$1.5B ByteDance Tokopedia Investment with GoTo For TikTok Shop, Indonesia E-Commerce War & Winners. vs. Losers - E356

· VC and Angels,Web3,Indonesia,Podcast Episodes English

“It's interesting because theoretically, every market consolidates over time and then now we're starting to see this finally happen in something quite fundamental, which is the e-commerce layer, a part of the iron triangle that people talk about. Jack Ma said that developing markets are like the three pillars of the iron triangle with fintech, e-commerce, and logistics. We're seeing consolidation finally happen in the e-commerce space.” - Jeremy Au

“It's really hard to make it work, with the culture and the integration, because all of those are non-trivial. Half of all transactions are probably value-destroying. They may sound good on paper, but you can't get the teams to work together, or the person who sponsored the deal left, and then the whole thing falls apart. I agree good acquisitions can be transformative. Look at YouTube or Instagram, but those tended to have been done earlier. I'm trying to think of a great acquisition that happened when things were already at scale because once you're big, there’s already gravity to your culture and how you do things, and it becomes really hard to change those.” - Shiyan Koh

“It takes time because you’ll wonder what the logic is. If you play it out, which is like saying you had a pretty good business and you’re growing really fast, why would you go take on someone else's business problems? You know how to operate your own business and how to grow it. Unless you're making a case where for $500 million in cash, you’re buying $20 billion, or 18 billion of GMV and the right to operate. And how can you even price the right to operate because, like you said, the FATMA was zero? But in other markets, that's not true. You can still operate and you don't have to take on the integration burden of another thing. And you know that the GMV that you're taking on is negative contribution margin GMV. So, what's the enterprise value of that? It’s interesting. Hopefully, it will make more people think about consolidation. Also, the worsening capital markets make people more willing to do deals because they just can't count on another round of fundraising.” - Shiyan Koh

In this episode, Shiyan Koh, Managing Partner of Hustle Fund, and Jeremy Au talked about three main topics

1. $1.5B Bytedance Tokopedia GoTo Deal Analysis: They discussed ByteDance's $500 million payment to acquire a 75% stake in the merged entity of Tokopedia and TikTok Shop Indonesia. This would create the new Indonesia e-commerce market leader with 40% market share. ByteDance committed to investing a future $1 billion into the operations of the new entity, which will contractually not dilute GoTo's 25% minority stake. The deal was motivated by TikTok's need to resume its Indonesia operations after a ban by the Indonesia government, Tokopedia's -0.4% adjusted EBITDA as % of GTV (Q3 2023), and the opportunity to create the #1 Indonesia e-commerce platform with larger economies of scale, a new media-led growth engine and a wider seller base.

2. Indonesia E-Commerce War: They discussed Indonesia's $52B e-commerce market: Shopee (36% market share), Tokopedia (35%), Lazada (10%), Bukalapak (10%), TikTok Shop (5%), and Blibli (4%). They explained how this consolidation reflects the regional trend of increasing focus on efficiency, logistics, and leveraging technological synergies to gain dominance, similar to Uber Southeast Asia's strategic sale to Grab to concentrate on core markets. Credit goes to Momentum Works and Freeman Ding for their analysis.

3. Winners, Losers, and Future Moves: They identified Indonesian consumers as clear winners due to continued intensive competition on lower prices and innovation in services, similar to the Uber vs. Grab vs. Gojek rivalry. They also discussed other beneficiaries, how this reflected the growing maturation of the region for M&A activity, and how competitors like Grab and Sea Group would react to this market development.

Shiyan and Jeremy also talked about the challenges of founders fundraising during the holiday season and their own upcoming family vacation plans.

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(01:43) Jeremy Au:

Hey, morning Shiyan.

(01:44) Shiyan Koh:

Good morning, Jeremy.

(01:46) Jeremy Au:

Good to see you. Excited to kind of discuss the TikTok shop deal with a ByteDance, GoTo regarding Tokopedia Indonesia.

