51% SE Asia Favor China (vs. USA), Sequoia & GGV VC Decoupling & Mobility Competitor Game Theory with Shiyan Koh - E410

· Podcast Episodes English,VC and Angels,China,USA,Singapore


“Why do we have to pick a side? There's a lot of shared goals between both parties like economic growth, making sure the world doesn't boil over, and feeding the people. There’s a deep underlying shared basis for a good negotiation between both parties. It just feels like we're just not getting there and we kind of lost that consensus. I'm an optimist. I hope that we reach that consensus again at some point of time where everyone figures out what shared basis and have that proper negotiation, but right now, people are being forced to pick sides. There’s a young tech operator who felt that if he chose to work at a Chinese company that's headquartered in Singapore, he will be disqualified from working at an American company later down.” - Jeremy Au

“I always tell founders that they only have three jobs, but the number one is don't run out of money. And one way of not running out of money is being really good at raising money, and the other way having a sustainable business. So we're not in our zero interest rate environment anymore, but I think depending on who you are, you can't drink your own Kool Aid. If you're running the fundraising game, then there is an end point to it. The music does stop at some point, and so hopefully, you took advantage of all that cheap capital and built something that’s great and sustainable. And you didn't drink too much of your own Kool Aid.” - Shiyan Koh

“It's great to get liquidity in any format in this environment for investors, but I think some of the benefits of being public may be more muted because there are compliance and reporting requirements that are actually non-trivial, that you have to do when you're publicly-traded. And as a microcap, you don't get a lot of research coverage because there's just a limit to how many stocks analysts can cover. And if you don't get coverage, then it's hard to get some bigger institutional holders.” - Shiyan Koh

Shiyan Koh, Managing Partner of Hustle Fund, and ​​Jeremy Au talked about three main themes:

1. 51% SE Asia Favor China (vs. USA): Jeremy and Shiyan debated how the region is politically and economically reacting to the China vs. USA's "strategic competition". If ASEAN decision-makers were forced to pick sides, 51% opted for China vs. 49% for USA (ISEAS Institute poll). Pro-China: Malaysia 75%, Indonesia 73%, Thailand 52%, Singapore 39%, Vietnam 21%, Philippines 17%.

2. Sequoia & GGV VC Decoupling: Jeremy and Shiyan discussed how global investment firms are structuring themselves to mitigate US-China risks. Sequoia spun off Peak XV and Hongshan, while GGV announced their split into Granite Asia and Notable Capital (USA). They discuss how Limited Partners (LP) are driving the geographic re-delineation of investment coverage, and why GGV and other funds are exploring more debt instruments.

3. Mobility Competitor Game Theory: Jeremy and Shiyan analyzed the bike-sharing market in Singapore, including public-private partnerships and challenges like weather and infrastructure. They were amused that Anywheel, a bootstrapped (unfunded by VC) company outlasted VC-backed competitors such as Mobike, Obike, and Ofo to win and become the market leader. They discussed how cash efficiency interacted with economies of scale, the promise of winner-takes-all markets, negative blitzscaling, and competitive game theory created the "boom vs. bust" nature of last-mile mobility startups.

Jeremy and Shiyan also replied to listener feedback about overlooking Trump investment links in the TikTok ban issue, the role of public-private infrastructure partnerships in supporting infrastructure projects, and blitzscaling vs. sustainable growth strategies.

Supported by Grain

Grain is an online restaurant that serves healthy yet tasty meals on demand and catering. They are backed by investors, including The Lo and Behold Group, Tee Yih Jia, Openspace and CentoVentures. Their meals are thoughtfully created by chefs with wholesome ingredients. For the month of April, Grain teamed up with Hjh Maimunah to bring you a quirky yet delightful experience for the first ever Michelin-inspired catering in Singapore. Learn more at www.grain.com.sg. If you ever need to feed your teams of family, go check out Grain. 

(01:33) Jeremy Au:

Morning, Shiyan.

(01:34) Shiyan Koh:

Good morning, Jeremy.

(01:36) Jeremy Au:

I still can't believe you flew in so late last night and you're still pushing on.

(01:39) Shiyan Koh:

This is my third engagement this morning. Let's do it.

(01:42) Jeremy Au:

I feel, I feel better. Like I didn't wake you up in the morning.

(01:45) Shiyan Koh:

Coffee. Always coffee.

(01:46) Jeremy Au:

Ah, the secret. All those good flavanols and polyphenols to help you with that longevity. I like how coffee used to be like one of those like good things that became a terrible thing. And then now it's a good thing again, because there's antioxidants, so.

