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The Balance Between Possibility vs Probability and Who Is The 1 in 40? - Jeremy on The Masters of Cashflow Podcast

· Press,Podcast Episodes,Founder,Start-up

Jeremy joined The Masters of Cashflow Podcast on 7 Oct to chat with Andrew Senduk about:

  • His journey from being a founder to becoming a VC
  • The effects of the pandemic on fundraising
  • The role of VCs in the startups that they work with
  • The difference between “founder” investors and “financial investors”
  • What he would like to be remembered by when at the end of the day

Check out the podcast here & the transcript below.

Transcript:

This is episode number 23 with Jeremy Au, investor at Monk’s Hill Ventures.

Welcome to The Masters of Cashflow podcast. My name is Andrew Senduk, a former banker turned tech entrepreneur, and in each episode, I interview the movers and shakers of the venture capital and investment space in Southeast Asia – with the only goal to help you discover how to raise more capital, build better companies, and to give you a better understanding of the people behind the biggest funds in the region.

Thank you so much for spending time with me today. Now let's get started.

Alright, beautiful people. Welcome to a new session, a new day. We have a new guest, and I'm excited to have Jeremy Au on the show because we've been trying to set this up for some time and the moment has arrived. Jeremy has had a very interesting journey. I love this journey, always from being an entrepreneur and then going to the other side of the table, but actually, his career started with the Singapore Armed Forces, which is always a beautiful feat, then going into consulting –  co-founding both Conjunct Consulting in Singapore and then after that you launched a company called CozyKin in the US. Then you started angel investing after the company got acquired. Currently, you are at Monk's Hill, one of the… I would say one of the OG investors within the region as well. So Jeremy, good to have you on the show, man. Good to see you. How's life on your side?

It’s good! It’s a beautiful day outside and I'm glad to finally do a podcast recording with you after we caught up so many times.

Yeah man, we talked about it briefly but I think your journey is… I would say like an ideal path. Going from building stuff, going through the trenches, knowing what blood, sweat, and tears it requires to build something. Now, you're on the other side, which is, I think… a relaxer side? Like how is the other side, man? How has it been like just comparing the whole founding and building season of your life? And now, looking at it from the other side, the VC side.