(01:54) Jeremy Au:

Before we start, I just want to give a quick shout out to Jeff Lonsdale for giving us some feedback regarding chess and how it's a deterministic game. So I just want to say we totally agree with you about how it's a domain of compute that computers have figured out pretty early and pretty quickly.

(02:08) Shiyan Koh:

Do you play chess, Jeremy?

(02:10) Jeremy Au:

Not myself, but my brother in law plays a lot of chess. He's good at chess, apparently.

(02:14) Shiyan Koh:

I just signed my kids up for chess.

(02:16) Jeremy Au:

Oh, why are you teaching them a skill that computers have dominated?

(02:21) Shiyan Koh:

Well, so far, you know, they're small, so they're not at the level where it matters yet. I think I'm mostly interested in it for like, teaching kids executive function, like making a plan. As you may know, small children are not really good at making plans and so just having the exercise of Hey, like what's going on here. If I thought one step ahead or two step ahead what do I think might happen? Is like a good exercise and any excuse to like help them learn how to sit still and focus for longer periods of time is kind of what I'm into. So shockingly, they both enjoy it. It was a bit of an experiment.

I wasn't sure. And so. I'll make a plug, if anyone wants their kids to learn how to play chess, it is possible. And there's a great company called Chess at Three that teaches kids from three years up how to play chess. It is in United Square though, which is definitely a negative.

(03:09) Jeremy Au:

It's a kid-friendly mall.

(03:11) Shiyan Koh:

Have you been to United Square?

(03:12) Jeremy Au:

Yeah. I was just there last night for dinner.

(03:16) Shiyan Koh:

It's a frenzy of children, and then they've got those stupid like, mechanical animals driving around trying to knock you over. It's just it's too much, but once you get inside and you play chess, it's very calm, but the mall I detest.

(03:30) Jeremy Au:

It's an agglomeration of all the things that kids want. So it's a kid's wonderland, right?.

(03:35) Shiyan Koh:

I mean, yeah.

(03:36) Jeremy Au:

What kids want is not necessarily what parents want, I guess.

(03:38) Shiyan Koh:

Yeah, yeah, you're all hanging out in the yakut drinking coffee waiting for your child to finish their class or whatever.

(03:45) Jeremy Au:

Yeah, on that note, talking about businesses, we want to talk a little bit about the recent TikTok shop deal that was just announced. It was a surprise for many folks and a lot of folks were busy digesting what the news meant and how it was going. So I figured we should talk a little bit about it in three stages. I think first of all, we'll talk about it in terms of the mechanics of the deal, so what are the facts. Secondly, you know, we'll talk a little bit about. The motivations and the context for the deal. And then lastly, we'll talk about looking ahead, who we think the winners, the losers, what we should think about ahead. And on that note, I just want to say a quick shout out to Momentum Works, for Jianggan, who was previously on the podcast, check out his episode. But he did a lot of the analysis, as well as Freeman Ding as well, who has provided a lot of the point of view on this as well. On that note, Shiyan, what do you think about the overall deal first?

(04:28) Shiyan Koh:

Well, it seems like a pretty, well, I don't know. It seems the parties all got what they wanted. So if we had to go through the various parties, I think we had covered this a few months ago on the ban, the social media app ban that had shut down TikTok shops operations in Indonesia. So I think that was something that TikTok was trying to solve. I think anyone who's ever reviewed the financials of go to. You know, saw people trying to put a positive spin on negative contribution margins being not as terrible as they used to be, but still negative. And so I think, right, I think if you think about all the stakeholders, TikTok got a way to get their store up and running.

GoTo gets to narrow their focus on the ride share and financial services business while offloading a loss making operation. And I don't know, maybe the powers that be got a face saving way to, um, allow TikTok to operate, but in a way that, uh, helps a national champion survive better. Is that too cynical, perhaps?

