value of the debt component cash flows. The behaviour of a CB. It is also logical that for every year the CB is not converted, the liability component increases, converging towards the value of the principal i.e. the amount that needs to be repaid upon maturity (just like a debt obligation with a 12% cost of funding) . Note that over this period, there is no change in the equity value of the CB. The cash flows of the liability component  over five years would look like this: For every year that the CB does not convert, the 12% interest (costs of raising a plain vanilla debt) is accrued (not paid ) in the income statement, flowing straight to the company's retained earnings. Now let's look at the alternate scenario in which investors swap the CB into shares. And let's assume this happens at the end of the third year . Executing a debt-to-equity swap in year 3. At the end of year 3, the liability component " zerorizes" due to the swap and the principal gets converted (capitalized) into equity on the books. A share premium (equity) get recognized as part of the conversion . This premium is computed as the difference between the issue price of the CB and the outstanding book value of both the liability and equity components at the point of conversion 144,191 + 932,398 - 1,000,000 = 76,589 Simply put: The equity premium reflects the perceived "benefit" in raising a 8% CB vs plain vanilla debt at 12%. Editable worksheet:

A copy of the bible can often be found in the drawer of the bedside cabinet in most hotels. Like most travelers, I casually ignore this, partly because I don't have any affinity for the bible, but also because I tend to overlook and treat it as part of the hotel room fittings (apologies to the folks at Gideon International ). So as I was searching for some writing material in my Marriott hotel room in Shanghai, instead of a bible, I stumbled upon a book titled " Spirit to Serve - Our Stories" . The book basically showcased the lives and experiences of various hotel employees from all over the world, each summarized with a caption and a 1 to 2 page writeup. I am not usually fond of reading corporate marketing material but ended up flipping through the pages. Inside were interesting stories about Marriott's employees - from hotel managers, room attendants, concierge staff, chefs to butlers and bellboys / bellmen. One of those stories included a head bartender who moved from Cambodia to Washington DC more than 30 years ago and he described how many memorable friendships were forged with the returning guests. There was also a story about a mother of four and how she juggled work at the hotel and family time at home. I found many of these stories intriguing and ended up going through most of them. Towards the end of the book, I came across this afterword which I thought was quite meaningful and that it should have been placed right up front: The Twelve Rules of Success Continually challenge your team to do better. Take good care of your employees, and they'll take good care of your customers, and the customers will come back. Celebrate your people's successes, not your own. Know what you're good at and mine those competencies for all you're worth. Do it and do it now. Err on the side of taking action. Communicate. Listen to your customers, associates and competitors. See and be seen. Get out of your office, walk around, make yourself visible and accessible. Success is in the details. It's more important to hire people with the right qualities than with specific experience. Customer needs may vary, but their bias for quality never does. Eliminate the cause of a mistake. Don't just clean it up. View every problem as an opportunity to grow. I have stayed at my hotel in Hong Kong for nearly three years now. Truth be told, the guest-facing staff hasn't changed that much. In fact, most of them recognise me, even if I had gone on an overseas trip for a long time and haven't been back for weeks. I know this because they always pass me my courier packages as soon as they see me step in through the main lobby entrance. In fact, some time back, I heard that it is quite common to see hotel employees working with the same hotel for more than twenty years. I don't think many of them are paid top dollar, and the skills for the service industry are somewhat transferrable. On the contrary, for many white-collared jobs, it is relatively more commonplace to see people moving around only after a few years. So it got me thinking: Assuming we say that Marriott is a successful brand / corporation, if it's not about the money, then what keeps these people working at the same place for years and even decades? Is there a hidden incentive scheme that I am unaware of? Or is it the familiarity of the environment? The social support that comes with forging familial relationships with colleagues? A genuine sense of satisfaction from a customer service role? A good line manager? Or is it mostly just a lack of better options out there? For corporations that are religiously fixated on pursuing performance and the bottom-line results, have they sacrificed some aspects of their corporate branding and employee loyalty in the process of being successful? "Today's analysts will be tomorrow's managers. Today's managers will be tomorrow's Vice Presidents. Today's Vice Presidents will be tomorrow's CEOs and business owners."

1992 - PSLE. It was the year I took the PSLE ( Primary School Leaving Examinations ). Some might say I was in one of the top notch primary schools in today's terms. The school had come from humble beginnings, being located in a neighborhood whereby most of my friends stayed in HDB flats and everyone knew their neighbors. I had been fortunate enough to almost always be in the top one or two classes with the best performing students. Back then, my childhood dream had been to be a doctor. So for my PSLEs, I was aiming for a score of over 260 (300 was the maximum) as that would surely propel me into the best secondary schools. When the results came back, my score was an astounding 237 - a decent grade no doubt for many, but it fell incredibly short of what I had hoped for. I could not qualify for any of the schools that I had initially shortlisted and I remembered walking along the road to the bus stop just outside the school after collecting the result slip as mum and I re-evaluated my secondary school options. I eventually went to a secondary school that I had never heard of (which later also turned out to be quite a good school). Despite the turn of events, those four years were one of the most transformational periods of my life. Excellent teachers and numerous outdoors expeditions would shape me into a highly athletic, all-rounded and balanced person that good grades alone could not achieve. 1996 - Food poisoning. On the morning of my English 'O' levels, I came down with an extremely bad case of food poisoning. So bad that on that fateful morning, I had to be sent to the hospital. I vaguely remembered the nurse putting me on a drip as I gradually passed out on the wheelchair. Back then, I had enrolled in a triple science route as part of the pre-requisites to study medicine. I had nine subjects under my belt and English was just one of them. Failing or skipping the English papers meant that you had to re-take the entire year of school again, regardless of the other eight subjects. Everything was on the line here. When I had woken up, I remembered distinctively that it was 8:25 in the morning and a man was seated just across the bed where I was. The school had been informed of my circumstances and had sent an invigilator to the ward. I ended up taking my English papers nearly an hour behind every one else, in a slightly woozy state and with a thick hypodermic needle stuck in my right arm. Although the doctors had diagnosed it as a simple bout of food poisoning, I was put under further observation for a week. Ironic as it seemed, I scored an 'A' for all the papers that I sat for during my stay in the hospital. But I still fell short of the overall grade requirements to break into the top five junior colleges. 1999 - Career choices. I did well enough for my 'A's to do nearly any course I wanted in university except for medicine. I eventually gave it up when I traded biology for athletics , which I later obtained school colors for. As I left junior college and served my mandatory national service in the army, I had been offered a prestigious government teaching scholarship to study at some of the most reputable universities in the US. The catch was that I had to commit six years of my life to the public education sector upon graduation. So I passed. A year later when I graduated from OCS, they had once again offered to send me overseas to a military college in Japan and engineering school in exchange for serving six years in the army. I declined again, mostly because I didn't like the idea of working under a covenant. I figured there were much more job opportunities beyond civil service after four years of studying in a university. I had dreamed of being an engineer - or at least that's what I remembered one of my teachers in junior college saying then, " Go study engineering, it will always be in demand ". So I enrolled in Computer Engineering, believing that it would lead me to the holy grail of all professions. 2006 - China and the world of finance. Studying engineering in university proved to be much more difficult than I had thought. I was toeing the red line and nearly got booted out. But my life changed forever when I decided to spend a year living and working overseas in China. I had been introduced to the glittery world of business and finance. Everything that I had looked forward to in an engineering career had basically been undone during those twelve months in Shanghai. I convinced myself that I wanted to be in banking, specifically investment banking . My entry into the corporate finance team at KPMG marked the day that I would renounce my engineering career forever. Based in Raffles Place, I was excited to be in the league of young and aspiring fresh graduates, eagerly looking forward to make that eventual transition into a bulge bracket bank with a five-figure monthly salary. But I missed that boat when the 2008 financial crisis struck, crippling the hiring plans of the large investment banks across the globe. In the twist of fate, I managed to join a mid-market Korean securities house. I clocked my mileage, put in the hours and late nights, adhering to the rites of passage, before subsequently moving on to BNP Paribas and Standard Chartered Bank as part of a larger and more institutionalised corporate finance set up. 2010 - Rinse and repeat. Investment banking turned out to be a jealous and selfish bitch, demanding your personal and social time more than anything else. I had worked up to sixteen-hour work days, eighty-hour work weeks, pulling all-nighters, even on weekends and holidays. I was simply trading time for money, as one of my colleagues had coined the term then. For many years, the routine had been: Wake up, drink coffee, generate pitch books, run financial models, update trading comps, get yelled at by seniors . Rinse and repeat. I had received several offers to jump ship , some of those include buy-side and corporate development roles that promised a more balanced lifestyle and decent pay check. But all this time inside my head was a voice that kept saying, " just stick to the plan, put up with this for a few years and then leave ." 2016 - Been there done that. Leaving banking and building a business from scratch was probably one of the best and worst things that happened to me. On hindsight (as with most of everything), it had been one of the most liberating initiatives I had done with my career. But nothing would prepare me for what was to come: Waking up every day without reporting to a boss at the office; Learning the ropes of HR, operations, finance, legal and sales all at the same time; The disappointment of getting repeatedly rejected by client prospects. But most trying of all was the constant anxiety of watching your bank account being depleted month after month. No one would be able to understand how difficult the process was without having gone through this experience first-hand. Entrepreneurship would basically test your limits and push you to the breaking point, again and again. But it was good mental training and personal development: Under any situation, no matter how hopeless and impossible it seemed, your mind would always force you to find a solution. Looking back, I recalled reading in some random article and people telling me that, money shouldn't be the reason why you start a business. It should always be about purpose , it should involve solving a pain point in the industry, or making a better product, or offering a better service to the world. I never explicitly admitted it, but what mostly drove me to do it was the naive illusion that I could make lots of money, and in a relatively short time. It was much later that I realized employees are in fact the richest people in the world. They will all be slaves but they are still rich [1] . 2021 - Moving to Hong Kong. It felt surreal the day I left Singapore. It had been an indefinite job posting and I had initially planned to return possibly after two years. I am into my fourth year now and residing in Hong Kong today feels so much different from it was three years ago. A part of it feels like a home and a sanctuary. Sometimes I think about how life would be like had I not accepted that offer to be based overseas. Paterson Walk, CWB... where I currently stay. Epilogue I had been watching a documentary on CNA about a hawker describing how he had transformed his business along the way, and it stuck with me: [1] Entrepreneurs of course have the potential to be much more wealthy, but no one considers the tail event. Only a miniscule percentage of entrepreneurs make it really rich. For every mind-blowing successful start-up seen on social media, there are at least a thousand others that have failed and don't even show up in the headlines.