(01:59) Shiyan Koh:

I'll take it. Whatever it is, it helps me. So I'm not, I'm not giving up coffee.

(02:03) Jeremy Au:

So we did get some listener feedback from a past episode, and we will link to it in the transcript below about the TikTok ban and how it's come back four years later. So it was first proposed by Trump four years ago. Now Biden is looking at doing it. And then we had a debate about it, and we had some listener feedback.

So let me just summarize the two perspectives that the listeners had. The first is that they felt that it was not a nationalization. So they said that it is a divestment requirement, but the owner of this could be any non CCP and no non-China linked person. Entity. In other words, I think they're saying that it may not be a nationalization, but it should be bought by somebody who's a non-Chinese buyer. So that potentially, for example, include the Saudi, his or the European. So I think there's a larger ambit of that, or even a pure Singaporean company. So that's one argument of feedback.

(02:50) Shiyan Koh:

Oh, someone proposed to me an alternative structure.

(02:53) Jeremy Au:

Oh yeah, go for it.

(02:54) Shiyan Koh:

They said, look, open AI has already shown you the .Way you can donate the business into a foundation.

(02:59) Jeremy Au:

Oh, and then let it foundation be pure, purely run by the TikTok algorithm. That's going to be a nightmare. That's like Westworld. There's like an AI called Rehoboam. So that's how we do, I create our AI overload. It's like we divested the Chinese algo into a self independent algo. That's hilarious, actually.

(03:17) Shiyan Koh:

Well, so it's not really owned by anyone. So you can save face, right? And it's a foundation. So, I don't know. You could come up with creative ways to structure that.

(03:24) Jeremy Au:

You know what is even more terrifying than the idea of like X person controlling the levers? of the algorithm to show a mirror to society is the idea of a perfect AI-driven mirror to society. That's like even worse because, it's like,

(03:37) Shiyan Koh:

All those experiments with AI CEO, right? so you sort of say, okay, the entity sits inside a foundation. The AI CEO has these objectives. And they set quarterly and annual goals. And we all take our instructions from there.

(03:49) Jeremy Au:

Now that is a truly a weapon of mass destruction there. I mean, I'm just saying like you already have these trust and safety teams all removing all kinds of content, right? But then you just give it to AI like it's a perfect mirror to ourselves.

(03:59) Shiyan Koh:

You're saying it just reinforces the worst parts of everyone.

(04:02) Jeremy Au:

Yeah, because, there's so much control now. I mean, everybody's tuning the outgoes, right? I mean, we already removed the definition of extremist content, whatever the definition is, right? We remove gambling, depending on local jurisdictions. We've removed all kinds of, pornography as well, from the platform as well.

So all that stuff is actually due to a political process, a law enforcement process which feeds into you know, your trust and safety teams in all of these social media platforms and Twitter and Facebook and so forth. So I know it'd be kind of interesting if you let it be truly independent, what it shows, I guess.

Oh, I'll watch this.

(04:34) Shiyan Koh:

You'd watch that movie? You'd watch that Netflix special?

(04:36) Jeremy Au:

I'll watch the 30's.

(04:37) Shiyan Koh:

It's a reality TV, it'd be a reality TV series. What happens?

(04:40) Jeremy Au:

What happens? I just want to see like, so we did a webcam into like white outputs out and then to see like, you know, And then we see like dancing videos, like climb 10x in the popularity stuff.

(04:51) Shiyan Koh:

Sorry, it's just when you were, I just remembered that feedback someone had given me, so I thought I would chime in.

(04:55) Jeremy Au:

Yeah, it was totally fair.

(04:57) Shiyan Koh:

I didn't mean to derail you from the other feedback from our listeners on that episode.

(05:00) Jeremy Au:

And then the second piece of feedback that we got was that, Hey, we missed out on the Jeff Yass angle. So the SIG investment angle where he is a donor to the Trump campaign. He's also a large investor in TikTok and he's also a large investor in the Truth Social SPAC by Donald Trump as well, or at least affiliated with him. So I think it's an interesting kind of, identification that of an angle that I think from my side, I think we fairly didn't cover in our last episode.

(05:25) Shiyan Koh:

Yeah, I mean, that is funny, right? Is that actually a big US fund? It is a financial beneficiary of the evil TikTok.

(05:33) Jeremy Au:

Well, I mean, the truth of the matter is that, a lot of US investors have invested in Chinese equities, whether at the market level or individual stock level. So, I think Bridgewater, for example, Ray Dalio and his successor CEO was slammed for having invested in Chinese equities.

