I’ve been a little busy!

About this time last year I started going all in on my side project, OKKA Golf.

OKKA is my passion project. In a nutshell, I screenprint golfwear.

To me, OKKA is equal parts art, creative outlet, golf, and business. A seriously fucking fun combination.

I am not a religious person, but OKKA genuinely feels like some divine purpose I have been put on this earth for.

I’ve put a stupendous amount of time, money, and effort into this already. And I don’t regret a single second.

Do I screw up constantly? Of course.

Do I doubt myself every second day? You betcha.

Would I start it all over again if I had to? Abso-fucking-lutely.

I have nothing to lose.

I’m a curious kid. I love asking ‘why?’ But an extension of that is, “why not?”

Why can’t I create an authentic, high-quality golf brand from Perth?

If you still want to follow my writing, I share all my learnings through .

Yes, it’s more focused on art, creativity, and a small business context. But still very applicable to other aspects of life. Once a value investor, always a value investor!

building a brand - OKKA

keys to creativity

a non-exhaustive list of ingredients to creativity. "Nobody gives a fuck about your creative integrity, none of it matters, just make shit!” be bold and prolific John Mayer explains how you become creative by creating. There’s no thinking yourself into creativity. But you have to be stupidly brave…

Read more

2 years ago · 3 likes · Kalani Scarrott

Allocators Asia has been the biggest blessing I could have ever dreamed of.1

To think 2,000+ incredible people read this is mind-boggling.

Appreciate everything this newsletter and you guys have taught me.

I’m just so stoked to now be putting all I’ve learned into practice.

My 3rd drop is now live. If you do get around to getting anything (no pressure! I never wanna bully someone into buying), let me know and I’ll look after ya :)

Always grateful. (っ ᵔ◡ᵔ)っ

- Kalani

building a brand - OKKA

watch me build a golfwear business from scratch

By Kalani Scarrott

You can find previous posts here. I also write about my business at , interview legends at Compounding Curiosity, and lurk on Twitter @scarrottkalani.

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

I’m all about doubt, questioning ones self, and the nature of reality.
Certainty is my enemy.
- Anthony Bourdain

A bit of time between emails, but I’ve been flat-out like a lizard drinking here. I’ll leave my personal mumbo jumbo until the end, so let’s get stuck in.

The new commodity superpowers

The growing demand for these commodities (rare metals key to the renewable energy revolution) is starting to shake up both the economics and the geopolitics of the energy world. The supply chains for some of these metals are becoming entangled in the rising tensions between the west and China, which dominates processing capacity for lithium, cobalt and rare earths and is considering restricting exports of some materials. Governments from Washington to Brussels to Tokyo are assessing where they can reliably source critical minerals without going through Beijing’s orbit.

The renewable energy revolution is underway, but there’s growing concern about actually sourcing the materials needed. And SHOCK! HORROR! Countries are (rightfully) looking after themselves!? Who woulda thought???

The poster child for harnessing value from materials is Indonesia, which produces nearly half of the world’s nickel, a key ingredient in electric car batteries. Years of export controls on raw nickel have already succeeded in building an extensive domestic smelting industry, as well as battery plants and several electric vehicle factories. After the country banned exports of raw nickel in 2014, it attracted more than $15bn of foreign investment in nickel processing, primarily from China.

Today Indonesia has banned exports of everything from nickel ore to bauxite, with an export ban on copper concentrate coming into effect next year.

Not everyone agrees with these policies, however: the EU has challenged them at the World Trade Organization and won an initial hearing. Indonesia is appealing against the verdict.

But government officials say the country’s efforts to build domestic industry and encourage manufacturing are straight from the same playbook that western countries used a century ago. “This is not something we are doing out of the blue,” says Investment Minister Bahlil Lahadalia. “We are learning from our developed country counterparts, who in the past have resorted to these unorthodox policies.”

Working in the Technology Industry in China

Inject these slice of life pieces right into my veinsssss. Ever wondered what working in tech in China looked like? Wonder no more! Leo previously worked as a product manager for Kuaishou Technology, a leading technology company in the field of SFV and live streaming in China.

Regarding working experience, my biggest takeaway is the cultural emphasis on being data-driven and user-driven.
Data-driven: […] decisions regarding resource allocation or whether we want to fully scale the product after the beta phase are not made solely by the product owner. Instead, we heavily rely on data feedback from the beta launch, such as user retention and user engagement metrics. These also provide a starting point for further user research and reflection on previous version of product design. Kuaishou has a data analysis team of over a thousand members to support every product and business within the ecosystem.
User-driven: As a product manager at Kuaishou, you have the full support of a professional user research team, many of whom come from backgrounds in professional user research firms like Nielsen. For key products, user research is often conducted on a weekly or bi-weekly basis. As an example from my experience with an internationalization product - before launch, the product's official name was not decided by the product manager and the team, but rather by providing initial users with a shortlist and allowing them to vote for the final name, which turned out to be easy to pronounce for users in different languages and accents (this is crucial!) and had no negative connotations in local cultures (this is often overlooked especially when you plan to enter mutiple countries in a short period of time).

See also: My interview with Sean Upton-McLaughlin about Building a Career in China

India - A Subcontinent Of Potential

India is to this day a rather poor country, at least on a per capita basis. In nominal GDP per capita, it is ranked at the level of Congo, Ivory Coast, and Uzbekistan. If looking at PPP, India is still ranked in the vicinity of Venezuela, Nicaragua, and Honduras.

This can be deceiving, due to India's massive population, which allows India to be the world’s 3nd biggest GDP if measured by PPP.

So somewhat paradoxically, India is too poor to really provide for its population, but can also mobilize massive resources into limited projects, as illustrated by the recent Moon landing, making India one of the only 4 countries on Earth to have explored the surface of the Moon.

I think this dichotomy is a major driver of the schizophrenic public opinion about India, usually falling either to “INDIA SUPERPOWER !!!!!!” or “undeveloped dysfunctional economy“.

Both opinions can be placated by cherry-picking either the GDPper capita or the total PPP GDP of the nation.

GRAB + Uber + Ride-Hailing Industry Primer

An absolute behemoth from here.

Nearly all of GRAB’s business operations are in highly commoditized industries (e.g. ridehailing, deliveries, advertising, banking). This implies that sustainable profitability is a direct function of adding value to the customer — which is what will generate excess Gross Profits. There are no moats to hack the system — the only way to grow the business is to genuinely add value to society.

In U.S.-China AI contest, the race is on to deploy killer robots

Credit to for getting me onto this one. Lol’d at the truth behind pesky people making everything so much harder.

Take away the people, and submarines become much easier and cheaper to build. For starters, Ghost Shark has no pressure hull – the typically tubular, high-strength steel vessel that protects a submarine's crew and sensitive components from the immense force that water exerts at depth. Water flows freely through the Ghost Shark structure. That means Anduril can build lots of them, and fast.

But why are these AI subs so important?

If America fails to act, it “could see a shift in the balance of power globally, and a direct threat to the peace and stability that the United States has underwritten for nearly 80 years in the Indo-Pacific,” the report (Closing the Deterrence Gap and Building the Future Joint Force) said. “This is not about the anxiety of no longer being the dominant power in the world; it is about the risks of living in a world in which the Chinese Communist Party becomes the dominant power.”

The Question Li Ka-Shing Should Have Asked About Hong Kong's Future

I'm not singing praises of Singapore or elevating Lee Kuan Yew. I simply admire their mastery of public relations and strategy. Unlike Hong Kong, which has nothing but empty slogans, Singapore's propaganda is the real work of masters.

What caught my attention was Li Ka-Shing's subsequent commentary. He reflected on Lee Kuan Yew's early policies in Singapore, which some might consider authoritarian today. He said, "In the context of their era and historical backdrop, there was no room for laxity. The focus was on improving people's livelihoods and building the future. This, in essence, was the most humane approach, and I deeply admire him for that."

I call this enemy: The Sun - How Japan blocks it out

Just another fun slice-of-life post.

If you imagine a Japanese person sweating, you’d more likely imagine it due to stress than the sun. But for anyone who has been to Japan in the summer, especially during any prolonged heatwave, you’ll know that the sun can be as unbearable as any arid desert or tropical getaway.

China’s Age of Malaise

Agree or disagree on Evan’s points, it’s extremely well written.

The streets of Beijing still show progress; armadas of electric cars glide by like props in a sci-fi film, and the smoke that used to impose a perpetual twilight is gone. But, in the alleys, most of the improvised cafés and galleries that used to enliven the city have been cleared away, in the name of order; overhead, the race to build new skyscrapers, which attracted designers from around the world, has stalled.

Timen Swijtink - Lacàph and Building a Coffee Brand in Vietnam [Spotify] [Apple]

As someone in the early days of , I loved the chance here to interview Timen and pick his brain endlessly on building something from scratch. Particularly enjoyed his point about storytelling as a Superpower

“In wine and spirits, storytelling is so important and the history of Rémy Martin as a Cognac brand is a huge part of why people want to buy Rémy Martin. So it’s the same what we’re trying to do but it started there. I had an excellent experience with working with an artist here in Vietnam and it was there that I realized the added financial value that storytelling can bring to a product because without that context, it’s just another coffee product. If you build that context for consumers and if they appreciate it, not all consumers will appreciate it, but a lot of consumers do, they wanna know about where the products come from and who grew it and things like that. So if you’re able to tell that story alongside your product, you’re gonna add some value and people are willing to pay for that. […] It’s like, we’re selling coffee, but it’s coffee with the story for people that care about where their products come from. […] We’re after people who are curious about the world around them and they care a little bit more about where the products come from and who made it and was it made with care and things like that

Turned my post about the Life and Lessons from Zhang Lei into a video!

[READ] The Alchemist by Paulo Coelho

A gem. A rare book that makes me reevaluate my life and changes how I think. BUT! I don’t think everyone will like this. If you told me “Kalani, this was pure soppy dog shite aimed at basic people looking for life advice”, I wouldn’t argue with you.

“When we love, we always strive to become better than we are. When we strive to become better than we are, everything around us becomes better too.”

Think this is one of those books that will either hit you hard, or not at all. I’m glad it hit me.

“When each day is the same as the next, it’s because people fail to recognize the good things that happen in their lives every day that the sun rises.”

[READ] Invention: A Life by James Dyson

Pretty mid if I’m honest. Usually, I’m all over these kinds of books, but this felt pretty stale. And like one big ad for Dyson products about how they’re so damn great. I don’t know. It just felt light on storytelling, heavy on self-serving bullshit. Pretty dry.

“My tale is one of not being brilliant. I wasn’t even trained as an engineer or scientist. I did, however, have the bloody-mindedness not to follow convention, to challenge experts and to ignore Doubting Thomases. I am also someone who is prepared to slog through prototype after prototype searching for the breakthrough. If a slow starter like me could succeed, surely this might encourage others.”

[READING] Elon Musk by Walter Isaacson

Doing the audiobook version of this (thanks Spotify!) and really enjoying it so far. I also loved Walter Isaacson’s Steve Jobs biography and this is right up that alley. Note: I have already read Ashlee Vance’s biography on Musk (admittedly like 2 years ago?) and I’m not finding this repetitive. The book starts perfectly with a banger:

“I reinvented electric cars and I’m sending people to Mars on a rocket ship, did you think I was going to be a chill, normal dude?”

I swear I say this every month, but busy period for me lately!

Targeting a December 1st launch for my Golf gear venture. I’ve been mad as a dog screen-printing, designing, learning to sew, all so I can put together something unique that reflects me and my passions.

The last thing I’ve wanted to do with this is slap a logo on a tee that’s been all done overseas, without having any of my input and toil put into it.

I’m piss poor at marketing, I’m the first to admit it, but when I put together the full process of my work, I think that’s going to go a long way in showing how much effort and love I put into this.

Anyway, chuck me a follow on Instagram (@OKKAGolf) to see where I’m at :)

I’ll finish with this email with this video though:

Seventy-five years.

That's how much time you get if you're lucky.

75 years. 75 winters. 75 spring times. 75 summers. 75 autumns.

When you look at it like that, it’s not a lot of time is it. Don't waste them.

Get your head out of the rat race and forget about the superficial things that preoccupy your existence and get back to what's important now. Right now. This very second.

And I'm not saying drop everything and let the world come to a grinding halt.

I'm saying that you can become a seeker. You could be loving more. You can be taking some chances. You could be living more. You can be spending more time with your family. You can be getting in touch with the part of you that lives instead of fears. The part of you that loves instead of hates

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via your personal owl and trust that fate will deliver it.

I’m trying to be helpful and listing some great podcast episodes recommended by others, sort them by category, provide some highlights or context, and link to them.

Recommendations are from Patrick OShaughnessy's tweet: What’s a great recent podcast episode?

The format for each episode linked is: Episode and podcast linked to transcript / YouTube [Apple Link] [Spotify Link]

Enjoy!

Business, Investing & Markets

Nassim Nicholas Taleb & Scott Patterson on Tim Ferriss [Apple] [Spotify]

Nvidia: The Dawn of the AI Era on Acquired [Apple] [Spotify]

Costco on Acquired [Apple] [Spotify]

Ben: I want to say a Jim Sinegal [co-founder and former CEO of the Costco] quote, "This isn't a tricky business. We just tried to sell high quality merchandise at a lower cost than everybody else." I think it's hilariously farcical. He's both right and so cheeky. This is an extremely tricky business.

David: Yeah. I have heard him say that many times, too, in my research, and I occasionally hear him say the second part of the quote that he selectively leaves off. The second part is, "Anybody can sell goods for cheap. The trick is to make money while doing so."

Ben: We've talked about a bunch of it in this episode. It's the 50 little things that they do that all synchronize with each other that makes it work. You don't do one of those and it falls apart.

Oh, I want 10,000 SKUs. Oh, I want to be a leader in ecommerce. Oh, I don't want a membership fee. Oh, I want to blow out a bunch of merchandise and do a sale. Any of these trade-offs you break them, the whole thing breaks.

Simon Torring on eCommerce in Southeast Asia [Apple] [Spotify]

Teledyne Early Annual Reports [1967 and 1968 on Spotify]

Where Does Your Return Come From: Yield, Growth, and Multiple Expansion [Apple] [Spotify]

Will England - A Primer on Multi-Strategy Hedge Funds on Invest Like the Best [Apple] [Spotify]

the job of being a PM, whether you're quantitative or fundamental is psychologically extremely toxic because you're going to be wrong basically just as much as you're going to be right. You're going to get kicked in the face a lot and you're going to be someone who's the smartest person that they've known their entire life and then they're just going to get beat up all the time.

And that's what the job is. And that takes a certain psychological profile and that requires training, and I just don't think many humans are wired that way. So I don't know the exact number, but it would be inaccurate to say that you can just take anyone with a resume and assume that they're going to do well in the model. And if anything, probably the multi-manager space, in my opinion, is a bit too crowded at the moment, which is natural in finance because something works when we know more people get drawn into it. And in some ways, we're seeing that right now.

Health, Science & Tech

Dr. Paul Conti: How to Understand & Assess Your Mental Health [Apple] [Spotify]

I thought the whole breakdown of the structure of self was fascinating and a good reminder that we're 95% just a chemical concoction (biological supercomputer) and 5% conscious. - @awilkinson

Also loved the bit about projective identification (radiating stress to others for no reason other than to get attention/make them feel your feelings).

