Chia Jeng Yang on Local vs. Foreign VCs in SE Asia, Transactional vs. Relational, Winners vs. Losers - E81

Chia is a Principal at Saison Capital, a leading FinTech-focused venture capital fund, who has done especially well in emerging markets like Southeast Asia and India. Their direct investments include Grab, Southeast Asia's largest startup and super-app, as well as ShopBack, Southeast Asia's largest shopping and cashback rewards platform. Their limited partner investments include some of the top- performing funds in Southeast Asia, like East Ventures and Beenext, as well as global funds like Quona Capital and Antler. 

Previously he was the fifth employee for Antler, the leading global pre-team venture builder. He also both invested and launched markets for them in Europe. He was also at Rocket Internet where he helped build out an eCommerce company in Pakistan and Sri Lanka that was bought by Alibaba.

On the side, he is co-founder of Shaper Impact Capital, a 60-person platform that helps early stage startups with an impact connect with resources they need for the next stage of growth.

He runs good-admissions, a Harvard Business School admissions advice platform where all proceeds go to charity. He also angel invests in marketplace and consumer startups in emerging markets like Indonesia, Bangladesh, and Egypt. His educational background includes a law undergraduate degree from Cambridge and will be doing his Harvard MBA in the future. He likes indie music, hiking and writes about venture capital at his website, which can be found at www.chiajy.com.

This episode is produced by 

Kyle Ong.

Jeremy Au (00:00:00):

Welcome to Brave, be inspired by the best leaders of Southeast Asia tech. Build the future, learn from our past and stay human in between. I'm Jeremy Au, a VC, founder and father, join us for transcripts, analysis and community at www.jeremyau.com. So Chia, want to introduce yourself about how you're a terrible human being. 

Chia Jeng Yang (00:00:34): 

Yeah, I know, for sure. I think friendship definitely is pushing it, so let's keep it at that. Sorry if my microphone is a bit like noisy, but I am on the walk. Cool, so quick intro of myself, ex-operator now currently a VC. I look after early stage across Southeast Asia, India, and I do LP investments, which is investing into VC funds in the US. 

Jeremy Au (00:00:58):Awesome, Jeng. You know, I think one fun fact that people don't know is that Chia used to be a firefighter in Singapore. So share some fun firefighting stories that you have. 

Chia Jeng Yang (00:01:09):Yeah, you lose kind of weight, so my profile pic is like 30 kilos after that fun experience. Yeah, so at one point, I look quite attractive, no more. 

Jeremy Au (00:01:19):Now you just look like a normal VC with your vest in a profile picture with San Francisco in the background, so just like every VC? 

Chia Jeng Yang (00:01:28):I mean, that's how you get the inflow to be honest. People look at your DP and they go from there. 

Jeremy Au (00:01:36):It's like I want to invest as LP into this fund, because he's wearing a vest and is from San Francisco. 

Chia Jeng Yang (00:01:43):Yeah, absolutely. Right, wait, so before you go, how controversial do you want this to go? Because I'd love to push it. 

Jeremy Au (00:01:50):You'd love to push it? Okay, you can say all the controversial stuff and then I'll be in a nice guy who says like, oh, why did he self-immolate himself on this one? 

Chia Jeng Yang (00:02:00):No one wants to do a controversial thing with me, that's so sad. 

Jeremy Au (00:02:03):Well, we'll make it spicy. It's a nice spicy. It's like the [Laoganma 00:02:09] spicy. Is like not too spicy  because of MSGs, some juicy stuff, but not actually spicy. Yeah. 

Chia Jeng Yang (00:02:19): 

Okay, cool. All right. I have a question for you because it actually came up an hour ago, I was talking to a friend of mine at Sequoia. And my question to you, is this, you're a founder, Jeremy, and you've raised from US VCs, great US VCs. I think you're working in a great fund right now in Southeast Asia. The question that we couldn't come up with an answer to is do you think that Southeast Asian VCs are more founder friendly than foreign VCs? 

Jeremy Au (00:02:48): Ooh-la-la! Spicy. 

Chia Jeng Yang (00:02:51): 

Yeah, perhaps specifically US VCs, probably I think that is the benchmark. And then we realized we couldn't actually answer that question because in the US, your story is benchmark your super pro-rata rights are super common. There's a ton of sharkish term sheets out there that exist. And actually in Southeast Asia, I think, maybe I got it wrong, but the prevailing notion and narrative was that Southeast Asia VCs are more old school, therefore more sharkish, but is that really true? So we couldn't actually come to a conclusion on that which you guys are about. 

Jeremy Au (00:03:29): 

Yeah, I mean, and obviously, I have some experience, I have conflict for interest obviously, representing a Southeast Asian VC. But I think I want to talk about it, you know, let's talk about simple fact, which is a US global VC in Southeast Asia is actually a local VC within America. And so when I was a founder VCing from Bessemer and NextView, just one of the top seed funds and obviously top series A funds. In America, I wasn't operating with foreign VCs, in that sense, I was operating with American VC servicing the American market. And so yes, they are global VCs in that sense, best may have invest globally and to some extent the other VCs do as well. But they are local for themselves, so that's an interesting dynamic that you didn't think we realized until we had this conversation. Everyone else looks at my funders as global VCs, but when I was working with them, they were local VCs. 

And actually, to be more specific, when I was working in America, in Boston, and then later expanding to New York, we were very specific about which VCs could add value at the city level. And so we are founding of Harvard Business School and MBA program, we were Boston, how we found it with the top three seed VCs is like NextView, Founders Collective and BoxGroup. Those are the tree on the Eastern sea coast and those are like they only do seed deals very reputable strong pipelines into series A obviously. And we wouldn't even really talking to the West coast seed specialists, because one thing we've realized was that, if you're based in Boston and you're working with a partner from a great VC, or whatever it is, the partner should be based in the same city as you are as HQ, because you're going to get so much help from them. You going to get engineer referrals. 

And I think, you know, I always sing praises on NextView ventures right they were in Boston. They gave me my leadership team and they helped me to close other people that I was pushing to close, but without them, I don't think we're close at all. And it was only possible because they were in Boston with me and they had a deep Boston network, because they had grown up in Boston, because their partners and their team was from Boston. And so even when I was in America/Boston, I was choosing to optimize for local VC and I did not take initially like San Francisco VC money, I took the best East Coast seed money that was local. And I think that was a tremendous amount of value, yeah. 

Chia Jeng Yang (00:06:20): 

Okay. But I think you're conflating, or purposely avoiding the question, because question is around founder friendly? Because value add is a piece of being founder friendly, but you can add a ton of value, but it will still be a shot. 

Jeremy Au (00:06:32): 

Well, I would... Well, I don't know about how you play a game Chia? I don't really see so because I think is really about the ROI. Every time we make a decision as a founder to invest in something, or hire someone we're always thinking about what's the cost versus what's the return. And so I think there's some VCs where they're more expensive, but he adds so much value that you'd be stupid not to take the money. And they're other people where they're super founder friendly maybe in terms of control, or valuation, but you also know that they're doing that, because they're not very value add. So I think you're right to say, if we define sharkish as the valuation, or the ownership percentage, or control rates that are looking for the price, in other sense, then that's true. I think they're higher price VCs and a lower price VCs. And on the other end, I'm just saying it's a different Xs altogether is the high value add and low value add. 