(05:26) Jeremy Au:

Well, let's talk about some of the facts of the deal. It took a little bit of math by all the various parties and to put some numbers there, ByteDance is spending about $500 million of cash to get 75% equity control and therefore much Tokopedia and TikTok Indonesia shop. And then go to become a passive 25% minority shareholder. But what's interesting is that they have an empty dilution clause, so they will not be required to fund the company moving forward. And so, and as a result, ByteDance has also committed to investing further 1 billion into the ongoing operations of the combined entity. But, for that quantum to come in, it would actually not dilute GOTO's stake as well. So, in other words, Tokopedia has become spun out effectively from GoTo. To a company is going to be led by ByteDance. So it's going to be a very interesting you can say acquisition or merger of these two business units.

(06:15) Shiyan Koh:

Yeah? Or it's just buying the right to play, right?

(06:18) Jeremy Au:

Yeah, I mean, lots of different ways to think about it. I thought this was interesting was you and I were doing some research on this, and, if you look at the Indonesia market, what is the total kind of quantum? And what's interesting is that, there are six major players in in the Indonesia e-commerce space, right? So the Shopee with 36% at about, 19 billion USD GMV. There's Tokopedia with about 35% at 18 billion. Then Lazada at 10% at 5 billion, bukalapak at 10% at 5 billion USD. And then TikTok shop had 5% around 2. 5 billion. And then Blibli had 4% at around 2 billion. So I think it's a nice way to think about the market share. And so this combined entity, basically, you had Tokopedia, which was, you can say tied for first place effectively but at negative contribution margins, now merged with TikTok Shop, and now that means the combined entity, effectively, would be the market leader. 40%. And TikTok shop was growing really fast as well, so it's interesting that they basically brought in a growth engine and a new way to compete. That's really orthogonal to how Shopee has been approaching the market as well. 'cause Shopee and Wikipedia look very similar, right? In terms of their approach. They use experience. But TikTok shop is actually a very different growth lever with its own distribution. In terms of go to market, live streaming lower cost of acquisition because everybody's using TikTok. So it's like quite an interesting competitive machine dynamic to play out.

(07:34) Shiyan Koh:

It's smart. It's a smart deal and so it'll be interesting to see kind of like How the new management operates it and whether they can control kind of the burn, and leverage some of these cheaper customer acquisition mechanisms. Because I do think like CAC is part of it, but I think, you know, there is just logistics as well. And that always contributes to the cost of these these businesses.

(07:53) Jeremy Au:

I mean, it makes sense for TikTok, right? Because, you start out with this fast growth business. You had not been allowed to proceed. but not effectively is zero because you're not allowed to operate. And then now, you're not only allowed to continue to operate, but now you've onboarded, basically millions of sellers onto your platform as well. So you can cross sell your TikTok, that also builds out your fundamental business in terms of the entertainment side as well, because now you're adding more products, more commercialization, more interesting content is going to be coming out. And then you also build out your logistic space, right? Because the Tokopedia has a logistic space that TikTok shop, mean, it's just, you just get to spread out your costs off. Logistics as well. So definitely a big win for TikTok. And like you said, I think it's also a win for Tokopedia, right? Because from GoTo's perspective, they've been narrowing the loss in terms of the contribution margin over time over the past four quarters, I mean, very aggressive about improving that, but this definitely helps them bring more cash into the overall GoTo entity, but also it lets them have 25% of what could potentially become the new market leader, right? Or the dominant player. So there's a very interesting play here.

(08:52) Shiyan Koh:


(08:52) Jeremy Au:

Reminds me of Uber's decision to exit the Singapore market in Southeast Asia. And then they basically say, look, rather than have effectively half or one third of the market in a dog eat dog, kind of like very negative contribution margin market, I rather have a minority stake in a higher CM more market power structure, right? and so.

(09:10) Shiyan Koh:

Concentrate, concentrate on my core, right?

(09:13) Jeremy Au:

Exactly, right? So Uber sold to Grab and then Grab pretty much took that position. In a lot of the core markets especially Singapore, which is an important, high contribution margin market, which is very important because there are very few cash cows in terms of markets across Southeast Asia.

(09:26) Shiyan Koh:

Yeah, it was fun, it's a fun times. I mean, I think also just more consolidation makes sense, right? This isn't the only space in which I think, ideally, if you look at sectors that have been funded and have a lot of well funded, fairly large companies I do think consolidation is probably in order.