AI-Powered Biological Software with Jakob Uszkoreit, CEO of Inceptive [Apple] [Spotify]

Behavioural & Self Improvement

Derek Thompson: From Acting to the Eminem of Macroeconomic Analysis [Apple] [Spotify]

His maxims for writing:
1. Formula for interestingness: Novel + important = interesting.
2. All interestingness arises from the presence of conflict. To make academic ideas interesting, find the conflict… the point of tension.
3. Ignore the A-holes. Find critics who are rooting for you and listen to them instead.
4. The taste of individuals is surprisingly weird. The taste of the masses is surprisingly basic.
5. Many successful people are like good oil scouts: They spend a lot of time searching for their space, and then they drill deep when they find the right niche.
6. Write to be remembered — so, write musically.
7. Repetition is the God particle of music. Rhythm repeats within songs. Verses repeat, and the chorus repeats too. There's no music without repetition. If you want to make your writing musical, add repetition.
8. When something doesn’t make sense to you, it probably doesn’t make sense to a million readers. When something seems kind of interesting to you, it’s probably kind of interesting to a million readers.
9. Writing a first draft is like crawling through 1,000 mud pits of uncertainty, doubt, mental blockage, and uninspiration so you can sprint for a few minutes in the clean fields of flow between them.
10. Some questions to ask if you're researching a subject: Can you explain this to me like I barely know anything about this subject? What, if anything, is actually interesting or new about this story? Is there some angle here that I'm not even seeing?
11. Every great scene in theater is a fight. Think of your favorite scene from your favorite movie. Did the characters agree on everything? Nope. Writing comes alive when there's conflict hanging in the air.

Richard Koch on The Tim Ferriss Show [Apple] [Spotify]

“Happiness is probably the least selfish thing that you can pursue, because if you’re happy, you’re going to make a lot of other people happy as well. If you’re miserable, you’re going to make other people miserable.”

&

“The 80/20 principle runs … through the whole of my thinking. So, in terms of my own success or money but also things like happiness, I’m trying to think, ‘What are the few things that I need to do in order to attain what I want?'”

Misc

Christopher Nolan: The Nolan Variations on Founders Podcast [Apple] [Spotify]

Every Second Counts with Actor Jon Bernthal (‘The Bear’) [Apple] [Spotify]

Ari Emanuel on Freakonomics [Apple] [Spotify]

Rory Sutherland on Tetragrammaton with Rick Rubin [Apple] [Spotify]

Winston Churchill: Hero of the Empire [Apple] [Spotify]

Although he would become famous for his sharp wit, Churchill was also uncomfortable addressing an audience unless he had carefully written and exhaustively rehearsed every line of his speech. Winston spent hours preparing for every formal lecture and even his brief remarks and would do so throughout his life. A friend would later joke that Winston has spent the best years of his life composing his impromptu speeches.

The Lincoln Highway with Amor Towles [Apple] [Spotify]

The Architect of Modern China [Apple] [Spotify]

“Let us advance courageously, to change the backward condition of our country, and turn it into a modern and powerful socialist state!”

Deng Xiaoping, a man purged by Mao and his followers twice before becoming leader of China, paved the way for a modern Chinese state and economy, opening the country up to foreign investment and technology, whilst maintaining firm control of the Chinese Communist Party. […]

they look at how China transitioned into the global economic and political powerhouse it is today, [and] Deng Xiaoping’s role in transforming the country

Zadie Smith on NPR [Apple] [Spotify]

You can find my previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

"At critical moments in time, you can raise the aspirations of other people significantly, especially when they are relatively young, simply by suggesting they do something better or more ambitious than what they might have in mind”
- Tyler Cowen

The quote is something that hits close to home for me. I’ve had a few overwhelming responses to this newsletter over the years that I’ve now printed out and put under my desktop.

It’s amazing how something so small can affect people’s life trajectories so greatly.

Let’s learn!

Kopi Kenangan, the Shein of Coffee - “The coffee chain that's brewing up a storm.”

Last time I was in Singapore I was lucky enough to meet Louis who writes , and boy is he onto something!

Kopi Kenangan is playing a different game. Instead of selling one product to a wide audience, they are focused on selling a wide variety of products to one audience: Indonesians. There’s no dogma as to what product they sell, or how they distribute it, so long as it remains profitable. If coffee and food products don’t have high margins, they’ll make up for it in volume. 

So far, it’s looking promising. In FMCG, there are three things that really matter: selecting the right product, marketing it, and then distributing it. Kopi Kenangan has proven itself up to the first two tasks, but it’s not clear if it can handle the latter. Tirtanata and Prananto seem to have recognised this however; their selection of investors and strategic partners suggests that they are likely to get some help on this front. 

Women in India: how to get excited by slow progress

Just an interesting perspective on something I literally have zero knowledge about.

Regardless of the end goal in terms of education or employment, the key point Sahana made was that it’s all about agency, being in control of your own destiny. […] Autonomy gives you a seat at the table. Having an independent income can also help to circumvent being encased in traditional systems.

While it is a tragedy this is necessary, many mothers will build savings independent from the family budget in order to support their own daughter’s education. This sort of action can help ‘break the cycle’. Gold is a typical savings vehicle, with many companies offering borrowing against these assets to help women support the cost of education.

China’s Japanification [Archived Article]

China’s housing market correction since 2021 is not only cyclical (or policy-induced), it is also structural reflecting major changes in demand vs. supply in the housing market. This is similar to Japan’s housing market correction in the 1990s.

Second is similarity in financial imbalance, i.e. the pace of increase and level of debt problem. According to the BIS, China’s total non-financial credit/GDP ratio approached 297% of GDP by end-2022, similar to Japan in the 1990s. Also similarly, debt is mainly domestic and domestic saving rate is high in both countries.

The problem of population aging is also similar. The share of aged population (65 and above) was 12.7% in 1991 in Japan, similar to China in 2019 (12.6%).

But it ain’t all bad news in China,

China has a much larger domestic market, a larger pool of STEM graduates and comprehensive manufacturing sectors. While China may be facing a more challenging external environment than Japan in the 1990s, there is also hope that China can achieve technology upgrade and commercialization in some areas. For instance, China has become a leading player in new energy and new energy vehicles in recent years.

Massive h/t to Emerging Market Skeptic for getting me onto this one!

See also: Will China Be the Next Japan? A tale of two housing crises: Charting the path from Tokyo's turmoil to Beijing's bubble.

The Rise & Fall of Foreign Direct Investment in China

From 2000 to 2015 China received about 40% of all net foreign direct investment (FDI) to Emerging Markets (EM). In the wake of the pandemic net FDI flows to China initially surged, but over the last four quarters have turned negative.

In contrast to 2016, the latest decline in net FDI flows has been driven by a sharp decline in foreign investment in China rather than a surge in outbound investment by China. At face value this suggests that ‘de-risking’ of supply chains and diversification through ‘near-/friend-shoring’ may be underway.

But the data is more nuanced and less conclusive: The primary driver of lower foreign direct investment inflows appears to be the repatriation (instead of reinvestment) of foreign multinational’s (MNCs) earnings on their Chinese operations rather than a decline in “greenfield” investments.

Sea - Limited, it seems

with some great insight here around the hottest stock (if only by people’s interest lol) in Southeast Asia at the moment:

Shopee (and Sea’s management) was lambasted for being overly aggressive during 2020-2021 and launching in several markets in LATAM, India, and Europe. The overreach did bite them in the behind and they had to retreat. But for whatever reason, the market seems to think that TikTok employing almost the exact same strategy will be successful. If we’re being intellectually honest, we must admit that TikTok will also likely mess up along the way and retreat from markets where the battle is tougher (or less lucrative).

Related: Hayden Capital’s Letter mentioning Sea Ltd (starts p. 14)

A return to the loss-making days was not what investors wanted to hear. But also did the market really expect the company to remain in “cash-harvesting” mode, when regional ecommerce penetration is still low (~15% on official retail data, and even lower when including informal transactions) and the company still has a lot left to build in its ecosystem’s infrastructure (i.e., self-owned logistics)?

At the heart of it, the market is worried that this recent pivot is primarily a defensive move, in reaction to TikTok’s regional ascent this year. The fear is that Shopee is going to spend all its profits, just to stand still. Perhaps this increased investment is structural (i.e., recurring), something perpetually required to keep competitors at bay. If so, this decreases the long-term margin expectations for the business.

Related: SEA Ltd: The Prodigal Son (2Q deep-dive)

Highly recommend checking out ’s other articles on Sea Ltd as well.

I cannot understand why markets would punish SEA’s share price so severely just because they announced a return to a growth focus [...] Their previously deteriorating businesses are fully healed from a financial perspective, and each of their business units are in much better shape in comparison.

On top of that, SEA has a fortress balance sheet to weather come what may, and their industry’s TAM growth prospects of 10% are as bright as can be realistically hoped for. Going concern risk is practically nil; and they have a dominant 30-50% market share in a commoditized e-commerce industry where competition ultimately boils down to having the greatest economies of scale.

I’m sure I’m missing a lot of negatives since this is primarily a financial statement analysis — but I’m equally sure that I’m missing a lot of positives as well. When your margin of safety is this huge, does it not justify a 12.5x earnings multiple?

Related: ’s eBook with 33 Insights published over a 3-year Period by Independent Analyst Oshadhi Kumarasiri who went against the tide with his Bearish Call on SEA LTD.

Luckin overtakes Starbucks in China sales for first time — thanks to ‘pseudo’ coffee

To the surprise of absolutely no one, consumers freaking love sugar syrup with a hit of caffeine:

For self-claimed coffee enthusiasts in China, there’s also room for debate over whether what they like to consume is truly coffee, Ma said, noting that popular coffee items at Chinese Luckin and Starbucks stores should be better described as “sugary mixed drinks with some coffee.”

Citing industry insiders, Ma pointed out that in the second half of 2022, coffee-based drinks only accounted for 60 percent of sales for Luckin. Of those, “five drinks made up for about 75 percent of the revenues, and four out of five are mixed drinks,” like coconut coffee, the chain’s flagship beverage.

“These drinks are all sugary and caffeinated,” Ma said. “While direct black coffee consumption isn’t very high, there is clearly a high preference for caffeine.”

Taxi drivers are earning more from viral TikToks than from rides

Just cool to see some people getting some success in the content game!

Mpo Bhabay, a full-time motorcycle taxi driver for the ride-hailing giant Gojek, amassed 250,000 followers with her high-spirited TikTok videos. In them, the 44-year-old shares stories about her everyday life — from the difficulties of working as a driver to life as a woman and mother in Indonesian society. 

In the span of three years, Bhabay has gone from offering to do free endorsements for brands to earning three million rupiah ($200) per video — more than half a month’s minimum wage in urban Jakarta, where she lives. With up to four sponsored videos a month, her earnings as a driver for a ride-hailing app — 50,000 rupiah (roughly $3) a day — pale in comparison.

Travel notes: Manila

Finishing with a fun one. I just love boots-on-the-ground analysis and experiences like this. I really regret not doing these types of posts myself last year when I was backpacking through Southeast Asia. Huge miss by me.

I went to Manila on a personal trip with no company meetings scheduled. But I came away more positive than before, given the rock-bottom valuations and a macroeconomic backdrop that’s likely to become more positive once interest rates come down to reasonable levels.

I’m becoming more careful of who I invest with. While the Ayalas, Razons and Gokongweis have decent reputations, other businessmen may not be as trustworthy.

And then there’s a question of politics. For now, Bongbong Marcos seems relatively hands-off. But whether he’ll eventually go down his father’s path － that remains to be seen.

Simon Torring on eCommerce in Southeast Asia [Spotify] [Apple]

Lucky enough to interview Simon Torring, Co-founder of Cube Asia, a market insights company for online retail in Southeast Asia. Cube Asia helps brands, retail companies, and investors drive profitable growth by leveraging more recent, granular, and reliable data and insights about their online sales channels. 

So I picked his brain about anything and everything eCommerce in Southeast Asia. From SEA Ltd’s struggles with Shopee, to the inevitable rise of TikTok shop, if it concerns eCommerce in Southeast Asia, we got it covered.

My favourite takeaway is the eCommerce party may be over, but do you have to leave?

“we were spoiled up until about a year ago, the 10 year CAGR had been very high, 30-40-50% or something like that, an amazing growth. That's never coming back. It's gonna be more, perhaps the next 10 years will be something between 14-17% or something. So still growing much faster than retail is in these markets. It's growing much faster than GDP but that rocket growth period is over and it has very big implications for the brands that are selling because they've been used to treating e-commerce as a new venture and something where top line mattered and where profitability would be sometime in the future. And what's happening now is the top line growth party's over. It's much more now about just sustainable operations, reaching profitability and it's a very interesting moment in e-commerce.”

Related: This tweet from @FredaDuan

Southeast Asian eCommerce space is looking more like China now:

In just 5 years, China market went from a firm & duopoly to a bustling market with 5 solid contenders.

The question: Is Sea Ltd shaping up to be Southeast Asia's version of Alibaba?

As public companies like walk the tightrope between growth & profitability, private companies (like TikTok Shop) which do not have as much concern on the burn rate are expanding aggressively.

Unit economics of TikTok Shop:

- Lower take rate: 9% for 3P platform vs. 5-7% for TikTok

- Better ROI: closed loop system; merchants advertise on-app & track conversions effortlessly

- Traffic & Acquisition: TikTok Shop's secret weapon: Ready, active users. Traditional e-comm platforms constantly battling to stay relevant w/ ads spent on and .

Giuliano Octavianos, Head of Asia Expansion at Coinbase on just build: exploring the journeys of asia’s builders [Spotify]

Alongside Louis from who I shared at the very start of this article, is another Singaporean wunderkind destined (and on track) for great things. (We all had a coffee together and boy did I feel like a fish outta water!)

Beyond cool to see her launch her own podcast! I know how tough and daunting it can be to start a podcast, so be sure to check the podcast out and show some support if you love it like I do!

Turn off your clickbait title detector for a few seconds, because this video is so extremely based.

99% of success advice is for normies who are okay with settling. And I was not okay with settling, so I followed the 1% batch of crazy advice. Warning, if you don't have an open mind, you're going to think this video is crazy

TL;DW?

1. Focus on earning more and not saving or spending less. Instead of thinking, how can I save an extra 100 this month? Think, how can I make an extra 100 this month? Because making money is a lot harder than saving it.

2. Realize that you don't get like an assistant or a house cleaner or, you know, employees when you make X amount of money. Getting those things is how you make X amount of money. Because outsourcing frees up your brain and frees up your creative energy.

3. Words are spells. I realized that my negative money talk was manifesting in real life.

4. Rich people have nicer but less things. You will feel so good and so luxurious and your actions will follow.

5. Lower your stimuli. Put your phone in black and white. Don't watch the news. I haven't watched the news in probably a year. You'll Don't doom scroll. Sit in silence. Meditate. Do yoga. Mindfulness. Lower your stimuli.

6. Have a why. I was in a job where I was treated unwell, and I couldn't leave because I didn't have the money. Money gives you options to leave bad situations.