And so on average obviously, you're going to have a rough correlation on over the medium to long-term, higher value add firms get to have higher ownership percentages, or higher prices, because of their small demand for their capital. And on average, there are lower value add they have to fight with lower prices. And then if you have high prices and low value add, over time, everybody realizes that this is a dumb term sheet to take based on versus other term sheets. And on the other side obviously, there's a few folks in every generation of VC, where everybody knows that adding a ton of value in excess of the price and that could be because the VC is trying to build a name for themselves, or they're new, or they have a lot of money, or they have a really high functioning team. And so I think that cluster of extremely high value add versus their price is kind of like all the founders want them. Anyway, so I think that's the... But of course it's not to some extent, there's some reversion to their mean here. So Chia, what do you think? 

Chia Jeng Yang (00:08:50): 

Okay, I will share, I mean, actually there's something I don't have a firm view on, but maybe just to rephrase the question to make it easier. On a personal perspective level, like you as a founder, would you have taken money from someone that could have added a lot of value, but maybe it's somebody who could abandon you when things are going bad? Would you take that risk on a personal level? So I don't have any funds in mind or whatever, but it's the trade off between value add versus someone who can support you all the way, what's that balance? 

Jeremy Au (00:09:28): 

I mean, it's hard to tell, if he hands off the money. I mean, because that's almost like a philosophical question, because most founders, myself included, it's very, very hard to tell in advance of the transaction whether this person has a history of sticking by founders- 

Chia Jeng Yang (00:09:46): 

Okay, they have their reputation not of doing that. So either way, but you know upfront that there's a bias towards one way, or the other. How do you value like someone sticking by you for an example? 

Jeremy Au (00:10:01): 

...Yeah, this is actually a really good question. It's part of the value add equation. It's because the transaction, or the price is there, the moment the term sheet is done, then there is some level, you have millions of dollars in your bank, and that's the transaction. Well Jeng, Chia, I think you're asking another question which is like, are you looking for a transactional, or relational VC? Does it make sense? I think that's actually... 

Chia Jeng Yang (00:10:28): Yeah. 

Jeremy Au (00:10:28): 

Y

eah, you know what I mean, because the transactional VC, is basically, this is a one time transaction and everything else after that is up to you and I versus a relational one that's looking to do that. And of course, it's kind of a fake trade off, right Chia. Because the truth is, every VC is both transactional and relational. Their KPI is transaction, but they are also human beings. Okay, anyway, so that's me on the, you know, I always need us to think about a framework for my training. Personally, I would always take the relational primarily because I think when you have no money, the money feels life changing. But I think at the end of the day, it's really about the business and the value. So I think people mistake the start-up for the funds raise and I think that's the biggest problem I... When I hang out with founders, everyone's like, wow, Jeremy, you raised X amount of money and I'm like, whoa, I'm more proud about the team, I'm more proud of revenue, I'm more proud of the customers, does it make sense? 

And only a relational VC can really build that out with you and be there in good times, obviously, but in bad times I mean, it's guaranteed there's going to be bad times. And so if you took the money for the money, but you didn't take it for the relationship, the trust, I think you can end up in some really sticky problems. And I think people undervalue how much that is a negative risk in terms of start-up survivability, I would say, honestly. But also I think they undervalue its impact on the actual operating value, you can call it, of the start-up itself. What do you think, Chia? I mean, obviously, as VC who has been in the game for longer, you've hung out VCs who've explicitly told you like, we focus more on transactions versus those are more focused on the relational component. So how do you see the difference in their approaches? 

Chia Jeng Yang (00:12:23): 

Yeah, so maybe to contextualize why I asked the question, I'll give my input on this side, because when we think about global VC in that sense I think global here normally means like US focused. Some people may think that they have to view that they're more of relationship, some people will have to view, they're more transactional and so it actually has an interesting kind of implication for that. Especially if you have VCs who are perhaps like dipping their toes a little bit and then sometimes they're more relational, and sometimes they're way more transactional. But I find like, no one believes that they are of the same level as local VCs, so with this kind of one of the differentiators areas. 

But to answer your question, I don't think anyone will ever claim that they're transactional, I don't think that they think that's a bad brand, that's a bad messaging. And so you never hear that, but then in practice when you talk to founders and you do back channeling, you hear all about it. I am actually really conflicted. I don't know. I've seen situations where founders are going in, eyes wide open and they are telling me, look, X, Y, Z is like this, but that's who that person is and they can add very specific value, and I need that value and so let's just do it. And then I've seen it the other way around, which is, you know, I really like this person and even though it might make less sense, let's take their money and let's work together. So it's really a little bit of both, I personally don't have a framework on it just yet, but I'm just trying to figure it out. 

Jeremy Au (00:14:04): 

Yeah, I think you say something, well, also Chia, I want to point out that this is how we know your Laoganma spiciness because if we didn't name names. So I think the question that we have here is, I think there's a lot of sophisticated founders who are okay of a transactional relationship, because they're sophisticated and they understand what it is about and that's what they want. I think when you know, what's the label on the can, then it's more obvious and more straightforward. I think the sticky part happens is when a founder tends to trend towards being wanting to be relational on average, doesn't realize that entering a more transactional relationship. I think the corollary of that is that, there's still a transaction that happens with the financing in happening because we're focusing on the business. I think when everyone's very honest and about it upfront, and everybody knows what they're walking in then, no, that's good, it's great. But I think when there's a mismatch, or misunderstanding about, was like, oh, I thought I was okay with transactional, but it turns out I actually need more relational approach. Oh, I thought this was relational, but actually, it's transactional. I think that's when sticky things really happen for our founders. 

Chia Jeng Yang (00:15:17): 

Roger, okay, now that makes sense. Maybe just to switch gears another topic I wanted to bounce off you was also, and this is something I don't have a firm view on yet. So I've been talking to a bunch of funds that are trying to make their first check into the EU and to Southeast Asia, and super interesting perspective where they're coming from a lot of these are US funds, or global funds. And they are taking the approach that, oh, we see what's going on in other regions and even though, perhaps we have a small team etcetera, we want to see similar business models and invest in those because we've seen the end state. 

Now, with this not that I reject the proposal outright, but my contention is that 10 years ago, the path for development for tech was roughly the same. ECOM 101, look pretty much the same everywhere in the world. Now you fast forward to 2020, Southeast Asia looks super different from India, which looks super different from China, which looks super different from the US, which looks super different from Europe. And my kind of problem with this whole method of investing is obviously, there's very important lessons to get from each region, but the degree of localization because of how tech is developed in their own natural way in these regions is so important, that is just really, really hard to try to copy wholesale. And I came from Rocket Internet, I do see the value of that, but I also see huge amounts of flaws for that model. I'm curious someone who's looked into US, investing in the US and now investing in Southeast Asia like, what do you think of that? 