(Laughs) I mean, that curiosity about what the other side was was exactly why I tried venture capital. To see, right? Because as a founder, you're just building the business. Every day, you're making a decision about customers, about employees, about product-market fit around traction. You're looking at metrics. You're always on the go, and part of “on-the-go” is that you've got to deal with this category of people called investors (laughs) and they always, you know, walk in, “TSK TSK TSK”... these investors, you know. Obviously, everyone's nice, everyone's on a spectrum of helpful, to not helpful. Although everyone offers to help, but not everyone follows through. Obviously, you're there because you've made a commitment to the investors that you’re going to grow that quickly and in return, they're going to fund you, and then you build out that rockstar team. That was the curiosity after wrapping up and being back in Singapore and you know, chilling like you said. Starting to angel invest. Well, starting to see that other side. Basically, I ended up getting a very nice unsolicited offer to join and I was like, “Oh.” I never really thought about this. They’re very persuasive because at Monk’s Hill, everybody's a former founder, and I think the pitch basically… and boiled down to, we’ve all been former founders. We know how hard it is. We also know the fact that not all venture capital is founder-centric, founder-friendly, founder-aware – and we want to bring that kind of mindset and that kind of empathy and humility to Southeast Asia. That was very compelling to me because obviously, you see different types of VCs out there and, this is the category that fit most with me in terms of the money I wanted to take, but also if I had to be on the other side, the team I wanted to be on. That was what interested me to join the other side. I think there's a couple of things I'm sure we can dive into more, but I think the biggest thing that really struck me about a difference was just the understanding of possibility and probability. What I meant by that is that as a founder, you just focus on the possibilities for your one company, right? How do I build my company did to be the better version with my team, with my resources, my teaming? The fundamental position is really about how do you open up the possibilities and therefore the growth of everything you're doing. Everything else that is not dedicated to that time, it's really irrelevant. So technically, seeing a movie – irrelevant. Hanging out with friends – irrelevant. Taking care of your health, also irrelevant (laughs). Because you just focus [on] broadening the possibility of this one company. I think on the investor side, it’s really about probabilities. You know, what’s interesting is I think AngelList recently came up with this study which is that one in every 40 companies that raise a seed becomes a unicorn. 1 in 40, that's 2.5%. You think about it and you're like, “Great.” From an investor perspective, it’s “Go look for 40 companies”. So invest in 40 companies and if you're an average investor, you're just as good as AngelList. You're going to get one unicorn out of 40 companies. Which, up to you about whether that’s a good outcome or bad outcome. And if you're better than average, it can be 1 in 20, 1 in 10. It's really about the probability of you meeting the next great unicorn person. You look across that and a year or two years or three years, you have that portfolio of 20 to 40 companies and you're just waiting for them, helping them and coaching them to become a unicorn. I, there was this like totally opposite. Because when you're a founder, it's ride or die. Right, baby? One company, you’re one out of the 40. If you are 10 out of 40, 20 out of 40, 30 out of 40. The outcomes range from going for a unicorn, to acquisition (which was where I was in), and to out closure. That range of outcomes is crazy because think about it. There's an interesting bargain where you're working as a founder, and I don't think I was fully aware when I went in was that I was going to go to this probability game in that sense. I'm not the kind of guy who goes to the roulette and picks a number. (Laughs) I bet all my salary for years and years, all my time for a couple of years, and all my free time and all the gray hair. I put in one number on the wheel and I spin it. I wouldn't do that on a roulette, but in some respects, me thinking about unicorn outcome was the same dynamic, right? That's an interesting dynamic where, to see that dichotomy, I think one thing that, as a result, that I've kind of taken away from this is that, every time I'm hanging out with another founder and we just hang out for meals and everything, I really think to myself and say… at one part of my job (current job), is to figure out who is the one in 40. After you accumulate 40 portfolio companies that you're going to help them achieve that goal, one thing I do think about is, if not picking one out of 40, the 39 out of 40 that I'm with, just hanging out with, they're asking me for advice, et cetera, it is also my responsibility to help them get to the next stage. Get to that better outcome, whether that's an acquihire, acquisition, bootstrap, profitability, cashflow smoothness. Even like a unicorn, centaur valuation… that's my responsibility. The cost is so asymmetric. To an investor, 39 out of 40, it would just mean, “Hey, this is something that I feel sad about and I will help you, but it's not my life. It's not my day-to-day, it’s not my identity that is lost.” Right? But for, 30 to 39 out of 40, that's gonna be like… that, right? So I try to work very hard to just be super aware and choose to be more direct, and also diplomatic about things as much as I can to be like, “Hey, here's my point of view and I can be wrong. So feel free to prove myself wrong slash yourself right, but the real goal is let's prove the business right. And my hypothesis is that this isn’t really working, or this outnumbers, or this burn has been troubling, just the dynamics doesn't feel very good. Let me help you, give you a few ways to think about the problem.” At least that gives them one point of triangulation. I hope that… obviously I'm sure some people would be like, “Ugh!”. I was that person. I was that founder. “Ugh! This VC didn't get it. Or, my hope is that over the longterm, they are going to be like, “Well, this is the first time he spotted something that I didn’t spot,” or you know, “We respectfully agreed to disagree and turns out, I was right, or turns out, he was right.” But doesn't really matter. It's more like, at least now, he’s aware of that dynamic. Because there's so many things we don't know that we don't know in this field. That's what I learned as a founder, what I learned about an investor, about possibility versus probability, and how I choose to be different.

Yeah. That's really good. That's an interesting fact, out of 40, only one becomes a unicorn, so let's talk about the rest. I think as an investor, we read about unicorns, we read about the decacorns, and we celebrate those guys. Of course, we should, right? It's amazing if you can reach those levels, but let's be honest. The majority of the companies that you'll invest in that will be started, will be founded in Southeast Asia, will not become unicorns. That's just the reality. I think it was interesting to talk about the 39 because the chances are much bigger. The probability is much higher that you’ll invest in a non-unicorn. Is that a bad thing? It's not a bad thing, right? But the question is if these companies come to you, and they come from different industries – from e-com, AI, SaaS, FinTech – whatever the segment would be... how do you guide these people? Because looking at, for example… I always find this interesting, from a founder's perspective, you come from a certain niche, whether you're building Conjunct Consulting or CozyKin. This specific niche does not always… it's not always the same as the companies that you're advising. You could be advising a SaaS company or a FinTech company, which is totally different than what you've actually built. How do you bridge that gap, so to say? Because you've come from a different industry or you built in a different industry – how do you coach these guys, within a different industry to become, at least the biggest, the biggest what they can.