7. Everything is an investment. What you read, who you hang out with, your biggest asset is your attention. Invest it wisely.

8. You need a fallback. You can't make good decisions in survival mode, and this is why I failed in entrepreneurship in the past several times, because I was always in survival mode because I didn't have a monetary fallback.

9. You have to take massive ownership of your situation. Massive. Say it with me, my life is a direct result of my past actions. If you don't agree with that statement, you've already taken the L. Sorry. And I know what you're gonna say. “I'm not responsible for blah blah blah blah blah this horrible situation I am I was in. I'm not responsible for where I come from”. Of course, you're not responsible for that. But you have to take responsibility for it in order to move forward. I know that fucking sucks, but you have to.

10. Don't spend money on things just because society says so or your culture says so. Basically, just question everything.

11. Get out of the consumerism mindset ASAP. Unfollow all brands. Rip the labels off shit that you buy. Unsubscribe from brand emails. Shop at brandless places like the farmer's market.

Building a resilient PE business in Asia - fireside chat with Tracy Ma, Hillhouse Capital

I’ve previously dived deep into the life of Zhang Lei. But the story behind Tracey Ma, his first employee, who is now a partner and COO, is just as interesting.

At the time I called an old classmate and asked him to join. He refused but recommended his wife. I asked: "Are you serious? You refused me and 'threw' your wife over?" His answer at the time was very objective and sincere: "I'm already a partner in a large law firm!"

And this video has only barely cracked 1,000 views on YouTube! How blessed are we. So this is the perfect chance to hear first-hand how Hillhouse has developed over the years.

Malacca: The Strategic Significance of the Strait

My latest YouTube video based on ’s excellent post, Malacca Strait: why does up to 40% of global trade flow through here?

[READ] This Is Not a T-Shirt by Bobby Hundreds

Half memoir of Bobby, half business history of The Hundreds. Success, failure, and lessons learned in building a streetwear business.

Definitely recommend it if you’re looking to learn about building a brand and community, as Bobby has done it from the ground up.

The best and worst thing about entrepreneurship is that there are no rules. There's a history behind you to acknowledge, learn from, and build off, but you also don't want to follow the blueprint too closely; the past is in the past.

Every generation progresses by questioning tradition, reinterpreting established practice, and adding its voice and style. It takes balls to forge new territory. It takes guts to say no to best practices. Whenever up-and-coming entrepreneurs ask me what it takes to gain the industry's recognition, I say,

"You shouldn't care about earning their respect. You should be doing everything in your power to piss them off."

On my side Substack, I’ve compiled all my takeaways.

[READING] Total Recall: My Unbelievably True Life Story by Arnold Schwarzenegger

A big bastard of a book, but an enjoyable read. The dude gets after it, and markets himself well. When Arnold finishes recording his scenes for a movie, the work isn’t even remotely done. He’s doing non-stop interviews and travels not just in the US, but everywhere overseas too. He saw the value in foreign audiences well before others did.

Early to bed, early to rise, work like hell, and advertise

And,

“it's not what you get out of life that counts. Break your mirrors! In our society that is so self-absorbed, begin to look less at yourself and more at each other. You'll get more satisfaction from having improved your neighborhood, your town, your state, your country, and your fellow human beings than you'll ever get from your muscles, your figure, your automobile, your house, or your credit rating”

Apologies for the radio silence on my end since the May email, been a little busy!

In a change-up, I’ve been working on a side passion of mine, building a golf brand. I love golf. Like I’m playing 4-5 times a week. And the days I’m not I’m thinking about it 24/7.

My simple solution to a problem I’m solving is: golfwear fucking sucks.

It’s either boring as batshit company logo polos for fat old dudes, or over-the-top tacky ass designs for frat bros.

We can do better than that.

So hand-designed, hand-screenprinted by me, with a solid personal touch is what I’m trying to achieve!

Slow and steady wins the race and I’m hoping by December I’ll be able to start slinging out some polos and shirts for those in the know :)

building a brand - OKKA

watch me build a golfwear business from scratch

By Kalani Scarrott

I’m not really a poem guy, but today I’ll finish with one. My takeaway is that just because something special ends, doesn’t mean it was a waste. So if my foray into golfwear crashes spectacularly, I won’t even be mad because this steep learning curve has been a bloody fun one.

You can find previous posts here. I also interview legends at Compounding Curiosity, and lurk on Twitter @scarrottkalani.

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

“You must recognize what you are about to do, highlight what you do not like about it, and spend time visualizing each and every obstacle you can.”

- David Goggins

A big month for me. So a shorter compilation than usual.

A recap of my run across Singapore is down at the end.

Otherwise, let’s dive into some sweet content!

Chart of the Month - MRT/LRT map overlaid on top of a map of population density in SG

Carro: Solving the Lemon Problem

Louis does a great job breaking down their business model and showcasing the large market opportunity for them. Not a hype piece. Not a hit piece. Just a good ol’ fashioned deep dive.

the used car market is large, fragmented, and generally a terrible experience for most users. There’s no reason to believe that such features are unique to any one country; after all, the lemon problem is not constrained by geography or culture. […]

But if we go back to the core problem that Carro solves (and use a great deal of imagination), it’s possible that Carro will facilitate any vehicle-based transaction that has an opaque market. Trucks, lorries, yachts, bicycles, e-scooters - these are all fair game.

Of course, not all of these will materialise, and those which do will have to operate on a tweaked business model. But if this is any sign of Carro’s ultimate potential, we’re in for a ride.

How Tokyo Became an Anti-Car Paradise

When you think of Tokyo, the first image that may come to mind is the insanity that is Shibuya crossing. Or the crowded streets and busy footpaths. But in recent years, the city has been making a concerted effort to reduce the number of cars on its roads and make it more pedestrian-friendly.

[Andre Sorensen, a professor of urban planning at the University of Toronto, who published a history of urban planning in Japan] told me about how in the 1950s and ’60s, the trains were a huge point of national pride for the Japanese government, a bit like car industries were elsewhere.

“And justifiably! It was a fantastic invention. To say we can make electric rail go twice as fast. What an achievement.” Thanks to that, the railways ministry became a huge power center in government, rather than a neglected backwater as it often had become elsewhere.

Pair this with: My conversation with Jorge Almazán, a Tokyo-based architect and author of Emergent Tokyo: Designing the Spontaneous City.

Jensen Huang NTU Commencement Speech 2023

You know if the speech is getting comparisons with Steve Jobs' Stanford Commencement Address then it’s gotta be good.

Retreat does not come easily to the brightest and most successful people like yourself. Yet strategic retreat, sacrifice, deciding what to give up is at the core, the very core, of success.

And this next bit is extremely topical for me, so can’t not include it!

Either you're running for food or you are running from becoming food. And oftentimes you can't tell which. Either way, run! And for your journey, take along some of my learnings, that you will have humility to confront failure, admit mistake, and ask for help. 

You will endure the pain and suffering needed to realize your dreams.

Pair this with: Michelle Yeoh addressing the Harvard Law School Class of 2023. Spoiler - Stay loose, Know your limits, and Find your people.

"Learning how to fall teaches you how to land and learning to land gives you the courage to jump higher"

How Japan Won the Lithography Industry (& Why America Lost)

Extremely common Asianometry W.

In 1978, 70% of all the world's lithography equipment came from an American supplier. As late as 1982, Americans still held 62% of the market.

Seven years later in 1989, Japanese firms held 70% share of the market - led by their two lithography giants: Canon and Nikon. The American once-market leaders, rapidly declining. One loses $100 million by 1986. The other withdraws from the market entirely by 1989.

How Japan got its swagger back

Japan's economy is growing at its fastest pace in years, thanks to strong exports and corporate earnings, yet stocks are still trading at relatively low valuations compared to other developed markets.

shareholder activism has also evolved to sit more comfortably in the mainstream of Japan investment. The number of activist funds in the country has risen from under 10 in 2014 to nearly 70 this year. Between 2015 and 2022, notes Masatoshi Kikuchi, chief equity strategist at Mizuho Securities, the number of shareholder proposals submitted by activists in Japan rose from below five to nearly 60.

Investing with Impact with Johan Rozali-Wathooth [Spotify] [Apple]

Everything I love about making a podcast. A passionate guest, interesting stories, and above all, just dealing with amazing, kind people. Johan is a legend and I’m so stoked to share this one.

Big Panda asks Little Dragon, "What's more important to you: the journey or the destination?" To which Little Dragon answers, "Neither. It's the company."

As always, the most efficient way to share videos is through a YouTube playlist. Videos include both well-known channels and some hidden gems. But mostly, I just want to showcase some of the most insightful and interesting videos related to Asia-Pacific for this month.

[READ] Never Finished: Unshackle Your Mind and Win the War Within by David Goggins

No surprises around this recommendation given the month I’ve had. And I definitely recommend the audiobook version for this one given there’s a mini-podcast interview at the end of each chapter giving more context and insight.

“Every minute you spend feeling sorry for yourself is another minute not getting better, another morning you miss at the gym, another evening wasted without studying. Another day burned when you didn’t make any progress toward your dreams, ambitions, and deepest desires. The ones you’ve had in your head and heart your entire life.”

Ready to run through a brick wall after this.

“We all owe it ourselves to stand for something. Principles give us a foundation — solid ground we can trust and build on as we continue to redefine what's possible in our own lives. Sure, some will be put off by your dedication and level of effort. Others will call you obsessed or think that you've gone crazy. When they do, smile and say, "I'm not crazy. I'm just not you.”

Pretty crazy month man. Preeeeetty bloody crazy.

Spent a day running 53km across Singapore. Got my story featured on Mothership. What else is there to say?

I gave a full recap on my Instagram which I’ll include below. Fair warning, has some naughty language if that’s not ya kinda thing.

But overall, it’s honestly one of the best things I’ve ever done. Highly recommend anyone who’s keen on having a crack at it.

Happy to help out in any way possible with advice re: the route, tips, and tricks.

The biggest question I’m asking myself is: “What challenge is next?”

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

"Stand up! Be bold! Be strong!

Take the whole responsibility on your own shoulders, and know that you are the creator of your own destiny all the strength and success you want is within yourself.

Therefore make your own future”

- Swami Vivekananda

Short and sharp issue today. Let’s go.

Chart of the Month - Population Circle

The Epic Tale of Japan's Mightiest Companies: The Sogo Shosha

Rei again bringing the goods. The Sogo Shosha are a fascinating example of Japan's economic history. They're a reminder of the country's rise as an economic superpower, yet they're also a symbol of the challenges that Japan faces as it tries to adapt to a changing global economy.

the biggest Sogo Shosha are truly a one-stop-shop, handling everything from hardware and software development to construction, farming, factories, retail, medicine, and even government functions, such as laws and infrastructure procurements.

While trading companies can be found around the world, only a few can boast the scale of operations and versatility of a Japanese Sogo Shosha. These giants have a global distribution network and utilize their financial resources to their fullest, with economic sizes that could rival some countries, truly making them a force to be reckoned with.

Naval Warfare, the Crux Of Industrial War

There is also the discussion that China’s navy is a “green sea” navy. It means it is mostly designed for coastal defense, and ill fit for overseas expeditions.

It is entirely true and would be a serious weakness if Chinese ships wanted to, let’s say, blockade the Panama Canal. Or defend Chinese interests in the Atlantic.

However, I doubt this is much of an issue to control the South China Sea…

Especially as this is a shallow sea, where submarines might struggle to make a difference.

So combined with the presence of missiles and air force on the mainland, able to support the Chinese Navy (more on that below), I would say both navies are on relatively equal footing at the moment.

And the balance is quickly tipping in China’s favor.

And some interesting (worrying?) stats around shipbuilding:

Ultimately, in case of a USA-China hot war, military shipyard capacity will be relatively irrelevant. WW2 was won by the USA by converting civilian capacity to military one.

Ford & GM car factories —» tank factories.

Civilian shipyards —» military shipyards.

So military shipyards are maybe not THAT important. In case of a serious conflict, the “spare” capacity of the civilian industry would be the real determining factor. […]

The problem for the West is that the ENTIRE shipbuilding industry is now in Asia. I am not exaggerating. Only 4% of the world’s ships are NOT built in Japan, Korea, or China…

“Hardtech” Corporate VCs Rising in China

A startup’s golden ticket to fame and fortune used to be a check from either Alibaba or Tencent. During China’s Internet boom, you are either on “Team Ali” or “Team Tencent.” With that affiliation comes either the massive platform advantage on Taobao or AliPay that Alibaba offers, or the massive traffic and distribution advantage on WeChat that Tencent offers. […]

Up until 2018, more than 50% of China’s tech unicorns are still either with Team Ali or Team Tencent. With a slowing economy, Covid, tougher antitrust and data regulations, intensifying technology sanctions from the US, and the central government’s broad effort to clean up 40 years of “startup debt” since Opening and Reform […], being in either Alibaba or Tencent’s orbit is not what it used to be, as both giants try to “look smaller.” […]

Alibaba and Tencent’s combined investment deal volume (blue) has fallen to about the same level as the combined volume of Habo, CATL, BYD, and Xiaomi (orange).

China On Track To Pass Japan in Auto Exports

EVs are going to help China do to Japan what Japan did to the US in the 1970s. So Japanese automakers are feeling the pressure from Chinese competition, and for good reason.

But some of the Japanese automakers pain is self inflicted:

when there is a big, abrupt shift in technology and market conditions that undermine the existing business model, the dominant players are likely to stay with the old technology and business model for too long because they underestimate the shift in front of their eyes, That gives room for new challengers to rise.

Japanese firms suffer an additional problem hobbling their ability to adapt to change due to almost exclusive promotion from within the company, executives find it hard to abandon a product or technology championed by the seniors who sponsored them. That would feel like a betrayal. It’s one of the reasons companies like SONY lost billions of dollars over many years by sticking with TVs for far too long. Can new CEO Koji stray very far from the strategy trumpeted by Toyoda?

It is not foreordained that Toyota, Honda, et. al. will fall victim to this common pattern. But time is not on their side.

Here...comes...INDIA!!! - The world has a new largest country, and it's on the move

Home to a large population, a rapidly expanding middle class, a favorable business environment, and well-positioned to benefit from the global shift to a more digital economy. India is poised to become a major economic power in the coming decades.

I admit that I don’t yet know what all the results of India’s rise will be. But I feel that it has to be something to celebrate — not just because it means hundreds of millions of human beings released from desperate poverty, but because it means a richer world. Economically richer, yes, but also culturally richer, politically more multipolar. It will be a world where power and wealth and global mindshare is no longer monopolized by the powers that carved out empires in the 19th century. If the human race is to flourish on this planet, India’s rise had to happen.

Long-term front-running - An introduction to value investing

Michael does a tonne of incredible work with Asian Century Stocks, and this primer is no different. Gonna be a piece I share thick and fast with mates looking to learn more!

Getting to a well-balanced portfolio requires turning over many stones and discarding ideas that didn’t work out. And when you find ideas that score particularly well, be prepared to bet big.

Acquired Podcast: The Death of Japan’s Sega Corporation (1:05 hours) [Spotify] [Apple]

In a single console generation, Sega went from ~0 to 50% US market share (dethroning Nintendo!!), and then kind of just… died? A shorter than normal Acquired episode, but one well worthy of a listen.