Jeremy Au (00:17:08): 

Yeah. Well, two thoughts come into my brain and it ties under two conversations. I think first one is, if a teammate in Southeast Asia, or any region has a potential time limit for their time in this country, or the region, personally, it creates and shortens the theory game for them to build a relational component review. And what I mean by that is, the biggest reason why most people good faith back, I mean, it's classic game theory. The more games that you're played, the more good faith you act. And then if the game is going to end next year, I'm sorry, in the next round, then everybody ends up cheating on each other in the game theory exercise. And I think that happens a lot in the overall landscape and anything, it's like, if you are VC, or founder, you're committed to this geography for, I don't know, the rest of your life, then your reputation matters very, very much. And so obviously, as a personal person you are, as a device is in good faith, in terms of morals and values, but there's also a strong reputational incentive for you to act as a good faith actor, because you have that 50 year game in front of you as a founder, as a VC, as an operator. 

And it's easy to do due diligence on that, it's easy to do reference checks and vice versa. So I think that's actually tying both parts to it together which is like... And I think the reason why it segues nicely in the second point is, you having a conversation about when a team is entering the region, it's still TBD, how committed they are to the region, does it make sense? And everybody is knows that, and I mean, everybody is wise, everybody is fair about it, everybody is upfront about it. And so of course, I think what most people who are entering the region will enter their checks, as their checks are going to be better priced, or a better deal for founders on the price. Because founders are saying, okay, you're new to the region, so the only way you're not going to get in is if the transaction is better, if that makes sense. 

Because I personally expect less from the relationship. You don't have local value add, local network, I don't know how committed you are to the region. And I think that's where the sophisticated founders are kind of like saying, okay, they're coming to a region that there's going to be better checks in that sense, but not necessarily relationship. So that's on one side, and of course the race on the other side and if you're new to the region is, how do you show that you're committed to the region, how do you show that even though you don't have the network now, how do we build it out rapidly and stick around. And I think that's the big question. Yeah. What do you think, Chia? 

Chia Jeng Yang (00:19:55): 

Okay, your point is more on commitment rather than how useful... Okay, so I think what was coming from it, from a point of how useful is cross geography knowledge transfers in the context of extreme, increasingly complicated local nuances, which didn't really exist to the same degree like 10 years ago, for example. 

Jeremy Au (00:20:25): 

Are you saying that because you as a VC think they're making a terrible investment decision? Or are you saying that as a founder, who is saying to over believes their narrative that they do to understand the region? So I guess what's your beef of this conversation, or belief? Yeah. 

Chia Jeng Yang (00:20:42): 

Yeah. So I don't have a firm view yet, I do have some thoughts, but there's, I think two issues. The first issue is that, again, if you go back 10 years ago, ECOM 1.0 will looks exactly the same, almost everywhere in the world. People talk about localization and local nuances, but frankly, it's still very small, but it was still big enough to screw around with some big players like Rocket Internet. Now, if you fast forward to 2020, the world in different regions like India, China, blah, blah, blah, they all looks so, so different. You can't even compare it anymore. And the existing infrastructure they're building on top, it's just super different. 

And so now, when you come with this value prop of, hey, I can see what's going on in other parts of the world and I can implement it here, that does two things. Number one, it encourages copycat clones, which may not necessarily be super successful and then it's just like they pile enough money being funneled into perhaps the wrong business models. And promoting the wrong narrative that this FinTech product was super successful in the US, therefore it must apply in Southeast Asia. So that's increasingly the narrative that I see which I wouldn't have had an issue with 10 years ago, but I'm not sure if it's necessarily applies now. And so that's kind of my question mark to the topic of global versus local VCs. 

Jeremy Au (00:22:03): 

Right, and I guess the question is, so first of all, I agree with you that if you invest by analogy, you're pretty sloppy. If X worked in Z, therefore X will work in A, and that the limit of it, I don't... And obviously, everybody, or nobody says that, but obviously, I've always say that doing due diligence and thinking deeply. But I think you're right to say that it's going to be there, but what's the beef there? Wouldn't that not be a problem, because in 10 years time, we're going to find out that this VC lost a shit load of money in Southeast Asia, because of this approach. 

Chia Jeng Yang (00:22:39):That's like 10 years time, in the meantime, you have global capital flows, funding the wrong things. 

Jeremy Au (00:22:47): 

I see. So you are frustrated about, all you think is the side effect of that is that we are... This naive type of investing is pointing founders in the wrong direction to chase around products and is also causing, I guess, local, or more sophisticated VCs, more nuanced VCs, from being able to get a proper returns I guess. 

Chia Jeng Yang (00:23:13): 

I didn't say that, but yeah, I guess. I hadn't thought through it on that side of things. But yeah, I was just more kind of raising a general obstacle, where there are some funds that I think I've done really well. They come in from a different part of the world, they hire actually X local founders to be investors on their team, and so that gives them a lot of the local context necessary etcetera. I think my issue is like, but in reality, that's not what most funds do, in reality, it's one person, two main shop, setting up and then pumping more with AUM that dwarfs local funds, and then committing accordingly. So that's my big question mark over the topic of local versus more regional/global VCs, like the impact on the ecosystem per say. 

Jeremy Au (00:24:14): 

Well, as speaking from a founder perspective is not bad at all. I mean, sure, I think, as a founder, it's okay to have more capital in because you want to have more people taking bets. And as a founder, if you separate your personal career trajectory and experience from the company success. So okay, I mean, there's two scenarios, your company was never going to work and you just got naive money and therefore you got funded. And then you had a great time for one and a half years, and then you crashed and burned, I mean, whatever. Or maybe you have two stacks of those kind of capitals, so you crash and burn after three years. Well, that's terrible, obviously, for I'll say, employees, especially as for some employees who do the transition. 

But from the founder perspective, it may not necessarily be bad, because now they get opportunity to learn how to build a start-up using this capital. And now they can take those lessons and use it to build the second start-up and employees can use experience to join another start-up. I mean, technology market is so tight that is not much of a transition to some extent. So that's the founder perspective is it may not necessarily be bad per say for that. And I think the other argument I would say is maybe all the local VCs are too cynical. Like they're too tightfisted and you know, Scrooge McDuck here, because they have no vision and so on. No vision, you know, investing by analogy is a far superior investment tool and so- 

Chia Jeng Yang (00:25:44):I think I need to write a medium article about Jeremy dissing local VCs. 

Jeremy Au (00:25:48): 

...No. I mean, I'm just saying maybe poetry works, like invest by analogy. And now, certain founders get to build businesses that nobody else saw. What's wrong with a VC being contrarian, I guess, to some extent and saying they think it's going to work. I mean, the person who bears the pain of that at the end of the day, it would be the LPs who invested in funds that are less sophisticated in their investing by analogy approach, right? 

Chia Jeng Yang (00:26:18):Yeah, yeah. Now, I think that's a fair point. Now, I think it's fair point. 

Jeremy Au (00:26:24): 

So I think the question is who wins. I mean, instead of like, yeah, it kind of sucks and everything, but who wins, who loses? You have too much capital in the market that's coming in flows, who wins local founders, locals technology employees, follow on cap. Like VCs that are able to use that to get follow on funding, those people win. Founders will get to build a business that they never would have been able to build if the capital market was tighter. Moonshot ideas that could have never been made it also get to get funded, who are losers, right? Losers would be LPs in funds that do this approach by incompetent, or a mature way, so those are the true losers. Obviously, losers who may be employees of incumbent companies that got attacked, or disrupted that otherwise would not have been attacked, or disrupted because of this capital inflow. Yeah, at least there's a partial as I'm sure there's a longer list of winners and losers. 