Yeah. I think you’re asking a very real question, which is what right does a VC have to give any advice at all? I always tell people two very simple things. The first is this, “Would you hire this VC to be part of your team?” I'm just saying. What I mean by that is we as founders spend so much time finding the right person. The right Head of Sales, and we're like, okay, do you have eight years of experience in sales? (Laughs) Or you ask someone who is like Head of Customer Service, VP of Customer Service, and you're like, this person better have five to eight years of high… experience, high growth, customer service. You want this person to be aligned with your vision, to be a good culture fit, et cetera. And then we meet the founder, and they have money, you throw it out the window, right? Because you're like, “Oh, he's a VC at this company. Therefore, let's go!” And then you walk out, you're like, “Oh, I didn't really like him. I didn't really understand the thing, he wasn't paying attention, he was late for our meeting, and he didn't even understand the question, but I like him.” And then you're like, “Whoa, really!?” Like, I mean, you like the money… we all know that because we need that money to keep going, it's an input. But that's very different from, “Would you hire this person?” And this person is going to be on your board, this person is going to be, in the worst-case scenario, the person that's on your board, and you're going to be working with him as you shut down your company. That sucks if you're not on the same page, that sucks if they don't believe, that sucks if they don't work well together with you. What's even crazier is in the best-case scenario, this person is going to be with you for the next 7 to 10 years in some form or fashion as you work towards that exit, that unicorn dynamic… you're going to be working with them. So for a long time, it's a real dynamic. So really being able to say, “Would I hire this VC?” Obviously, you have to think about all the things I just said. Look at this VCs temperament. Whether they come prepared, whether they have empathy, whether they have humility, whether they actually have the fundamental experience to talk about it because the truth is if you have five years experience in VC, or 10 years or 20 years, I think what's really good is that they have experience in probabilities, which I just talked about. They have experience in pattern matching across different industries and they're experienced in connecting you to various networks, but their ability to provide customer service and asking them a customer service question, probably isn't going to be super helpful. When you asked me that question, you're like, “Jeremy, tell me more about space and what are you thinking the trends are for space tech?” And I'm like, “I wasn’t in space. I've seen a bunch of space startups outside in, and it's in a deck so I can provide some context from there,” but I work very hard to say, “This is something I am not the best person to talk to.” I would say, “I would rather connect you to someone who does know.” But not every VC does that and I think that's very troubling. I think, as a founder, I met that and really couldn't tell that, but now on the other side, I'm like, “Oh, that’s pretty obvious to me now.” I think founders should really work hard to ask questions that VCs actually have operating experience on or they've worked at portfolio companies and been on board. Everything else is kind of like… honestly, kind of like a crapshoot. It depends as well on the VC's ability to cut the act and say that. In converse, the best VCs are better able to articulate that upfront and put a caveat, put a dynamics about what they’re good or not good at. I think the second thing very quickly as well is, fundamentally at the end of the day, there's also an element of trust and beyond the skill sets of whether the VC is able to help you or provide a dynamic of how to go from Point A to Point B it's very much, it's really about it – trust. I’ve seen so many people who have actually also worked with people who are extraordinary, people who are adding value, helping us as a support, but there's no trust. That's something to really be aware of because if you can't build that relationship, build that trust, then just like any team, you can have two superstars – but if there's no relationship, it's not going to work. I think that's something that we forget because we work our asses off and we only got one-term sheets, so we just got to go over this one-term sheet so it doesn't feel like you have a choice. I always tell people, “Hey, you always have choices.” Choices about how to rebuild a relationship, choices on how to structure your fundraising process and get multiple term sheets, different dynamics. I think that's really important to have because there'll be tough times for sure, and there may be good times, but either way it's gonna have both.