I love the story about the disaster that was the Sega Saturn:

the PlayStation will be released in the US on September 9th, 1995. Sega's like, great, they're not moving it up, we're going to beat them to the punch, we're live today, we got a four-month head start, let's go. Then the new head of Sony Computer Entertainment America, Steve Race formerly of Sega of America, up to the podium to give a "brief presentation".

He walks slowly up to the podium. He's got a large stack of notes. He places them down on the lectern, shuffles them around, waits a beat, he's ready to give his big speech. He looks up, he looks at the audience, and he says, $299. Then he picks up his notes, and he walks off stage. Most people in the industry, I think, would agree that this is the greatest moment in all of video game industry history.

Why on earth would any consumer go buy a Sega Saturn today on May 11th, on its launch day, that has no Sonic game, has only six games total, and it costs 399, when you now know that the PlayStation which is far superior, is going to come out just four months later, they're going to have perfect ports of all the latest and greatest arcade technology video games, and it's going to cost less? You're not going to buy a Saturn.

and poor little Sonic

Sonic was a one trick pony, and that they never really found an effective way to expand the franchise. [...] It feels to me like there's a lot of nostalgia to play with, but it didn't really create any durable extensible IP or gameplay, frankly.

Been (a little) busy on the YouTube channel, doing not one but two(!) videos this month!

My latest one was a collab with from about his post, Samsung is in a crucial transition.

From its humble beginnings as a small trading company in postwar South Korea to becoming a global technological powerhouse, Samsung has left a permanent mark on the world of tech.

Join me as I help explain and analyse its incredible origins, iconic products, and relentless pursuit of excellence that defines Samsung's legacy.

My other video this month was another collaboration this time with from on his post The Cultural Superpowers of 2072.

Culturally, America is the most dominant country today. Everyone wants to watch American TV shows, listen to American music and follow American politics.

There are three important things to being culturally dominant: high incomes, a large market and cultural freedom. America has all three, and is unique in having all three at the same time.

But other countries will grow faster and hit all three criteria, they will become culturally dominant. Maybe not in 10 years, maybe in 25, and very likely in 50 years, the market for popular cultural attention is going to be dominated by (currently) developing countries.

But otherwise, my video recommendations are the same as every other month, through a YouTube playlist. I aim to highlight both well-known channels and some hidden gems. But mostly, I just want to showcase some of the most insightful and interesting videos related to Asia-Pacific for this month.

[READ] From Third World to First: The Singapore Story: 1965-2000 by Lee Kuan Yew

I don’t think it’s actually meant to be a "how-to" book, but this is probably the GOAT material on nation-building.

The future is as full of promise as it is fraught with uncertainty. The industrial society is giving way to one based on knowledge. The new divide in the world will be between those with the knowledge and those without. We must learn and be part of the knowledge-based world. That we have succeeded in the last three decades does not ensure our doing so in the future. However, we stand a better chance of not failing if we abide by the basic principles that have helped us progress: social cohesion through sharing the benefits of progress, equal opportunities for all, and meritocracy, with the best man or woman for the job, especially as leaders in government.

Where do dreams go to die? Is it in a cubicle, working 9-5 Mon-Fri?1

I’ve started applying for full-time roles of late2 in finance again, and I'm already feeling like a part of me has died. A wishful part that dreamed of working online, freelancing, or maybe even one day having 1,000 true fans.

I keep trying to remind myself about Tim Urban’s life path tree. Because looking back on when I was a kid, I think what I enjoyed is I really could have done anything or been anyone. A legendary sportsman was possible. Backpacking hippie. Corporate highflyer.

I feel like my potential lifepaths are closing fast. And scariest of all, what if I’m destined to be mid?3

On one hand, I feel young. 27 compared to 77-year-old retiree is blissful. 27 and having no career, no home, no status, no true calling, can be a a little stressful.

If I ‘succeed’ and get a full-time gig, is this it? Is this life?

Go to work for the majority of my weeks, buy a house, pay off mortgage, retire? Where’s the fun?

I like to say variety is the spice of life. So how do I make my life spicy goddammit! Pls help.

I apologise for my whinging and whining. It felt good to write this out.

Overall I’m actually in a good head space. This one teeny-tiny aspect of life just depresses and scares me.

Until next time! 🙃

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Also, a cheeky reminder to subscribe to my YouTube channel! I post videos every time I feel like it and you’ll not only learn a tonne, but be entertained too.

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Recommendations are from Patrick OShaughnessy's tweet: What book legitimately changed your life?

Categories

Classic Literature & Fiction

• 1984 by George Orwell

• Animal Farm by George Orwell

• Atlas Shrugged by Ayn Rand

• A Wrinkle In Time by Madeleine L'Engle

• Blood Meridian: Or the Evening Redness in the West by Cormac McCarthy

• Death of Ivan Ilyich by Leo Tolstoy

• Kane and Abel by Jeffrey Archer

• Letters to a Young Poet by Rainer Maria Rilke

• Musashi: An Epic Novel of the Samurai Era by Eiji Yoshikawa

• Revolutionary Suicide by Huey P. Newton

• Shantaram by Gregory David Roberts

• Slaughterhouse-Five by Kurt Vonnegut

• The Fountainhead by Ayn Rand

• The Hobbit and The Lord of the Rings by J.R.R. Tolkien

• The Picture of Dorian Gray by Oscar Wilde

• The Road by Cormac McCarthy

• The Second Coming by Walker Percy

• The Stories of John Cheever by John Cheever

• The Sun Also Rises by Ernest Hemingway

• The Three-Body Problem by Cixin Liu

Biographies and Autobiographies

• Am I being too subtle by Sam Zell

• Barbarian Days: A Surfing Life by William Finnegan

• Bo Knows Bo by Bo Jackson

• Can’t Hurt Me by David Goggins

• Fearless by Eric Blehm

• From Third World to First: The Singapore Story – 1965-2000 by Lee Kuan Yew

• If This Is a Man and The Truce by Primo Levi

• Letter to My Daughter by Maya Angelou

• Let My People Go Surfing by Yvon Chouinard

• Life Lived Wild by Rick Ridgeway

• Made in America by Sam Walton

• Miracle In The Andes by Nando Parrado

• Not Fade Away: A Short Life Well Lived by Laurence Shames

• No One Here Gets Out Alive by Danny Sugerman

• Poor Charlie’s Almanack by Charlie Munger

• Shoe Dog: A Memoir by the Creator of Nike by Phil Knight

• The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope by William Kamkwamba & Bryan Mealer

• The Choice by Edith Eger

• The Fish That Ate the Whale by Rich Cohen

• The Power Broker: Robert Moses and the Fall of New York by Robert A. Caro

• The Snowball: Warren Buffett and the Business of Life by Alice Shroeder

• Total Recall by Arnold Schwarzenegger

• When Breath Becomes Air by Paul Kalanithi

• When I Stop Talking, You'll Know I'm Dead: Useful Stories from a Persuasive Man by Jerry Weintraub

Investing, Markets, Economics

• Common Stocks and Uncommon Profits by Philip A. Fisher

• Incerto: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile, Skin in the Game by Nassim Nicholas Taleb

• One Up On Wall Street by Peter Lynch

• Strategy Is Destiny: How Strategy-Making Shapes a Company's Future by Robert Burgelman

• Superforecasting: The Art and Science of Prediction Superforecasting by Philip Tetlock & Dan Gardner

• The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It by Michael E. Gerber

• The Education of a Value Investor by Guy Spier

• Warren Buffett: The Making of an American Capitalist by Roger Lowenstein

• Zero to One by Peter Thiel

Science, Tech, and History

• A Brief History of Time by Stephen Hawking

• A Short History of Nearly Everything by Bill Bryson

• Outlive: The Science and Art of Longevity by Peter Attia

• Sapiens: A Brief History of Humankind by Yuval Noah Harari

• The Beginning of Infinity by David Deutsch

• The Selfish Gene by Richard Dawkins

• Why We Sleep by Matthew Walker

Self-Improvement / Philosophy / Psychology

• Atomic Habits by James Clear

• Deep Work by Cal Newport

• Don't Sweat the Small Stuff by Richard Carlson

• Essentialism: The Disciplined Pursuit of Less by Greg McKeown

• Extreme Ownership by Jocko Willink

• Getting More: How You Can Negotiate to Succeed in Work and Life by Stuart Diamond

• Growing Back to the Land by Adrienne Dueringer

• Happiness: A Guide to Developing Life's Most Important Skill by Matthieu Ricard

• How to Fail by Scott Adams

• How to Win Friends & Influence People by Dale Carnegie

• How Will You Measure Your Life? by Clayton Christensen

• Influence: The Psychology of Persuasion by Robert B. Cialdini

• Leadership and Self-Deception by Arbinger Institute

• Man’s Search for Meaning by Viktor Frankl

• Mastery by Robert Greene

• Meditations by Marcus Aurelius

• Men Are From Mars, Women are From Venus by John Gray

• Mindset by Carol Dweck

• Never Finished: Unshackle Your Mind and Win the War Within by David Goggins

• Non-Violent Communication by Marshall B. Rosenberg

• On the Genealogy of Morality by Friedrich Wilhelm Nietzsche

• Predictably Irrational by Dan Ariely

• Reality transurfing. Steps I-V by Vadim Zeland

• Status Anxiety by Alain De Botton

• Talent is Overrated: What Really Separates World-Class Performers from Everybody Else by Geoff Colvin

• The 4-Hour Workweek by Tim Ferriss

• The 7 Habits of Highly Effective People by Stephen R. Covey

• The 48 Laws of Power by Robert Greene

• The Art of Gathering: How We Meet and Why It Matters by Priya Parker

• The Good Life by Peter Gomes

• The Happiness Advantage by Shawn Anchor

• The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom by Jonathan Haidt

• The Inner Game of Tennis by Timothy Gallwey

• The Master and His Emissary: The Divided Brain and the Making of the Western World by Iain McGilchrist

• The Zen Path Through Depression by Philip Martin

• Thinking, Fast and Slow by Daniel Kahneman

• Zen and the Art of Motorcycle Maintenance by Robert M Pirsig

Religion and Spirituality

• A Hunger for God: Desiring God through Fasting and Prayer Paperback by John Piper

• Atmamun: The path to achieving the bliss of the Himalayan Swamis. And the freedom of a living God. by Kapil Gupta MD

• Ecclesiastes in the Old Testament1

• Grist For the Mill by Ram Dass

• Mere Christianity by CS Lewis

• The Cost of Discipleship by Dietrich Bonhoeffer

• The Monk Who Sold His Ferrari by Robin Sharma

• The Power of Now: A Guide to Spiritual Enlightenment by Eckhart Tolle

• Siddhartha by Herman Hesse

Misc

• How to Read a Book by Mortimer Adler

• Learning for Analysts and Future Portfolio Managers with Alix Pasquet III [Video]

• Megathreats: Ten Threats to Our Future and How to Survive Them by Nouriel Roubini

• Moneyball by Michael Lewis

• Running and Being by George Sheehan

• Steve Job’s Stanford speech [Video]

• The Matter With Things by Iain McGilchrist

• The Power of Myth by Joseph Campbell

• The Road to Self-Renewal by John Gardner

• The Timeless Way of Building by Christopher Alexander

Disclaimer: I’ve used Amazon Affiliate Links. Feel free to help out by using them, much appreciated! 

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Leave anonymous feedback, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

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Don’t fall into the trap of productivity porn—chasing productivity for its own sake isn’t helpful. Many people spend too much time thinking about how to perfectly optimize their system, and not nearly enough asking if they’re working on the right problems. It doesn’t matter what system you use or if you squeeze out every second if you’re working on the wrong thing.
- Sam Altman

I’m still here. You’re still here. Let’s boogie.

Chart of the Month - The Growth of China’s Rail

Vietnam's coffee culture survives 10 years of Starbucks [PDF]

Whilst Vietnam has the biggest cafe market by total value and number of shops in Southeast Asia, it has just under one Starbucks location for every 1 million people - the smallest number among ASEAN’s six main economies.

As an aussie coffee snob (on a decaf bender of late RIP), I don’t think this lack of Starbucks is a bad thing!?

The local chains chart stood out to me though:

From Highlands’ website, there are over 200 stores in Ho Chi Minh City alone. I first visited HCMC in 2016, and not just saying this for dramatic effect, but it was where I first fell in love with coffee (having two raging coffee addict mates as travel buddies helped too). But I remember all the small, intimate cafes, making it seem so homely.

Visiting last year in 2022 it felt much more on the chain-ey side. Cafe Amazon isn’t in the above graphic but I remember them everywhere in my latest visit.

But my pro tip for Vietnamese coffee? Make sure you try an egg coffee at Cafe Giảng if you’re ever in Hanoi. The iced option literally changed my life. Fair warning, the place is chokkers. As busy as a public school bike rack. Get in and go upstairs, get a stool, and enjoy one of the best coffee experiences of your life.

Zhang Lei - Lessons from a Legend

You know I gotta pump my own tyres.

From an early life hustling at Zhumadian Station renting books out to bored passengers, earning the highest college entrance score in his province, trying life as a bricklayer on a construction site, to not only studying at Yale, but having investing legend David Swenson as a mentor, to now running one of Asia’s largest private equity firms.

Zhang Lei has lived a life most of us would be lucky to achieve in several lifetimes.

I hope I did his story justice.

Alibaba Reorg Either a Berkshire-like model or just clever corporate engineering

If you work in tech long enough, you will experience many company reorgs. They are almost as routine as sales kickoffs or quarterly earnings calls. But every once in a while, a consequential company does a reorg so major and out of the box that it could shake up how an entire industry does things.

Google becoming Alphabet in 2015 was one example. Alibaba’s most recent reorg, announced earlier this week, is, in my view, another.

Alibaba’s new six units:

• China Commerce (Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global. Alibaba Health, and 1688.com)

• International Commerce (Lazada, AliExpress, Trendyol, and Daraz)

• Local Consumer Services (Ele.me, Amap, and Fliggy)

• Cainiao (domestic and international logistics)

• Cloud (Alibaba Cloud, DingTalk, and other cloud-based B2B SaaS products)

• Digital Media and Entertainment (Youku and Alibaba’s own movie studio)

Kevin Xu explains that the positive interpretation of their reorg is Alibaba moving to a Berkshire-like model (a lightweight holding entity that owns many many businesses – some wholly, some partially, some of which are synergistic, some of which are totally uncorrelated, and all of which operate independently and generate lots of cash). And the cynical view of the reorg would be corporate engineering and antitrust dodging.

I guess only time will tell!

Arisaig Partners 8 anecdotes from their first post-Covid visit

1. Traffic is back and people are out and about 

2. Mask wearing is not endemic despite covid opening being so recent

3. COVID infrastructure has gone

4. Food delivery is structurally important in China’s major cities and infrastructure has evolved

Meituan is now delivering 50 million orders per day (on average) vs 27 million pre-COVID. […] Cities are adapting, and riders are asked to drop orders on racks in the lobbies of shopping malls or office buildings, and message the customer that the food has been placed for collection. This saves the time required for riders to send the orders to door. What this means is that Meituan riders can deliver 40-50 orders per day compared to riders elsewhere who can only deliver 25-30 orders. Order density is perhaps the crucial determinant to enabling favourable unit economics in the food delivery space, in our experience.

