Singapore: USA Civilian Nuclear Deal, Politicians vs. Technocrats & Allianz Insurance Acquiring NTUC Income with Shiyan Koh - E358

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

1. Allianz Insurance Acquiring NTUC Income: Jeremy and Shiyan dissected the business logic and new facts that have emerged, especially regarding the current competition and performance challenges facing NTUC Income. They addressed the confusing public communications, emphasizing the need for transparent messaging to maintain stakeholder trust and societal confidence. They also reflected on the lessons for nonprofits and social enterprises regarding the importance of the constitution to safeguard social objectives.

2. USA Civilian Nuclear Deal: Singapore signed a thirty-years long “123” agreement to access US nuclear energy technologies and expertise that are under export controls. 95% of Singapore’s electricity is powered by fossil fuels, with low opportunities for solar, wind, geothermal and other renewable sources. Nuclear modular reactors would be one of the few ways to achieve Singapore’s ambitious 2050 net zero carbon emissions pledge. America signed similar deals with Australia, India, Indonesia, Japan, Philippines, Taiwan and Vietnam - with implications for energy security, diplomatic alliances and optionality for national defense.

3. Politicians vs. Technocrats: They explored the contrasting leadership styles and political approach of Tim Walz, JD Vance, and Mitt Romney. With different experiences as teacher, veteran, venture capitalist, management consultant and community organizer, they exhibit the difference in skillsets between governance and winning votes. They compare this to Singapore’s policy and political landscape, and whether technocrats or retail politicians better serve their communities.

Jeremy and Shiyan also discussed the role of regulatory oversight in corporate transitions, the influence of legal structures on organizational missions, and the cultural implications of business practices across different regions.

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(01:40) Jeremy Au:

Hey, Shiyan.

(01:41) Shiyan Koh:

Hey Jeremy, how's it going?

(01:43) Jeremy Au:

Good. I'm calling in from sunny Palo Alto. So Silicon Valley. It's been four plus years since I've been here. It was like pre versus post pandemic and it's crazy because it's it's like before and after and everything looks beautiful. Everything looks the same and, but you know, in your head, like four crazy years went by.

(01:58) Shiyan Koh:

I guess I don't have that because I go to the US so frequently. But, yeah. I mean, it's hard to beat Californian weather and natural beauty. You know, the best.

(02:06) Jeremy Au: Yeah, I've been busy loading up on Mexican food and soon In-N-Out.

(02:09) Shiyan Koh:

Oh no, you should be eating fresh produce. It's tomato season. It's stone fruit season. You should go get all that fresh fruits and vegetables that's hard to find at home.

(02:19) Jeremy Au:

Okay. I did have one salad today, so I do feel like salads are fresh in California as well. How do you resist Taco Bell?

(02:26) Shiyan Koh:

Oh no, You gotta go to the mission. Do not eat Taco Bell. Eat proper Mexican food.

(02:34) Jeremy Au:

I know I did have proper Mexican food, but then you have to have authentic Mexican food and then you got to get your fast food Tex Mex.

(02:40) Shiyan Koh:

To each his own. I'm not judging you. I'm really judging you, actually. Totally judging

(02:46) Jeremy Au:

Thank you for being honest about you judging me. So, on the note of judging, people did write in about the NTUC Income, the Singapore insurance and said that they really enjoyed our episode. Obviously at ,that time, there was very little news, but we had heard about the news and we identified that there was a lot of gaps in the logic that was articulated. And since then, you and I have been swapping a lot of notes about the various like interviews and notes and facts that have come out. So what's your take on the situation now, Shiyan?

(03:10) Shiyan Koh:

I mean, I think the biggest news that came out was the former Income CEO's open letter to MAS. And I guess there were new facts in that, that surprised me. So this guy, in that he had given assurances to the independent board members at the time of enterprises investment that their commitment was to safeguard the social mission and that their capital was going to be permanent capital was not going to be redeemed. And so obviously he feels betrayed now that that is no longer the case. And, he wrote this open letter, but I think fundamentally, to me, there's a question of do you still believe in the social mission?