And it was kind of a weird thing because, there's a consensus that's okay to invest in Chinese equities for a long time. And then now everyone's kind of like, putting on the pressure to say that, Hey, that's a disqualifying attribute whether that's on Reddit or in public politics, retail politics as well.

(06:00) Shiyan Koh:

Yeah, I mean, I think also it's interesting that, we're seeing this in how the funds are structuring themselves, right? So we already had the separation of Sequoia China, Hongshan, and India, PeakXV from the main Sequoia. GGV just announced the separation. And then I think there are a couple other big, multi national funds that are probably discussing this pretty intensely given sort of the sensitivities.

(06:23) Jeremy Au:

Yeah. I mean, it's interesting to note GGV, which has been a strong investor in the Southeast Asia ecosystem. So for the Asia partnership, it will be called Granite Asia, right? And the U. S. partnership will be Notable Capital. And then the partners and the managing level has been split, right?

So we have the Asia side. We have Jenny Li and Zhixin Fu, right? And it's going to be headquartered in Singapore, investing in APAC, including Southeast Asia, Japan, China, India, and Australia. And then the U. S. partnership is a notable capital and be led by the managing partners, Glenn Solomon, Hans Tung, Jeff Richards, and Oren Yunger. So it'd be Silicon Valley based, headquartered with offices in San Francisco, New York, targeting US, Israel, Europe, and Latin America. So it's an interesting split that we're going to see. It's a big thing, honestly.

(07:05) Shiyan Koh:

Yeah, I mean, I think they felt like they needed to do that sort of proactively, right? Before somebody came after them to say, Hey, why are you holding these assets? And I think we've also heard LPs, have concerns about, am I going to have exposure if I'm invested in some of these multi region types of things, am I going to have political exposure? And so they're sort of trying to evaluate their risk there.

But I think Jeremy, we were just chatting earlier about like, what does this trade war mean for people who are not American or Chinese? Do you have to pick a side?

(07:34) Jeremy Au:

Or Indonesians or Thai? Or like most people in the world.

(07:37) Shiyan Koh:

Yes. Yes. If you're not in the 1.1 billion, was it 1.4 billion Chinese, or you're not in the 300 million Americans. If you're like, the other 6 billion people. Do you have to pick a side?

(07:46) Jeremy Au:

I used to speak at the Institute of Policy Studies back in 2015, think I was speaking in Singapore, and actually at a panel discussion that we had, that was the biggest question I was asked was, hey, do we have to pick a side between the China and the US on the Singapore side, on a policymaking side?

And, it's interesting because this question keeps resurfacing since 2015. And now it's become even, I don't know, the volume has gone up, right? I don't think it's at volume ten, but a DAO's definitely at, what, volume six, maybe? But it's, I think it used to be at like a one, right? And it's just been like, clicking up by one DAO, every year.

My short answer is, and it's the same as last time, is like, why? Why do we have to pick a side, right? I mean, I just think that there's a lot of shared goals between both parties which is economic growth, making sure the world doesn't boil over and then feeding the people. So, I think there's some like deep underlying shared basis for a good negotiation between both parties. And, it just feels like we're just not getting there and we kind of lost that consensus. And I think I'm an optimist. I hope that we reach that consensus again at some point of time where everyone kind of figures out what that, what shared basis and actually have that proper negotiation. But yeah, I think right now, I think people are being forced to pick sides. In fact, I just had young tech operator and he was basically saying that, Hey, he felt that if he chose to work at a Chinese company that's headquartered in Singapore, that he will be disqualified from working at an American company later down and I was like, I mean, like you said is what's interesting is that whether or not.

(09:06) Shiyan Koh:

The people are asking the question.

(09:07) Jeremy Au:

Exactly. Because people feel that, they feel that pressure. And I was like, and I didn't, why I said to him is, I do believe that if you work at, for example, an executive as a key, so Chinese company in a sensitive area, like social media, for example, I think it would be pretty difficult for you to work in an American company. That's my belief, but I think it's less sensitive if it's like a more like B2B or more back office kind of transfer. I think that's one, but two also, I think that it probably also doesn't matter as much for junior folks. And also I think it's a little bit one directional. That's my sensation. I don't know whether it's true or not, but I think the concept is primarily, if you work at a Chinese company at American company, but I do think that if you work at American link company and you choose to work for a Chinese company, I think that's still a doable move. So that's my point of view.