(09:42) Jeremy Au:

Yeah, so let's talk about what it means for the strategic context what does it mean for the future?

(09:46) Impact on Other Market Players

(09:46) Jeremy Au:

So I think this obviously is not good news for the other players in the market, right? So obviously you have Shopee that was previously in the lead. And now, your number two competitor, effectively, it has a second wind with a new growth engine. So I think that's going to be huge, I'm on dynamic and I think we talked about it on a passport, Kashi, and because Sea group has really been signaling for the past two quarters that they expect to invest a lot more and moving away from profitability into a competition mode because I think the price saw this coming on the mark writing on a wall here I think Lazada also previously just got an announcement for another $634 million capital injection from Alibaba group. Everybody's kind of gearing up for another round of competition.

(10:25) Shiyan Koh:

It's good for Indonesian consumers. These are the winners, right?

(10:28) Jeremy Au:

That's true. There's a lot of capital. I mean, it's like back in the Uber versus Grab versus Gojek days, right? There was a lot of subsidies flowing from the competition dynamic.

(10:36) Shiyan Koh:

Yeah, so I think, for Lazada and Shopee, who are also market leaders, now you have a sort of reinvigorated combined entity to go fight against who, as you point out, is like a little bit orthogonal, right? They're not competing on the same axis. So it'll be interesting to see how that plays out. I think also just like in the ride share business. I think if you're grab, you're like, Oh, well now I have a more focused competitor I'd go to. They sort of shed one of their big loss making businesses and now they can kind of double down on the ride share and the financial services. So I think that's probably an impact to grab. How about Bukalapak? They're the other sort of Indonesian native marketplace that could have potentially been a partner to TikTok.

(11:12) Jeremy Au:

Yeah, I think definitely, they're going to be in a tough time because they don't have a entity, or cash cow businesses in adjacent, parts of the conglomerate to process them, they will have to raise capital from a local stock exchange. It does feel like it is a good shot. Honestly, you can imagine all the other players in the market would be like, Hey, should we acquire slash merge with Bukalapak? I mean, the same math is going to happen, which is, hey, right now you have a combined entity, can we bolt on this acquisition and get more market power as well?

So I'm sure that's what every M&A team is having that conversation is like, including, I'm sure go to TikTok must be having that conversation as well.

(11:47) Shiyan Koh:

Yeah, so it's a fun time.

(11:48) Jeremy Au:

Yeah, because Bukalapak only has 10%, right? And then if Tokopedia right now, that combined entity is 40%, Shopee's at 36%. Lazada is 10% but you say it's a cash injection. So you're basically like the only person who doesn't, I don't know.

(12:00) Shiyan Koh:

No sugar daddy.

(12:01) Jeremy Au:

Wow. That's one way to put it. Yes, indeed. So yeah, I think it'd be an interesting set of decisions they're going to make I guess BliBli as well as 4% as well, probably has the same strategic dynamic with Bukalapak as well. I

(12:12) Shiyan Koh:

Have you bought anything on TikTok Shop Jeremy?

(12:15) Jeremy Au:

I have not yet Valerie Vu, another BRAVE course has previously bought like vitamins and other stuff from the TikTok shop. So yeah, I'm looking forward to it. I've bought stuff on Instagram shop before, the small dads, impulse purchases. But not yet on TikTok actually, and it's surprising because I, but then again, of course, you know, there's a lot of live streaming stuff. It's like a lot of it's like clothes oriented or stuff like that. So maybe I'm just not the target market. knows? I look forward to my first TikTok shop purchase algorithm. You heard me. I want to buy something from TikTok shop,

(12:44) Shiyan Koh:

What are they gonna show you Jeremy another black t-shirt? Come on.

(12:48) Jeremy Au:

Maybe some electronic or I don't know, fidget spinner. Some kind of like doodad, a motivational poster, maybe. What else do you think is going to be for the future as well? So obviously, like you said, I think it's a fair point. I think Indonesian consumers continue to benefit for sure, because, you have more capital coming in.