Chia Jeng Yang (00:27:23):Yeah. Okay, now I think that makes sense. No, I think it makes sense. 

Jeremy Au (00:27:28): 

Loser would be like a local rational VC that's fighting against great term sheets, but there's a competition argument and so then local VCs have to fight better priced, not better price, again, it's not... Price is a function of value, but higher valuation term sheets, local VCs were to compete against that. So global VCs will enter using higher valuation term sheets, because the market price of that, of their value added is lower, whereas local VCs will have to compete more on value add to show that even though they have a lower valuation, they have better value add, so as a better price. Yeah. 

Chia Jeng Yang (00:28:15):Yeah. Okay, I think maybe this is just like... So I think what you say is completely rational and makes 

sense. I think I'm just philosophically opposed to the end conclusion which is by the logical extension of their logic is you just need to pour money in, full stop. No need to think about it, just spray and spray massive amounts of capital and you will get an outcome. 

Jeremy Au (00:28:39):And this is why I love, this is better. Why not? Pour more money in, you know, is the future right? 

Chia Jeng Yang (00:28:45):You said economics at Berkeley, that's what they teach you there, right? 

Jeremy Au (00:28:48): 

No, no, the economics of Berkeley is very much on the labor union side, and a microeconomics. So I do have a contrarian point of view personally as well and we can do that for the future, I'm pro regulator. I mean, I think, but you could argue that the future has been undervalued in terms of investments into it. 

Chia Jeng Yang (00:29:08): 

You're talking about now where the interest rates is like minus 0.25, or something like that. I don't think, no, but that's a semi serious point, like more capital is needed is the answer? That's, you know, the logical extension of the argument is very strange, I've never been able to grapple with that. 

Jeremy Au (00:29:31): 

Well, that's a fair point which is what we're seeing here is because interest rates are so low globally, as long as... So in some ways, if venture capital, which is all about finding technology companies to grow and change and build a future, as long as they outperform a negative interest rate, then that's implicit subsidy. Which is also explaining why so much capital inflow is going into venture capital and private equity, which is therefore going to start-ups, which is therefore going into the technology and founder talent crunch across the world. So there's a lagging effect of yesterday interest rates. And I think we'll see more and more capital entering the technology world which is great for people who are building the future, because now your implicit IRR rate, the hurdle rate, I guess, is much lower than it had to be for building investments. And that's terrible for incumbent companies that had to deal with a more rational, internal cost of capital. 

Chia Jeng Yang (00:30:33):Yeah, yeah. I'm still philosophically annoyed by the people.

Jeremy Au (00:30:37): 

You're annoyed that you're not the master of all the LPs telling them how much to allocate to VCs. So you'll be like a Soviet command economy, you're like this economy can only take this amount of capital and this economy can only pick up this amount of capital. 

Chia Jeng Yang (00:30:56):No, to be clear the logical extension of the logic is mass unthinking capital should be pushed into the tech sector, which is just a little bit strange. 

Jeremy Au (00:31:08): 

Well, I mean, I think that's a strong man argument, because we all know that LPs are very sophisticated, we know the GPs are very sophisticated. We know that founders are sophisticated and so everybody is sophisticated in aggregate. So it's kind of the arguing gets the market economy where the invisible had caught price is going to find out like, yeah, better VCs, better founders and better LPs will channel capital to the most productive user capital over time, and we should let it all sort out. I think where I could agree with you. I mean, it's I do believe that regulators and governments should step in to mitigate the worst case, especially if the job transitions unintended side consequences and source of fault, so I totally agree about that. I don't know. I guess, maybe I agree with your philosophical angst there, but I'm not sure what your practical solution is going to be. 

Chia Jeng Yang (00:32:04):Yeah, no, fair. Okay, cool. I think we actually went super off topic. 

Jeremy Au (00:32:08): 

No, I think it's good, right? Because I mean, you're talking about capital flow. And I think another thing is, me, I will just debate with you a little bit about this one like, also for most founders, I don't think they're fully aware, but lots of local VCs are taking capital from global LPs. So I think it's less like, if you're a global LP, you're going to say, should I fund a US VC to enter Southeast Asia, or should I put money into a Southeast Asia VC that understands local market has been there longer? So the capital flow is still happening is just that some of it is channeled into global VCs and some of it is channeled into local VCs as well. So it's not as if it only benefits US VCs entering Southeast Asia, it also benefits local VCs as well. 

Chia Jeng Yang (00:32:53): 

No, I think that's fair. Cool, maybe switching gears, I'd love to hear your thoughts on visional VC, obviously, super smart GPs and have done a great number of good investments. This whole global VC is coming into multiple regions. We've seen that in places like India, we've seen that in Europe. And it has to a certain extent helped to crowd out and change the investing dynamics of that region. So I'd be super curious on, or whether you have any thoughts on how that evolves, just as an example, like, super good friend who's like a European VC. And just complaining to me the other day about tier one VCs coming in from the US and doing VC investments, and calling out their space there, just because of how much capital is floating around. So I'm curious on your thoughts on that. 

Jeremy Au (00:33:54): 

Yeah. I mean, obviously as speaking in a personal capacity always in clubhouse. I don't know, I mean, I love the bounces review, I think isn't a loser in this scenario, like emerging VC managers that don't get a chance to make bets on high potential undiscovered founders. I mean, that's.... Because, the founders are going to get capital from someone on average in, you know, always, I hate using the word in average, but I think that's the only way to think about it structurally. So I guess the real loser when you see global VCs entering and I think this is not only happening in Southeast Asia it's happening in Europe and LATAM etcetera. Because I think established local VCs have an established value add and presence, and track record, etcetera. So I think there's always going to be a niche for local VCs, there's always going to be a niche for global capital, so is the competition. It's not like a slot, or channel, or lane. I like the word crowding out, I think it crowds out emerging fund managers that cannot tackle US capital flows of the zero interest policy. I don't know, what do you think, Chia? Because, you've worked with a lot of LPs as well, right? 

Chia Jeng Yang (00:35:13): 

Yeah, I actually think it's the reverse. So there's two questions, I think number one is, where future business models will come from. And I think the overwhelming consensus seems to indicate that future deal flow will come from the next generation. So folks who are two years out of their first tech job after university and those that are the young hungry people that are likely to build the next software company, next tech company, and so those are the ones that you invest in. And I did the unicorn age analysis, where it showed that even in Southeast Asia, the mode for unicorn founders, when you started the company was 24, so that's basically two years off university. And so what that has resulted and you see that a lot in the US, for example, it's like solo GP funds, super young folks, 22, 20, who are basically friends with all the folks they went to first year of university with, or are just super well networked and they can actually have a pretty successful first paying microfund. There's way too many examples in them, but they exist out there. And so that creates like, the pressure on existing VCs, who they get older and older, and older etcetera. 

And the second thing I think was, I'm just going to quote The Ken here, but there's an interesting Ken article about Kalaari capital in India, where they were at least making a point that the Kalaari capital was like tier one and then recently, they've had a bunch of trouble, etcetera, etcetera. I won't comment on how true all that is, but the basic argument was they lost a little bit of their shine and that process only took five years. So the two points here are, future of VC a little bit and especially in the midst of all this tier one, global brands and the second is actually, how defensible is a VC brand. The answer might actually be not really. So I actually think emerging VCs will do really, really well and tier one global brands will do well, but there's that squeezing pressure. And we see in some very interesting methods to compete against them which I think can be successful. But my understanding and my framework is that, that's what exists. 