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

It's just been over two months in Hong Kong and I have already developed a routine sufficient for baristas to know what coffee I typically order. The speed at which the orders are processed is impeccably fast. It takes only less than three minutes to do up a vanilla latte at Pacific Coffee Company at Lippo Center. Things in Hong Kong somehow move incredibly fast. The shop just below where I stay even knows what I typically order for takeout: Basil pork rice or Hainanese chicken rice. Oh, and Chicken rice tastes slightly different over here, it done slightly Thai-style, nice, but just different. As I grow older, I feel that routine becomes increasingly important. Whenever I am overseas I tend to wake up significantly earlier as compared to being at home. I treasure the moments of making my way to the usual coffee or confectionery place to start the day, regardless or whether it is a working day or the weekend. I enjoy simply just sitting there, relaxing and basically do nothing but unwind. This is very likely a habit had was cultivated early on during the downtimes of my national service days where I mostly hung out at Coffee Bean during the weekends. To date, I spend most my time on the HK island side, occasionally making trips to Kowloon on weekends. I hardly venture north of the area past TST (not sure why). I hear that there are many nice eateries in the area but it can be difficult to get seats especially over the weekends. Admiralty and Central have become synonymous with work. They are nice places to go over the weekends because it tends to be less crowded, but I still find it hard to look for places to sit down for a cuppa. Comparatively, Sheung Wan is a lot better, especially when you venture further south of the island (further uphill) . My go-to place is Halfway Coffee which is located along the street selling Chinese antiques. It is frequented by ang mohs (or gweilos at the locals say) and mostly the affluent local community in Hong Kong. Halfway Coffee at Sheung Wan Perhaps one of the biggest differences for coffee and general dining here is that prices are way much higher (a black sugar latte sets me back by about HKD 50 or roughly SGD 9, which is nearly 70-80% higher than similar artisanal coffee in Singapore). I haven't tried hiking yet although I have heard much about it but maybe I'll do so towards the end of the year when it's cooler or when I decide to break out of my routine of weekend coffees.

The Lamborghini brand sixty years ago was not known as the luxury car brand it is commonly associated with today. They were actually well-known for making tractors. Apparently its owner Ferruccio Lamborghini was unhappy with the fact that the clutch on his Ferrari car wasn't working as well as he expected and decided to give this feedback to Enzo Ferrari , who tells him off that he is better off sticking to manufacturing tractors. Insulted, Ferruccio later went on to build the first Lamborghini supercar a year later. Fast forward a series of technology innovations and many years later, both Lamborghini and Ferrari are now associated with the league of prestigious car brands. So when Apple announced last week that it had hired someone from Lamborghini to lead its electric vehicle program , it got me thinking: how does one go from high-end consumer products into cars? And is that even possible? Why would any veteran in one industry and who has spent the last few decades of his life working in a zone of familiarity jump into a totally new business? Can you imagine the kind of conversations he would possibly be having with the engineers on the ground? Calibrating watts to kilowatts . Migrating from working with small iPhone and Mac enclosures to designing large car chassis. Not to mention, ensuring the religious compatibility with the entire Apple ecosystem, which I am sure will be an important consideration in the design process. This guy has to basically get management's buy-in to look at and potentially execute things in a whole different way. So how do you convince someone who has done things a certain way their whole careers to get out of his comfort zone and embrace a whole new ecosystem? Say if this initiative was championed by another company with a brand and scale much smaller than Apple, would they also be able to headhunt and convince someone of a similar calibre to drive this innovation? The importance of a virus. A friend once commented the use of " virus " having a negative connotation. I don't really think so. Businesses in their early phases struggle with sourcing for capital and achieving profitability. But once they have crossed that chasm and survive, they then have to deal with grabbing other important resources such as attracting and retaining talent. You can always use capital to buy talent. But to keep talent, you need more than just money. You can retain the existing employees and management teams that have been comfortable with a certain way of doing things, keep the status quo, and you most likely continue to survive. But to get to that next level, you will need introduce a change agent , a different way of looking at things and someone who dares to challenge conventional wisdom. I like to think of it as introducing a virus to the system. Vaccines work in this way: Introduce a foreign agent to the system, a dose small enough without killing the host, allowing it to learn and adapt. There will be discomfort. But over time, the idea is to acquire immunity and become stronger. Professional experiences, both good and bad, follow a person around for a long time. Well established companies like Apple have better leverage over smaller companies to attract and inoculate talent because of their brand equity . Branding doesn't necessarily apply only to consumer or retail facing businesses. It is how people outside the firm view the company - the customers and suppliers (existing and future), as well as employees: past, present and potential. Are existing and past employees proud to say that they have worked at a particular firm? Despite the expected grunt of having to work long hours under tremendous pressure and high expectations, do they feel a sense of accomplishment and pride after leaving the firm? Do these people feel like they have learned something or contributed to something during their stint within the company? Do past employees simply drop off the radar once they leave the company or does HR make it a point to keep it touch with them? An example of those who make it a point to keep in touch with past employees or alumni include KPMG , Goldman Sachs , McKinsey , the list goes on. Most alumni who reminisce their time within the firm over drinks tend to mostly remember the struggles, the tough times and the nasty people. For good or for bad, these moments represent shared experiences. And no matter what kind of impact it has left on them, these shared experiences inevitably shape their professional outlook and approach towards their future careers. Those experiences and intangible skills acquired form a sense of identity - much like how people feel a sense of loyalty to their countries although the majority will continue to complain about taxes and how their governments are not doing enough to help them. This sense of identity in the context of the corporate world is basically brand equity . But how do you nurture brand equity? Encourage people to embrace discomfort as a normal Dare to try (and fail) attitude - don't over-penalize for the lack of results from trying, penalize for the lack of trying. Encourage idea generation and reward execution - it's good to have ideas, but remember that execution is everything Hire well - Test for ability and skills, but once employees and managers come onboard, be genuine in understanding what drives them deep down and make an effort to help them achieve their personal development goals All employees (past & present) are brand ambassadors for the firm. It's ironic that a lot of firms invest relatively more time to ensure that they hire well but spend so little effort when the employee is formally onboarded and during their exit from the firm. Never under-estimate how much advertising (good or bad) employees can do when they are no longer at the workplace Customers, suppliers, employees and basically anyone who comes into contact with the company directly or indirectly needs to form an impression of the business that resonates with its values and corporate culture. But culture cannot be built overnight. Like a good habit, it is formed from months and years of iterating and improving. A distinctive company culture sticks long after employees have come and left. And with all things in good time, culture becomes brand equity. " We only incentivize performance " - that's impossible... performance is a result. You can only incentivize behaviour. And so the best companies are aware of their own values... and build a culture around those values. The ones that go toxic, they forget about those values, they think it's performance at all costs. " - Simon Sinek Any new product or venture has risk, but beyond a strong balance sheet, the companies who are most genuine, willing to adapt and embrace change with a little discomfort to build a good culture and brand equity will find themselves in the best position to attract talent and succeed in the long run. "Invest always - and above all - in people Better to give talented (if unproven) people a chance, and endure a few disappointments along the way, than to not believe in people. The number one ingredient in their secret sauce is an obsession with getting the right people, investing in those people, challenging those people, building around those people and watching those people experience the sheer joy and exhilaration of achieving a big dream together. And, just as important, stay with your proven people for a long time. " - Jim Collins [Disclaimer: I hold shares in AAPL] [The story of Lamborghini and Ferrari can be found here .]

I conclude. Without a doubt. That the McDonald's double cheeseburger. Is the best cheeseburger in the world.