It's so interesting. I think that the trust element is kind of like a red line in every relationship, and maybe it's maybe, even more, when it comes down to, “Can you give me some money? I can build my company.” Even more in fundraising, but talking about term sheets, talking about having multiple term sheets. I think with founders sometimes (depending on their burn) they have this sense of… not desperation, but it's like, “We need cash, bro. I mean, we're burning money. We need cash.” I think that's always a very difficult starting point to fundraise, right? When there's a lot of cash burn and you're doing your rounds and you're doing your roadshow, which makes it maybe even more interesting for VCs. That would maybe be a good bridge to, to these last 12 months, 18 months of this crazy time we live in right now. What has been your take on the ecosystem? Just the whole funding climate. When the pandemic just started, I think the initial reaction of all LPs… a lot of cash, just in general, a lot of cash in the region was kind of stuck? Let's see how this evolves… and then after maybe one or two quarters, suddenly… LET’S GO! Let's go! Liquidity, crazy levels. I'm not just talking about the VC space, I’m talking about PE space, just talking about capital markets. This is pretty crazy right now. What has been your view? You're in the trenches, right? So you see what's going on. What has been your observation during the last, let's say 18 months, 24 months, maybe – from the start of the pandemic through to now, it becomes just the way it is. Investing becomes through… Zoom! This whole new culture of fundraising where we have a lot of capital, where we have a lack of personal touch, so to say… to build that first relationship, how's it been? What are the trends or changes that you’ve seen?

Yeah. I think what's interesting is what changed, but also what didn't change. It's always the news, right? Every day there's something new, but we need to look a bit deeper and take a step back – what didn’t change is also just as important as what did change. Everything about it has three layers. One is the fundamental macros, the second one is the pandemic on business value, and the third is actually capital markets. And so what I mean, by that is on the fundamental macro side is… there’s still a story about Southeast Asia, which is that there's an emerging growing middle class that has gone digital and there's an opportunity to leapfrog. Exit old modes of thinking and go straight into the digital age, ranging from online e-commerce to using TikTok, to going from place to place using different mobility solutions, and all of that is being digitized. There's that fundamental understanding that's there, as well as the fact that over the next 10 to 20 to 30 years, as long as there's good governance in each country, each country will continue to grow and emerge and join a higher GDP rank. That's the fundamental thing and I don't think we should forget that because beyond 2022, 2023, all the way to beyond – that's really the story for the next 10 to 20 years and I think a subset of that is there's the reality that as America, continues to stay where it is and as long as China continues to rise, and India continues to rise, then in some weird way, we're reverting back to the 1700s and 1800s where Southeast Asia was that hub between all these different countries. Southeast Asia back then was really about that melting pot and entrepot between all the different cultures. India, China, and the rest of the world. Kind of like actually reverting to that time. It's history. The second question is really about the pandemic, right? I wanna talk about how the pandemic is impacting real business value and separate from what you structured the question was just pandemic on the capital. I think the capital markets, but also the fundraising dynamics and there's almost a function of these three functions. The pandemic was painful for consumer confidence and governments carried out lockdowns. And as a result, F and B suffered. Therefore any companies that focus on dine-in, or for example, services like in a B2B catering, serving office parties and pantries basically suffered tremendously during the pandemic. The fundamental business value was destroyed because it was not allowed to carry on or it was restricted. At the same point of time, the flip side of that is that online ordering boomed. Ghost kitchens boomed because there's this huge demand for suddenly serving food that’s not just hot and fresh, but also to areas that were traditionally not being served. The budget of the consumer of eating food did not change but instead of it being consumed at the office or outside in the central business districts, they now are being done at home in the form of groceries or order-in. That's just one vertical, but I think that happens for multiple verticals so everybody's working home, so now everybody's doing Zoom, but then because you're using Zoom now you need other services. Again there’s a huge boom and we see this globally play out in different individual stories in each country. That's that dynamic that is pretty key to not just forget, but it's really about the fundamental business value of it. The third thing that I think is the least important is the capital markets. The capital markets – and I wrote this piece – so feel free to go to jeremyau.com to read the post on capital advantage and snowballing. I think what we're seeing is that in response to the pandemic all the various central banks around the world have basically printed a ton of money. A TON of money. What's happening – I think what people don't understand –  is all of a sudden the money has to go somewhere because it's not going to interest rates. So they're going into private asset markets and public asset markets. Public markets, we saw that giant boom and stock market. Everyone's like, “Oh, is it because of individual retail investors?” The answer’s NO! Like we can't know, we're confident, but we're not that confident. Institutions that buy ETFs and public stock markets, there's a rally and global equities and the public markets, but also a lot of money has been flowing to private markets. That's gone into VC, and yes, a lot of it (again, I'm gonna use a lot of jargon. I'm just going to see, I'm going to Google this data) has gone into a larger fund because they can take large checks from large LPs. And so. What I've seen is that your top 1000 tech companies have had a tremendous uptick in their funding rounds because there's so much liquidity. There’s so much capital looking for terms and so they are going to these large companies via the VCs and funds. That's why you see this large push towards late stage and growth in that valuation there. And to a lesser extent is also going into early-stage as well as riskier markets, in which case, Southeast Asia is one of those. I think what we're seeing in Southeast Asia is basically more money's going to Southeast Asia because they're comfortable with the risk involved relative to China, which seems very risky due to government action, or to India, which feels like a tighter market that you need really strong domain expertise. It's not as easy to get in and out based on legal and governance. It basically means that Southeast Asia is getting more capital on average, which is good, which means that capital is becoming more plentiful. No matter what, it's becoming more aggressive and it's willing to take earlier bets. That's a positive sign. There's nothing else to it. This is what’s capital's looking for – earlier bets, right? So what that combines – all three of them – is that end of the day there is a good, fundamental, strong, and sustainable macro base for Southeast Asia that everybody understands. Out of which the pandemic has impacted vertical by vertical different consumer and enterprise behavior, which is fundamentally driving the differences in business value and it depends on your approach as a founder or your approach as an investor to how to handle that. Lastly, the capital markets have become more aggressive globally due to the printing dynamic. So there's a push towards, higher valuations, but also more early investments, which are both two sides of the same coin.