So in the US, you see that super commonly, like Keith Rabois from Founders Fund, happily tells everyone that he's the most prolific LP investor into emerging managers. But really, because he's basically taking all these young, solo GPs, micro VC guys, and they're essentially almost working for him, but through their own shock. And I think that's an amazing strategy, I think that's a great strategy, but you then cut out and treasure everyone else in between. 

Jeremy Au (00:38:35):

Okay, this is interesting. So you are saying that VC market will trend towards a barbell shape? 

Chia Jeng Yang (00:38:45): 

I'm saying in the US, it's already started to do that. And one of the points and while I do believe it's not inevitable, but I don't want to talk about all that piece, but yeah, I definitely do think that's where the US has gone, number one. And number two, one of the main points that you use to counter which is VC brand, it's actually interesting one because using The Ken's example of that particular Indian fund, it seems to imply that VC brands are not exactly very defensible. 

Jeremy Au (00:39:17): 

Yeah, I'm processing what you just said. Because there's a bunch of different things you're saying. One is to talk about industry trends in the States. And then the second one is talking about is, what do we see the trends in Southeast Asia, which is different question. And then the third is, you're talking about VC brand as a defensive advantage. And we're doing this in the context of the global versus local dynamic. So Chia, which direction do you want to go in? Because it's like four questions you opened up.  Whichever is most interesting to you. 

Jeremy Au (00:39:46): 

Well, 1I think the barbell analogy is an interesting one because I think we source and I think Clayton Christensen wrote about a disruption of the management consulting industry, which applied that basically, as technology improves and sort of falls off. And what's interesting is we actually did see that, we saw all of your middle market management consulting firms all get acquired. And so we saw... 

Chia Jeng Yang (00:40:10): Like Bait, right? 

Jeremy Au (00:40:11): 

Why are you talking about Bain? Bain is still on one side of the barbell. But yeah, I think there's still a question, which is with, as companies become more sophisticated, as they use more technology, as implementation changes. McKinsey is still number one far ahead of everybody else in terms of every... So will they be the farthest end of the barbell and then BCG and Bain they'll be right behind. Yeah, I think that's seeing clearly this point of view is more like, there's disruption happening for the management consulting industry and so they had to reinvent themselves. And that's why we saw Monitor Group get sold, a whole bunch of other companies got sold to the center, and PwC and Deloitte and sources off. So yeah, you could make the argument that VCs will get disrupted in that sense. Yeah, it's a possibility, I haven't done enough analysis leaning back in this chair to be like, you know, while the VC industry is going to go barbell shape. 

Chia Jeng Yang (00:41:09):Okay, no, I think that makes sense. 

Jeremy Au (00:41:10):It's hard to use analogy, but educating me Chia, I was like, why do you think the US market went barbell? 

Chia Jeng Yang (00:41:15): 

Well, a little bit because of what we just talked about. If you do believe that fundamentally, the world trends towards just massive amounts of capital and founder friendly terms, then you just add massive amount of capital and founder friendly terms to a tier one brand, and you kind of really don't need anything else to compete. Because by the admission, the level of thinking needed is not very high to execute successful VC strategies. And so that's what happened where you literally just need a tier one brand with a high AUM, and then you just need to get in front of folks fast enough. And so instead of going through traditional routes, which is, we are a tier one fund which is a series A fund only, the tier one fund decided to go even more downstream. And then they realize, actually, let's capture more of the ecosystem. We can hire all the super smart people, or super smart hustlers, because they don't want to work for us, but we'll be LPs in them. 

So then you're just like a funnel to IPO. A money ecosystem funnel to IPO. And your mode is your tier one brand and even though that's not a super defensible mode, you just need to make sure that every other brand dies first. And so that's the logical extension of what we've been arguing for over the past, like 45 minutes. I'm not sure, I have no strong opinions just yet about whether or not that's the ideal state, but I feel that explains how the venture scene will look like. 

Jeremy Au (00:43:06): 

Yeah, I think so. I mean, I think the truth is, yeah, if you're, a tier one VC in the eyes, I mean, in the States, then you get all the deal flow inbound. Because every founder is like, yeah, this is how you know, look at university level. ThE safety school is the rich school and those are the dream schools. Those are the three schools that you apply for the three bands, right. And so that's why everybody applies to Harvard, because is the dream school for everybody. Everybody is going to put their hand in just to get a shot, and so Harvard gets to do all thing. But if you're like a middle tier university, or bottom tier university, then you have to start sculpting folks, if that makes sense, to come in and keep your selectivity high, and keep your diversity population good. So yeah, I mean, obviously universities benefit from the oligopolistic nature of the university credential system, so that's highly defensible in that sense. 

But yeah, I think there's some similar dynamics in the consulting industry, like... Yeah, I mean, if you asking me if the question is, is that a playbook that we're seeing happen in the world today, in the US market domestically for VCs? The answer's yes. And if the Southeast Asia, I guess, maybe have going down flows like, if the Southeast Asia capital markets and tech market was allowed to grow by itself without anybody joining in to region then I think it would eventually have reached that. But you have created a nice spread right off great local and middle tier and a long tail like, a pyramid structure. You know what this reminds me of? You know, Chia, it reminds me of the arguments around multinational corporations into Southeast Asia. Like, how open to foreign direct investment should a country be. And obviously, there's a Southeast Asia approach where we have a ton of MNCs. And then we also have the China approach where it had no capital and then it went a lot of capital. And then after it became like, somewhere in between where they forced every multinational corporations, JV [endright 00:45:20], to foster in their new next generation champions. So does that resonate as analogy, or similar parallel, or does a debate around Southeast Asia, FDI and FMCs, yeah. 

Chia Jeng Yang (00:45:32): 

I think slightly different, there's actually a very separate capital regime for financial institutions. And specifically, like PE funds, which I think is the better analogy. But yeah, I know, I think there's some overlaps. Maybe in inches of time, maybe the last question I'll pose to you is, what do you think we need more often in Southeast Asia? 

Jeremy Au (00:45:56): 

Well, did you hear the answer of this? You know, when you say more of, it reminds of the second Wall Street movie. Did you ever watch the movie of Wall Street? I think, the protagonist asked the antagonist that is like, what's the number? And the guy said like, what do you mean by number? And the protagonists is kind of like saying, the number is the number at which you would walk away from all of this. What number would you be satisfied with to the walk out with and stop playing the game, whatever it is? And then the antagonist smiles and just says, more. It's a great scene, but basically, he's just saying like, there's no one thing, there's no number that is satisfied with, he's only satisfied with more, the pursuit of more. Which is of course, you know, there's a moral of the story that we have there, I don't know. So when you said more, it just reminded me of that. 

I mean, because at the end of the day what a Southeast Asian it needs, does it need more of everything, or it needs more founders, it's more great tech talent. It needs more local VCs to understand local market, it needs more regulators who understand how to balance of it's trade offs. We need more like ecosystem builders, I don't know, it is just more everything, yeah. I'm more agnostic about the inflows I guess. I don't know, what do you think Chia? What do Southeast Asia need more of? Your turn. 