It has been a relatively productive two weeks in Singapore. Most of the conversations I have had ranged from my life in Hong Kong to opinions involving the current state of affairs in China. A few common themes consistently came up and I thought it might be a good idea to summarise them here. China will open up eventually. There is no denying that supply chains, the over-leveraged property sector and the broader economy has been impacted over the last two years. This has likely resulted in a slowdown of the economy (though hard to scientifically verify if any of the public disclosed figures can be relied on). There's a lot of noise involving the recent protests, possibility of further lockdowns, and speculation over when travel will open up. But no one really knows. The concern over handling foreign infections is understandable given that China has over a billion people. Just imagine the toll on healthcare infrastructure if a billion people went to the hospital at the same time. That being said, we can be sure that China will eventually open up. The country's interest for doing business with the rest of the world remains intact. There is no way to prove this and unfortunately waiting too long also means higher costs for businesses. Changing population demographics. A changing demographics and mindset is shaping the new world economy. Persistently high youth unemployment rates is posing a longer term problem for the economy. The tang ping 躺平phenomenon has obviously been one of the catalysts. But the contraction of jobs supply is partly also due to the crackdown on big tech and edu-tech over the last year, the imploding of the property sector, and the more recent cost-cutting measures observed in various household tech giants such as JD.com and Sea . There is also less profit-driven motivation (or greed depending on how you look at it) to excel in life. Call it the successful result of pushing for common prosperity (共同富裕) or simply renouncing the lofty desires in life (看破红尘). Young people are increasingly comfortable with getting by doing the minimum. This is a generational paradigm shift that is taking place not only in China, but many parts of middle-class Asia as well. The beliefs and values of those born before the 1980s have been mostly shaped by the need to have a good education in order to secure a well paying job. Having gone through the dot-com boom and bust, the Asian financial crisis and globalization. Hard work has been taken to be the 'holy grail' for being successful - success in life being largely defined as having a high paying job, even at the expense of sacrificing personal time and working long hours. Hard work correlates to wealth, which buys a roof over the head and some financial stability. And the results have been evident over the last 5-10 years as seen in higher income levels. Economists in Asia have previously also touted the emergence of Asia's middle class, in which the rising affluent population (especially the Chinese) were expected to spend more on lifestyle and luxury. In a recent weekend coffee catch up with a friend, he mentioned an interesting observation: Setting aside the affordability of buying a home, it is actually a lot easier for young people today to get by. In Japan, Korea and China for example, there are tons of convenience stores for getting decent hot food and supplies. There are shops like Uniqlo and MUJI for clothes, and "dollar stores" such as Daiso and JHC for incredibly cheap household stuff. If you are willing to forgo the luxurious brands, you technically don't have to dig very deep into your wallet to live comfortably. It is actually very easy for people to 躺平 and give up on the ”high life". From a capitalism point of view, this is obviously bad for the country because growth has traditionally been associated with increased spending, and not about being contented with living the simple life . And while US and the rest of the world are hiking rates to fight inflation, China by contrast is doing the opposite. By cutting domestic rates, the Chinese government is probably adopting the age-old "inflation targeting" monetary policy to rejuvenate economic growth and avoid stagflation. A new new normal. The narrative on the outcome of China's recent party congress meeting is obviously extremely divided, you either love it or hate it. Some of the peers I spoke with see XJP's next 10-year rule as an iron-fisted style of governance. While it might appear as if too much power is in the hands of one person, this continuity also implies a certain stability in policies, which can be a good thing in today's volatile markets. The so-called 'strong fisted' ruling also means that privately owned enterprises who work more closely with state-owned-enterprises could be seen as a more 'friendly' party aligned with national policies under the current regime. "I believe China is currently in the range of 3 to 5 percent growth, and headed rapidly to zero" - Politico.com In 2016, when the term " new normal " was first introduced at China's 13th Five Year plan, there were several opinions hinting that one of the world's largest economic engine was rapidly grinding to a halt, including the possibility of a catastrophic outcome. But an article published in Fortune put this into perspective: " The slower growth rate is a sign that China’s enormous economy has passed the startup stage and is beginning to mature. While this is certainly a new environment for investors to wrap their hands around, it doesn’t equate to economic Armageddon. " China and most of the global economy continued to thrive in the three years that followed, right up to the pandemic in early 2020 which took the whole world down. What doesn't kill you makes you stronger. Maybe that could also be what the world needs right now: To be less pessimistic and gradually learn to embrace a second new normal of a controlled (or regulated) market economy rather than a free market economy that is jacked up on steroids.

In aero-propulsion engineering, it has been found that the most amount of fuel per kilometer is burned when a plane is taxi-ing and taking off , not when it is 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 assembling a team to build a new product or a new business, all 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.

I used to played a lot of basketball in school. Basketball is a fast-paced game that embeds a lot of strategy. A team of five on each side can come up with numerous ways to score within a 24 second time frame. Everyone on the team has a role - the point guard, the power forward, and the center. Street basketball sometimes involved three-a-side on a half court, and given my height I was always told to play the center position. The center position was important. When you are on the offense, the center serves as a back-up to do a rebound if the point guard's shot is off or if the power forward needs support while doing the lay-up. When you are on the defence, the job of the center is to be the sturdiest pillar under the net, blocking every shot that comes your way and turning the play over. But I hated playing the center. It was a boring position: standing under the net, constantly looking up and pivoting around a 1-2 meter radius. Sure enough I might be able to get the rebound most of the time but there was not much fun in catching the ball and then passing it on almost immediately. So I always preferred doing the layups, occasionally shooting from the 3-point line, mainly for variety. I would sometimes get told off for not staying in my position. I wasn’t trying to be ‘showy’ or anything, but simply because I enjoyed the momentum and dynamic game play as compared to relatively standing still. This ‘rigidity’ took out a lot of the fun in competitive basketball playing and I eventually found my way in athletics. Much later on, I realised that a lot of school teams select their center positions primarily based on height. The idea was that even if that person had no ball-sense but had the height, he could be trained to do what he was supposed to do. Grunt of the firm. The running of businesses, especially for employees, unlike a basketball game, may not be that enjoyable. But like basketball, companies need to assemble a spread of people based on different functions and positions - rainmakers, executors, administrators and grunts. Last week, I had someone in the office telling me how frustrated she was over doing something she felt was unnecessary and that the exercise yielded no value. “I don’t like what I do, but I have no choice.” Many employees don’t like their day jobs but a lot of them in this category feel disgruntled primarily because the work is not fun, they don’t see the point of what they are doing and often perceive it as stuff that needs to be done in order to report to the higher-ups. This employee was the grunt of the firm. And despite her lack of experience, she was generally good what she does - accountable, hardworking, and diligent. She does what she is told and sometimes goes the extra mile to get it done even on a weekend. Now and then she wants to be able to see the big picture, the significance of what she is doing and be able to learn something in the whole process. But the reality is that, sometimes the things we do at work that seemingly make no sense need to be done because only those with real skin in the game says so. Such is the reality of a lot of working environments. I don’t like playing the center position but the team simply needs someone there to just hold the line. Sometimes a small nudge in the mindset can change the perspective of how people can approach work and carry on their day-to-day jobs. As part of any job, sometimes it is unavoidable that you have to do the things that you don’t like to do. Because a lot of employees don’t condition themselves to seeing things this way, they often get upset, feel unappreciated and eventually leave. Employee attrition can go down like a negative spiral and be a big problem for companies. Right fit. Managers can obviously do a lot more to understand the attitude and personalities of their employees. Too much focus is placed on hiring for skills rather than personality. Sure enough, a lot of companies include “ cultural fit ” as part of their hiring criteria but in today’s context, remote working and high employee turnover is increasingly becoming the norm. In the past, “right fit” means placing someone in the organization who would ideally jive with the rest of the team. In companies whereby departments are constantly being refreshed with new faces, it can be difficult to foster any real camaraderie . I once overheard a senior colleague in an interview asking a potential hire: “Are you prepared to work long hours?” It got me curious because I wondered what response he was expecting to hear from such a rhetorical question. If the candidate gave a brutal reply insisting on doing regular hours, would his honest preference imply a lousy fit for the company? And if he/she answered ‘ yes ’, wouldn’t that be pretentious? As hiring managers, what are we really trying to look for in a candidate's response when we throw them questions like these? Just as all basketball teams want the tallest, fastest and the best shooters, all companies want the most hardworking, the most resourceful, and innovative people (ideally at a fraction of the cost). In a certain extreme, companies simply want corporate slaves working in a manufacturing sweat shop . This is mathematically speaking, solving for maximum P&L but does nothing to improve corporate culture. To make it worse, the Internet has also virtually created a 24-hour work day, resulting in a term called neurofacturing , which basically refers to the modern white-collared jobs involving technology and brainpower. The Atlantic has an interesting article that talks about why people spend all day at the office working. Do candidates who claim that they are willing to embrace the long hours make better employees? Companies tend to be somewhat myopic when hiring, focusing on either the highest " neurofacturing capacity" or filling immediate human resource gaps such that they almost always overlook the candidate’s interests and ambitions. After all, why does it matter? Just think about it: How many of the interviewers that you’ve met previously really took a genuine interest in your long-term career aspirations? Aside from the long working hours which seem to be mostly a given now, most of the questions directed at you probably test for experience and skills: “ Can you tell me how to value a company? ”, “ Can you do this? ”, “ What have you done before that convince us you can do this? ” The idea that if someone has had success in his or her previous stints, there is a good probability that they will be able to replicate this in their future roles. But this is not always the case. “History helps us calibrate our expectations, study where people tend to go wrong, and offers a rough guide of what tends to work. But it is not, in any way, a map of the future. - Morgan Housel If companies could focus on aligning corporate goals with the ambitions of their potential employees, imagine how much impact that could potentially have on productivity and culture. Instead of searching for the best match of skills and experience in the relevant industry, one could consider placing more focus on hiring for personality. For example, someone who enjoys talking about everything under the sun could be a fish in water for a sales role. A perfectionist could be a good managerial hire for a public relations role whereby collaterals need to be impeccably produced. Or someone who has previously attempted a failed start up could also be the best choice for a corporate venture role as he would be prudent and sensitive to the nuances of launching a new product, having gone through it first-hand. Hard technical skills can be trained but interests and unique experiences remain more deeply ingrained in a person’s DNA. Furthermore, people generally don’t like to be told what to do because it makes them feel like they are not in control. Instead of free will, they feel like they have been given no choice even though they might have been happy to go along. [ Jonah Berger ] People produce their best work when it interests them. Companies use incentives such as money, hoping to channel and convert some of these personal interests into their commercial interests. No fault in that. But to do so requires some work in understanding what drives these people.