5. Competition in food delivery has increased but Meituan remains dominant in terms of delivery speed and offering

6. Healthcare enhancement is a focus for the government post-COVID, and aligns to government focus on moving up the manufacturing curve

7. EVs are rapidly taking over the car market

8. Humble and hardworking management teams are back at work, and focusing on building brands and businesses

China's aging population threatens a Japan-style lost decade [PDF]

Not a mindblowing realisation to most. But some interesting charts and talking points brought up.

For years, China has capitalized on cheap labor to become an economic powerhouse and the world's factory floor. That will have to change. As happened in Japan, manufacturers could slowly start exiting the country, resulting in a vicious cycle of falling domestic demand and less domestic investment. In turn, fewer jobs and a further drop in private consumption and business investment could follow.

Petrol smuggling to Thailand

A different but interesting article. Essentially:

Standard petrol in Thailand retails for 36-37 Baht (USD 1.03-1.06) per litre, compared to just RM 2.05 (USD 0.46) per litre in Malaysia. […]

Thus, smuggling cartels are able to buy petrol for 16 Baht and sell for 24 to 26 Baht, making 8-10 Baht per litre. Retailers sell from 30-45 Baht, making 6-21 Baht per litre. […]

Estimates of daily sales in Southern Thailand range from 10,000 to 25,000 litres per day, depending on the day of the week, and time of month. This extrapolates to 160,000-400,000 Baht (RM 20-51.4K) imports of petrol per day from Malaysia, excluding diesel purchases. This gives petrol smuggling cartels 80,000-200,000 Baht gross per day, which would be divided between half a dozen smuggling cartels.

Dan Wang’s 2022 Letter

The GOAT. This one is too big to do justice with any short snippets from me. Worth reading on a late Sunday arvo in the sun, beer in hand.

"The Chinese state remains enormously capable. But that statement demands refinements. First, it increasingly resembles a crew of firefighters who bring extraordinary skill to dousing fires that they themselves ignited."

RESTRICT China It's “game over” for all Chinese tech companies in the US.

For founders and entrepreneurs, it's time to start recognizing this reality and plan your overseas market expansion activities elsewhere. There are plenty of opportunities still, albeit less profitable ones, in Southeast Asia, Latin America, the Middle East, and corners of the EU.

For VCs who invested in Chinese tech startups at rich valuations on the assumption that the US market is up for grabs, it's time to do an honest markdown of those deals and adjust expectations accordingly. 

Why is Japan so Wacky? Blame it on the Economic Bubble in the 80s

An interesting initiative with interesting consequences.

Enter the Furusato Souzei (ふるさと創生事業) project. This was an initiative started by the prime minister at the time, Noburo Takeshita, which gave over 3,000 local governments a million dollars each to use however they saw fit. The idea was to revitalize local communities and showcase their uniqueness in the form of new buildings or events. […]
In Aomori, Nishitsugaru-gun (now Tsugaru-shi) funded the creation of a giant clay figure at Kizukuri Station, whose eyes light up when a train arrives. This massive project went to a station that hosts less than 220 passengers daily…

Pony Ma’s essay from A Letter a Day

What makes a good internet product? 

1. It must have its applications, because a product creates value only when it is used.

Basic science continues to advance beyond the limits of human cognition and empowers us with greater capabilities. But these capabilities, being constantly improved and accumulated, need to be applied in real-world scenarios to actually make our work and life better. Fidonet connected people around the globe and allowed information exchange and relationship-building to happen. This new application scenario brought the computer to life for most users. 

2. Second, new values are created through the network, which takes shape and evolves when there are enough product users. This is like good literary work, which is often interpreted differently by readers beyond the author's original intention.

The same is true of an internet product. Often creators don’t realize how people are going to use their programs until they see them in action. The greater the number of users, the more application scenarios and methods that can be explored and the more innovations and creations that can occur. Close observation of everyday life allows us to discover more and gain inspiration from which we can develop new functions and drive the product’s evolution.

In the few decades after Fidonet, we witnessed the rapid development of the internet and have been lucky to play a part in its evolution. The products Tencent has created, like QQ and Weixin (and its international version WeChat), are the result of collaboration between internet professionals and users. Both parties have been involved in the exciting creative process, which is ever-changing.

3. Crossover

Many innovations in the tech industry are a result of crossover applications. When the technical capabilities of humans develop to a certain stage, crossovers will give rise to new application scenarios. For example, QQ is a crossover application of the instant messaging tool to the internet domain, and the nature of Weixin is in fact a mailbox, meaning it is the fusion of the mailbox and the mobile internet. 

Understanding Japan’s Insane Bubble with Rei Saito [Spotify] [Apple]

I could listen to Rei for hours, both for his incredible knowledge of Japan, and his super smooth voice.

“13 of the 20 most valuable global corporations in 1989, right at the peak of the Japanese bubble, were Japanese. So, more than half of the 20 largest companies in the whole world were Japanese. On top of that, the asset bubble. So, the property prices, we talk about 2008 as a horrible time in the US but in the early 90s, Japanese property prices were almost double of American property prices in 2008 in the largest cities. So the bubble was twice as big in Japan as it was in 2008 in the US which is unfathomable. One fact I really love is that Japan is quite a small country, especially if you’re from Australia. I read somewhere it’s the size of California. All the land in Japan was worth more than all the land in the US at its peak. The Imperial palace, which is like a couple of football fields, you can literally walk around it in half an hour, that place alone was worth more than California.”

Nintendo on Acquired [Spotify] [Apple]

Beware, it’s a bloody big podcast at 3 and a half hours. And it only covers Nintendo up until the ‘90s! So hopefully we get a part 2 of post ’90s Nintendo

This is a classic case of the brightest results often coming from the darkest periods:

remember the state that the United States was in. They just went from $3.2 billion being the home gaming market size to $100 million. They're burying games in concrete, in landfills, smashing them up, and throwing away consoles. This is 1983, so it's the exact same moment in Japan that somebody—I don't know exactly who and exactly what the story is—is deciding to pull the trigger and say, take the Famicom [Nintendo Entertainment System] and make an American version of it.

By 1990 Nintendo had taken 95% of the video game market and did $2B in revenue!!!

Building the hottest Southeast Asian Tech Startup Newsletter with Amanda Cua, Founder of Backscoop [Spotify] [Apple]

Amanda’s LinkedIn marketing is annoyingly good. So plenty to learn from this convo.

the best part of being young is that you have so many years of your life to make up for all your failures. I have always said like, it's cause I was 19, if I fail, I could go back to college, get a new job, and my life will be so much longer that this might just be buried in the past, right?

[…] do I want to do it? And how bad will I feel if I never do it? If I don't take the leap now and I told myself that regret that I would feel is going to be so intense that I might as well do it now, I literally have no excuse.

Michael McGaughy: Distressed Markets and Unconcensus Investing

Only available as a YouTube video AFAIK, but a valuable conversation!

Same as every other month, the most efficient way to share videos is through a YouTube playlist. I aim to highlight both well-known channels and some hidden gems. But mostly, I just want to showcase some of the most insightful and interesting videos related to Asia-Pacific for this month.

This tweet received an excellent reply that I found interesting and worth sharing.

Other than that, I don’t have much else to add.

Burnout is following me around like a bad smell.

I treat my content as if it were a compost heap. I read, research and consume useful resources, but then leave it alone, let it compress down, and degrade into its useful fertilizing elements.

Only now do I realise I’ve been spreading my shit for too long. Without focusing on the initial composting part. Time to chill out, read, and recharge I think.

"the world is filled with people doing the best they can... [people] who would like to put on a clean shirt every morning and live their lives with a little dignity.”
- Anthony Bourdain

Godspeed amigos.

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

I reckon you can. Because outside of China, I don’t think enough people know the story behind the notoriously media-shy Zhang Lei.

From an early life hustling at Zhumadian Station renting books out to bored passengers, earning the highest college entrance score in his province, trying life as a bricklayer on a construction site, to not only studying at Yale, but having investing legend David Swenson as a mentor, to now running one of Asia’s largest private equity firms.

Zhang Lei has lived a life most of us would be lucky to achieve in several lifetimes.

I hope I can do his story justice.

Early Life

Zhang Lei was born in 1972 in Zhumadian, a village in Henan province, in central China. Fair to say the Henan region and its people have some, strong perceptions shall we say. From an NYT article:

Henan has a P.R. problem, [...] It is not the prettiest part of China, to be sure.

But much worse, some people from other parts of China treat residents there with a disdain and mistrust that approaches racism. If you believe the slurs, Henan is crammed with thieves, ruffians, grifters and con artists. [...]

It prides itself on being the birthplace of the early dynasties that make it the “cradle of Chinese civilization.” But it is crowded, heavily rural and not as polished as coastal regions. The rough charms of the province are not for all travelers.

So Zhang from the get-go wasn’t some inner-city snob. His parents both worked full time and Zhang mentions that as a child of a dual-income family, one of the benefits was that there was no one in charge. So he would sneak out while his parents were away at work. Zhang was a sporty kid and while in elementary school, his grades were poor, he hated homework, and almost didn’t make the minimum admission score for junior high!

And even though he hated homework, Zhang had always loved reading books. And lucky for him, he had a relative that worked in the city library. So his parents would often give him off to this relative for the day. Given Zhang’s rebellious streak, his relative was afraid of Zhang running away, so they "locked" him in the library. And although he was naturally active, he enjoyed calming down and reading books all day in the library alone.

But business would enter Zhang Lei’s life when he was seven. As his parents lived next to a train station, he noticed a business opportunity to solve a pain point.

The trains on the Beijing-Guangzhou Line often stopped for a long time when they arrive at Zhumadian Station. So for the passengers waiting at the station, the best product he could offer was to eliminate boredom.

So Zhang mobilized his classmates to bring together books, comic strips and various magazines. Passengers would be able to borrow these for a fee. Zhang and his crew even started a "package service" - providing water and snacks when passengers would rent 5 books at once.

An early valuable lesson on product-market fit.

A love for learning 

After his lessons in business and reading anything and everything he could find his hands on, he fell in love with deep thinking, logical reasoning, and decision-making.

So decided he would get his academic act together and work towards leaving his small town of Zhumadian, and attending the best university that he could.

Eventually, for his college entrance exams, he scored the highest marks in not just his school, but his entire province! Thus earning him a scholarship to Renmin University in Beijing.

But before attending college, in order to gain life experience, Zhang did work at a construction site and worked as a bricklayer for a month.

At Renmin University Zhang majored in international finance. And why’d he chosen that subject? He’d heard that this major has a high admission score and that there are foreign teachers teaching foreign languages.

But he dove head first into the topic and joined a securities club at Uni to further study the securities market and translate investing books.

He and a couple of other students organised a stock market simulation. The goal of the stock market simulation competition was to guide students to pay attention to the fundamentals of stocks and to explore the relationship between company performance and the rise and fall of stocks.

The simulation competition even ended up being broadcast on China Central Television and with actor Li Lingyu hosting it!

one of the most important things in life is to find someone you like and truly trustworthy to do fun together.

Life After Uni

After graduating in 1994 at the age of 22, there was a big decision to make: what job should Zhang choose?

At that time in China, the domestic financial market was underdeveloped, and there were very few securities and investment companies. Most of his fellow classmates chose to work in banks after graduation.

A common theme in his life, Zhang took a different approach. He chose to join China Minmetals Group, which was an odd choice but ended up being a great fit.

It gave him the perspective of a real working business, allowed him to meet colleagues with different educational backgrounds, perspectives, and insights, and gave him ample opportunities to travel for work and see South West Chinese provinces like Guizhou, Yunnan, Sichuan, and more.

To say Zhang loved it would be an understatement:

I can chat with colleagues or local friends on the road, about rare metals to local customs, and learn about a broader and more vivid society through them.

And slowly but surely, the allure of studying overseas began to grow on him. Zhang had many classmates and friends around who’d previously studied abroad. And ever the self-starter, he felt that he should go outside China to see and gain experience too.

Journey to the West

It was 1998 and even with the hurdle of high tuition fees and living expenses, he took the plunge. He applied to multiple colleges and got admission to several, but Yale Graduate School was the only one that offered him a scholarship. As Zhang mentions, it was impossible to refuse. Another Yale bonus was their Dual Master’s degree program, so he was able to do an MBA and M.A. in International Relations.

But Yung Wing was also a massive inspiration for Zhang. Born in 1828 to a commoner family, Yung Wing received a complete Western higher education. He was the first ever Chinese student to graduate from not just Yale, but an American university.

But back to Zhang, after a year of study, there was a small speedbump. The MBA program only provided scholarships for the first year, and the tuition and living expenses for the second year were completely unfunded. So finding a source of income was the goal.

The initial job search was less successful than ice skating uphill. He’d enter the interviews in high spirits, and leave them downcast. Zhang didn’t understand the nuances of interviews and how they operated, but he also didn’t specifically prepare for them.

And without sounding like a Disney movie, Zhang stayed true to himself. He was always honest and upfront, even asking a management consulting firm in Boston for an advance payment for the roundtrip travel expenses, instead of paying in advance and then being reimbursed as is common practice.

I concluded after the fact that applying for a job may not only be about finding a job, but also about finding your true self and showing your uniqueness. Despite not being able to follow the typical career paths of many MBA students, I stick to what I believe and explore what I am curious about, because fun stories come from challenging lives.

Since the job hunt was unsuccessful, Zhang had to find another way. It was the dawn of the internet era, so he decided to take a year off from Yale, return to China, and start a business.

So he and several old classmates set up a website to build an investment and financing exchange platform. The core idea was to essentially connect capital and entrepreneurs. In the craziness that was the internet bubble, they managed to reach profitability after 6 months, and also quickly got financing. Lo and behold, the internet bubble pops and business ain’t so good anymore. They wound up the business, and even though there was no need, Zhang made a point to return the money that the investor financed their company with. Returning the money and the internet economy would be key factors in the future for Zhang.

So back to Yale we go. Wandering the grounds, by pure chance Zhang sees an internship opportunity in the Yale Investment Office, surely he’s half a chance! Zhang remembers the interview with David Swenson well, he pretty serious, asked a tonne of questions about investing, and was surprised when Zhang answered mostly "I don't know" to Swenson's questions. Zhang believes he was hired because he was honest about his shortcomings.

Besides honesty, Swenson prized fiduciary duty above all else, so it’s no wonder Zhang is fond of saying "I'd rather lose a customer than lose their money,"

Cementing their relationship, Zhang would also volunteer to translate Swenson’s book, ‘Pioneering Portfolio Management’ into Chinese.

Return to the Middle Kingdom

After graduation, was an investment analyst for a global emerging markets fund that covered South Africa, Southeast Asia and China. He enjoyed that he often travelled to South Africa to study mineral resources.

After that Zhang was also NYSE's first Chief Representative for China and founded the NYSE's Hong Kong and Beijing offices.

Hillhouse Heroics

But eventually, Zhang Lei decided to try his luck on his own. At the age of 33, Zhang founded Hillhouse in 2005 and officially opened on June 1, 2005. Zhang mentioned it was Children’s Day in China, and they all felt like kids, excited and curious.