Chia Jeng Yang (00:47:16):It needs more people like you did. I think that's all we need. 

Jeremy Au (00:47:16): What do you mean by that? 

Chia Jeng Yang (00:47:22): 

It's just like unashamedly promoting. The other thing, I think it needs more experienced founders. I think it needs more founder VCs and more operating experience. And I think that will help us build our community and I think that's always been my thing. 

Jeremy Au (00:47:39): 

Yeah, I think that's actually a fair point. And I think one thing that I wish we had more of, and I think I didn't really... I got a lot of in it States that I didn't get, or I don't see so much of this in Southeast Asia is like, experience founders giving back. Like experience founders have gone through the whole process from zero to proceed to X, Y, or Z. B, C, D exit. Because I think we're going to have exits, but I think every founder who's successful right now, is still busy with their own start-up, so they don't have time, or capability, or even the license honestly, to really build out the ecosystem. Whereas in the States, it was like, you would have many founders as chill, or relaxed, who would catch coffee with you and get excited about, I don't know, the business, get excited. 

And I had this great coffee with this Israel founder who was in the States and they bootstrapped a company, and I won't talk about the name. And then they received this giant valuation when they finally found they might have raised capital. And he was just excited, I don't know, he was just... I had a chat with him and obviously, I was coming in more of like a pitch approach, as a founder, blah, blah, blah. But I had fun in that meal with him, he was just being excited about the future. It didn't feel like a transaction, it didn't feel like a pitch, does it make sense? I don't know. And I kind of missed that in Southeast Asia. It feels like a lot of people being very aware that there's a transaction happening. So it's less about what is being done, but how it's being done, I think. So yeah, I guess, you triggered me in thinking about that, that's what I would like more of. Is like less about what is the capital, or what is the transaction and what is the value and I wish it was more of how is the transaction, how is the business, how we have a relationship, how we help each other. Maybe that's my tie-dye UC Berkeley, Kumbaya side coming out, but that's how I think about it. Yeah. 

Chia Jeng Yang (00:49:43):Sure, it'd be capitalist. Okay, cool. That sounds good. I think we had a good chat. You want to wrap up Jeremy? 

Jeremy Au (00:49:50): Yeah. 

Chia Jeng Yang (00:49:50): You'll conclude? 

Jeremy Au (00:49:51): 

Yeah, I'll conclude. I think, Chia, what did you take away from our conversation that we had? Like the summarize. I'll tell you what you got me thinking about which I didn't really think about. You got me to think about the barbell effect and I'm going to have to do more research on this to understand this. Because I do see the barbell effect in professional management consulting services, where McKinsey, Bain and BCG is all that's left on one side of the barbell and everybody in the middle died. And I think we do see the barbell industry for a lot of different industries like, online search. So I think the barbell is something I had to think about on the capital side. And I think you got me thinking about when you use the word crowding out effect, it reminded me of the multinational corporation debate and the openness to foreign direct investment approach, that different Southeast Asian countries have debated over. And then I think we see China on a little bit down one end of the spectrum and we see LATAM for example, and a little bit more on the other side of the spectrum. So I think I probably will have to sit back and think a little bit more about crowding out effects and a barbell effects, I don't know. What did you take away from this conversation, Chia? 

Chia Jeng Yang (00:51:02): 

Yeah, no, I thought it's a good one. I took away your lack of philosophical alignment to my hatred of the money printer effect. I think philosophy is a great way to make economic decisions, obviously. And yeah, so I think I need to come to grips with reality on that a bit more. 

Jeremy Au (00:51:25): 

So now, yeah. Well, I love it, I mean, yeah. I guess it's my economic side coming out, but I think the philosophy side is also an important part. I don't know. It's a tough one. All right, Chia I think you got to jump out, right? 

Chia Jeng Yang (00:51:40): Yeah, no, it sounds good. 

Jeremy Au (00:51:41):Then if anybody wants to raise their hands, feel free to raise their hands and ask questions, I guess. And 

keep the conversation going into some extent. 

Chia Jeng Yang (00:51:50): All right, cheers. 

Jeremy Au (00:51:51):All right, take care. Yeah, see yah. 

Chia Jeng Yang (00:51:52): See you folks. 

Jeremy Au (00:51:53):Hi [Humid 00:51:53] Hi Janine. Humid, you want to introduce yourself very quickly and then ask a question. 

Humid (00:51:59): 

Hi Jeremy. Thank you very much indeed for bringing me on. And I actually have wanted also to ask Jeng Yang a question, because I did chime in with his philosophical approach, when he was speaking about the e-commerce 10 years ago. And now in 2021, the world looks just completely different and is actually much more fragmented. And you can't just have one system that would apply to all I mean. And we have like, the outlook for Asia is extremely upbeat and very bullish, what are the KPIs that you apply under these circumstances of 2021, post-COVID, when you make your investments, for example, in Europe? Do you have a recipe for that? 

Jeremy Au (00:52:51): 

So just to clarify, I mean, it's a shame that Chia had to jump out because this is our experiment on a two person going deep in talk show format. I guess the question you're asking is, how do we measure success when entering a new market as a VC, is that your question, Humid? 

Humid (00:53:08): 

Totally, but also against the background of the world changing very, very fast. You know, in Germany, I'm located in Germany currently, but I lived in Singapore, we're just lagging technological innovation. And when you speak about VCs and about going global, or local, you're talking about very advanced VCs strategies, while we're in Germany still struggling, let's say with the entry level. Does that make sense? 

Jeremy Au (00:53:38): 

Yeah, I see where you're coming from. I'm starting to understand myself, I'm still learning, I won't be up front to everybody. I think that as a consumer of the headlines, I think we look at it from an innovation ecosystem perspective. And I think, as a technology talent person, I think about it from job opportunities and my salary. And as a founder, I'm thinking about it as my ability to raise capital for this idea. And if I'm a little bit more sophisticated, I'm thinking about some ideas are riskier than others. And the more capital there is, the more ability to support the riskier ideas in that sense. Or in terms of risky as a founder, risky as the idea, risky as a team. 

And I think for the VCs, I think at the end of the day, the metrics that are going to use is MOIC, the multiple on investor capital, and net IRR, you know, the net of internal rate of return rate. And those are two metrics that are there, is like lagging indicators, because we're looking at the book value investments going up over time. So I think that at the end of day the metrics for VC when they enter new market, they're not looking at it from an innovation system, they're not necessarily looking to build the ecosystem. If they're entering a new market, that's saying to themselves, I believe that I can make good investments that would be unicorns, or have a high rate of return for my fund. So the answer is a little bit more pedestrian probably the way you hoped, but also, I think, a lot more real, I think. Because I don't think they're thinking about it from how do we build Germany's ecosystem? Yeah. Hopefully that answers your question, Humid. 

Humid (00:55:14):Well, we could go deeper, but I think at this point of time, this answers my question. Thank you very much.Jeremy Au (00:55:21): 

Yeah, I mean, maybe you'd add one thing is, I think, if you are, I was giving example, a VC who is a German citizen going back to Germany from the States. I think you'll also care about the local innovation ecosystem, because you care about it as a German citizen, does it make sense? With home as your ties, your family, but I think you would care less about it from an ecosystem perspective and if you didn't have those ties. Does it make sense? Like the VC hat is different from you as a human being. And those two things are naturally linked together because so far, we don't have robot VCs yet. Well, it's only a matter of time, but- 

Humid (00:55:59): Not yet. 