[ Disclaimer: I’m neither a parent nor speaking on behalf of all parents ] I was walking on the pedestrian bridge to Pacific Place in Hong Kong, watching people from various walks of life - young and old - pass when this thought came to mind: They say that those who have kids tend to look and behave older than they really are. It’s not just the result of long term fatigue and physical exertion, but also the experience and wisdom that comes with it - Knowing what to avoid, where to step, how fast to go, what not to eat. Older people, like parents, likewise share an inherent trait of being highly averse to risks, especially overly-high risks. Risk management is a very underrated attribute. It is boring, dull and invisible. Its virtues are often only realised in times of ruin or in hindsight as we grow older. Contrary to what we conveniently assume, wealth has little correlation with a person's line of work but more about just being around at the right place and the right time. I have seen high-flying bankers who used to hold lofty pay-checks, being being so-called "reduced" to the common man. And it's not only bankers, celebrities share a similar fate as well. People such as Michael Jackson, Mike Tyson and Nicholas Cage went into financial debt splurging on extravagant items. Hard to imagine sometimes. Being in a highly-desired job and earning a five-digit monthly pay-check upon graduation doesn't guarantee that you'll be financially well off in your 30s and 40s. And even if you find yourself in a financially advantageous position in your 40s, circumstances can change quickly overnight if you make a misstep. I find those swaggering in this category while exuding an air of arrogance incredibly vulnerable and borderline repulsive. So risk management isn't sometimes about portfolio growth and diversification, but more about knowing when to avoid bad decisions with drastic outcomes. Knowing when not to act when everyone else is getting excited about hopping on the bandwagon, learning how to avoid FOMO , and also when to move when everyone else is cowering. Those who are ruin-averse tend to be more humble and better at doing this. Experience is oftentimes good teacher. Steve Schwarzman of Blackstone once said in an interview with Bloomberg . There are no brave old people in finance. Because if you’re brave, you mostly get destroyed in your 30s and 40s. If you make it to your 50s and 60s and you’re still prospering, you have a very good sense of how to avoid problems and when to be conservative or aggressive with your investments.

Examining financial statements can be tricky and tedious. "You don't have to have every single answer. It doesn't matter how many blue trucks a company owns. More important is what can you do in the business, in the the 20% that will really drive the results and drive the outcome" - Talks at GS, Henry Kravis From an accountant's point of view, the ledger has to be always complete and accurate, even if it means laying out a few hundred lines of items. From a banker's point of view, we tend to be only interested in the top 3 to 5 items that affect the top and bottom line. There is always room for uncertainty and nothing is ever absolute. Unlike accountants, we talk about numbers in ranges and what-ifs . Nothing is ever precise. Sometimes we bankers talk too much as well. There is a lot of art in balancing uncertainty and precision when it comes financial modelling. One must be careful to avoid being caught up in too much detail such that it hinders decision-making and deviates from what we hope to achieve from building the model. This is where the 20-80 rule is useful. This rule can apply to cost cutting initiatives too. Conventional wisdom and numerous precedents dictate that the elimination of jobs should start at the top where it takes up presumably the bulk of costs. But removing the top brass could be potentially detrimental to an organization, especially if senior managers are instrumental in steering the business. The case here being: Better and more cost-effective to remove the head of a business unit than three or five cogs in the wheels. On the flip side, by removing the cogs i.e. shaving away a huge number of "low-cost" people, we also run the risk of overburdening remaining managers and employees with more work, which can lead to dampened motivation and workplace fatigue. Aside from headcount measures, firms tend to also cut back on business travel, entertainment and other petty expenses as part of cost saving initiatives. While prudence is a commendable attribute, if we put too much focus on the small items, this will ultimately hinder business development initiatives in the bigger scheme of things and sometimes limit creativity and innovation. So to sum it all up, no easy way out. And all of the above fundamentally relates to cost savings - a convenient way to justify improving profitability to shareholders. However, most companies tend to neglect that " the short term cost savings provided by a layoff are often overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation — all of which hurt profits in the long run. " In times like these, it is even more important for the firm to be upfront when communicating to staff. In late 2010 with the onset of the Eurozone crisis, I remembered my entire team being rounded up in a meeting room to be given a brief "heads up" of the looming uncertainties. No promises were made. The job cuts came about 3 to 4 months later. It was a difficult time but that short briefing gave everyone sufficient time to get mentally and logistically prepared. No one benefits from such a situation - the folks who are departing obviously lose their jobs and the ones who stay on shoulder more work and responsibility. But as much as possible, you want to avoid having huge clouds of uncertainty hanging over everyone's head. It is of course also hard to be encouraging but still absolutely necessary for the firm and managers to communicate the facts to the team in terms of what to expect, rather than soldier on silently. Employees will be employees and 99% of them will always feel victimised in a situation like this. There is also another good cause for initiating cost-cutting from the top - to demonstrate solidarity . Collective hardship and pain are a good band aid for fostering some camaraderie during turbulent times. And perhaps more important than solidarity is trust. The relationship between a firm and employee extends beyond just a contractual agreement but a psychological one. Most employees who have been laid off don't feel that they should be penalised for the underperformance of the company, especially if the employee isn't in a leadership or senior management role. At the risk of sounding unfair to those with skin in the game , there is an inherent perceived disproportionate balance of risk and reward, in which the employee feels involuntarily placed in a weaker bargaining position, subject to the whims of their employer i.e. the firm ultimately reserves the right to terminate them during a period of economic uncertainty. But feelings of negativity and distrust can be contagious and can spread quickly within the rank and file. In the strictly commercial sense, profitability and shareholder value are both important metrics to measuring corporate performance. There are no jobs without the existence of a company, no company to speak of without the investment of capital. No capital without shareholders / stakeholders. But even as we strive to maximise profitability, it is equally important to ensure sustainability in generating profits, to go beyond the numbers and dive into corporate culture to examine the quality of earnings being generated. By solving for profitability in the near term, are we putting the longer term strategy of the firm at risk? In the words of the founders of 3G Capital : “Culture is not about supporting strategy, culture is the strategy.”