Yeah. It brings me to this whole probability, a theme where we started with a lot of capital in the market. Do you think that now is a good time to start a VC like this from scratch? Or is that a whole different ball game? Because raising money as a VC, you've got your LP so I understand that there's a lot of track record. There's a trust element where we talked about it earlier, but what about new VCs? Because, just comparing, overall the VCs investments going into the tech scene. I mean, US is of course still leading, with 50 plus percent. It's being invested there and the rest is scattered around the world, but what do you think about new VCs? What do you think about raising money now?

I think the interesting dynamic for LPs is that because of the way that the money was printed, a lot of it went to the top 10%. In America, that’s the awkward reality. So they already had a ton of cash. From that perspective, as an LP, they want to put money to work, but to them, putting a $1 million check into an LP is just as much work as putting a hundred million dollar check into a VC. As an LP, that dynamic, because you’ve gotta manage, you’ve gotta monitor, you have to build a relationship, get a trust… truth is, all of these large checks of cash is really fundamentally going to the large VCs, whatever you want to define “larger”. Obviously, you see that from Sequoia, they're all strong VCs, but they also have that type of relationship with US LPs that have gotten them the benefits of this print dynamic. That being said, of course, there are trickle-down dynamics, so because of that, they’re willing to throw checks or at least, be open to supporting other emerging investors as well. But I just wanna say, I think there's a disproportionate impact, across different categories of VCs and on an individual side, it’s really going to boil down to your individual track record, performance, and ability to build a relationship.

It's a funny thing, right? Because I talked to different investors. One category is, they built themselves, they found the companies, they exited. And then there's the “financial investors” who are bankers, investment banking or whatever financial background… but you also talked to a lot of VCs you know a lot of investors right? I think that the trick of investing the skill of seeing the probability of an investment or of an entrepreneur is something that comes with the years. It's not something that… you'll just have it – or maybe there is? I don't know. But from your side, it's a bit biased of course, because you've been a founder, but what do you think about those types of investors? The investment banking, financial, maybe pure modeling investors versus the maybe more emotionally inclined entrepreneurs-turned-investors who know what it's like to build. Is there any advantage of the one versus the other, or what are your thoughts about knowing the probability of investment?