(09:52) Shiyan Koh:

I think the challenge would probably be more cultural.

(09:54) Jeremy Au:

Yeah. And how many people actually have the experience? I mean, of having done both, right? I think JX Lye, right? He's the founder of Acme, former Chief Product Officer of Endowus. He was a former guest on the podcast, which we'll link to in the link below, but he's one of the few people who worked at both Dropbox and Lyft as well as ByteDance, right? And so very few people in the world have actually kind of like crossed or done both sides.

(10:12) Shiyan Koh:

Yeah. Yeah. It's, it's interesting. It'll be a continuing conversation.

(10:17) Jeremy Au:

What do you think? I mean, you asked me what I think. I was just kind of curious.

(10:20) Shiyan Koh:

I don't know. I mean, I think that like I suspect the barrier is much more cultural than, there's now a blacklist. And if you've worked at any of these companies, we're not going to hire from them, but I do think that if the political temperature continues to increase, then, I think for more senior roles, there'll be more scrutiny. And that will be a consideration. But yeah, interesting times we live in.

(10:37) Jeremy Au:

That actually brings up a good point, which is that recently the use of ISEAS Institute in Singapore recently just did a survey of Southeast Asia. And so basically they asked Southeast Asians if ASEAN, which is the geopolitical association for Southeast Asia had to pick sides, and had to pick between China and US for the first time ever, since this question was started, was being asked since 2020. The majority of respondents now opt for China. So 50.5% would opt for China. And 49.5% would prefer the US if ASEAN had to pick sides, which is fascinating. This came out and, obviously I think it's a reflection of Southeast Asia, right? Which is that it's pretty much 50-50 split right now. It has quite, been quite close to that for quite some time. But now, obviously every paper is hyperventilating that, Southeast Asians would pick China more. I mean, 50.5% is a very small number, right?


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(11:24) Shiyan Koh:

I guess, what does that mean though? What does it mean to pick China? I think a lot of people's experience of China is the investments that they do in their countries. I think through the sort of previous belt and road type of stuff. Whereas I think a lot of people's experience of the U. S. is less that and possibly more sort of cultural exposure: media, entertainment, music even like speaking English. I mean, I, I don't know. I think it's like an interesting, everyone wants to be their own sovereign country, right? Nobody wants to be like a vassal state. So it's like an interesting question. I'm like, I don't know. Maybe this is a guess, like only small countries. It's just like, well, what does it mean to pick sides? Because there's obviously things that you can like and dislike about both countries' policies.

(12:02) Jeremy Au:

So let's kind of like write off some of the numbers. So the Philippines and Vietnam were about 80% would prefer the US. Singapore was about 60% are preferring for the U. S., as well as Myanmar and Cambodia. And then after that, you have Thailand, which is about 50-50. And then you have Brunei, Laos, Indonesia, Malaysia which, generally preferred US for around a 20% to 30% range. So, kind of like in a stack rank of like us affiliation being higher would be Philippines and Vietnamese and the Singaporeans, then the Myanmarese and the Cambodians and the Thais and the Bruneians, Laos, then the Indonesia, then Malaysia. So it was an interesting stack rank. And just to throw in one more number is that similar to what you said is most people don't want to pick sides, but only 8% wanted to choose, whereas 47% basically said that ASEAN should be independent and resist pressure from both the U. S. and China. So the vast majority actually don't want to pick sides either, as you said, but if they had to pick sides, that would be the stack rank of numbers. And we'll insert this chart into the the podcast and the the transcript, yeah.


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(13:01) Shiyan Koh:

Yeah, it's very, it's very interesting. On to less political topics, Jeremy.

(13:06) Jeremy Au:

So yeah, circling back to Granite Asia. So I think there are two interesting facts about it. First of all, they had built an advisory council to guide expansion, which included Thomas Ng, a GGV founding partner Tay Kok Ping, a former GIC president for special investments. and Teo Ming Kian, the former chairman of Singapore's National Science and Technology Board. So, I think quite an interesting vector of folks that'll be on advisory council. The second part of that strategy is that they are looking at exploring private hybrid funding, which is a mixture of both equity and debt. And they want to use that capital to basically explore that different financing structure than what we have historically seen in Southeast Asia, right? Which is pure equity and some debt, I think, in the ecosystem.