My first experience of altitude-sickness was in 2008 while on a trip to run a marathon in Leh , northern India. I had gone on a small excursion to the Ladakh ranges on the first day, arriving at one of the mountain passes which was more than 5,300m above sea-level (as a reference, K1 base camp is 7,800m). The area was large and hilly, and in my excitement then, I sprinted up one of the knolls for a panoramic view of the landscape. On the journey back to the hotel that day, I became totally out of commission, and basically had to stay in bed for the rest of the day right up to the following morning. I initially thought it had been motion-sickness from the winding roads but later realised it was most likely due to the lack of oxygen from the thin air. Because the marathon was held in an area of high altitude, the race required a mandatory four-day, no-exertion acclimatisation process. No exercises, no jogging, no training, no hiking, just sitting back and relax. Also, on the third day the doctors would make everyone run a short two kilometre stretch outdoors and take your heart rate at the end point. If it was too high or deemed dangerous, they had the right to revoke your participation on race day beyond contestation. Following that incident I learned that: There is always a natural limit to the way things work. You can always try to test those limits, and if you are lucky, get away with it. I read later on also that altitude sickness if not managed properly, can result in potentially a life-and-death situation. It all makes sense. Before any race, every athlete knows to do sufficient interval trainings and regular runs with a gradual ramp up in distance and intensity. By pushing your body in a short time and disrespecting the importance of progressive physical conditioning, you could end up as what we used to call a one-burst wonder: someone who would give his 100% during one race and then retire forever. Even if you are an above-average fit person doesn't mean you can always push your body to extremes under a short period of time. To perform well for extended periods, one must follow an appropriate and natural course of physical conditioning. Some studies on ecology talks about how bigger body sizes improve short-term survivability by reducing the risk of being caught by a larger predator. "There appears to be a link between accelerated growth and lifespan: rapid growth early in life is associated with impaired later performance and reduced longevity" - Neil B Metcalfe, Pat Monaghan In fact a bigger body size also increases the chances of successfully making a kill to get food. With size also comes the ability to accumulate energy reserves that reduces the risk of starvation. From a Darwinian perspective, it is only in the best interest to grow big as fast as possible. This is not difficult to relate to. From big bullies to big companies, size does matter. Growing quickly maximises your chances of outperforming or eliminating the competition. Yet, observations on lab mice and other animals have statistically shown that with rapid juvenile growth comes reduced lifespans in adult years. Seems like any desire for rapid growth comes at a cost. For example, Red Bull might "give you wings" but the energy surge from one drink can last for up to 4 hours before most people descend into withdrawal-like symptoms and 'crash' the rest of the day. Also, performance enhancing drugs such as steroids have somewhat permanent damages on the body, years after those who use them have stopped. These damages often result in the human body using up additional resources which could otherwise be directed towards the normal upkeep and functioning of the biological system. Every sentient object follows a certain natural order of growth and size: "Each animal, as a product of chance mutation and natural selection over geologic time, ' has a most convenient size '. We don’t expect, for example, to see cheetah-like elephants or elephant-like eagles in the wild, do we?" - J.B.S Haldane But there are elephants that want to run like cheetahs, and cheetahs who want to fly like eagles. In business, Damodaran talks about the importance of companies to ' act their corporate age' within the corporate finance cycle: "Teenage" companies don't always think through the consequences, but the future is full of potential.... then you've got young growth companies. This is when you are at the peak of your glory. This is when you can go to sleep at three o' clock in the morning, wake up at six and still function. Young companies are all about growth. Unless you have a legacy like a Walmart or a Coca-Cola , chances are the markets are pretty unforgiving towards 'small-ish' companies and those who demonstrate an unimpressive growth rate. Some large companies today continue to be unrelenting in the pursuit for innovative growth. As a result, ambitious sales and profit targets are drawn up to satisfy stakeholders. Apparently, more is good, bigger is better. In today's market, it's extremely easy to enter the penalty box with a zero or negative growth rate. You get left behind easily once you stop moving. Growing up is indeed hard to do. On the other hand, if you consume too much steroids to bulk up, you might do this at the expense of sustainability and sometimes even survivability. A HBR article written in 1983 talks about how ineffective work delegation and poor management of cashflow increases the possibility of failure for companies in the "take-off" phase (Stage IV below). Without a solid foundation of management, a firm that grows too quickly puts its operational hierarchy at risk. Delegation of responsibilities and work fail, resulting in higher costs, lower efficiencies, outflow of talent, higher requirements for working capital and therefore cash flow. Source: HBR, "The Five Stages of Small Business Growth" | https://hbr.org/1983/05/the-five-stages-of-small-business-growth In the worst case scenario, it may even result in a fallback to the Survival stage or fail. "Companies are born, they mature, they decline. It's the nature of that process." - Damodaran Like the laws of nature, there needs to be a healthy respect for the inner workings and dynamics of industry and markets. Knowing one's limits and when to lift or push the pedal on the accelerator is an un-deniable truth that both businesses and individuals need to eventually come to terms with.

Come next year on 3 January, I would have clocked three years into my current company. This would also be my longest unbroken stint working at any organization (apart from the one I started). For most people, staying at one company for many years is a given. But for me when I graduated, “jumping ship” (switching companies) was something of a norm , a necessary rite of passage in order to get a significant pay raise or to move up the corporate ladder. That said, my perceptions towards career progression and life overall in general had also changed dramatically over the last 17 years. I had moved (or evolved) from being a relatively young desktop grunt, crunching numbers and producing eye-catching powerpoint presentations at breakneck speed, into a mid-senior management role. With more work experience, I am called upon to show up at meetings either because I am a subject matter expert in a particular area, or simply because the ratio of grey hairs to black hairs on my head is higher than average (I like to think that it is due to the former). They say you can only appreciate most of the learnings in life once you have clocked sufficient mileage. I have had my share of experiences, both the good ones and the bad ones. I have pulled all-nighters at work, got promoted at work, take part in at least one billion-dollar transaction, sat and moderated a number of interesting M&A negotiations, seen corporate re-organisations resulting in teams being shuttered, getting laid off, laying people off, watching people get laid off, etc. I am not particularly proud of some of the things I've done, including sacrificing a lot of my personal time for work, but for good or for bad, it has made me the person I am today. When I was younger in my career, I had looked towards those who were older (presumably have clocked more mileage than me) for a professional role model - both the positive and negative examples. I learned that there isn’t one perfect epitome of a successful person. I have had colleagues who leave the office promptly at 6pm, pulling off a sustainable work-life balance (defined here as getting off work on time). And then there are also those who are religiously back at the office every weekends regardless of family. I have had seniors who were extremely competent in execution but suck terribly at management. Some were nice people but couldn’t execute. Some use looks to get by. Some put in the gruelling hours to prove their worth. Each of their characteristics were unique in a homogeneous and somewhat brutal environment, which makes understanding them both interesting and complex at the same time. And people being complex creatures, are what makes them interesting. But then again, at the end of the day, who decides if they should be deemed successful ? As I grew older, I realised that these hallmarks in which we define how well we do in life increasingly deviates from the professional workplace and quantifying the material possessions. But to say this assumes that we have been lucky to be able to earn well - well enough to get by in life comfortably, keeping the lights on, and putting food on the table. There are many other aspects that we consistently take for granted such as a happy family, your parents, your siblings, kids, friends you can rely on, good health, and for some, the ability to travel overseas at whim, and perhaps quite importantly, the peace of mind. No amount of money can buy any of these. But life will occasionally throw you a wrench to test how far you would stray from the path to give up on any of these, and if you had subconsciously forgotten the most important things around you. You can listen to anyone's experience and draw conclusions on how you should live your life and solve your problems. But at the end of the day, everyone’s position is different, and you bear the consequences of the decisions you make solely by yourself. Because what works for one person may not work for another. Many of life’s lessons and takeaways don’t need to be drawn from the advice and anecdotes of other people. It just comes from a position of inner peace and self-realisation.

As I enter my third year of working for a Chinese company and living in China, it felt apt to reflect on and summarise a few takeaways from a cultural perspective. Gift giving is almost always a norm (and expected) when visiting someone. When in doubt on what to buy, more expensive equals more sincerity. Face apparently is still a big thing. You can leave home without bringing a wallet . Everything you need is stored in your phone - from money to your national ID. You can even buy meat from the market and pay via Wechat or Alipay . This is the power of putting a smartphone in the hands of one billion people and having an incredibly decent mobile broadband network. Buying stuff online is often cheaper than buying it offline or over the counter. The Internet has completely eradicated the need for any human interaction. Why bother negotiating for an extra shot with the counter-top casual banter when you can get discounted deals through an online menu? The catch here is whether you can navigate the complex menu sequence... Patriotism is in their blood. While some of the Chinese people may not agree entirely with the ideologies and methods of their government, they remain very proud of their own achievements and feel a strong sense of loyalty to their country. People all around the world aren't very different. A girl wolfs down seafood on Douyin Nearly everyone watches douyin ( 抖音). Contrary to being an unhealthy social addiction, I find douyin quite intriguing, and an excellent source of entertainment and general knowledge, not only about China but also the state of world affairs. Needless to say, the Chinese media is skewed. But who is to say that Western media and media all over the world is not?. Watch, rinse and filter accordingly. You can live your life without stepping out of the house - getting food, groceries, plumbing, courier, train tickets, etc. This is even more evident after 2020 when every one was forced to stay indoors during the pandemic outbreak. You can also hire anyone to do almost anything from queuing up to valet driving you home when you've had too much to drink. Because everything is transacted online, merchants take consumer ratings very seriously. Any negative comment in the forums can easily go viral and equivalent to being served a death penalty . The guiding principle being: The opinions of one billion people can’t go wrong . The stark income differential between the developing and urbanised areas is probably what keeps quality and service standards high and input costs low. Take for instance the food delivery sector. There are many videos online that showcase how riders - many of whom are in the low income bracket - risk life and limb just to make sure food gets to people’s doorstep on time. They earn only a fraction of a white collar income, but that huge population and wide domestic income gap is what keeps the gig industry going and the domestic economy resilient. The main reason why stuff in China appears so relatively cheap is simply because of its vast population. We know this but still choose to believe that cheap equals “ lousy ”. You just need to have a discerning eye when shopping for stuff online (especially on Taobao 淘宝). If you can ignore how some of these brands are named, you will realise that there are many places which are reputed for wholesaling high quality white label products for many global upmarket brands e.g. electronics in Dongguan , Guangzhou ; furniture in Foshan ; industrial parts from Wuxi ; textiles from Jiangsu and Shandong region, etc. Everything is “ made in China ”. The trillion dollar luxury goods market thrives on the fact that consumers like variety and perhaps more importantly, ultimately fall prey to effective advertising. University entrance exams are incredibly cutthroat . Being based in a certain province or city could pigeonhole you into a certain career or an industry for life. As a result, parents often go all lengths to ensure that their kids receive the best education the system can offer. Only the rich can afford sending their kids overseas. Beijing (北大) and Tsinghua (清华) are regarded as the " OxBridge"  equivalent, and considered the crème de la crème, at least within the country. There is also a vast difference between a local and a foreigner gaining admission into either of these universities, the former considered more prestigious as the attrition rates for locals are incredibly high. As a matter of fact, the locals don't really care if a foreigner gains admission to 清华 or 北大. Ownership of real estate is still considered a status symbol for many Chinese. As a result, many will do whatever it takes to hold on to their property even if the prices are falling. This trend however seems to be changing with the demographics as younger Chinese are increasingly being more knowledgeable about investing their savings into wealth management products. Happy third work anniversary.