Yeah. The truth is, there’s no right or wrong, no good or evil dynamic to it. I always tell people – is the investor fully aware of what they're walking into? Is the founder fully aware about what they're walking into? I think fundamentally, this boils down to it – if you are an investor with a financial background, the super skill is finance, right? What I mean by that is they have an investor's mindset of picking the best company is probably more dynamic around a deal basis. Are they able to run deals? They're executing faster on average because it's deal-centric, their workflow from their previous work experience. They’re also thoughtful and experts on finding future fundraising opportunities or other funding channels, and looking at the financial metrics, because that's the background – it’s finance, right? How do I engineer this finance dynamic? Investors who are former founders and operators are going to be on another side, which is that they're looking at the team. They understand dynamics, they’re able to spot who's a strong team member, who's not able (from a spotting perspective). And also has the trust, from that dynamic of having worked with people, and on the other side also able to actualize more business value. So others focus more on actualizing financial value, but as it's actualizing business value, which is, improving your net promoter score by 1% is actually very huge. If you think about it on a 10-year time horizon, and the amount of capital is going to go short and revenue. 1% NPS is huge outcome. It could be easily tens of millions, of dollars of impact on a bottom line to due to retention and that's the kind of value that someone with founding experience or operating experience is going to come in from. I think as a result because of that, what you'd normally see the truth of the matter is that therefore there's a dispersion where financial type investors tend to accumulate towards the later stage, and more operator-centric investors tend to be more in the early stage because at an early stage what the company is going through –  I always talk about this, it's like the jungle, the dirt road, and the highway, right? That's the three stages, every startup. So the start in a jungle is, “Where the hell am I? Where am I going?” What is product-market fit? And then I have to figure out my team, it's just… and I was in the military. You're taking a machete and it's just like this, that's cutting. You’re just cutting your way out… and eventually, you would do what’s right, and you get there. You tend to be on a dirt road. It’s that – the second stage, which is you have an idea of roughly what to a product-market fit is, you have a bit of true north, where you're roughly going, but still tough. You need to get a coach. There's all kinds of things that you're trying to actualize about the actual business. The third is obviously the highway, which is your builder's nice highway. It's got like three lanes and your job is get three trucks in each lane and then stack them… just drive them down to high expressway. I think that's where the operator type of VCs are really the preferred top partner – not necessarily, it’s preferred, subconsciously for most people – because they're going to be the ones sitting with and saying like, “Okay, I get it. Let's talk about product-market fit.” Whereas the financial investors are going to be like, “Well, your business is not great. What's the ROI?” We can’t talk about that if you’re not talking about who’s the customer. I think that as the company grows and preseason becomes larger then the financial type of investors grow into their own and are able to help. Obviously, there's gonna be a mix, right? Because you don't… you can't, it's not a hundred percent in one side, 100% other side, but I think that’s where the mix changes.

Yeah. Because maybe also like stage-wise, it also depends, maybe early stage is much more towards, let's say, founders turned investors versus the more structured investors who are creating deals. Which brings me to an interesting topic, right? I think we saw it a lot in the early tech scene in Indonesia, people are betting on the rocket internet type of ventures back then that were from a… let's say P and L perspective. So purely from a financial model perspective, maybe not the best investments, just from a bird perspective. But at the same time from a, market education, market-grabbing perspective, a great investment… sort of. Which brings me to the statement that a good investment is not per se good business, or maybe it's not a good investment. Depending on what the goal of it is, if you say, “Okay, we're aiming for unicorns” or aiming for 10, 20, a hundred X.. this business is actually profitable, but it's not a good investment. What are your thoughts about the maturity of the Southeast Asia tech industry? Where there's still a lot of looking for that product-market fit, looking for that right team to hire…  there's still a lot of probability that things could go wrong, but maybe there's a good business. Maybe they're actually a good business, but from an investment perspective, maybe the time horizon, it takes too long, so you don't go in. So what are your thoughts between the maturity of tech and making good investments from an ROI perspective? While sometimes needing to hold back or not being able to invest, even though it's actually a good business, but maybe it's not going to be a unicorn business, maybe it can only become a max, a hundred million, our business, for example – which you could still 10x as an investor. Is that difficult to kind of like balance those two? Because I assume as an investor, you want to have that one out of 40, you want to go for the championship trophy. You know what I mean? How do you balance those two?

My perspective is, the truth will catch up at the end of the day, when you go public, there is going to be a dynamic where you're going to have full disclosure on your financials, the retail investors will be there and, the market wisdom will kick in across the retail investors, to the institutional investors about whether this makes sense, or doesn't make sense, right? We saw that story come to a certain dynamic for where for years and years, even before the attempt to go public and everything went sideways was people just… knew. That they weren't gonna show whether it was a real estate company or a tech company. And so everyone was working, but yeah. The banker was like, the real estate company was like, “You should do it.” And then the tech team was like, “No, you should do it.” That's an interesting dynamic where we're going to see that dynamic. It may not necessarily even happen after IPO. It could happen two years, three years, five years after IPO… which can be pretty unfair because maybe that means the price of that realization falls on retail investors instead of VCs, on operators but at the end of the day, there's a certain dynamic where we're gonna find out. This is a matter of timeframe. That being said, of course, I'm fully aware that the private market capital is there to support that growth rate, so it'll take time to find out. And that's not a very satisfactory answer because it doesn't mean like there’s a good “karma” answer… good companies should get funded very quickly and bad companies get funded last. Fundamentally, the good companies and bad companies, like you said, it's like one axis. and the other axis is like – there's high growth rate companies and it's slow growth rate companies. There can be high growth rate bad companies, and it can be slow growth good companies. The way I always think about it is, and I try to forget, about this outside-in approach, right? It's like, what does the market say? What is it going to do? What's the best dynamic? I always tell about it as from the inside out, which is, “What do you want to build? What do you want to be proud of? And how do you want to be in charge?” Because I think some of this high growth is, of course, founder-driven, right? Which is, I want a solution, and I want higher growth, I need more capital to grow the business faster. Sometimes it’s also very driven by the financial dynamics. Which is, “Oh, how do I… I have to grow faster because the investors want me to grow faster, therefore I have to go raise more capital. So I need to rush.” And then I always tell people, you want to be the first, not, not the latter, right? At the end of the day, you are the one who is in charge, you're the one who has control about what's going on.