(13:43) Shiyan Koh:

Yeah, I think it'll be good. I think having their center be in Singapore and obviously a lot of Singapore connections between Jenny and Jason. So I think that's all really good for the region. I think

(13:52) Jeremy Au:

It's interesting that we're seeing more debt as well. I think a lot of folks I've met are really looking at debt as an instrument for a couple of different reasons, right? But I think the big one is just that for some of the growth trajectories to the companies, that might be a better structure in terms of cost of capital to drive returns, but also get something back as well and various outcomes.

(14:09) Shiyan Koh:

Also, because banks are so conservative in the region, and so I think there is really room for private credit. I think the private credit market here is so much shallower than what you have in the U. S. And so that actually really limits a lot of the growth channels that you're forced to take pretty expensive equity when I do think that is a more appropriate instrument in some situations.

(14:25) Jeremy Au:

I think that the CFOs in Southeast Asia have less experience in debt. I would say as well. Obviously, the CFO field is a little bit less mature compared to the U S. But you know, the set of relationships you need to have to access that the trust relationships that you need to have, but also how to think through the equity and debt capital stack. I think that does feel like it's an area for improvement for Southeast Asian CFOs from my perspective.

(14:47) Shiyan Koh:

Yeah, but I mean, also, we just don't have that many companies at scale, that could take on some of these structures.

(14:53) Jeremy Au:

You need to be profitable.

(14:58) Shiyan Koh:

Which is also not very common for, for startups.

(15:01) Jeremy Au:

You have IP, I think at least some sort of like real IP there, some sort of license rights as well. So yeah, so I think it's an interesting dynamic, but it's kind of like chicken and egg, right? I think as the more VC funds do more that I think we'll see people kind of get smarter about it, but I think it's an interesting instrument that we'll see more of, not less in the future, which is interesting.

(15:18) Shiyan Koh:

For sure.

(15:18) Jeremy Au:

So we had an interesting article about why is it so hard for bike sharing companies to survive in Singapore? So we had SGBike exited and then they had to hand over all their bikes and customers to their competitors.

(15:30) Shiyan Koh:

It is funny, right? Because actually, I think that Singapore is ideal for biking in some sense because it's so flat, but the weather works against you, I think is one piece of it. But I actually think that can be solved with the electric ones. So you don't have to expend as much energy. But also I think in most of the cities where you've seen the bike stuff really take off, there is public-private partnership. So in New York, for example, where the program is used very extensively, Citi is the partner there. Their branding is on all the bikes, but the program is actually run by Lyft. And so I think that helps the program stay afloat but it is sort of like a, you have to believe there is a non-financial benefit to the program, which is one, of course, like there's advertising for the partner, but it's also like lowering the number of cars, reducing pollution, increase exercise for the population, et cetera, et cetera.

But as a pure financial proposition, I think it's pretty challenging. And I think if you remember when they did the crackdowns on the scooters, they made it really hard to like, Oh, you have to park in this specific place. You like, it's like, well, there's no bike lane and can't be on the sidewalk. There's like pedestrians there. And so I think we actually need to do more there. It does seem like end parks is doing a bunch on the bike routes though. If you look at some of the new routes that they've opened up and I do know people who live on the east side, they have a very nice bike commute into town and it's protected. You're not on the road. There's enough space. You're not fighting with pedestrians either. And so I think actually, if you can have more of that, that would be great. And I do know they put a lot of bike parking around MRT stations so that people can do kind of like, bike the MRT station and then take MRT in. But I don't think Singapore is that bike-friendly yet.

(16:58) Jeremy Au:

Yeah. Like you said, it's really hot. It's rainy, and actually, honestly, bikes are pretty cheap, right? So if you live and you know, your route, putting a bike lock is there. So I think it's interesting, like you said, the macro factors of, like, how flat, how much the government is pushing for more cycling infrastructure and the fact that most Singaporeans bike for fun, I mean, that's a lot of good macros. I find it also quite interesting because Anywheel is now the market leader and is the only operator that really didn't take any venture capital funding.

(17:23) Shiyan Koh:

Last man standing. last man standing, bootstrap, cash-efficiency. They beat Mobike. I don't remember, and Obike and Ofo, like those were like the massive VC-funded ones. Those were like dramatic, boom and bust, leave their bikes everywhere kind of thing. So it's interesting that this homegrown company that didn't take venture capital won the VC-funded mobility wars. I mean, we saw Lime out in the US we saw Bird, for example. Those were, kind of like pioneer, the first generation of last mile mobility companies.