Had catch-up drinks with a much older (more than 12 years) friend that I hadn't seen in nearly two years. Our common experience of having worked overseas led us to talk amongst other things: Money, work, mid-life challenges, investing, investing in real estate, and the state of the economy in China. Economic lifespan. The state of working in banking and finance. It becomes incredibly hard to find something in between. You are either senior management or not. Besides, those who earn up to the S$5,000 range are typically younger folks with 3 to 5 years of experience on their backs. Salaries for banking and finance are often above-mediocre. Those in banking and finance work round the clock with no night or day. You are basically on call 24-7. Regardless of whether you are in the front or mid office, you basically work round the clock, constantly on your phone and replying emails. The markets today are digitally powered with information that move at the speed of light. Singapore today, more than ever, serves the international market, therefore warranting that we work across all time zones. While there are many who still struggle with finances in their fifties, the unspoken truth is that money shouldn’t be a focus anymore at this stage. Grey hairs. Also, people expect you to act your age for the role you are in. When you are an analyst, you are expected to do the grunt work. When you are an associate or director, you lead execution. When you have more than ten years of experience on your back, you are meant to assemble and manage a team, impart knowledge, and on occasion, demonstrate thought leadership and disseminate advice. No more upside... Take REITs for example: investors could make compounded returns by re-investing the dividends, and relying on further appreciation of the share prices because of insatiable demand for space. Over the last year or so, distributions and share prices for REITs have declined quite a fair bit. Higher interest rates have hit distributable income margins but rental reversions are also taking a hit. This is not only the fault of inflation and borrowing costs impacting their own businesses but also impacting the businesses of their tenants, crimping the ability to accommodate the higher rents. REIT managers today have to weigh between higher rents and lower occupancies, or otherwise run them at the same occupancies at lower rents. Not an easy decision. A bleak world... To re-stimulate the economy, we have to rely on the next generation to accumulate wealth and buy homes. For this generation of folks who can’t afford to buy houses, they will simply just move in with their parents. Furthermore, China is also faced with an ageing population, which means that when the older folks pass on, there will be possibly an over supply of housing. It might take at least 8 years for for this segment of the economy to recover.

During my first interview upon graduating from university, I showed up at the offices of an IT consulting business. The premises were then at the under-construction Biopolis area of Buona Vista in Singapore. Started by a pair of French founders, it was a fledging business that provided IT consulting services, primarily targeting large European companies that had a significant presence in Asia. Like most of my peers, I was an eager young freshie looking not just for hands-on work experience but also an opportunity to gain more geographical exposure. I was told that the role required someone who was not only conversant on the technology front but also good at communicating with clients. Someone who could be like a Marissa Mayer of Google, traversing between the technical and the business aspects. This person had to be able to navigate conversations with potentially blue-chip clients of the world, yet possess the programming skills to write code for television. The goal was to eventually create a simulation prototype to be showcased to the Chief Engineer and the CEO, so that they could launch the final product in the global market. They wanted the best of the best, and I did want to be the best of the best. Midway into the conversation, I was also shown a huge wall-hung map of Asia Pacific as the founder himself stood in front of it, pointing to various cities while sharing his grand plans of expanding within the region. I had liked what I heard and was convinced that this was the company I wanted to join: A regional role, growth prospects, ownership. Money aside, there was also the hybrid business-tech angle, the entrepreneurial experience, and being part of that rewarding journey. If I had pressed on about comps, they probably would have also talked about employee share options and long-term incentive plans. Everyone likes share options – an equity stake in the business, unlimited upside, bragging rights to call yourself a shareholder . The founder’s sales pitch had worked. Never mind that I wasn’t a client. I had been sold into doing something bigger. I am less impressionable these days (no discredit to that company that I interviewed with in 2005). Much later, I also realized the effective-ness of talking to a prop of a world map when it came to showcasing the vision and geographical reach of any business. Some firms give away equity as part of selling their story. You might be able to get away with paying out less cash to employees who are clueless on how to value a business. But many fail to realize that equity is only worth something if it can be converted into money. Besides, for privately held companies, the pathway to a liquidity event is sometimes not straightforward. “Ownership is usually a bust unless your company is being fast-tracked to sell for big bucks.” - Karen E Klein, Bloomberg Then there are also those who will take a lower pay for a great working environment. For many startups and emerging businesses, founders and management have to find out what motivates their people to go above and beyond . Surprisingly, it’s usually not money. Adrenalin wears away quickly and no amount of money can compensate for working in a toxic environment. Corporate culture at its very essence is what makes a business successful in the long run. How do we provide support and training for newly onboarded staff? Do we have an environment that allows individuals to develop themselves both professionally and personally? How do we stay in touch with those who leave the firm? What is the first thing that comes to mind when people hear about the firm's name? Do we have Friday happy hour drinks? Do we make it an effort to listen to what employees really want, or are we just forcing-feeding the narrative at every townhall meeting? When employees go above and beyond the job and pay check, it essentially all comes down to corporate culture. Selling equity isn’t enough. Value needs to be communicated, and maybe that was what I saw in that world map.

“They talk about work-life balance. That’s a term I didn’t even know when I was their age. Work-life balance. When I was their age, if there was no work, there was no life.” - Morris Chang There is a huge mindset difference between those in their mid 30s and 40s compared to the Gen Z population, categorised as those born after the year 2000 or those in their 20s who have just graduated. If you are one of those who believe in working hard and earning lots of money for your future retirement or to be financially free, you probably belong to the mid-30s and 40s group. Gen Z doesn’t care for money. Gen Z also doesn’t think that far. Their manifesto in life revolves around " YOLO"  (You live only once), a term I first heard only when I spoke to a colleague about the importance of having CPF savings in 2019. Some mud in the water might be good. “水至清则无鱼” ( "Fish prefer muddy waters and avoid clear streams" ) When Jack Ma was “rusticated” after his speech at the Bund Summit in 2020 , I think it might have sent a certain message to the business community about the new rules of capitalism in China. I don’t think he intentionally meant to sound like he was going against the authorities, that innovation isn't afraid of regulation . Some dislocation in the market is always good for entrepreneurship as long as those in the game play by the rules. But the concept of risk-reward is viewed very differently the moment you take away the opportunity for any abnormal upside in a free market.  This trend further permeated when the term " common prosperity"  was introduced in 2021 as part of China attempting to bridge the wealth gap. What followed was a series of events including the ongoing purge of corrupt civil servants, clampdowns in the private online education and peer-to-peer lending segments.  Not that the occurence of any of these events had anything directly to do with the worrying youth unemployment statistics today. But it is interesting to note that for Gen Z, coincidentally, this was a period whereby most of them had started to enter the workforce. They should be brimming with excitement and hope for the future. Regardless, the contagion caused ripples across the industry, essentially discouraging the pursuit of excessive wealth and high incomes, almost similar to imposing a virtual red line on how much one can earn. And people generally stop trying too hard the moment you define strict limits on how much they can achieve. “The point is ladies and gentlemen that greed, for lack of a better word, is good.” - Gordon Gekko Gen Z looks at money very differently. Aside from graduating into a generation characterised by apathy, most of them are financially cushioned by the wealth of their parents, who are mostly Gen X. Gen Z’s outlook on life and material values are quite different. They are not obsessed with going after flashy items, brands or asset ownership. Why Calvin Klein  when you can Uniqlo ? Why Louis Vuitton  when you can MUJI ? And renting isn’t such a bad idea when home ownership is too far-fetched at current income levels. Besides, there is always that option to stay with their parents if all else fails. According to Morgan Housel , the mindsets and lifetime investment decisions of people are heavily anchored to the experiences in their own generation, especially those in their adult life. “The differences in how people have experienced money are not small, even among those you might think are pretty similar. Take stocks. If you were born in 1970, the S&P 500 increased almost 10-fold, adjusted for inflation, during your teens and 20s. That’s an amazing return. If you were born in 1950, the market went literally nowhere in your teens and 20s adjusted for inflation. Two groups of people, separated by chance of their birth year, go through life with a completely different view on how the stock market works:” Because of that, when it comes to the perception of money, what one group of people think as ridiculous might sound totally fine for another group of people. While the vast majority of Gen Z’s parents have put in the hours, sown the seeds and reap the harvest of their hard work, most have also concluded after two or three decades of their working life that earning lots of money is nothing but simply a means to an end. There is no point in chipping your life away and earn so much only to spend it when you are too old and frail to enjoy.  In this vein, financial freedom to Gen Z means that I only need enough to survive and get by instead of the need for any passive income from an investment asset. Furthermore, most of these people have been brought up in an environment in which they have been very likely been told to “do what makes them happy ” rather than get into a mindless pursuit of money, the rat race. Social media for what it is, also plays a big part in influencing the way they think of lifestyle and money. You can almost live your whole life online in the digital realm. Some people even make money simply just by live streaming ( 直播 ) their day-to-day activities. Source: DFC Studio Why work the regimental hours when you can make a living sitting at home doing stuff on your own terms? Ironic, but the biggest ultimate sponsors of these initiatives are the parents of Gen Z, the same group of people who believe in decent wages for decent work done. These are just some of the mindset challenges faced by employers today in a workforce increasingly dominated by Gen Z workers. They don’t care for the high incomes. If these people do not find their work purposeful, they leave. If pushed too hard, they leave. They just simply don’t care anymore.  There is nothing right or wrong with that way of thinking. But it is the rat race mentality that propels the economy. The rat race makes people to want to earn more and live better than their peers. For good or for bad, it forces creativity and innovation.  Today, there is no incentive to do that, no incentive to go above and beyond the call of duty, no upside. They just want to lie flat. You can continue to whip the proverbial horse but you can’t make it go faster.  The point is ladies and gentlemen that greed, for lack of alternatives, is good for the economy . There isn’t a perfect solution for how employers and managers should work with the younger generation. Some might say “ shut up and listen to your elders and seniors ” but I think that would only invite more resistance. However it does help to understand how the post-millenials of today think and behave the way they do. Given the youth unemployment rates and the current state of the economy today, maybe a little dose of “Jack Ma” wouldn’t hurt... Have a great week.