(03:44) Shiyan Koh:

I think it's one thing to say we needed Income when we were a young country and getting off the ground and all the policy sizes were too small, so no, no profit driven insurance company would underwrite them. So that's why we needed a cooperative to do it. But now we're in a different phase of development and that's no longer the case and therefore, we're not going to do this anymore. So that's like, the motivating idea around our social mission no longer is valid. And therefore the best thing to do is to sell it off, make a profit for shareholders and let the market do its thing. I think that's one thing. I think it's really hard to say, Oh, we're going to sell it to Allianz a profit making entity, but Allianz is committed to its social mission. I just find that really hard to believe because, it is hard to stop profit making entities for behaving in profit making ways. That is their nature. And so, fundamentally have to either say one thing or the other thing. I think trying to get both feels a bit disingenuous to me. What do you think Jeremy?

(04:35) Jeremy Au:

First of all, a fantastic way to describe the history and I think also to describe a fair question to ask, which is, do we believe in the social mission? I think that's also probably what the regulators thought about because we already know that this must have cleared regulators way beforehand. So this must have been a decision that was made. But I said, I agree with you. That has never been articulated as a can of worms. I think the second piece that I really resonate with you is the language was so inconsistent logic-wise that I think it caused everybody to jump on it, right?

Because like you said, one is we maintain a social mission, but we have changed it from a cooperative to a corporation with a cooperative's majority stake in it. So now effectively we're selling it off. So that's one. And then two, I think the other part that I found a bit hilarious on the logic was, was like, what they said was this company is doing really well and we have plenty of money, but we also need Allianz to bring in new money, but then Allianz is going to buy 51% and this company is not going for an IPO, we're just selling shares, right? And I'm like?

(05:31) Shiyan Koh:

So there's no new money.

(05:32) Jeremy Au:

Yeah, exactly. There's no new money. Wait, so it's kind of like inconsistent, right? It's like, you don't need money, but then you're supposedly getting money. But then you're supposedly getting money, but there's no new money. Actually, if you really look at the transfer, what is happening is that supposedly, currently, policyholders will be grandfathered in, number one.

Number two is that Allianz will pay a premium because there's a way to get into the Singapore market and grow a customer base and operations, fine. But three is the premium. The money is not going into NTUC Income or the current shareholders. It's actually going to the NTUC Enterprise you know, those capital, I guess in some levels, returns to the cooperative itself. I think that simplification really should have been spelled out better because I think they just tried to put every single positive message together, but it just didn't make any business logic sense.

(06:15) Shiyan Koh:

Yeah. I think it's confusing. And so ultimately, do you believe that cooperative should exist? And then people make this argument. Oh, but it's not like NTUC is always the cheapest. Therefore it no longer exists as a cooperative or whatever it is. And I was like I mean, first of all, I think there's a million skews because people don't actually want to always compete on price on the exact same thing. They're trying to give people bundles of features that are at a price that people will pay for. And so I think the nature of being a cooperative and not being a profit making corp corporation is that you have more flexibility to offer things that are reasonably priced that are not top of market, but you still cannot sell them in a loss making way because that also does not make any sense. I mean, it's such an interesting situation, but I think it's also like a microcosm of how poor corporate communications is in Singapore.

(07:01) Jeremy Au:

I think we can say corporates do it better, I would say. I think this, I wouldn't call this a corporate communication. I would say it's a cooperative communications era because I think it's just trying to message to everybody, but the crux of it is like, if there are business decisions that don't make sense, you should be transparent about it because if not, people are going to assume the worst of it. So let me give you an example. I think it's okay for us to say that NDUC Income is not the world's best performer because it's not meant to be the world's best performer in terms of profit. So as a social enterprise, like you said, it's meant to be run at breakeven or at low profit levels because it's able to offer better pricing on insurance rates. So what we can say is if we really look at the financial statements and look at it properly, is first of all, NTUC Income is doing well in some segments of the business, especially where there's a social mission because they're able to have a low cost of capital, number one. Number two is they are underperforming in some highly competitive verticals because they're trying to act like a corporation, which they really should not be doing because it's a very different business model and it's also very expensive and they shouldn't be there as a team. Number three is, they don't have a lot of liquidity, but they are rated very highly by the markets because it has implicit government support. And so the whole point of it was that NTUC Income is supported by NTUC Enterprise, NTUC Enterprise is supported by the Singapore government.