And I think it's interesting because the competition, not only through subsidies, but also through the formats, right? So I guess Indonesian consumers are going to see more live streaming, because I'm sure Shopee Bukalapak, everybody's just going to start Lazada is going to start trying to generate some sort of TikTok-like competitor slash capability. So I think that'd be another thing that we'll probably see happen.

(13:22) Shiyan Koh:

Well, I've got a portfolio company for you if you want to implement live streaming Check out ShopLive. They do uh, you know, the backend APIs. They power a lot of e-comm in Korea. Um, and so rather than having to build it out yourself, you can just call some APIs and plug it right in. So,

(13:38) Jeremy Au:

Are you appealing to investors are appealing to the M&A teams?

(13:42) Shiyan Koh:

No, I'm talking to product teams. Anybody who wants to implement, live streaming and live selling capabilities into your app or whatever audiences you have, check it out ShopLive.

(13:52) Jeremy Au:

Yeah. Yeah. I think I think it would also be interesting to talk about what else is there for winners and losers. I thought Momentum Works did a great job. I think they talked a little bit about how Indian businesses are also an interesting category, so obviously those who are early adopters are going to benefit from TikTok Shop. And then those who are not yet on the platform, have to either get on it or they're going to fall behind. So I think it's an interesting behavior shift I think we're going to see.

(14:16) Shiyan Koh:

Yeah, I mean. It's exciting. It is funny that all of this is so consumer-driven.

(14:20) Jeremy Au:

I mean, technically it's a B2B shift, right? Historically people have not figured out how to do B2B SaaS, for example. But, if TikTok and, the entire e-commerce platform really transitions, the whole SME space, I think it'd be an interesting dynamic.

(14:32) Shiyan Koh:

Yeah. What other losers are there?

(14:34) Jeremy Au:

I think what's interesting is that Grab obviously has to focus as well because the Gojek business effectively has received a cash injection through the sale of Tokopedia. So, be a more focused team, just got more capital. So it'll be interesting to see how that plays out as well.

(14:48) Shiyan Koh:

Well, I think the Momentum Works folks suggested an intriguing possibility, which is, can they just buy over if they're willing to divest Toko, are they willing to divest Gojek? And then GoTo just is the financial services entity left behind. And then you end the competition. I don't know whether the Indonesia's, would allow that type of more monopolistic type of structure.

(15:06) Jeremy Au:

Yeah, I mean, I think people forget that SoftBank, actually had used to have stakes in both Gojek as well as Grab and they really wanted this merger to happen years and years ago. And then, it was Grab that said no to this merger because they felt they could focus and keep growing the business.

(15:21) Shiyan Koh:

Yeah. So, interesting times.

(15:23) Jeremy Au:

Interesting times indeed. But yeah, I think that, there's a lot of synergies that will happen, right?

(15:27) Jeremy Au:

Obviously. So, it'll be interesting to see how that works out.

(15:30) Shiyan Koh:

Would like for people to write in if they have bought something on TikTok shops and share their experience.

(15:35) Jeremy Au:

Yeah, definitely. I think I also like what Momentum's kind of said you know, Hey, we think that it's good for Tokopedia employees because their company was losing market share slowly, but now, you have new leadership, public large T.

(15:47) Shiyan Koh: Yeah. I mean, I think people can sense when things are in decline, right?

(15:51) Jeremy Au:


(15:51) Shiyan Koh:

People start to attrit, and then that kind of sets off a negative moral spiral. And so I think that can be very challenging.

(15:58) Jeremy Au:

So if we fast forward this story, like five years, 10 years, how do you think this plays out?

(16:03) Shiyan Koh:

As in, who's the winner?

(16:04) Marker

(16:04) Jeremy Au:

I mean, you know, I think it's interesting because theoretically, every market consolidates over time and then now we're starting to see this finally happen in something that's quite fundamental, which is the e-commerce layer, which is, part of the iron triangle that people talk about. Jack Ma said that developing markets is like the three pillars of the iron triangle It's like FinTech, e-commerce, and logistics. So I think we're seeing consolidation finally really happen in the e-commerce space. Just kind of curious how you think this continues to play out.