Zhang Lei started Hillhouse capital without an investment track record apart from being an intern analyst at Yale endowment. But interestingly, none of his other four co-founders had investment experience either!

Zhang mentions how when he was looking for business partners early on (and I assume these rules still apply), he established three criteria:

• A good character

• A love to learn,

• and the ability to endure hardship.

There’s an interesting tale in Zhang Lei’s book about how he found Tracy Ma, Hillhouse’s first employee. Tracey today isa current partner and COO at Hillhouse, but her path there was less than straight forward:

The early days at Hillhouse were tough. Zhang’s wife would often help out doing everything from cleaning, sending and receiving letters, booking business trips, and pouring tea and water. Essentially she supported the middle and back offices and even served as a receptionist.

And Zhang, the ever-frugal entrepreneur, decided that when the air conditioner would turn off at 6 pm, they would have to open the windows to cool the office down. But because they were near ground level, there were plenty of mosquitoes that would find their way in. Staff would joke and count the number of bites they had.

But raising capital was a different story. When Hillhouse was first founded, the domestic private equity fund in China was still in its infancy.

So how raising the initial capital became a severe challenge in the early life of the business. Given the atmosphere of China's rapid development, they decided that they will focus on China's story and growth to impress overseas investors.

Hillhouse’s first LP (unsurprisingly) was Yale Endowment. Zhang even named the company after Hillhouse Avenue in New Haven, Connecticut, near Yale’s investment office.

Zhang Lei often jokes about that startup period “When I started Hillhouse, I had this weird strategy and it sounded distracted. That’s why no one else invested in me other than Yale.”

Zhang’s mentor, David Swenson, in a CCTV interview said:

“Sometimes people say ‘this individual is one out of a hundred’

That’s not Lei. He’s one out of a million. […]

It’s hard to say his [Zhang’s] succes is a surprise. Because I was fully convinced that he would be successful.

But the mangitude of his success is astonishing.”

Yale ended up committing $20 million initially and then committed a further $10 million shortly after due to Hillhouse’s performance.

Curious about Yale’s returns? Take a seat. You might fall over.

As of April 2020, Hillhouse’s investment from Yale was worth over 2.4 billion US dollars.

Decent return on investment I guess.

Zhang Lei and Hillhouse Today

Zhang Lei has a bloody interesting story, but his incredible success with Hillhouse is the cherry on top.

Hillhouse has had a successful track record investing in a range of companies across various sectors, including technology, healthcare, and consumer goods.

This has enabled it to generate significant returns for its investors over the years. And by significant returns, I do mean significant.

From a NYT article, in the 10 years since its founding in 2005, one investor said that Hillhouse had returned a yearly average of 39 per cent. 39%!

The S&P500 averaged a little under 6% in that same period in case you were wondering.

But what investments have driven Hillhouse’s insane growth? I’ll list a couple of their best.

• Early on in its history, Hillhouse made an investment in Tencent. At that time, the company’s primary product was the QQ messaging service, and its total market cap was under $2 billion. Today, Tencent has transformed into a massive Internet enterprise with a valuation over $400 billion.
  Tencent wasn’t a clear-cut home run though. Zhang and Hillhouse had doubts. They didn't know if Tencent could find more monetization opportunities or if enough people would use it. But luckily, on a business trip to Yiwu when doing their due diligence on another business, they found that small merchants all over China were putting QQ on their biz cards.
  Hillhouse still holds Tencent today and Zhang now remarks that they didn’t buy enough shares!

• In 20101, JD.com wanted to build out its own logistics offering which investors hated. When everyone turned them down, Richard Liu turned to Zhang Lei. Liu initially asked for a $75m investment, but Zhang told him to take $255m or Hillhouse wouldn't invest a cent.

  Zhang saw that JD.com could do what Amazon couldn't in the US, build out a last-mile logistics operation that would be the ultimate moat
  Hillhouse invested $255 million in JD.com. Four years later, that stake was worth ~$3.9 billion when JD IPO’ed.

As of September 2022, Hillhouse has over $65 billion in AUM2 and more than 450 employees, and offices in Singapore, Hong Kong and Beijing.

So according to Zhang, what is Hillhouse's own long-term investment philosophy?

It's very simple, just find a group of reliable people and do something interesting together.

Lessons and Learnings

There’s plenty to take away from Zhang Lei’s story in itself. A desire to learn. Willing to exit his comfort zone. Being bold in what you want.

But he has also shared some quality wisdom on what he’s learned along the way.

The first point I was to highlight immediately is about empathy and how competitors can help grow a market together.

Now call me soft or a bonehead with little life experience, but I think life’s more fun and rewarding when being collaborative rather than competitive 100% of the time.

There are many great qualities to look for: persistence, smarts, teamwork orientation. But I would emphasize empathy and the ability to connect with people who are different from you. We see that great entrepreneurs will always have unbelievable empathy for their customers, their employees and even their competitors. The best entrepreneur does not necessarily view competitors as if it were some game, but they think about how the competitors together will nurture the market.

And obviously, as we’ve learned, Zhang is a lover of self-study and reading, so what are his thoughts on investing in yourself and your education?

There's nothing better than investing in yourself and investing in your education. And education investment over the long-run always produce the best compounding results that you could never imagine. That's, for sure, the best investment you could ever make on yourself, on your friends and your relatives, and the society. I have a deep belief in that. 

Also, I like Zhang’s thoughts on not only how technology might change, but how technology change might affect different people in different ways.

There two things that we should be mindful of: One is about technology change. Artificial intelligence would that replace human capital? Secondly, about the knowledge gap, or digital gap, between different socioeconomic classes of people especially in places like emerging markets where they don't have the same access. The people in a suburb of Jakarta may not have the same access for the people in New Haven. The little gap actually kind of widened. So, how do you bridge that gap? And also, how do you think about technology, not as disfranchising factor and actually as the equalizer. As an equalizer to help bring people together. Those things are very interesting.

But what the 4 qualities of great entrepreneurs he likes to invest in?

• long-term thinking, even in face of great uncertainty

• industry insight that results in innovation

• focus on execution, artisanal obsession

• high empathy, so as to coordinate & gather more resources

And Zhang’s message to up-and-coming entrepreneurs?

“in a world where many are drunk on instant gratification, those who understand the value of delayed gratification will already have a massive competitive advantage”.

After David Swenson’s passing in 2021, Zhang Lei left a tribute on Hillhouse’s website that I’d like to finish with.

"I find it challenging to convey the magnitude of David's impact on my life. David was my first teacher in the discipline of investing; he taught me what it meant to be a fiduciary, to be truly long term, and to build an organization with a soul."

After watching countless videos, reading numerous articles, and suffering through a rather average google translation of Zhang Lei’s book, Zhang is firmly on my Mount Rushmore of favourite investors.

And like a lot of other great investor peers of his, Zhang’s curiosity and passion for his work stand out. He’s amazing at what he does, no doubt. But he looks like he’s having a bloody tonne of fun doing it. Living the dream, I reckon.

A great way to wrap up is one of Zhang’s favourite quotes from a Ming Dynasty emperor, which has broader lessons: 

Further Zhang Lei Resources

• Robert Shiller Interviews Zhang Lei [Link]

• Zhang Lei has Lunch with the FT [Link]

• Zhang Lei Talks at GS [Link] [Some Notes]

• Interview of Fund Manager Lei Zhang from Yale [Link]

• Lei Zhang's Lecture at Columbia Business School [Link]

• How China’s Zhang Lei, the billionaire Tencent and JD.com tech investor, went from selling instant noodles to buying a stake in Amazon [Link]

• The Chinese Billionaire Zhang Lei Spins Research Into Investment Gold [Link]

• Alumni in action [Link]

• From investments in Tencent to Zoom, Hillhouse founder Lei Zhang is one of the world’s richest financiers [Link]

You can find previous posts here. I also interview legends at Compounding Curiosity and lurk on Twitter @scarrottkalani.

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Nothing in this world can take the place of persistence.
Talent will not; nothing is more common than unsuccessful men with talent.
Genius will not; unrewarded genius is almost a proverb.
Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent. The slogan Press On has solved and always will solve the problems of the human race.
- Calvin Coolidge

G’day guys, gals, and galahs.

February. The shortest month. Certainly no shortage of content to shift through. LFG

Chart of the Month:

Fun Fact of the Month:

How Japan's buses stay punctual1: Infrared sensors on the buses and streets connect to a control centre, which extend traffic signals on the road where the bus is on to ensure the buses travel smoothly to the next stop

Transforming Indonesian Fisheries: A visit to Cirebon

Pretty cool story of an aquatech startup that's a 4 and half hour drive outside Jakarta, and is on track to receive unicorn status.2

So my understanding of the problem that they solve, is that in traditional aquaculture farming, getting the right amount of feed into ponds at the right time is critical because it accounts for 80-90% of a farm’s overhead. However, it is extremely difficult to standardize manual feeding.

eFishery solves the above problem by leasing (at ~$10-15/month) and selling their in-house developed smart feeder device (so both hardware and software) to aquaculture farmers to help them optimize feeding and farm productivity.

This particular farm has 16 ponds and each pond has ~10,000 catfishes. To put things into perspective, that is about 1,250 kg of fish per pond. 1kg of catfishes (8-9 catfishes) can be sold for 20,000 rupiah (~US$1.30). The farmer owning these 16 ponds started with 2 ponds in 2020 and 1 eFishery smart feeder. Today, he has 16 ponds and deploying 16 smart feeders. Not only that he barely needed to increase any labour (he has two employees) thanks to the smart feeder, but his feed conversion ratio also improved significantly. Before using the smart feeder, every 1kg of feed translates into 0.7kg of fish, after using the smart feeder, every 1kg of feed now translates into 0.9kg of fish. The harvest cycle has also improved from 4 times a year to 6 times a year. Just think about this, the farmer can harvest ~320,000 more catfishes each year with the help of the smart feeder. That is US$52,000 more income, a 50% increase in revenue, for the farmer each year.

Steve Waugh's 5 Lessons From Failure

Gotta toot my own horn. Believe me, I don’t want to tell this story because I’m so extremely humble, but a little birdy told me that this article found its way into the Australian Cricket team camp before the third test, and would ya believe it, the boys came away with the win!?

I don’t want to take all the credit, since I’m so humble. But I reckon I deserve most of it.

No player should walk out to face a bowler without a strategy for playing him. And this means that the bowler is not testing you; you are testing yourself against that bowler. The distinction is a fine, but vital one. It means that in the final analysis, it is not the individual bowler that is causing the problem, but your approach to him.

Deep Dive: Japanese Trading Companies

Sogo Shosha, or Japanese trading companies, are a fascinating topic and have done an awesome job explaining their business, history, and also Berkshire’s investment in them.

Sogo Shosha means “General (=Sogo) Trading Company (=Shosha)”. The name itself doesn’t carry a lot of meaning but today it specifically refers to seven large-caps: Mitsubishi, Mitsui, Itochu, Sumitomo, Marubeni, Toyota Tsusho, and Sojitz. All are listed on the Tokyo Stock Exchange (and have US-listed ADRs too).

[…] they account for more than US$200bn in market cap and $30bn in net profit. This is not some small obscure industry! The top three (Mitsubishi, Mitsui, Itochu) are somewhat comparable in size. The largest is Mitsubishi, which has market cap of ~$50bn, $7bn in net profit, and employs ~80k employees (across all subsidiaries). Berkshire invested in the five largest Shoshas, […]

They are extremely diversified (often said that they handle everything “from noodles to satellites”) and because of this, investors easily get lost in the diversity of their business operations and fail to grasp the big picture. There is also no “Western comp”, further making them challenging to understand. Interestingly, the rating agency Moody’s recognizes Sogo Shoshas as its own unique category, separate from other conglomerates and distribution businesses.

Smoke & Mirrors: The illusions of Islamic banking

Islamic banking is something I’m very vaguely familiar with, so reading 's breakdown was a great primer into understanding this huge section of banking.

in Malaysia, where Islamic banking and finance is a USD 300 billion market, growing around 14 percent per annum. According to Bank Negara Malaysia, Islamic banking assets reached USD 254 billion by 2020, where today Islamic banking represents 40 percent of the total banking sector.

And what the hell is Islamic banking I hear you ask?

The three basic principles of Islamic banking are the prohibition of riba, or interest and/or excess profiteering, the elimination of gharar or uncertainty, and the banning of maisar, or gambling. Islamic banking must comply with Shariah law under the concept of the Tawhid, the umbrella of the Islamic theology.

Murray helps explain how Islamic banking weaves around these rules and interpretations of them. Just a really interesting read.

[14 page PDF] Japan Rising - Is the Land of the Rising Sun finally on the rise?

Japan Rising Is The Land Of The Rising Sun Finally On The Rise

333KB ∙ PDF file

Download

Download

[82 page PDF] How the world could look like after a Taiwan war

Mammoth read. But a couple points I found interesting:

Taiwan’s fall to China would likely break some U.S. alliances and reshape strategic relations in the Indo-Pacific. One author assessed that the Philippines and Thailand would likely break their alliance relationships with the United States (because they are already fragile) and surrender to PRC hegemony.

And people might say “well yah duhhh” to this one, but still important to mention again:

The PRC would become more aggressive toward its neighbors if it were successful in taking over Taiwan. Beijing would not sit back and rest on its laurels after having “recovered” Taiwan. A few, including our Japanese author, feared that Japan would be next, especially if it participated in the attempt to defend Taiwan. Others saw the South China Sea as a likely area for increased PRC assertiveness. The Indian author worried about a flare-up on the PRC-Indian border, while the Australian author saw an expansion of PRC influence in the South Pacific and increased pressure on Canberra to terminate the U.S.-Australia alliance and the newly concluded Australia, United Kingdom, United States security arrangement, dubbed AUKUS. The Australian author envisioned that Australia would stay the course with the United States despite internal debate, but feared that New Zealand would be more inclined to accommodate the PRC. The Korean author, while likewise worried about increased PRC assertiveness, was more concerned that the PRC would give a green light to North Korea to march south.

🚨 Job Opportunity🚨 — Star Magnolia Capital in Search of Hua Mulan

Friend, previous podcast guest3, and all-round good bloke Shinya Deguchi, is looking for someone to join Star Magnolia Capital.

I would have applied if I was a Singaporean resident, but alas, I can only pass this on to the 10% of my readers from the Lion city. But most of all, I feel like this is an awesome example of how a job description should present itself.4

Open and upfront about renumeration, encouraged to contact current and former colleagues, and detailed about who and what they’re looking for.

If you’re interested and fit the criteria, make sure to apply!

Peter Douglas on Japanese Hospitality and Nozawa Onsen [Spotify] [Apple]

“one of his [Audley Twiston Davies’] favourite sayings was “When you have no idea what to do, for God’s sake do something”. which is just the best bit of business advice possible, cause it may or may not be right, but just making a decision empowers you, whereas sitting around going, “I have no idea”, you feel you are the victim.

Don Dongfan Ma of Horizon Insights on China of Tomorrow [Spotify] [Apple]

Enjoyed the points about how much government policy affects the macro situation and State Owned Enterprises.