Yeah, but I mean, I think in general it is good, right? I would encourage more bike commuting. Even with the electric bike, I think what they've shown is that people who do bike actually they get more exercise than they would have otherwise,

(18:02) Jeremy Au:


(18:02) Shiyan Koh:

If it didn't exist. And so I think those are all net positive. And there's all this stuff about Singapore being, like, a blue zone, and a big part of the blue zone sort of characteristics is that people move their bodies in regular life. It's not just about going to the gym, but there's enough in their daily activity. I just got back from Tokyo I mean, people talk about how Japan is such an aging country, but all those old people are walking around. Like they're taking the subway, you know, they're and it's um, it's not disability friendly, I would say. There's a lot of stairs. There's not always an escalator. You have to walk quite far sometimes to transfer between trains, but you know, I think that daily activity actually really helps people at a population scale level. So, it was, it was just interesting to see that.

(18:39) Jeremy Au:

What it reminded me of is at the end of day, we're down to two players left in the market. So there's them, and then there's a Chinese new entrant, which only has 10,000 bikes. So, I feel like this market by nature has that, like "network effects". I don't know what to call it, a coverage area, whatever that thing that gets VCs very excited to be like, Hey, there's some, there's some, economies of scale, like this market should not be fragmented across 10 different players. It will eventually consolidate to one or two, but I think what's interesting is that it's the non VC funded bootstrap one that got there to the end. Because normally that slide is used to argue that you should VC fund it, and then you need to blitzscale and you need to swamp and swarm the market in order to become the last man standing.

(19:17) Shiyan Koh:

I think blitzscaling is probably not as popular as it used to be, and so, I mean, I think at least if you look at the results for the last five years, right? I think the people who blitzscaled, they're not that many ultimate winners. I think a lot of people just set a lot of money on fire.

(19:30) Jeremy Au:

Yeah, I mean, we're also kind of like a little bit unfair to the author of blitzscaling because, he implied that there was a very strong requirement of positive unit economics before you blitzscale. But everybody kind of said, the public markets are going to reward a cash budding business at the end so therefore, why don't we just make it negative blitzscaling. The unit economics are not fixed yet. You'll blitzscale first to get and kill and become the last man standing. And then we'll switch on profitability monopoly profits afterwards, which is a interesting I thought this was an interesting microcosm of the entire debate that we've had multiple times about the right capital slash growth approach.

(20:02) Shiyan Koh:

I don't know. I always tell founders that they only have three jobs, but number one job is don't run out of money. And one way of not running out of money is like, Hey, you're really good at raising money, but the other way of not running out of money is like you have a sustainable business. So, obviously we're, we're not in our zero interest rate environment anymore, but you know, I think depending on who you are, like you can't drink your own Kool Aid, right? If you're running the fundraising game, then there is an end point to it. The music does stop at some point, and so hopefully, you took advantage of all that cheap capital and built something that was like really great and sustainable. And you didn't drink too much of your own Kool Aid.

(20:31) Jeremy Au:

Yeah. Well, it'll be interesting. You know, do you think the CCCS of Singapore, the competition authority is going to be like, Oh, we see that there's no more competition left, because, Anywheel has 30,000 bikes plus SG bike, probably. I don't know what the total end quantum is. So maybe it's 40,000 or 50,000 or 60,000. I guess the Chinese company, HelloRide has the license to operate up to 10,000, but, it's a bit like the Uber Lyft dynamic, or the Grab Uber or Gojek Grab kind of like choke out. We're just like, you pretty much have 80% share, you have the returns of you have to market size domination. Then he can gives you the profitability margin.

(21:05) Shiyan Koh:

Yeah. Yeah. I don't know. I mean, I think they'll probably want to see kind of how it plays out, cause I don't think you want no players.

(21:12) Jeremy Au:

Like three players is unsustainable for your economics, unless you're really, really well run or very, very patient.

(21:19) Shiyan Koh:

But I am curious who are the users, right? Because to your point that a bike is not that expensive. And so I think I rented a bike maybe when they first all showed up, because I was kind of just curious, but I haven't actually rented a bike. Whereas in contrast, whenever I go to New York, I actually use city bike quite a lot because it's integrated into my Lyft app. And sometimes that's just like the fastest way to get someplace because you don't want to switch trains. It's not on a direct subway line. And you're like, okay, I'm going to bike 25 blocks and that actually is the fastest way to get someplace. So I, I am curious because I've seen them more in like residential estates increasingly, and then also it's like light industrial areas where maybe there are buses, but the buses don't come as frequently and so people would rather ride out to their job or whatever it is, but I'm curious actually who the user base is.