The reason why they're able to borrow cheaply on the public markets is because of that implicit government support. And I think we can just say all that stuff and just say yeah, on a standalone basis without government support, it's not the world's best organization and wouldn't have the world's best debt position in terms of security but again, it wouldn't be right because it's a cooperative. So there's the whole point is this is supposed to be a government incorporation. So I just find it like the inability to describe the actual position of NTUC Income as a business, and try and pretend like everything's perfect and therefore it's a perfect time to sell is not the way to do it.

(08:43) Shiyan Koh:

Yeah, I think the short answer is just be straightforward. Don't try to wayang wayang, just be straightforward. Yeah, it's like a very hilarious situation, but I also wonder if the idea of a cooperative almost seems quaint in this era and maybe we are so used to the idea of profit driving everything that it blinds us to other structures that can be helpful. I don't know. This is like a total random aside, but I was on holiday with some friends, and they wanted to go to this place that's famous for some dish. So we went to the restaurant and maybe it was half hour after the restaurant opened, and we get in line, and then they're like, it's sold out.

And then my friend is like, what do you mean it's sold out? What kind of business is this? They know people are coming to buy this. Why don't they just make more? And I was like, I don't know, maybe they had just worked enough for the day and they had made enough money and they're just going to go home and take a nap, hang out with their families. They didn't feel like they needed to max out this thing. And he was like, that doesn't make any sense. He's like, look at all these people, hungry people standing in line. Why aren't they capturing this demand? And it was like an interesting cultural moment, right? Where I was like, yeah, it's true. Why didn't they max out? And maybe, you don't have to max out everything. Maybe it is okay to run something in a sustainable way that is not maximizing profit all the time. Shocking idea.

(09:57) Jeremy Au:

Shiyan, are you a communist?

(09:59) Shiyan Koh:

No, that's it. I'm not a communist. I'm a total capitalist, but I think there's heterogeneity of choice and preference, and we should honor that.

(10:08) Jeremy Au:

Yeah. I think the key thing from my perspective, and I am very passionate about this because I've worked for so many years with nonprofits, with government institutions, and I also worked with a lot of social enterprises as well as for profit organizations that have a social mission on the CSR side. And I think the key thing that's really important here is that legal structures are really important. And to some extent, I think this poor CEO, the guy who made a guarantees that the corporatization of NTUC Income, I think he did believe it. He did believe that it will continue being a for profit enterprise. It allows some flexibility, allow for better management team response to market conditions, but at the end of the day, the legal constitution is the true safeguard of a mission. And the moment that structure was restructured into a corporation with key shareholders, I think the future was almost baked in, in the sense that it was always going to happen eventually to some extent. And so I think it's an interesting piece.

(10:58) Shiyan Koh:

You're basically saying he, he set it on the path already. Vot bien.

(11:01) Jeremy Au:

I think there's a difference between an insurance provider and Singapore Airlines because Singapore Airlines is a corporation, but it does obviously have some very strong government-linked controls on the board and so I think, there's some important pieces, but Singapore Airlines, there's no social mission to it. I mean, it's provide a great experience. The social benefits are clear. It makes Singapore a transport hub. It creates a lot of synergy for conferences, industry, business travel, headquarters, but Singapore Airlines doesn't really have a social mission, explicitly in that way.

(11:29) Shiyan Koh:

Yeah, but it has a national security strategic purpose.

(11:33) Jeremy Au:

Yeah. So I think we just had to be aware that it's not to say he set it a path, but I think it's fair. I mean you can always make the case that somebody said, Do we really need to manage this function anymore because there's not much social benefit? But also I think you can also say there's a management cost, right? Because we are focusing on this business and there's no issue of privatization. Margaret Thatcher did privatize many things that were considered key assets and they became a steady, profitable assets that became much more efficient, but we also see countries doing that thing way around where they nationalize assets and make private assets into public assets.