(16:28) Shiyan Koh:

Yeah, I mean, I feel like there probably should be some consolidation in logistics. I guess. It just doesn't seem like a great business while you still have this competitive dynamic driving lack of pricing power. It's an interesting question, which is, do you get a better flywheel between TikTok Shop and Toko? Or do you get a better flywheel between Shopee? That sort of high margin gaming translating into Commerce, plus their own sort of financial service wallet type of thing, like who's got the better mouse trap? It's a good, it's a good question.

(16:57) Jeremy Au: You know, you just made me think of two things. First of all, I think is that we've historically not really seen much regional M&A and I think this would be an interesting milestone where we may see more strategic M&A capabilities being built out in terms of teaming slash workflows. And for example, one thing I think about is, would someone buy Cool Move, or are the live stream slash content platforms because TikTok is very much a consumer video platform. So you can imagine a new set of capabilities being reoriented.

(17:23) Jeremy Au:

I think also we've not seen our big tech companies in Southeast Asia acquire startups. And this could be an interesting continued evolution for teams to start buying capabilities as well.

(17:34) Shiyan Koh:

And it's actually really hard to make it work. Like the culture, the integration, all of that stuff is like non trivial, I think we're like half of all transactions are probably value destroying, right? Like they sound good on paper, but you can't get the teams to work together or, the person who sponsored the deal left and then the whole thing falls apart. I agree good acquisitions can be transformative, right? Look at YouTube or look at Instagram. But those tended to have been done earlier. I'm trying to think of like really great acquisitions that happened when the things were already at scale because I think once you're big, there is a kind of gravity to your culture and how you do things and it becomes really hard to change those things. And maybe TikTok is nascent enough but they're going to be the operating leader, actually. So, Toko is the bulk of the GMV, but TikTok Shop's Management is the one that's going to be running the show.

(18:20) Jeremy Au:

Right. I think what's interesting is that in the ecosystem, there haven't been that many acquisitions of smaller startups, even in 50 mil, 200, 200, 300 mil, for example, a bucket range, which is, I think, an important exit structure right in the U. S. for a lot of outcomes. So I think this is an interesting milestone, honestly, because a lot of the acquirers in Southeast Asia historically haven't acquired, or if they do acquire, it had to be conglomerates. And so they don't have that practice of being able to acquire and then run it. I'll turn it around even right for the business. So I thought this is an interesting dynamic.

(18:52) Shiyan Koh:

Yeah. Yeah.

(18:52) Jeremy Au:

In fact, that's actually a good question for listeners, right? Has there been any tech? of tech companies in Southeast Asia. I'm just thinking about it.

(19:00) Shiyan Koh:

I mean, what is it, Intuit Bot Trade Gecko?

(19:02) Jeremy Au:

Okay. So the US entity buying, yup.

(19:04) Shiyan Koh:

God, we have to pull that Cento report. Dimitri has a good list of them.

(19:08) Jeremy Au:

It was like, Dimitri, come on. This rattles off the list.

(19:10) Shiyan Koh:

Yeah. It's a good question.

(19:12) Jeremy Au:

Yeah, but I think the answer is not many, right. And it's not a long list anyway. So this is going to be an important dynamic.

(19:17) Shiyan Koh:


(19:17) Jeremy Au:

What are the questions you have in your mind because of this yield in the future?

(19:21) The Future of E-commerce in Other Markets

(19:21) Jeremy Au:

I guess, does this applies to other markets is a question in my head. So, you know, Vietnam, the Philippines, Thailand, I'm just saying, would we see, for example, more consolidation in e-commerce and other players? That could be an interesting piece, right? Because if TikTok has pioneered this to some extent in Indonesia, you can imagine them replicating the structure in buying out local e-commerce platforms, right?

(19:41) Shiyan Koh:

I guess, but the question is like, would they have done this if they hadn't been shut out of the market?

(19:47) Jeremy Au:

The answer is probably not at this rate and this price, but you know, this would be something that could be, you know, in your toolbox, right? Because you could just start the process anyway. There's no harm in starting the process of looking at other companies in the market.