(22:01) Jeremy Au:

Yeah. I mean, obviously there's the tourist side. I've already seen folks there. I, I guess if you are, I don't know, actually, this is something maybe, why don't we reach out to CEO and say, Hey, can you come on and do an interview and talk about how you survived? I think it'd be a fun one.

(22:13) Shiyan Koh:

Yeah, that'd be really interesting. Inside baseball.

(22:15) Jeremy Au:

Yeah, it's interesting because it's, again, it's like a microcosm of everything we talked about, right? We're just like, it's a marathon or a sprint. And, how do you like do that? Because we've seen actually a lot of mobility companies really go through that boom and bust cycle, right? I remember Lime and Bird used to be huge, huge, huge, huge, huge.

(22:29) Shiyan Koh:

I think Lime is still doing pretty well. I think Bird Bird had a lot of challenges.

(22:34) Jeremy Au:

I think Lime is also no longer as big. It's it used to be like the way of the future. And now it's like,

(22:39) Shiyan Koh:

But I think they survived and I think if I recall correctly, their biggest markets are in Europe cause European cities are kind of like more, they're flat, they're more designed for this kind of commuting traffic.

(22:48) Jeremy Au:

For my Europe travel. Sounds perfect. I'm just like, yeah, yeah, yeah, yeah.

(22:52) Shiyan Koh:

You fit in with, with all the other Dutch people

(22:54) Jeremy Au:

No, the Dutch people have such nice bikes. I think mine is going to be like a branded in some garish orange or yellow or green color. They have those little nice European, you know, ones that stand up right, and then a little like basket in France. Like a wicker basket. And then inside is a bunch of fruit

(23:08) Shiyan Koh:

I want the one, the wheelbarrow, the wheelbarrow one, you know, where you put your kids in front.

(23:13) Jeremy Au:

I know. I always want to be like those cycling dads that cycles my kid to school.

(23:18) Shiyan Koh:

You can. Your children are still small enough. Mine are too big. I think it'd be too heavy to cycle them.

(23:22) Jeremy Au:

I know, but then, I'm getting complaints from the wife about, I was like, Oh, it's unsafe.

(23:27) Shiyan Koh:

But see, that's the thing, right? Which is that I actually think that Singapore is not actually that designed for biking in, it's protected bike lanes.

(23:33) Jeremy Au:

It's designed for recreational biking, but not for bike commuting, which is, I think, the biggest driver, if I was to say for this kind of bikes, it's, you commute, right? Because your goal from point A to point B, well, I'm sure some people do, but in that case, then you might as well buy a bike, right?

And so that's, and I think also public safety is a big part, actually, if I were to say one thing as well. If you have your own bike and then you pike it at a MRT, you have your own public safety. Like you don't think it's going to get stolen. You use your own bike, right?

(23:56) Shiyan Koh:

Yeah. Although, I was also thinking whether density was an issue. But in Japan, in Tokyo, there actually were a lot of bikers.

(24:01) Jeremy Au:


(24:02) Shiyan Koh:

I mean, the weather's better, but, and they were protected bike lanes. No, they weren't protected, but they were like sectioned. Yeah. They're protected bike lanes. So you definitely saw more bikers than you do in Singapore. And there's high public safety there as well. So, yeah, anyway.

(24:13) Jeremy Au: In other news, Terence Zhou, the founder of Ryde announced on LinkedIn that he said that he is proud to have made history as the first Singapore ride hailing company to IPO on the New York stock exchange.

(24:24) Shiyan Koh:

It's an interesting choice. I think, it's trading at like a 60 million market cap. So definitely in the sort of realm of micro cap public companies. I think we talked about Oh My Home going public last year and on NASDAQ, and I looked up the numbers there and it's trading at a 20 million market cap.

(24:39) Shiyan Koh:

And so it's kind of curious to me. I mean, obviously it's great to get liquidity in any format in this environment for investors, but I think some of the benefits of being public may be more muted because, there are compliance requirements and reporting requirements that are actually like non trivial that you have to do when you're publicly traded. And as a microcap, you don't get a lot of research coverage because, there's just a limit to how many stocks analysts can cover. And if you don't get coverage, then it's hard to kind of get some bigger institutional holders. So yeah, it's, it's a curious move.

(25:08) Jeremy Au:

Yeah. And, I also have to say that it was a very intentional choice of words, right? Because they said that they had a first IPO at the New York stock exchange, whereas Grab, the market leader in Singapore went on the NASDAQ and they went through the SPAC process, right back in 2020 and 21 which was then the largest foreign SPAC to ever happen during that time.