(12:01) Shiyan Koh:

Fair enough. Yeah.

(12:02) Jeremy Au:

Yeah. So what do we learn from this?

(12:04) Shiyan Koh:

What do we, I mean, the decision had already been made, right? To your point, which is this probably already had regulatory approval and then it was communicated badly. And then there was a big hoo-ha. And I guess, the default seems like it will just go through, but, who knows whether there is enough hoo ha to stop things.

(12:18) Jeremy Au:

Yeah, I think there's a face saving move. A liar's goal is buy 49% instead of 51%, so that could be a story. Maybe it becomes a two-stage process instead of a one-stage process. We don't know what the individual shareholders who are, they may or may not sell or they may not sell all of it. So I think it's not fully baked in as a process. But yeah, I think it was quite clear that this move had been telegraphed internally by the regulators, I'm sure. I mean, there's no way all the various people didn't know, right?

(12:44) Shiyan Koh:

What do you think about the latest announcement of our shared research agreement with the U. S. on nuclear technology?

(12:50) Jeremy Au:

Again, I'm not privy to any information here just in case I get hauled up or but I think, mean, look, it's staring right at us in the face, right? I mean, a month ago, they announced a facility announcing several hundred jobs for nuclear safety. Years ago, we had ministers talking or speculating about the ability of a nuclear power plant in Singapore. And we have Bilahari talking about how small states should have nuclear weapons to guarantee their own national sovereignty in a multipolar world. I think what we're just basically saying here is that, if you and I basically heard that America signed a deal with Saudi Arabia to set up nuclear research, all of us would be saying it's not an energy problem, although it's also a defense and geopolitics issue, right? It's the same way.

In a previous episode, I said what this tells me is that we are on a path to build out a nuclear capability in civilian energy usage. And I think it makes a lot of sense. I think the world is moving towards it. Nuclear reactor safety is much more safer with modular. There's no way for Singapore to really get a net zero for climate change and carbon emissions because first of all, we have oil and gas. Two is we have solar cells, but there's a lot of cloud coverage. We don't have enough space for wind farms. We don't have geothermal. If we want to keep a promise for net zero and we want to be a high tech country that uses all the latest AI chips and data storage and does as much high end manufacturing, you better have cheap energy and the only way to get there is through a nuclear power plant to keep all those promises. I'm not saying that we know that's gonna happen, but I'm just saying like the answer is there, right?

(14:10) Shiyan Koh:

Yeah all things to look forward to. But on a more cheerful note, we have all these great new memes with the addition of Tim Waltz to the democratic ticket.

(14:19) Jeremy Au:

It was so funny because, it was like, I felt like this was like diversity, equity and inclusion recruiting, but in reverse in a sense that, it was like watching,

(14:26) Shiyan Koh:

Even better. There was a picture of Tim Waltz fishing. He's like in full on fishing gear, standing in a river. And he said, and it said, He was an REI hire. REI is like a outdoor goods store. So opposed to a DEI hire, which I really enjoyed.

(14:41) Jeremy Au:

And REI is known for being used by many Caucasians in America for outdoor fishing and so forth. So I guess it was literally spelling out the joke to somebody who may not understand REI as a brand. But yeah, I mean, there we are, it's so funny watching the news and everyone's okay, it's literally spelling out. I was like, we need a white guy basically to be on this ticket. It was just so funny.

(15:01) Shiyan Koh:

I mean, I think they always pick VPs for balance. I do think there's a portion of the US that wants to see people that look like them, but he is a progressive governor. So in a sense, he is a very democratic democrat. He brought in free school lunch, did a bunch of stuff on abortion rights. I don't know. I think what's interesting is that he is a non coastal elite, right? He was a high school teacher. He was in the National Guard. It is such a, he didn't go to Harvard or Yale law school. He didn't work at an investment bank or whatever it is. Like he has a very sort of relatable kind of background.