Jeremy Au (00:55:59):...Not yet, yeah. We don't have robot VCs yet. But yet, the robot VCs would only care about the rate of 

return, does it make sense, as a transaction? 

Humid (00:56:06):Yeah, absolutely. Absolutely. 

Jeremy Au (00:56:11): 

Well, we do also see some VCs trying to do algorithmic investing. So yeah, there's no metric for the AI to be like, you know, coach kids, I don't know, or be helpful. Anyway, Janine, you want to ask question? Yep. 

Janine (00:56:24): 

Hey Jeremy, thank you, I've really enjoyed this format, I like the quick repertoire between you both. So I see I'm coming from Africa, from South Africa, actually. And I obviously see a lot of parallels between what you were saying about what Asia needs and what Africa needs. And I would like to just make a comment and happy to hear your comment back that. I've been working with start-ups since South African as the reputation of the work that my company Akro does has grown. I see that more and more of the experts in South Africa, people have worked in South Africa now, but maybe they're from the US, or wherever. I'm doing more and more work with start-ups in ours, US, UK and Asia, interestingly enough. So I'm always looking to build... I'm in the early stage space, it's really hard to get people putting their money behind the start-ups in the early stage space. So yeah, if you could comment on that. 

Jeremy Au (00:57:23):Sorry, I know where you're coming from, but I didn't quite understand the question. What exactly is the question here? Yeah. 

Janine (00:57:29): 

Sorry, yeah, it's a general question meaning that we're doing more and more work with people all around the world that have some kind of finger in Africa. Either they're experts from South Africa, or they've worked in South Africa and there's a level of trust with the work that we do with Akro. But whether I'm dealing with start-ups both in South Africa, Africa, or around the world, my challenge is always trying to assist the start-ups in getting early stage investment. Obviously, I understand the networking, and I do a lot of that. But yeah, if you've got any kind of tips for myself to help the start-ups 

in finding early stage funding investment, that would be welcome. 

Jeremy Au (00:58:20): 

It's a good question. I'm going to answer this in a personal way, rather than from a tactical way, because I think there's so many tactical ways to help a founder. Like right now, as I sit down, go to the pitch together, you know, shorter materials, give them good examples, blah, blah. So I think there's so many... Yeah, I mean, I don't want to give you some tip. I think the trickiest part and I want to create some I'm like, I don't know, class or this, but you know, it's like... And I think of the second time, third time founders I hang out with, we talk about this all the time. 

But as I think as for the founder, it is their one company, does it make sense? And then for the VC, it's a portfolio of you know, they're picking from 1000 companies to pick three companies, does it make sense? And in aggregate, the 20 VCs in the market will pick 60, I don't know, of their market, does it make sense? And so there's 1000s of start-ups that are out there, now let's say a 1000 start-ups, only 60 will get funding. And I think the tricky part, as a second, or third time founder, helping first time founders is being the bridge and articulating that funnel in a realistic and constructive way. Because the destructive way is to say you suck and you have no chance to be in 970 people, 940 people out of the market. 

Janine (00:59:48):Sorry, I have to interrupt you there. You have to hear my laugh because I mean, depending on my mood 

is when it depends on how direct I'm on that answer, sorry to interrupt. 

Jeremy Au (00:59:59): 

Yeah, right. Exactly, Right. I think so there's a realism doors there, but I think the numbers speak for themselves. And I think the best founders have two minds. The best founders are fully believe in this idea and understand why this business is much less risky, and much more valuable than other people believe to be so. And the second part is that they have the understanding that they could be wrong, or that the jury is still out, or that there is still a search for the truth, or the best company, it's a moving target. And I think the best founders are able to, as a result, have the conviction to build and do this crazy, crazy thing called building a start-up, when 97% of start-ups fail. 97% of seed funded start-ups fail, that's insane, think about it. It's like no start-up founder would ever, I know, play roulette. I know so many start-up founders who would never play roulette, never play poker, never play blackjack, but they build a start-up, does that make sense? 

And so they do that, so does this craziness about it, but they also have the realism and that drives that ability to improve on the feedback. And I think the tricky part of being a coach and friend to so many other start-up founders is that, you can only really coach to people who have both of those things and that's really, really tough. Which means that obviously, your aperture, you know, goal is not necessarily to invest in a certain number of deals, but to help your portfolio, or founders in your incubator accelerated. But only a percentage of your founders have that, or will learn to have that maturation process to be able to therefore learn the skills needed to achieve that. 

And I think that's why when I am helping founders, I try to focus less on the tactical things they can do, which of course is being done, but I also try to go deeper in the conversation and say, like, hey, what's the real business here? Why are we doing this? Why do we believe this is a great business? And if the business goes great, I think the pitch follows. When the business is doing really well, when the masses are being de-risked well, the numbers the business speaks for itself, and the pitch becomes less important. So anyway, then the communication becomes less important and then the VCs are trained to... VCs love hanging out with founders, who have figured out how to run a great business and are very coachable and are terrible at communicating. Like VCs love that persona, because VCs feel this is their chance to build, be part of a great business and is probably underpriced in the market because these people are not great communicators. Anyway Janine, I don't know what you think about that. 

Janine (01:02:43):No, that's awesome. Thank you for that. Perfect. 

Jeremy Au (01:02:44):Yeah. [Rena 01:02:45], you had a question, you want to raise your hand? And you had a question? 

Rena (01:02:48): 

Yeah. Hi Jeremy. Thanks for putting me up here to be able to ask my question. So I'm a co-founder of Edutech start-up. So what we're focusing on is actually, we really want to try to reinvent the way that people learn the language, Chinese language. And so I was thinking about your point where you were talking about 10 years ago, a lot of start-ups were essentially like copies of other successful start-ups that existed elsewhere, but they've evolved over the time to really take on their own, like character and flavor. So in your observation, or in your opinion, do you think this is something that might be the reverse for education start-ups, especially one focused on language. For example, if we do Chinese language education, so naturally, a lot of people would think about, okay, well, who are the best people to learn Chinese from, probably somebody from Taiwan, or Malaysia, or Singapore, or even China. So do you see that as something happening? I'm asking, because when we spoke to parents, one of the awakening that they had was, we're forced to do this online education and so why do I have to limit my choices to what's available in my own country. Why don't I go and look for options outside of my borders, like say, for example, Indonesia. So yeah, just wanted your thoughts about this. Thanks. 

Jeremy Au (01:04:22): 

Wait, so Rena, I want to clarify the question. Is the question is, are Asian consumers willing to look at regional players? Or is the question that we should be seeing more Asian models of innovation now compared to the past, you know, copy and localization? What's the question here? 

Rena (01:04:44): 

Right, so the question is actually centered around, can certain parts of the world, or certain countries become concentration of an offering of a service that's attractive people. So instead of sourcing it from their own region then everybody figures out, you know what, since this part of the world is really well known for this kind of education, then everybody just starts trying to get their services from a specific region in the world. 