And I think that record is probably going to stand for quite some time now in this bear market, but I'm mentioning it just because, I think people will want to make sure that I am contrasting that properly.

(25:34) Shiyan Koh:

Yeah. I mean, I think, and there's a, there's a bunch of, I think, sort of growth stage companies that are probably looking to the IPO process. I think Der Shing put out a post on Carro kind of like running through the numbers and, I think they're in a bit of a different situation. I mean, I think they have 180 million in cash still. So they're in no rush, I think and really trying to get the business in tip top shape before going public. And that I think would be a bigger financing.

(25:56) Jeremy Au:

Yeah, I think Der Shing’s article, which you also linked to in transcript was a really great breakdown from his perspective. Again, I think it just goes to show that there isn't much independent financial analysis, I would say, of public reports. And I'm really glad that he's writing. So I think he's going to be a recurring feature in our podcast. But basically he went to look at the end of March 2023 numbers and basically quote unquote, he felt that now they are effectively a car dealer plus car marketplace plus financing companies. There's some extras thrown in like selling ads and insurance. So he felt like at the end of the day, it's a nice synergistic business on the financing and marketplace where one plus one equals 2.5 plus.

(26:29) Shiyan Koh:

Oh, 2.5 plus. Sorry. I was like 1.1, it was 2.5 plus what?

(26:33) Jeremy Au:

Well, he was just saying that it wasn't, I think it was contrasting it to saying it's not one plus one equals five or 10, which is what the dream would be for a tech IPO. So it's this is a 2.5 plus business. So I think some key points it was saying was that, Hey, the Kavanaugh stock, which is a key benchmark has rebounded and Kavanaugh is profitable and trading at 13, 14 times EBITDA, whereas, Carro hasn't hit there yet still lost making overall it's making 5 million. In 2023 growing to 30 to 40 million FY 2024 and still loss making with minus 98 million in FY 2023, right? Which means that from his perspective, 2024 should show narrowing losses, but still be a net loss.

So he thinks that from his perspective is that Carro be valued 10 times EBITDA because of smaller size and loss making, which means that it's probably worth 300 to 400 million currently from his perspective. And which is yeah. And he felt like that as a result, that would be about 60 to 80% discount off the last round for Carro in terms of valuation.

(27:30) Shiyan Koh:

Yeah. They got to grow into their valuation.

(27:31) Jeremy Au:

I think this is a common story for a lot of Asian growth companies. I would say where they have to grow to the valuations.

(27:36) Shiyan Koh:

Well, I mean, I think we talked about the decoupling of Local regional investors versus the international investors that have been driving some of the headier numbers at the growth end of the spectrum. And so I think in this next cycle perhaps we'll see some more measured valuation upticks for companies that are just growing up now.

(27:52) Jeremy Au:

Yeah. I think that's the tricky part is the early investors are still making money in the ecosystem because you're not paying the pricing risk of a cost. They get diluted a lot more than they would have thought they would have had. But at the end of the day, it gets hits the finish line. It's a finish line, right? It says that I think Southeast Asia, the growth stage investors have not done so well.

(28:08) Shiyan Koh:


(28:09) Jeremy Au:

So what's the mantra for the week, Shiyan?

(28:10) Shiyan Koh:

Mantra for the week?

(28:12) Jeremy Au:

You know what this week, any words for intentionality?

(28:15) Shiyan Koh:

No, you know, I, I just came back from a week of meetings in Seoul and Tokyo and I'm headed to Hong Kong tomorrow for another set of meetings. And I was just reflecting on it and thinking like how lucky we are really to get to do the work and meet these people who are fired up about startups and innovation and really wanting to do more in that space. So yeah, maybe, can gratitude be a mantra? I don't know. I'm not a mantra expert, but like, I'm just feeling, I'm feeling you know, we want to be grateful and feel that gratitude because it's been so, yeah, we're so lucky.

(28:45) Jeremy Au:

Yeah. Amazing. I think on my end, I think the word that comes to mind is intentionality. So trying to be a bit more intentional, but some of the choices I have to make rather than reflexive. So I think that's something that felt like, the past few days, I've just been like move, move, move, flow, flow, flow, do, do, do. And now I'm like, okay, I think this is something to do with next week is.

(29:03) Shiyan Koh:

Oh, that's a good one.

(29:05) Jeremy Au:

Yeah. On that note, see you!

(29:05) Shiyan Koh:

Thanks, Jeremy. See ya.