And I just read the wall street journal did a analysis of his finances versus JD Vance's Vance's finances, and he doesn't own a house. He does not have like substantial investment accounts. The majority of his assets are like his pension from being a teacher and a governor versus JD Vance, who owns over a hundred K and Bitcoin has interest in over a hundred private companies, owns three houses. So I don't know. I mean, I think I like that. I think he feels like a normal person who has just had 15, 20 years in public service.

(16:05) Jeremy Au:

Oh, Shiyan. I mean, why are you not excited for JD Vance? He's a VC. He loves tech. He's also very good on Twitter. He wrote a book on hillbilly energy, which was very popular amongst the Silicon Valley crowd, right?

(16:17) Shiyan Koh:

I think he's an opportunist. Some of the sort of views that he purports to believe, I think are really terrible. So I don't think him being a VC endears him to me at all, actually. I'm not sure most VCs are going to be like great politicians. We should stay in our lane, you

(16:31) Jeremy Au:

Wait. I want to hear the story. So why, why, why, why, why wouldn't VCs be good politicians? VCs like to be on podcasts, self promote themselves.

(16:40) Shiyan Koh:

Whoa whoa, this is getting personal, Jeremy. I don't know. I mean, I think it's an interesting question, right? Do you think the average VC would be a great politician? I don't know if that's true. I think being a great politician probably requires like a fair amount of empathy with lots of different things and making trade offs. It isn't just about picking a winner. So I'm not sure that the skills necessarily always match up. Sure, they might be good on the sort of like fundraising side, which I do think is a key part of American politics, but, I'm not sure, like listening to multiple stakeholders or managing that is necessarily in a VCs and I'm not sure most VCs want to be politicians. So it's interesting.

(17:14) Jeremy Au:

Yeah, I know it reminds me of that story about Obama versus Romney, about creating the manifestos, and I always remember that, first of all, Mitt Romney is a normal guy. And he was a good business executive and he's done a good job and he has a business logic. And I think the years since his election, I think he has a lot of people have warmed up to him over the years, but what I remember was that when Mitt Romney was running against Obama, the story that I heard, and I can't find that thing, but someone was describing that the way Mitt Romney thought about it was like when he was trying to write his manifesto, he basically sat down with his team and he basically in a war room, in a conference room, basically wrote down all the problems of America and wrote down all the ways to fix all those problems, right?

So a very classic management consultant way of thinking about America and then whereas Obama, that point of view was that Obama, his prior record was a community organizer. So his thinking was, what are the communities I represent and that I want to represent, and what are the issues they care about, right? And those are very two different ways to build out a policy manifesto because one is representing community interests, and the other one is more of a technocratic approach, right? And I always think about that story quite a bit often. When we think about politics and so forth is, it's not, I think in Singapore, it's often blended together, like a technocrat and a politician, they tend to get blended as a role.

But I think, I always tell people, if you can't go back, even just like 50 years ago, our politicians were real politicians, since that you're high orators, very clear, the language could go positive, could go negative. And then civil servants and technocrats were initially a different lane, right? And I think Singapore, we've seen a lot of that blending, but I don't think there's a natural way of the world in a democracy.

(18:44) Shiyan Koh:

Not at all. I mean, I think Mitt Romney would have done great in Singapore.

(18:47) Jeremy Au:

He would have done very well in Singapore. He'll be very welcome. I think so. If you think about it, he'll sit down, he'll be like, Hey guys, let's talk about insurance. Okay. Let's do a corporate communications plan and let's lay out five point, explanation for going on.

(18:58) Shiyan Koh:

Even if you look at how civil, you look at how Singapore civil servants communicate with their numbered paragraphs. It's very structured. It does not sound like someone's trying to make an emotional plea to anything. But I think you need a mix, right? I mean, I do think I'm constantly appalled by how poorly San Francisco is administered for all of the money and talent that is there. Why is the city so badly run? I think administration is a key muscle of governing but at the same time, politicians also need to acknowledge that people have feelings and hopes and fears and address those. It is not always an ROI calculation or a cold, hard cash or whatever.