(19:59) Shiyan Koh:


(20:00) Jeremy Au:

I mean, if the price is fair, then is this a leg up, right? Because you just onboard and Sellers. and bias onto the platform. So for the right price, you know, anything is great.

(20:07) Shiyan Koh:

I don't know, I think it takes you need a moment in time, right? Because what's the logic, right? If you play it out, which is like Hey, we had a pretty good business, and we're growing really fast. Why would we go take on someone else's business problems? We know how to operate our own business, and we know how to grow it. Unless you're making a case that like, hey, for 500 million in cash, I'm buying 20 billion, or 18 billion of GMV, and the right to operate. And who, how can you even price the right to operate, right? Because, like you said, the FATMA was zero.

But in other markets, that's not true, right? You can still operate and you don't have to take on the integration burden of another thing. And you know that the GMV that you're taking on is negative contribution margin GMV. So, there's what's the enterprise value of that? So I, I don't know. It is interesting. I mean, I think hopefully it, it makes more people think about consolidation. But then there's always, just like I think that plus like the worsening capital markets makes people more willing to do deals because they just can't count on another fund, another round of fundraising.

(20:57) The Role of Acquisitions in Business Growth

(20:57) Jeremy Au:

But I think the flip that the game theory that you have on this side is that you would say the other thing, which is, hey, we were forced to do this, but we've built out a capability, let's just say fast forward a few more years. And we're pretty comfortable with integrating and turnaround our business because we just have a better way of doing things. And if we were to do this again, this is we have built a playbook and, integration teams, right? I mean, I used to work at Bain, and I used to handle these post-merger integrations and acquisitions as well. And so it's a capability. And once you've done one, you're like, I could do a second one, a third one.

So the cost doesn't feel that painful, especially when you have internal people who know how to do about it, how, and where to cut the fat. And it was interesting is that, like you said, you never want to be in a position where your BATNA is zero, because, so what you're saying is I'm going to buy preemptively so that I definitely had the right to operate locally because it's embedded and so so forth and then I'd rather pay now for a price where I'm not in a tight bind rather than being in a position where, like you said, the bad net is zero.

(21:49) Shiyan Koh:

Yeah. Yeah. Yeah.

(21:49) Jeremy Au:

So that would be the way you frame it up, you know, internally, right, in terms of conversation.

(21:53) Shiyan Koh:

Makes sense.

(21:53) Marker continue here

(21:53) Jeremy Au:

So seems like that's that. And maybe we'll circle back to this in the future if we have other thoughts about this.

(21:58) The Importance of Taking Time Off

(21:58) Jeremy Au:

People are starting to downshift into the December holidays. I think I had a founder reach out to me and she was like, Oh, I really need to fundraise I want to fundraise now. And I was like, yo, this is not a good type of fundraise. Everyone's on holiday.

(22:09) Shiyan Koh:

I mean, yeah, this is not a good time to fundraise. I would hold off until the new year to kick off a raise if you haven't started already. And try to wrap up conversations if you have things in process. Just expect things to be slow over the next couple weeks. But I would also just encourage people to really take time off for themselves.

(22:23) Jeremy Au:


(22:24) Shiyan Koh:

I think parents of young children will appreciate this, but everyone, which is when you don't sleep, you don't function well. And when you like don't sleep or don't rest for long periods of time, that also degrades your performance. And so I think startups are like incredibly tiring and just like taking the opportunity to like, if you can't imagine taking a week off, just take three days off.

Right. Where you like literally put your out of office message on. Don't check your email and just unwind. It'll take you at least 24 hours to stop thinking about your business. Anyway, so you're not really even going to have 3 days off. Right. But like, I just want to recommend that to people because it's really hard to have clear thinking when you're just exhausted and stressed.

And so by yourself a little bit of time over the holidays, just to unwind and think about next year and. you know, write down like one or two things that you really want to get done that are existential and don't stress about all the details just for three days. Give yourself permission to do that is what I would really encourage folks to do.