It just goes to show that even seemingly intelligent humans, when desperate, gullible and possibly even bored enough, will believe nearly everything you tell them and to some extent, resort to illogical behaviour to get what they want. When something good or bad happens, we lean towards seeking answers retrospectively. We look logically for these answers by re-tracing the steps and putting together the pieces leading up to the events that take place. There is usually a connection between the cause and effect. For example, “ he is so small and thin today because he didn’t eat well when he was younger ”, or “ he works in a mediocre job now because he didn’t study hard in school then ”.  Conversely, we make the subsequent conclusions in nearly every aspect of our day to day lives, for example: Studying harder maximises your probability of getting good results ; or: working harder increases your probability of doing well later in life . But whenever the science and logic fails us and things don’t go according to plan, we fall back on, or turn to the spiritual side of things. Humans seek comfort in rationalising stuff that happens to them, both the good ones and bad ones, but especially the bad ones. Hence, the existence of the avocado bell curve god,  drinking water mixed with the ashes of books, and the wearing of good luck charms, gods in other forms, amongst others. The truth is sometimes, the good and bad things that happen in life, they happen for no logical reason at all. A winning lottery ticket, contracting a deadly virus, a plane crash, bad timing when making an investment, black swan events, etc. Events that can significantly change the course of one's life . Life is a lot simpler when we start to make peace with  the things around us, rather than try to make sense of the things the happen around us. “We are so good at justifying things to avoid our deepest fears. That is one trick the mind is really good at.” - Alicia Cramer

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.

“All I ever wanted was the freedom to make my own mistakes.” - Mance Rayder, Game of Thrones Chasing a pipe dream. Some years back when we got into the advisory business as a start up, we had a whole bunch of M&A and capital raising deals, thrusted on to our plate by someone who seem to know important people from all over the world. There were companies who were looking to raise capital or get into new markets, start ups who were looking for venture funding, investors who were trying to put capital to work. It looked like a buffet of deals. We spent a considerable effort evaluating each and every one of them. Some times it involved a systematic way of filtering and deciding whether or not to proceed. Other times we had to do 'favours' such as meeting random people or even just sitting mindlessly in a lecture or workshop for days. Whenever we hit an impasse, felt it wasn't cost-effective or disagreed with pushing ahead, that someone would say, " When starting up, sometimes you just have to do the things that you don't like to do. " And as they say, listen to your elders and betters ... but the deal pipeline was so full - full of long shots and losers, projects that had a low probability of closing, clients that likely couldn't pay, or simply just a waste of time. It was probably only over a year later that I had begun to realise the ironic and toxic dumbness of it all: The idea of starting up had been ours, us bearing our own costs, but somehow suffocating under a blind workload, executing a totally different agenda that belonged to someone else, just to heed conventional wisdom, that it was part of the entrepreneurial journey , and we had to " do the things that we didn't like to do. " Vulnerability. I couldn't remember exactly when it started to dawn on me, but one day amidst the frenzy of calls and meetings, I woke up, subconsciously dragging my feet out of the house and feeling that morning anxiety of arriving at the office before 9:30am. I was also checking my emails and text messages in the same way I used to check my Blackberry  on a Friday evening ( yes we used Blackberry in those days ), hoping that you don’t get a nasty email from the ‘boss’ to turn round a slide deck by Monday. And in any job, the moment you start counting down to Fridays or dread Monday mornings, you are basically f****d. Back then I had been ‘working’ on several leads. I had no full context to these projects, no direct connection to the source, no tangible resources to mobilise. Perhaps, more importantly, no autonomy in dictating any of the commercial terms. It wasn’t even a client that I originated. I was stuffed to the neck with work that wasn't mine and was simply churning slides and spreadsheeting numbers. At every discussion, I found myself mostly on the receiving end, listening to fluffy ideas and being fed with lofty dreams, all the while being told to follow up on execution in the background. A lot of these didn't have any commercial mandates tied to it. It was basically a bunch of stuff that was done in goodwill, in the blind hope that would one day convert into a billion dollar opportunity. We were being played. And as the popular Chinese saying goes, I was being led by the nose . In that whole process, I think no one had really considered what I wanted for myself. It was a weird setting. Why? Because my intention of starting a business was to unshackle myself from a corporate job, but I ended up in a situation whereby I was working on someone else’s projects and providing the ‘weekly reports’ on a regular basis. Suddenly I was an employee all over again. The reality of it hit me hard when I ran this through my head and played it out right till the very end: I was no longer the owner of my business , whatever form it had evolved into: No say, no control, no money, no visibility, all of the downside and none of the upside. That whole process taught me something: In any moment of vulnerability, if you are not careful in protecting your dreams, someone else will show up and make you build their dreams for them. Sometimes people turn to those who are more “successful” without really aware that everyone is simply just trying to validate their own narrative, and what works for them may not work for you. Cardinal rules. In any business with more than one shareholder, it is entirely possible that decision making and relationship dynamics can get relatively complex. Everyone brings a different resource to the table. Some bring sweat, some bring relationships, some open doors, others bring influence. Regardless, no matter what you put into the pot, I have found that there are always some cardinal rules to live by: Integrity and transparency above and before economics, always. Respect the money and capital. Everyone has the right to their opinion, but only those with skin in the game get to decide. In any deadlock, refer to point number 2. If you ever feel that you are getting the short end of the stick in an agreement, refer to point number 2. If you find yourself doing the things that you don't like to do, refer to point number 2 You can bring up grey hairs and sweat from decades of experience, or show off selfie photos with the big shots. But none of that really matters unless you put money on the table. I still remember the January of 2020 (just before COVID), when I was walking to my usual morning coffee hangout in Singapore around the neighbourhood, while reflecting upon life's decisions. On hindsight, I should have been panicking given the unnerving amount of cash in my bank account and thinking about what lies next. But even in those dark moments, I had found a quaint inner peace, taking responsibility of all the good and bad decisions that were made. It was a liberating feeling of sorts. A peaceful morning walk Perhaps all I really wanted out from starting a business was the freedom to do what I wanted, including the freedom to make my own mistakes .