Michael McGaughy on Emerging Market Investing in Asia [Spotify] [Apple]

Michael really does invest off the beaten path and it was beyond cool to pick his brain on how he does it.

A big takeaway was there is no time like a crisis to invest!

“a lot of Southeast Asian countries didn’t really come outta the crisis until 2001 or so, but when I went back and looked at, how those companies did after the crisis, you just had phenomenal returns. I had our data provider backtest for me all the hundred baggers around the world in the last 30-35 years. And in Indonesia, I think you had like 8% of the companies that were listed at the time. I think there were about 400 companies listed at the time, and I think about 35 of them became a hundred baggers. According to this database, that’s an 8% chance of getting a hundred bagger. […]

all you really need over the last, what, 25 years is to find one of those and stick with it and be smart enough to stick with it.

As I say every month, the most efficient way to share videos is through a YouTube playlist. Highlighting both well-known channels and some hidden gems. But mostly, I just want to showcase some of the most insightful and interesting videos related to Asia-Pacific for this month.

Travels by Michael Crichton

Michael Crichton is an absolute Chad. Went through medical school at Harvard, multiple best-selling books, directed movies, travelled the world, and overall just my kinda guy.

Admittedly he does have a kooky side. In this book, he’s heavily into trying anything involving psychics, mediums, and spiritual retreats. He even writes about how he converses with a cactus at one point.

But overall, great lessons here. Across a range of disciplines. Finding his passion. How to travel. Dealing with life’s problems.

He’s open and honest about his fuck ups and I respect the hell outta that. I was a Crichton fan before this—borderline fanatic after it.

This passage below is my favourite from a book from a long, long time:

“As I listened I noticed a tendency to talk about how they don’t protect the environment, how they don’t run the government responsibly, how they don’t build quality products, how they never report the news accurately. The basic message was that they were ruining the world, and there was nothing we could do about it. […]

I don’t know about you, but I think I’m pretty smart, and I don’t always run my own life so well. I make mistakes and screw up. I do things I regret. I say things I wish I hadn’t said. A lot of the people you see interviewed on TV have impossible jobs. It’s only a question of how badly they’ll do them. But I don’t see any grand conspiracy out there. I think people are doing the best they can.

And what’s really wrong with making them the problem, is that you abdicate your own responsibility. Once you say some mysterious they are in charge, then you’re able to sit back comfortably and complain about how they are doing it. But maybe they need help. Maybe they need your ideas and your support and your letters and your active participation. Because you’re not powerless, you are a participant in this world. It’s your world, too.”

Caffeine by Michael Pollan

Technically a book yes, but only available in audio format. Imagine the best, most well-researched 2-hour podcast ever. Makes Andrew Huberman’s podcast seem like a rambling mess5.

Pollan made me realise, I don’t even like coffee! I only like the caffeine. So I have now been a week caffeine free. Is it life-changing? No. I have noticed I dream a tonne more when I sleep now. But overall I just like the feeling of knowing I’m not addicted to it. I tried a decaf iced latte the other day, tasted like turd water honestly. So let’s see how long I avoid it.

But a cool, mini audiobook to understand the culture around coffee, and more importantly, our relationship with it.

Nothing crazy on my end this month. No big announcements. No big complaints. Just happy to be here.

One small thing of note. I will be running across Singapore (~60kms) on Saturday the 27th May. So if ya in the area around those dates, drop me a line and I’d be keen on catching up with some readers. Will be in KL afterwards so the offer applies to my Malaysian friends too!

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

And more than anything, these lessons transcend cricket.

Whether it be investing, building a business, or trying to run a podcast, there are plenty of takeaways with a good story to boot.

Who the hell is Steve Waugh?

Even though Indians and Australians make up the bulk of my readers, I’ll provide a smidge of context to get my non-cricketing friends up to speed.

Steve Waugh is not only a former Australian cricketer, but is one of the most successful and respected captains in history. Known for his gritty determination and ability to perform in high-pressure situations, he was a bit before my time as a cricket tragic kid, but the stories around him were legendary.

Lessons from Failure

But in December 1996, Steve Waugh revealed to cricket writer Greg Bauer the psychological strategies he had used to turn personal failure into triumph.

After Waugh made a duck in the first innings of a Test against India in Delhi in October 19962, he went on to use all the errors he had made prior as the platform for his subsequent 67 not out (ground out over two days, and facing over 200 balls), no mean score on a traditionally tricky subcontinental wicket in the second innings.

After his first innings failure, Waugh listed all his mistakes that went into his duck.

The list was a catalogue of avoidable blunders: he had been watching the match on the television monitor, and had thus exaggerated to himself the dangers of the pitch (which was apparently in piss poor condition - umpire Peter Willey described it as the worst first-day pitch he'd encountered); he had been caught up in the noise and commotion of a dressing room full of visitors, instead of preparing mentally for what was to come; he had left behind the lucky red rag that he always liked to have in his pocket when batting; he had not formulated a strategy against India's spinners, who were making the most of a pitch that heavily favoured spin; and finally, he went out agitated, intimidated, and expecting to fail. 

But rather than dreading his next innings, he put together a strategy for coping based on the advice of people he trusted and respected. 

• That night, he phoned two people: first, his former captain and teammate, Allan Border, to ask for technical advice; and second, his wife, knowing she would give him the personal support and affirmation he needed. 

• Waugh paid special attention to the following Indian innings, carefully observing how their successful batsmen managed to deal with the pitch without losing their wickets. 

• He gave himself a pep talk about over-reliance on his lucky red rag, telling himself, “If I've got it, it's nice to have it here. But it's not going to play my shots for me!“

• On the day of his second innings, Waugh withdrew into a corner of the dressing room, studied the field while perfecting the details of his plans for the bowlers, and gave himself plenty of time and space to prepare for his turn at the crease. 

• A vital part of Waugh's approach was not to allow the prospect of facing any bowler to intimidate him. According to Bauer, Waugh said of Kumble, “He's probably the best spinner in the world on that type of wicket and yet it was almost as if I wanted to get down [to) his end and face him!”
  Waugh had a strategy for playing him all figured out, and was prepared to play a waiting game until he saw an opportunity to score. Waugh has described this as the most satisfying aspect of Test cricket: facing a really good bowler and taking the game to him.

These realisations from Waugh might not be particularly ground-breaking I hear you say.

But in each of these lay the kernel of larger lessons, which Waugh was experienced enough to recognize, and adapt to his situation.

These lessons are worth learning, and apply to many fields, not just cricket.

LESSON #1: NEVER BE TOO PROUD TO ASK FOR HELP.

Don't be afraid to look outside your own camp for help. Waugh found some useful ideas for playing leg-spinner Anil Kumble from an article in which South African captain Hansie Cronje described his team's strategy for playing Kumble's unique brand of fast, bouncy and barely deviating spin. It is also worth noting that a quiet chat with a supportive non-cricketing friend or relative - someone who believes in you, knows your strengths and can affirm them - can be a great psychological boost, even if they don't understand much about the cricket skills involved.

Reaching out for help or even just having a supportive chat is also extremely relevant to investing, which can be a brutal and lonely field.

Don’t get stuck in the bubble.

Branch out, learn from others. Which leads to the next lesson…

LESSON #2: DON'T UNDERESTIMATE THE BENEFITS OF LEARNING FROM THE OTHER SIDE DURING THEIR INNINGS.

Waugh's careful observation of how the Indians were coping with the conditions paid dividends. All too often, when the opposing batsmen are getting on top of the situation, we see the fielding side's heads going down. They might be better occupied observing what it is that the successful batsmen are doing right, and planning their next innings accordingly.

Charlie Munger (and many other famous and successful investors) often preach the value of learning new disciplines and educating yourself outside your area of expertise.

It is critical for a person who desires to be wise to think broadly and learn from others. Munger has said many times that someone who is really smart but has devoted all of their time to being an expert in a narrow area may be dangerous to themselves and others.

Examples of this include macroeconomists who study the economy but are disastrous when investing their own portfolios and marketing experts who may think that most all business problems can be solved through marketing. Financiers tend to think similarly about their own profession. Too many people believe that what they do at work is hard and what others do is easy.

“It is better to be worldly wise than to spend lots of time working with a single model that is precisely wrong”

LESSON #3: USE GOOD-LUCK CHARMS AND PERSONAL RITUALS TO BRING YOURSELF UP, NOT DOWN.

An astonishing number of top cricketers are superstitious and cling to certain rituals before or during a match. During India's 1996/97 tour of South Africa, Sachin Tendulkar insisted on wearing a special set of pads, once owned by Sunil Gavaskar, regardless of their increasingly battered appearance. Viv Richards always insisted on leaving the dressing room and taking the field last when his side was fielding. Shane Warne believed that his lucky number was 23, and was greatly heartened at the least sign of it (such as on his hotel room door).

The psychological benefit of lucky charms and special rituals can be great if they boost the confidence and comfort the player (or, as an added bonus, rattle the opposition); but their absence should not be allowed to make any difference.

Maybe this one is more cricket focused, but here’s my take.

For a while there, I poo-pooed anyone with superstitions in sports, putting them in a similar bucket to people who believe in star signs. As if my crusty red jocks with holes in them actually improve my batting? But eventually, I realised that if they do help me get in a comfortable state of mind, they can be helpful, even if not directly helping me physically as a batter.

So nowadays, if one of my missus mates starts rambling on about how Venus and Jupiter are aligned perpendicular and have gone into retrograde so that means they’re going to have a good 2023, so be it. I’ll bite my tongue as best I can, let them live their life (it doesn’t affect me, so why should I stress?), and hell, who knows maybe they might have a good 2023 because they thought good juju they thought was coming.

LESSON #4: FIND OUT WHAT WORKS FOR YOU IN THE DRESSING ROOM. THEN STICK TO IT.

Waugh had played enough cricket to know what worked for him, and by withdrawing into a corner to plan his strategies, he was retreating into a familiar and effective working space. Don't allow distractions if you know you need quiet. Don't brood if it makes you tense. If you know that you have done everything possible to prepare and you find that studying the game is making you more, not less nervous, then find something absorbing to do.

It took me a while to figure this out on my own, but some people just suit different styles of investing.

Don’t force something you’re not. If you enjoy being plugged into markets 24/7, are wildly emotional, and change your mind constantly, maybe value investing isn’t for you? Find a different approach that works for you.

Plenty of ways to skin a cat.

LESSON #5: RELISH THE CHALLENGE OF FACING A CLASS BOWLER.

No player should walk out to face a bowler without a strategy for playing him. And this means that the bowler is not testing you; you are testing yourself against that bowler. The distinction is a fine, but vital one. It means that in the final analysis, it is not the individual bowler that is causing the problem, but your approach to him.

This is closely related to perhaps the greatest hurdle of all: batsmen who put themselves under pressure. If they walk out to the crease intimidated by the way the game is going, the pitch, the bowler, and above all, believing that they will fail, they don't stand a chance.

Waugh freely admits that he got himself out in the first innings against India because he put pressure on himself and went out expecting to fail. When preparing his gear for the second innings, however, he packed enough changes of clothing to last right through a day of batting - a symbolic way of indicating to himself that he believed that he would not go out, and would bat right through the innings.

This is such a banger to finish with. Replace ‘bowler’ with ‘the market’

You might be able to sum this whole point up even further with the 5 P’s.

Prior Preparation Prevents Piss Poor Performance

When things go wrong, one option is the grin and bear it. But don’t discount the idea of stepping back, reevaluating, and getting stuck back in.

I’ll finish with one of my favourite quotes from one of my favourite blokes, Lee Kuan Yew:

I believe that life is a process of continuous change and a constant struggle to make that change one for the better.

In many ways, the work of a critic is easy. We risk very little, yet enjoy a position over those who offer up their work and their selves to our judgment. We thrive on negative criticism, which is fun to write and to read.

But the bitter truth we critics must face, is that in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so.
- Anton Ego

The above quote is to remind myself that often when I’m critical of something, it ain’t worth the paper it’s printed on. This issue will be a bit Japan-focused FYI, but let’s get stuck in—my personal spiel at the end.

Chart of the Month:

Morris Chang's 2021 Speech on the History and Future of Semiconductors [Part 1 & Part 2]

Originally from April 2021 about the history and future of semiconductors and TSMC, but has only recently been translated. And what a goldmine this is.

A brief history and the importance of semiconductors, explaining the division of labour in the semiconductor industry, Taiwan’s advantages in wafer manufacturing, the fab-centred semiconductor industry chain, and competition from the US and South Korea, this one has it all.

Chang hits home around Taiwanese talent, and why they’re key to TSMC’s success:

excellent and dedicated engineers, technicians, operators willing to commit to manufacturing. This is very important. At least in the United States, engineers are not as dedicated as those in Taiwan. I think people in other professions as well, haha. Americans are not as dedicated as Taiwanese. […]

Manufacturing in America is no longer a “hot” industry. It has not been “hot” for decades. People don’t want to work in the manufacturing industry. […] All of the above (R&D, finance, and marketing job fields) are more desirable fields to be in than manufacturing. The commitment to manufacturing is a great advantage of Taiwan.

A couple other main takeaways:

Comparing the American wafer manufacturing conditions with Taiwan, land is America’s absolute advantage. So are water and electricity. […]

American talents are not as good as Taiwanese ones, whether it’s engineers, technicians, foremen, or operators. The personnel dispatched by Taiwan to the US, like I said, are not necessarily the best in terms of management ability. The US also lacks the ability to mobilize manufacturing personnel on a large scale.

The result is that the unit cost is significantly higher in the US than in Taiwan. It’s true that it has subsidies. The US has both the carrot and the stick, with the former being federal and state government financial subsidies. However, short-term subsidies can not make up for its long-term competitive disadvantages.

and

TSMC is the largest company in Taiwan and led by professional managers, everyone from the chairman down. Of course, there are disadvantages as well, but I do think that to set up a world-class enterprise, deploying a professional managerial leadership is still a better model. […]

We’ve also had 120,000 employees since our founding, including those who have left. This actually indicates a very low turnover rate, only about 3%, 4%. We currently have 50,000 employees and have only had 120,000 employees in total for the past 30 years.

Of course, the support from the government and society at large is very important to TSMC’s success as well. This is what I’m calling for today. I hope they will continue to support TSMC and increase the advantages of Taiwan.

Malacca Strait: why does up to 40% of global trade flow through here?

has been a recent favourite of mine. Consistent and high-quality writing. Statistics, history, and good memes. What’s not to love!?

Simply put, the Strait of Malacca is the shortest sea route between the Indian and Pacific Ocean. It is over 1/3 shorter than its closest alternative. Access to the Malacca Strait facilitates up to 40% of global trade. 2/3 of China’s trade volume by sea and 40% of Japan’s sea trade. Sees 15 million barrels of oil per day go through the Strait and 1/3 of all LNG volumes to China and Japan. 80% of China’s crude oil imports (in 2016). It is the shortest sea route to get from Europe to the Far East.

Tyler Cowen on China

Sometimes feels a bit doomy, but I’d rather be doomy than have my head in the sand about risks and repercussions.

If something has not happened for a long time, most people simply forget about it. The last time a nuclear weapon was detonated against human beings was in 1945. So we simply start assuming it can't happen, it won't happen… It's not even within the set of our consciousness.