Yeah. I think that's the balance that everyone in the ecosystem needs to have, because even if investors only go for – “We want to have a hundred X”, then the majority of the companies might not even be “worthy” of the investments, right? Making it, making a bridge of family life and being an investor because I loved the last time you told me, I have a child as well, and in this time we live in now, working from home, a lot of liquidity in space, 11 investments going on, I have activities. How do you juggle? How do you juggle both – working from home and having a rollercoaster job as well? Investing. How’s that going?

Oh, it’s going great. I think we're very fortunate to have a pandemic baby, and what that has meant is that working from home has been a joy because I'm doing all these calls and then during the breaks, I can hang out with the kid. In the past, I would be at the office, I had to commute from Point A to Point B, or just stuck to doing email slowly… taking a break. I think there's a lot of joy to be with a child, and I've always loved children. At the end of the day, a child is a contract with the future. In VC, your job is to make science fiction a reality. You're making the future happen now. You're grabbing the future in 20 years and you're saying, “Okay, I'm going to give you millions of dollars to have to happen way earlier than expected,” because we see the value of that, and at the end of the day, when you do that, who are you doing it for? I mean, not really yourself, right? I mean, truth is, we grabbed space tourism. I don't want to say VC did a lot of it but let's just say, the VC capital through Amazon and we grabbed space tourism and made it happen starting now rather than in 20 or 30 years time. We’ll benefit from it when in 60 years and finally like, “Okay, let's retire and do that, take that $5,000 ticket to space.” But you know, space tourism unlocks so much more of space. The ability to travel to space, colonize future planets, have better satellite dynamics for our planet and the beneficiary of that is going to be our kids and our grandkids… and hopefully the great-grandkids, however it goes. The truth is, if you're investing in climate tech, no matter how terribly we pollute and destroy our planet, we still got 60 years of decent time because we had an America, Singapore, Jakarta, like we're in good capital cities. I'm not going to be impacted by this pollution, right? Rising sea levels – like we don't care like? We can move or travel. I mean, that's, that's the interesting dynamic is it is going to happen on the poor, on future generations, which is that… if we keep polluting for 60 years, we will be okay because we don't feel the brunt of the damage, but it compounds of a time, our kids, grandkids, great-grandkids, iterate that to the power of 10, 20, 30. If we keep going the way we're doing, it's going to wreck their lives. So I think, having kids is a nice reminder about why you are a founder, why you're a VC – which is that, you're making life better for people. Making life better for people, you get value and business value is actually created. Because of that, you get economic and financial upside. At the core of it is that someone actually enjoyed it.

I love that because it comes back again to that, the paraphrasing that you did, from outside in or inside out. I think when you start with that conviction, it's to build something, whether it's building your family or building a business to eventually make this world a better place in whatever type, shape, or form that would be. I think that is an amazing, amazing goal. If you can have that. And so Jeremy, we're almost at the end of the interview, and I want to ask you one final question, and that question is as follows: We fast forward into the future… far, far away into the future, maybe 60, 70, 80 years from now, where space travel would be 5,000 bucks, maybe even less. And I tried to Google your name – and this is still Google that we're using – but I tried to Google Jeremy Au and I tried to look you up on LinkedIn, but there's nothing I can find. I cannot find you on Monk's Hill. I cannot find anything except for three bullet points. These three bullet points are actually the bullet points that represent the life lessons of Jeremy Au. These three pointers are things that Jeremy Au wants to be remembered by, by everyone. What would those three life lessons be that you want to leave the world with?