Herd instinct There is somehow a tendency for people to encourage others to do the same thing just simply because it has worked out for them and they have benefited from it. But it can be easy to forget that what is good for you may not be good for me. Selling stories At Berkshire Hathaway's 2023 annual meeting , Warren Buffett commented that access to capital has gotten so easy that there is an increasing trend of people raising money to fund (or gamble on) questionable projects. With ample liquidity, a lot of money in the finance sector has been made from selling stories to investors who are looking to profit from companies beating expectations on their quarterly earnings. This trend has led to many firms getting carried away with chasing short-term publicity campaigns rather than delivering long-term value. Instead of selling products, selling stories has become the name of the game for many businesses and investors. "The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works." - Gordon Gekko (Wall Street 2, the movie) Living by IFRS 16 If you own a leasehold, the house you live in is NOT an asset even if you plan to book a gain from a sale in the future. The prudent thing to do is always to treat your mortgage as the sum of the future rent on your property. Learning how to think Artificial intelligence (AI) is so much more than just Trump and Musk dancing to the Bee Gees' Staying Alive . At a meeting last week, I decided to try out an AI-enabled note taking app which parses conversations into written text. The results were shockingly accurate. There were also additional options for further transcribing the raw text into various formats, structures, and even translate where required. Coming from a background where I am used to taking notes by hand, this is both game-changing and scary. Of course the tech is not new. Companies have developed voice transcription devices decades ago, many apps also offer the ability to join your online Zoom meetings as a "note taking assistant", summarising the key points and follow up actions after that. The technology has just gotten better thanks to faster processing speeds and more evolved language datasets. Young bankers today who pride themselves on pulling all-nighters to collect, organise and analyse data for their bosses are in for a nasty surprise. The value-add used to be the stamina and accuracy of ploughing through heaps of financial data, formatting them nicely into powerpoint slides. Today, Microsoft has come up with something called Copilot which is apparently an embedded feature capable of doing all of this. I hear that it can even generate a summary of your follow ups after returning from a two-week leave with hundreds of unread emails. Word is still out on how effective this can be. But Copilot could be a formidable upgrade over its predecessor, the irritating Microsoft paper clip assistant . If developed properly, it could potentially make the traditional work of junior investment bankers laughable. Also: "AI can draft 95% of an IPO prospectus in minutes" David Solomon, CEO of Goldman Sachs, commented this at a recent AI summit saying 95% of the content that goes into an initial public offering document can be basically completed by robots. Source: https://fortune.com/2025/01/17/goldman-sachs-ceo-david-solomon-ai-tasks-ipo-prospectus-s1-filing-sec/ If prospectuses can be automated, what of credit ratings, loan documents, information memos, financial models and process letters? But there is a bright side to all this: "The people that understand how to solve a domain problem in digital biology, or in the education of young people, or in manufacturing, or in farming... Those people that understand domain expertise, now can utilise technology that is readily available..." The playing field today is not about the ability to write code, it is the ability to synthesize real world solutions . It has always been. But in order to do that, one must learn how to think . If you think this is not important, consider for a moment: AI will not only eliminate the commoditised jobs, it will further exacerbate inequality between the rich and the poor, driven by widening the skills gap between those who know how to think and those who don't.

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

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.]

The world was a very different place in 2006. We were about 2 years out from the SARS crisis, I had completed my final exam papers, and had completed presenting my engineering thesis. Shortly after that and to much surprise, I came across a French IT consulting firm on LinkedIn, which at that point of time, was being engaged by Philips TV to develop a software prototype. There was a job opening for a software engineer that urgently needed to be filled. I took up the offer, and showed up to work almost at once while the rest of my peers were still in the middle of their graduation trips around the world. The product prototype was meant to be used for all of Philips' clients in the hospitality and healthcare sectors. My work desk looked like this: My work desk at my first job ever I had been good at writing code and we had just finished an impressive demonstration to the Group CEO when he visited Singapore. But I left less than 6 months into my role. I needed to get out. My motivation was driven by: The fear of being stuck in an engineering job, working from 9am to 5pm everyday for the rest of my life , and perhaps more importantly: The want of earning more money by getting into a banking job. That was primarily how banking and the world of corporate finance appeared to me then: Fresh graduates taking home $8,000 a month. No other career offered that kind of money, definitely not in engineering. But I was not lucky. My grades were less than mediocre and I had been in the 'wrong' field of study - engineering . I wasn't cut out for investment banking . I didn't even know what a Bloomberg terminal was, how to calculate a series of discounted cash flows, or the definition of enterprise value . I didn’t get my $8,000 per month dream job but with some luck and the help of an older friend, I eventually managed to join the valuations team of one of the large accounting firms. My cover letter in 2006 Trial by fire. I distinctly remembered my first day of work. All eyes were on me as I walked to my desk. It was only much later in my career that one of my colleagues told me with a giggle: "We were all wondering why you - trained as an engineer - came here to steal our jobs." So, it was with the combination of a bit of dumb luck, a vacant analyst position created by the timely departures of a few junior staff, and sheer persistence that landed me into a corporate finance role. I had graduated a year later than all my engineering classmates, which made me two years older than the guys who graduated from accountancy and four years older than their female peers. In short, I was the uncle of all the analysts in the team. For the longest time, no one could understand why I had taken a 33% pay cut from my job in Philips to venture into the unknown from a zone of comfort and familiarity. Many times, I even found myself having to clarify where I worked at previously: "Not Phillip Capital the securities house - Philips , the electronics company..." But I was incredibly scared during my first six months in my role. I had come from a working culture that involved going to an office in a tech-park five days a week, sitting in front of my desk writing code for long hours. Finance would be quite different. The closest I ever get to writing code was the Bloomberg functions within excel and perhaps some visual basic . Other than that, I was a fish out of water. I was so afraid that my line managers would deem me unsuitable for the job and ask me to leave. However, what they did do was make a bet that I would voluntarily leave within those six months. This incident was later unwittingly and awkwardly revealed by a stranger who crashed one of our team drinks. I remembered him saying: "Hey! You lost your bet. He's still here!!" It was just one of those things people in banking like to do. It sounds condescending and insensitive, but you pretty much got to have thick skin in order to survive. Investment banking isn't just about getting through the gruelling late nights and delivering on the number crunching. It was also about the harsh and toxic environment that one has to be prepared to put up with for many years to come. No shortcuts, no straight paths. Today, I get a lot of questions on how to break into a corporate finance career whenever I teach at the Singapore Management University. "I don't have any accounting or finance background, how do I get in?" Ironic as it seems, most of the people asking me these questions have better credentials and working knowledge about the field of investment banking than I had during my time. My attempt to learn about the workings of financial markets was through punting in stocks during the bull market, which peaked shortly in 2007 and went bust later towards the end of 2008. I dabbled into the markets not to make money, but more so to experience first-hand how it was like to invest, trade or punt . It sounds unusual given younger people today are more investment savvy and have even more access to investment and trading platforms. Unfortunately, I don't have a straight answer for how to get into an investment banking role. I guess the willingness to work hard beyond the stipulated 8 or 9 hours a day was definitely a plus, but beyond that, it had been challenging to also prove how you could get the job done eventually or the value you brought to the team. For most of my peers it was mostly due to the fact that they were familiar with navigating the culture , having done similar internships before. In my case, it was probably my posturing as the go-to-coffee-boy for all the work that no one wanted to do. Mostly, I attribute most of this to being at the right place , right time and meeting with the right people (天时地利人和). That said, everyone has a different trajectory. In 2006, I had found myself then in a somewhat employees' market in which banks had been actively poaching from the accounting firms, creating a vortex of hiring, and I had been lucky to get dragged into the process. Revisiting "the want of money" Bankers during those hey-days were also raking in deals (most notably from the many S-chip listings) and taking home multi-year bonuses. I recalled hearing someone from one of the local banks earning thirty six months of bonuses. Even if his base pay was mediocre, the absolute quantum still sounded crazy. At that point of time, it was even common for bankers who got less than a year's pay in bonuses to jump ship just because they felt they weren't compensated enough. What a crazy world. To contextualise this to a working person with an average pay, just imagine: Bankers typically earned in a year, the equivalent of what everyone else outside of investment banking makes in 3 to 4 years. It also implies that after working for 7 to 10 years in investment banking, you could possibly retire for the rest of your life. It makes everyone else's job look like a joke. And yet there are still those in the industry who continue to complain about working the long hours and being under-paid. Fast forward 10+ years on, the frenzy of hiring and huge bonus payouts have significantly subsided. But the brutality of the work environment probably hasn't changed. Many fresh graduates today continue to worship the altar of corporate finance, chasing the money and prestige of being accepted into the bulge brackets . It is important to realise that there are many careers out there which pay decently well (but may not pay as " fast and furious "), if you stick it out consistently. It is obscene that bankers are paid so much for the work they do compared to most other careers. "It's unacceptable that chocolate makes you fat, but I've eaten my share..." Therefore easy for me to say " do whatever makes you happy " or " be open to other well deserving jobs " when I have personally gone through and benefited from the system. No guarantees At the end of the day, everyone has to make peace with whatever career you have landed into. Many of my engineering-schooled friends are doing very well today, even having not gone into banking roles. Some are in sales, business development, entrepreneurs, etc. After all, not everyone who lands an investment banking career is guaranteed to make lots of money and the promise of working on exciting deals. Most of the day-to-day work in investment banking tends to be iterative (and sometimes even borderline mundane). These include stuff such as research, spreading numbers and window-dressing a company's profile. As a junior or mid-level banker, you'd be lucky to get involved in and be a spectator in deal negotiations. Be realistic, you won't get to be portrayed a hero or a rockstar deal-maker. This is not the movies. However, you will be paid well and most likely be a target of envy for most of your peers who are probably earning only a fraction of your salary. By the time you reach director or managing director level, chances are that you will feel the mighty burden of revenue targets and also deal with the complex politics that come as part of the job. Hopefully during this time, you stay grounded and haven't gotten too used to a lavish lifestyle that will put you in golden handcuffs for the rest of your life. More important than the prestige that comes with investment banking, you really have to love what you do. The dots really do connect backwards . It is not so much about simply earning the big bucks, but whether you also appreciate the dynamics of the job and find a way to sustain yourself in that line of work for an extended period of time. As I look back on my cover letter dated in 2006, I recall of how starry-eyed I was when I applied for a role in investment banking. I had been lucky, yet, at the same time, it also reminds me of how far along I had come. I had applied for the money, saved some, spent some, invested some and lost most of it. I'd gained knowledge of the subject matter, technical skills and the experience, including the network of people, intangible resources built over the years, and spat out by the system. But. No regrets.

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