It's like, how does this thing make someone feel? And how do you understand where that's coming from and help navigate people through change? That's what leadership really is. So it's an interesting thing, but I think on topic of writing down your policy manifesto and things like that, what has been interesting to me is that so far the Harris and now Harris-Waltz campaign has been quite joyful versus Biden-Harris, which felt a bit grim, where we are your last defense against Donald Trump and the death of democracy, which is like a very sort of negative positioning, do this so that this bad thing doesn't happen, versus I think Harris-Waltz feels a little bit more positive, which is Hey, here's the future that we think we want to bring about and you should be part of that.

And so even just that change in framing and I mean, the vibe shift, is real. So I think, I think our politicians could probably take some lessons around how to set forth a positive vision for the future. It isn't just a series of policies.

(20:28) Jeremy Au:

Yeah. I think this kind of circles back to the NTUC Income piece, which is there's so many ways to go. That messaging and the messaging was like, everything's fine. Everything's going great, and we're doing this because it's a great financial deal. And it's kind of like, this thing started out as a cooperative, right? It's a social mission. It is an emotional aspect, right? And I think we really shouldn't underweight that.

(20:47) Shiyan Koh:

Yeah, yeah, definitely. So what else is on your list for things to do while you're in California other than eat more Mexican?

(20:54) Jeremy Au:

I think the part about San Francisco that really reminds me about something is, about bubble economy. And I think it ties back to politics. I think San Francisco and Palo Alto, that's actually a wonderful lifestyle to have, right? Like you live in your safe apartment or home, you travel in your self-driving car or Tesla car, you know, bubble. And then you go to a nice workplace where lunch is there and then, it's totally safe. You don't have to leave that bubble. And then you go to another nice part of town, in your Uber again. And then you pop that bubble and then go back home, right? And then it's weird to have that very wonderful tech wall of a bubble of news and everything you want. And then like you said, have some really grim, crime statistics in San Francisco which is a weird contrast.

(21:34) Shiyan Koh:

Yeah, I mean, I think this goes back to, like, and you're seeing this though which is that people are becoming more active in local politics and trying to participate more so whether that's the NIMBY groups or Gary Tan from YC being really active in San Francisco politics, funding more moderate supervisors. There's, I think, democracy only works if people are actually involved, otherwise, yeah, if you always are in your bubble and you don't get involved, then it's really hard to point fingers, especially I think it's also the voting, like often young people don't vote and older people vote, and older people are voting to protect their own interests, which less housing being built because they're trying to protect their property values which, negatively impacts things overall but yeah, I mean, I think we all sort of live in a bubble, right? Everyone's bubble just is different.

(22:14) Jeremy Au:

Singapore is a giant bubble, but everyone lives in that bubble.

(22:16) Shiyan Koh:

Totally. Singapore is totally a bubble.

(22:18) Jeremy Au:

Yeah.

(22:19) Shiyan Koh:

My favorite Singapore story or one of my favorite,, I have all these great taxi conversations whenever they hear my accent, they, first of all, they think I'm foreign and then I'm like, no, no, I'm not. I just, I moved back from San Francisco. This one taxi, I was like, yeah, as you are, san Francisco got a lot of homeless people, correct? And I was like, yeah, there's some homeless people. I asked him uh, got white homeless people or not? And I was like, God, huh? Really? Yeah. I was like, because housing affordability is an issue that impacts everyone.

I explained about how like new houses weren't getting built and blah, blah, blah. And then he's huh? What's that government doing about it? And I was like, I think you fundamentally misunderstand how government works in the US. I was like, kind of nothing. So it's like very amusing to me, right? Because it's first of all, racism aside, there's all these, Singaporeans have all these expectations on what government should and should not do. And they're like horrified when other people are not doing anything. He didn't ask what are the citizens doing about it? He asked, what's the government doing about it?

(23:08) Jeremy Au:

Oh yeah. That's a fair point. What are families doing about it? What's, your local neighborhood doing about it? That's all the fair points.

Yeah, so on that note, let's wrap up.

(23:16) Shiyan Koh:

Yeah. Go eat some strawberries. Go eat some fresh tomatoes for me.

(23:20) Jeremy Au:

That's a good point. On that note, see you around next time.

(23:22) Shiyan Koh:

Alright, take it easy.