Brother, husband, human.

That's one tagline.

Yeah! That's the three bullet points, right? I can go into more of it but at the end of the day, it's like… you talked about a future, right? Which is, in 50 years' time, space shuttle is less than $5,000 by Google if it’s still around. But if you really think about it, you just fast forward, like 5,000 years, 50,000 years. You know? You have Marcus Aurelius, a Roman emperor and he's worked his ass off saving the Roman empire and he wrote it all down and we still read his books, but… to some extent, he's gone, right? I mean, we are really thankful to him. He’s done a lot of work. We remember him, not because he was a Roman emperor, but because I think he was very, very human about his duties and responsibilities in a tough time, and he was willing to be honest. I don't think he was intending to be that honest with billions of people because he was writing in his own diary and then it just got published. But I think we have different stories. It's the phrase, right? 2000 years ago, like what do we remember of? I'm sure the Babylonians thought they were a big deal back then, but we don't remember anything about them except they had some good architecture. Obviously, but we know we're descendants of them. There's a ripple effect. Look, you're here for a certain amount of time on his planet. You’re human, right? Being human lets you be happy, because it allows you to, not have to find yourself and be inhuman. I might be a good father, I'm the one father my children are going to have. And the right lessons I give to them is going to be there, and be a good husband, right? Because I love my wife and no need to break it. It's simple, right? That's how I want to be remembered. I think that a eulogy or a funeral or whatever it is, no one would remember like. “These are investments Jeremy did”, or that – it's going to be more like how did Jeremy help me during the investment, how he helped me, even though he didn't invest. How did Jeremy help, just hanging out and getting a beer? And I think that's something that I do quite a lot… I got into podcasting. The reason why I did a podcast is because I'm interested in human stories.

I love that. Yeah. That's awesome, man. The red line is really like the human side of what we're doing. Whether you're a VC, whether you're an entrepreneur, whatever business that you're in. I think the human side will always prevail and will always be the center of it all. Jeremy, I feel we could talk for hours, but we need to wrap it up, where can people find you, Jeremy? Where can they find you online? Where can they see the podcast? What's your bullet points on where – if people want to find more, read more about Jeremy Au?

My passion project that gives me so much life is really the podcast called Brave, you can find it at jeremyau.com. The reason why it’s a passion project is because it has the stories that I wanted to hear, for years and years… as founder and obviously I was listening to some podcasts that had that dynamic, talking about tough times, the fear, what it means to actually be brave because being a founder is honestly fucking scary. There's so many moments where you're just like, “What the heck is going on?” You're making the impossible possible, right? Because everybody thinks it wasn't possible to happen and now you're making it, so nobody knows what the heck is going on. Everyone's pretending to know what's going on, but nobody really knows, and you just figure it out. You’re the only one who’s brave enough or naive enough – or a mix of both, to do it, and I want to hear those stories. Also, I did hear those stories from Southeast Asia. If I could hear those stories, though from America primarily, I didn't feel like it represented my journey, our geography, our values, and our communities. So for me, as a result, I think getting the opportunity to honestly have really frank deep conversations about values and why we're doing what we're doing, that has been nice. One interesting fun fact is that I used to listen to a lot of podcasts before my own podcast. Now I'm like, “Oh, I get to listen to less podcasts now because I get to make my own podcasts.” It’s like the guy who buys ice cream versus making his own ice cream.

Yeah. That's the entrepreneur, and I love that, man. I love that. So jeremyau.com, The Brave Podcast with Jeremy Au – look it up, you won't regret it. It's going to be inspiring, checked out a few, and awesome, awesome work, Jeremy. Thank you so much, brother. Thanks so much for making time. Really appreciate our catch-up and I hope to see you soon, man – in real life, like get a beer together. That would be really nice.

Awesome. It was a pleasure meeting you.

Alright, man, we'll talk soon. Bye-bye.

Thank you so much for listening to The Masters of Cashflow Podcast. If you enjoyed this episode, please leave a rating and review and let me know your biggest takeaways of this episode. I want to leave you with this final thought of the late Tony Hsieh, CEO and founder of zappos.com. He once said, “Chase the vision, not the money. The money will end up following you.” I think that's a great reminder that in all the highs and lows that we go through as entrepreneurs, always keep your eyes on the vision. Thank you so much for spending time with me today. And I hope to see you in the next episode.

 

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