(23:19) Holiday Plans and Reflections

(23:19) Jeremy Au:

Ooh. So how are you winding down, Sheehan?

(23:21) Shiyan Koh:

I'm going to the U. S. I'm gonna, I'm gonna and hang out with family, um, you know, bake cookies,

(23:28) Jeremy Au:


(23:28) Shiyan Koh:

Cut down a Christmas tree, all that good stuff, I have my out-of-office message ready to go. You know, the moment I get on the plane, I'm hitting the button. So that's me. How about you? What are you going to do, Jeremy?

(23:39) Jeremy Au:

Also, go to New York City with two kids, my wife and I uh, and we're going to enjoy think some, you know, snow as well. We probably won't cut down a Christmas tree.

(23:51) Shiyan Koh: You can get that from the corner store! You can get them on a discount. It's getting so close to Christmas.

(23:55) Jeremy Au:

Yeah, I probably won't cut down a Christmas tree. I just never got into that whole tradition. Right. I mean.

(24:00) Shiyan Koh:

Well, I've never done it before!

(24:01) Jeremy Au:

Oh, this is also your first time.

(24:03) Shiyan Koh:

Yeah, Yeah, I've never done it before, but I've been told you can buy a permit for $5 and then cut down your tree, and my friend is going to lend me her saw. And so, I told the kids about it, they're excited, but then on reflection, I was like probably I'm gonna do most of the work like I don't think they're gonna be operating a saw, so I might have just shot myself in the foot with this whole plan, but know, I'm excited about it, I think it'll be fun.

(24:23) Jeremy Au:

Okay, send me videos. I will let you pioneer and be the first Singaporean to cut Christmas tree. I mean, it's not a holiday tradition, right? I mean, it's like Christmas, right? It's like Santa, such a heavy coat. There's no snow in the equator kind of thing.

(24:38) Shiyan Koh:

Well, my daughter has told me that she doesn't believe there's one Santa. She believes there are multiple Santas because one person can't visit.

(24:48) Jeremy Au:


(24:48) Shiyan Koh:

That many houses in an evening.

(24:50) Jeremy Au:

Wow. This is actually not bad. I like the

(24:51) Shiyan Koh:

And then Catherine was like, but he has magic reindeer. And she's no mom like it's not possible. So that's why she's like, I think there must be one per like country or territory. Like they, they have to split it up because, you know, they only have one night. Which I thought was pretty amusing. Never mind all the other logistical problems or questions she had not asked herself. Right. About the entire present operation. So, her other question was how does Santa know everything like about whether you're naughty or nice.

(25:18) Jeremy Au:

Ooh, CCTVs.

(25:20) Shiyan Koh:

That was her suggestion!

(25:21) Jeremy Au:

Oh, really?

(25:22) Shiyan Koh:

She said is it the CCTV and I was like, oh my god this Singaporean child.

(25:27) Jeremy Au:

Just tell her, no, it's your phone, it's spying on you. How about that? That's.

(25:30) Shiyan Koh:

Yeah, but my friend was saying like, you know, if they have too much skepticism you ask them the reverse question, right? Which is like what's more likely? Is there a global conspiracy of parents that all coordinated to maintain this fiction or there's a magical band,

(25:45) Jeremy Au:


(25:47) Shiyan Koh:

Thinking about a global conspiracy also seems pretty unlikely. So thinking about a global conspiracy also seems pretty unlikely.

(25:52) Jeremy Au:

Sounds like you're going to enter a Reddit rabbit hole of a conspiracy theorist. I have to remember that, but it feels like that's like a gambit, like a last move kind of thing. Right.

(26:01) Shiyan Koh:

Fortunately, yours are not quite at that age yet. So you've got a couple of years.

(26:05) Jeremy Au:

I'll write down all these moves in the future. There we And I'll be like, you know what? The solution is blockchain, for your privacy. There we go. Okay. On that note, thank you so much for taking your time and I'll see you next time.

(26:16) Shiyan Koh:

Take it easy. Happy holidays.

(26:17) Jeremy Au:

Happy holidays.



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