Jeremy Au (01:05:14):So is the question, do you think education brands can be created out of Southeast Asia? 

Rena (01:05:21): Yeah, yes. 

Jeremy Au (01:05:22): 

Okay. I mean, the truth is, there's so many education brands. I mean, the answer is yes, because you can create a brand around anything. I mean, obviously, my last start-up, you were working using Montessori, which is a globally reputable brand in that sense. Obviously, it is reggio so many things on the education. Then, I guess, to some extent in America, Singaporean math is quite popular as a form of material for a lot of kids being homeschooled. And I think you'll see a lot of technology and able boot camps and schools that are looking to build their own brands around... Well, there's, I mean, Khan Academy is another brand of, I mean, I watched quite a bit of Khan Academy. I also watch a channel called Extra Credits on, which is YouTube channel explaining stuff using games and extra history. And then there's Crash Course, which is another brand, which is around the Green brothers on history and I mean, I learned a ton of US history. Actually, I learned most of my US history via Crash Course, as a brand and I watched a lot of global history and stuff like that. 

So the answer is, yeah, I mean, you can create an educational brand from anywhere and anything as long as people believe it. I don't think anyone is good, I think some brands obviously don't make sense fundamentally, like, I wouldn't learn English from China. I mean, this is like chinaenglish.com, everyone is like what? They'll be a singaporeanenglish.com, it's like who wants to learn Singaporean English, or who wants to learn English from Singapore, I guess. I don't know, but I guess are you... Maybe let me ask this last question, are you asking a question which is, do we believe as a group that people want to learn Chinese from people who grew up in Singapore, is that your question? 

Rena (01:07:20): 

Well, I mean, fundamentally, we do believe that there is demand from... It doesn't necessarily have to be just from Singapore, I mean, Singapore, we have our own academy standards that people try to meet when they're learning the language. So it's a bit more from the academy angle, but I'm thinking about it more of like, people, or especially kids who their parents want them to learn the language and they can really come from anywhere in the world. 

Jeremy Au (01:07:47): 

Rena, may this clarify, are you asking whether a team in Southeast Asia can create a globally, or regionally competitive app, an education brand? Or are you asking whether education brand would succeed from being, is handicapped by coming from a region and is no longer being handicapped? 

Rena (01:08:07):Yeah, it would probably be the second question. 

Jeremy Au (01:08:13): 

At the end of the day, I think parents care about their kids. I mean, obviously as a dad's statement. I have a three month old daughter and the truth is, yeah, I speak Mandarin to her all the time, because I know that I want her to be bilingual. I should mentioned this upfront, sorry. So I care about this topic, I want her to be bilingual. And we have read Chinese books to her and stuff like that, or Chinese podcasts and things like that. I think any parent who says, wow, this brand is really good, because it comes from X country is pretty unsophisticated. And it would be pretty unsophisticated, obviously, but I think the other way of saying it is, I don't believe parents purchase, or think that way. They don't say like, I'm buying this shirt, because it comes from America. I think they're saying, I would buy this education, if it's good value for money. There's a high ROI in a sense, it's going to help my kid learn, it's fun. It's simple to deploy and it has a fair price, or a great price versus the value. So I think the country dynamic is like the 

least significant criteria out of all of that, that's my two sense, yeah. 

Rena (01:09:27):Right, thanks. Thanks a lot, Jeremy. 

Jeremy Au (01:09:28):Awesome. Does anybody else have any questions, or Janine, Humid, Rena. Any other questions you 

have? Feel free to raise your hands if you have another question here. 

Humid (01:09:36):I would actually, but I think this will last probably another seven to eight hours and I can hear your kids 

crying in the background. 

Jeremy Au (01:09:43):No, ask the question, one more question then, let's go for it. Yeah. 

Humid (01:09:47): 

Okay, I have a very specific question. What would you advise if you have a tech company that is very successful and they have developed an app in the e-sports area. And the field of expertise they're offering is just fabulous and it's not there, but the recipients, the football associations, for example, they are still lacking this kind of innovative impetus. So I don't know whether that makes sense. It's just like, let's say the football association and the football clubs are still in the 80s and you have a product of 2025. And you do know exactly, they actually need this product, but they are reluctant to see the necessity for this, does this make sense? 

Jeremy Au (01:10:39):So you're saying, why does the customer not get it? 

Humid (01:10:43): Correct, absolutely. Yeah. 

Jeremy Au (01:10:48): 

Well, is like every parent and a kid, is like, why does my kid want to eat spinach on equivalent? It's like, I think there's only two answers to it and sometimes it's a function of both. Which is either you're not a great salesperson, or you're the wrong customer. You what I mean, those are the only two answers. I think there's some friends I know, who are such great salespeople that they could sell me anything. And I think the tricky part I always tell them is making sure they are building a product that is actually worth selling, you know what I mean? Because it's not something you can build a company around. And another question is, what is the market telling you? Maybe these are not the right customers. Because these customers that you just mentioned, the truth is, they are buying stuff. They spend millions of dollars on, I mean, your customer segment advertising, merchandising, you know what I mean, salaries, so they are customers to lots of different things, but they're not spending on this. So they're not bad customers. They're not customers who are unsophisticated, they're sophisticated customers who know exactly what they want. So the question is, are you a bad salesperson, or have you designed a product that's not really a good sale? Or are you targeting the wrong customer? So do you need to go tighter with your niche, or do you go for a different segment altogether? So there's two answers. But I think if you end the conversation with the customer doesn't get it, or I think it's a very bad spot to leave the conversation, strategically. And if you say, the customer is dumb, I mean, or it's something that can be said, but it's not an actionable insight. The only actionable insight is how do we change our product/how do we change our speech. And then the corollary question is, how do we change the customer who we are going after. Yeah. 

Humid (01:12:41): 

Jeremy, this is just so brilliant, because while you were speaking, I just made up a new strategy in my mind. Actually, maybe we should offer this to more successful, more innovative and flourishing clubs, maybe in Asia, or somewhere else in the world, and then reimport it to our own country, because then it will definitely sell. You know what I mean? 

Jeremy Au (01:13:03): 

Yeah, exactly. So many people are like, I always use the dating analogy. You're like, this is the one, this is the one, this is the one where, you know, when I was a kid, or a teenager. And then you get older, you're like, oh, wait a moment, maybe I wasn't the right fit. And these are all the reasons that I look at myself and then sometimes you're like, and they're not the one. They don't have to be the one. They are a human person with a name and they will be with someone eventually that fits them. It takes two hands to clap. They are a sophisticated buyer of who is the best fit for them and I am a sophisticated buyer of who I am. And sometimes the other person realizes it faster than I am. 

Humid (01:13:42):Absolutely. Absolutely, thank you. I will take a detour. Thank you very much. 

Jeremy Au (01:13:50):Awesome. Well, thank you, everybody. 

Humid (01:13:53):And this is just so insightful. Thank you very much, you really made my day, thank you. 

Jeremy Au (01:13:57):Awesome. Thanks everybody. Thanks Janine. Thanks Humid and thanks to everybody. 

Janine (01:13:57): Thank you. 

Jeremy Au (01:13:57): Thank you. 

Janine (01:14:01): Thanks, cheers. Bye-bye. 

Jeremy Au (01:14:04): See you. Bye-bye.