Terrorism, at different periods of time, becomes thought of as not possible; not recently, [since] of course it became salient again with 9/11. A major pandemic that affected everyone­ — HIV/AIDS, although it did affect everyone, was not perceived that way — is salient again. We just underinvest in catastrophes if they haven't happened in a long time.

I see this pattern in history again and again and again. I think a major war between great powers falls into that category. And now with Russia, Ukraine, China, and Taiwan, it's no longer the case. People talk about it a lot. I'm not sure how much the talk helps, but at least there's some basic awareness that these things can happen.

Japan was the future but it's stuck in the past

“after a decade here I have got used to the way Japan is and come to accept the fact that it is not about to change.”

A BBC’s Tokyo correspondent’s farewell essay after 10 years in the country that paints a bleak picture. Fair in some parts, harsher in others, the counter article below might be a better piece to truly understand it. But important to link first for context.

Actually, Japan has changed a lot

counters a couple of the Wingfield-Hayes’ arguments:

• In Japan, houses are like cars. As soon as you move in, your new home is worth less than what you paid for it and after you've finished paying off your mortgage in 40 years, it is worth almost nothing. It bewildered me when I first moved here as a correspondent for the BBC - 10 years on, as I prepared to leave, it was still the same.
  
  Smith responds “Tokyo has managed to build enough housing to make housing costs fall, even as people continued to stream from the countryside into the city. Whilst also increasing the size of the average person’s home!

• Wingfield-Hayes: A third of Japanese people are over 60, making Japan home to the oldest population in the world, after tiny Monaco. It is recording fewer births than ever before.
  
  Noah? The only reason we associate the low fertility trend with Japan is that it started there first.

And why does Noah Smith’s rebuttal article even matter?

I admit that part of my determination to rebut charges of Japanese stasis is just personal pique — irritation at the cliched cultural essentialism that still defines Japan in the minds of too many Westerners. I suppose thinking of Japan in terms of the bubble and crash of the 80s is less ridiculous than thinking of it in terms of samurai traditions and The Chrysanthemum and The Sword. But still. Come on.

Perhaps, though, there actually might be a little bit at stake here. As Japan becomes a more open, globalized country, Western ideas and opinions have the potential to change Japan for the better. Outside perspectives could help Japan to solve the very real problems of the 2020s — corporate ossification, technological slowness, etc. But if Westerners essentialize Japan — if they think of it as a country and culture frozen in amber — they won’t have much to offer the country in the here and now. Japan is, in fact, a very dynamic and changeable place.

Why is Java So Weird?!

Java (an island in Indonesia, where Jakarta is located for those unfamiliar) is home to nearly 150 million people and the population density is ~1,100 people per square km. 3x the density of Japan or the Philippines, 7x that of China, and 30x that of the US.

But why?

Java has more volcanoes and fewer other types of mountains. This means lots of very fertile land that can sustain a lot of agriculture for a long period of time. The Javanese grow lots of rice with that fertile land, which feeds its huge population. The Javenese also need big families to tend to the rice fields, so natality has always been encouraged. Fertility of land have bred fertility of humans.

It’s a very visual type of post, so I can only summarise so much. Do check it out.

Japan's Bubble-Burst: The Party That Wasn't Supposed to End

Succinct. Rei has done an incredible job explaining and summarising Japan's lost decade and its consequences.

It’s not all doom and gloom for Japan today, but it does face a tough road ahead.

Japan's recovery was far from complete. The nation faced a daunting challenge in the form of a declining population and aging society, leading to a shortage of labor and a reduction in domestic demand. Japanese banks remained hesitant to lend to anyone but large enterprises, and Japanese companies resisted implementing new reforms and technologies. In fact, Japan currently ranks as the least productive country among the G7 nations. […]

The end of the lost decade may bring some relief, but it is clear that Japan still has a long road ahead to secure a bright and prosperous future.

I’m going to highlight a couple of the most popular podcasts over Jan/Dec, but I've also done some other super interesting podcasts recently like Sean Upton-McLaughlin on Building a Career in China, Raghav Kapoor on Disrupting Investment Research with Smartkarma, Steve Vines on Defying the Dragon: Hong Kong and the World's Largest Dictatorship, and Callum Morton-Smith on Construction and Quantity Surveying in the Middle East.

Bloody lucky to be able to do what I do!

ASML & EUV Lithography Deep Dive with Asianometry [Spotify] [Apple]

The engineering, the costs, and the numbers involved for EUV machines that ASML makes just make my head spin. Note that Jon did this podcast at super short notice, whatta legend!

It’s estimated that one EUV machine uses as much energy as 10 DEUV machines. TSMC has one fab that they’ve been doing a long time in Tainan, and that single fab is estimated to use as much energy as the entire country of Costa Rica. And one year of operations will light up the Eiffel Tower for 17,000 years. So that’s part of the reason why these machines not only cost so much to build, but also cost so much to run.

Rajeev Mantri, Venture Investing and India’s Economic Prospects [Spotify] [Apple]

On why India is fertile ground for Deep Tech Investing:

“India always had a very deep pool of technical talent. So India’s always had, for probably several decades now, very high-quality scientists, engineers, researchers, and so on. The human capital is already here. The second reason was that there were actually major challenges that were confronting the country, that were confronting the economy, in the areas of energy, healthcare agriculture, many of the so-called atoms-based industries. So I felt that need was there, the capability was there. So I always felt strongly that, you know, it would happen maybe if not in 2009, then maybe by 2014, if not in 2014, then maybe by 2019.”

Also gives me a chance to include this graphic comparing the population of countries to states in India. Mind-boggling stuff.

What Made the Modern World | Stephen Davies [Spotify] [Apple]

Monster thanks to Matt Joass for recommending this to me.

Modernity1 wasn’t sudden. It was a gradual change. But there have been pockets of modernity in history (the Roman Empire during the second half of the first century and most of the second century, the Middle East under the Abbasid Caliphate, and China in the 12th and 13th centuries)

during these periods and in these specific locations you do find many of the features of modernity you find intensive growth, you find a move towards greater urbanization, you find a move towards more rationalism or more skeptical scientific approach to the study of the physical world and of human existence. But the point is they do not last they are typically short-lived and the end in a kind of crisis. […]

they're replaced by something else and you get a reversion back to the historical norm of economic stagnation and lack of economic Innovation and dynamism

So as a follow-up question, why has this intensive growth, greater urbanization, and individualism that started in Northwestern Europe in the 18th century not suffered the same fate as its predecessors? Why has it lasted rather than coming to end in a crisis? INNOVATION BABY!

The magic ingredient is Sustained Innovation. Now that goes with a whole lot of other things. In particular it goes with things like free discussion and intellectual and social and cultural liberty because if you don't have those things you're not going to have innovation. Because innovators by definition are people who create something new which means very often that it's something that contradicts or wrongs against the conventional rules and norms.

Same spiel, different month, the most efficient way to share videos is through a YouTube playlist. Not a massive playlist this month, just high-quality bangers.

Also, a cheeky reminder to subscribe to my YouTube channel! I pinky promise I will try my damn darndest to post a video analysing Buffett and his Apple investment in February.

[READ] Emergent Tokyo: Designing the Spontaneous City by Jorge Almazán

Stunning book. A rare one where you’d really want a physical copy. Hopefully, will get Jorge on Compounding Curiosity soon :P

The effects of burnout are starting to appear again, but I’m hesitant to blame the actual work I’ve been doing. I think my management of my time and stress has been less than stellar. So February is aiming to be a reset of sorts. Getting my shit in order (you’d be mortified at my lack of planning, schedules and systems that keep my podcast, newsletter and various things in check).

My favourite personal trait (that does impede me sometimes), is that I have a life outside content, investing, and being online. I love golf. I love cricket. I love gardening.

For better or worse, I don’t have one true passion that I’m willing to put all my life’s work and effort into. I like to change things up.

What’s the point in being uber-successful in a single discipline, if the rest of your life is an absolute shambles?

It’s not a tradeoff I’m willing to make.

I haven’t cracked the shits and given up. But do excuse me if I ever do a Harold Holt2.

I’ll probably be having a fucking grand old time away from the computer.

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia + Compounding Curiosity (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Hello friends, enemies, and those still under review.

Through my work I sift through a metric shit tonne of content, so I’m keen to share with you some of the best I've come across in the past year.

If I had to pick a theme for the content I’m suggesting it’d be content that makes you think, yet makes you curious for more. Hopefully, anyway.

I’ve sorted them into Articles, Podcasts, Videos, and Books, and I’ve even included a blurb or summary for a lot of ‘em.

Enjoy!

LVMH and The Luxury Strategy - A deep dive into luxury brand management

Incredible analysis that uses The Luxury Strategy by Jean-Noël Kapferer, a book considered the definitive guide to understanding luxury consumer brands and applies it to the French luxury giant Moet Hennessy - Louis Vuitton (LVMH).

Attention by Morgan Housel

But there’s a middle ground to gain and maintain attention:

• Get to the point.

• Good stories > deep lectures.

• Transform gut feelings into words, explaining something people intuitively know is true but haven’t yet put into words.

• Be broad. “Your job is to write something that a hedge fund manager will find informative but a complete novice will understand.”

• Introduce a new topic through the lens of something readers already know.

• Be timeless.

You can give people information; you can give them an opinion; or you can try to change the way they think. The first is ultra-competitive. The second pulls you towards pandering. The third is, I think, by far the most powerful, and the best way to not only get but keep people’s attention.

A Compulsive Search for the Most Interesting People with Patrick O'Shaughnessy

Patrick is some sort of non-giving-up podcast guy. And for me his curiosity and tenacity is infectious. Even better, the conversation was recently released as a podcast!!! Listen on Spotify or Apple.

Mark Manson, the Self-Help Guru Who Burned Out

Mark Manson, self-help blogger and author, best known for "The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life." But what happens when a self-improvement guru burns out?

Why is LinkedIn so cringe? The answer is in its business model and algorithm

Despite being a cringetopia, LinkedIn does have a few redeeming qualities. The biggest being accountability. Since people use their real names and the platform is tied to their careers, people act relatively civil.

The Legend of Li Lu

Li Lu might be the most interesting investor ever. Bold claim! But hear me out…

• Born during the Cultural Revolution where his parents got sent off to labour camps so he bounced around peasant families that could take him in.

• Survived the great Tangshan earthquake whilst all of his foster family perished.

• He not only participates but helps lead the Tiananmen Square protests of 1989 where he ends up on China’s most-wanted list.

• He flees China and ends up in the US where he becomes a world-class value investor and best buds with Charlie Munger.

How Tokyo Avoided the Affordable Housing Crisis

Something you never notice until you learn it. But Japan’s 12 standardized land-use zones is a solid reason why I love that place so damn much. Essentially, apartments, restaurants and schools can be built in all but two zones. Talk about A E S T H E T I C. “If you love me, let me go, back to that bar in Tokyo…”

China's Secret Reason for Electrification

Title may sound clickbaity, but the article is the bee’s knees.

China’s leaders are (rightly so) obsessed with the threat of a blockade. How would a blockade manifest first? By cutting China off the energy supplies from overseas.

Instantly, the flow of 10 million oil barrels per day would stop. So would the 15 billion cubic feet of gas per day. And the 250 million tons per year of coal. […]

There is, and will not be for at least 20 years, no valid alternative to fossil fuel to run a military force efficiently. Electric buses are possible, electric tanks are just not an option.

So in the case of war + blockade, you would need to save ALL the local gas & oil production for the war effort (military + industrial production of weapons).

Vietnam: It's time to level up - Noah Smith

I was in VietNam in August, and my god I wanna see it succeed so bad. Whatta place.

Vietnam since 1990 has been a solid development success story, but it’s still in the early days of the process. I’m really rooting for the country to succeed — if the government is willing to take the right steps, Vietnam could be the next Malaysia, or even, someday, the next South Korea. What a triumph that would be.

Your attention didn’t collapse. It was stolen

to heal my attention, it was not enough simply to strip out distractions. That makes you feel good at first – but then it creates a vacuum where all the noise was. I realised I had to fill the vacuum. […] Almost everyone reading this will have experienced a flow state at some point. It’s when you are doing something meaningful to you, and you really get into it, and time falls away, and your ego seems to vanish, and you find yourself focusing deeply and effortlessly.

And how to get in a flow state I hear you ask?

1. You need to choose one goal. Flow takes all your mental energy, deployed deliberately in one direction.

2. That goal needs to be meaningful to you. you can’t flow into a goal that you don’t care about.

3. It helps if what you are doing is at the edge of your abilities. E.g the rock you are climbing is slightly higher and harder than the last rock you climbed.

Gambling on Development Review

Bless Pradyu for providing a TL;DR

1. Economic development is dependent on the deal between elites of a country. In most poor countries, elites choose to extract resources from the economy because the policies that lead to development can endanger their political position.

2. When elites decide to have pro-growth policies, they’re taking a risk that it will work out and benefit them personally. Most elites do not want to take this risk, and would rather enjoy the spoils of corruption instead.

3. Some circumstances like the possibility of losing legitimacy (e.g. China after the Cultural Revolution) can force elites to focus on economic growth. But this doesn’t guarantee it. Elites also have to ration state capacity wisely and be open to correcting course for countries to escape extreme poverty.

The amazing true(ish) story of the ‘Honduran Maradona’

Just a crazy tale. Crack a coldie on a quiet Sunday arvo and read this one.

SONY - 75 years of electronics history in 3 hours on Acquired [Spotify] [Apple]

It’s right there in the title! They’ve compressed 75 years in 3 hours, giving you the greatest ROI on your time you could hope for.

Mr Beast on The Joe Rogan Experience [Spotify]

Must listen for creators. Mr Beast, no matter your opinion of his content, is one of the most popular personalities on YouTube. So he knows his stuff. Talks about his YouTube journey, how to generate ideas, and viral content strategy.

Kunal Shah: Core Human Motivations on The Knowledge Project [Apple] [Spotify]

Todd McFarlane — How to Make Iconic Art, Reinvent Spider-Man, Live Life on Your Own Terms, and Meet Every Deadline on Tim Feriss [Apple] [Spotify]

Todd is a quirky dude. Great storyteller. Great anecdotes. Imagine if your rambling uncle at Christmas was also uber-successful. I loved this interview.

Stratechery (with Ben Thompson) on Acquired [Spotify] [Apple]

Another one for creators. Ben is the OG business content creator, and this podcast and this one explaining the history and business of Stratechery itself is a banger.

David Senra on Invest Like the Best [Spotify] [Apple] + (my twitter thread of takeaways)

The podcast I’ve re-listened to most this year. And one I will continue to re-listen to.

How Abe Shaped Japan [Spotify] [Apple]

This episode was actually recorded prior to Abe’s passing. So at least you know there’s no sugarcoating. Great round-up and recap of his life in politics.

TSMC and Taiwan’s Semiconductor Industry with Tim Koay, Historian on Taiwan Early Stage Semiconductor Initiative [Spotify] [Apple]

Absolute banger of a podcast on Taiwan’s Semiconductor Industry origins. Jon from Asianometry interviews Tim here (I’ve also done a deep dive on TSMC with Jon), so Jon knows what to ask and when to probe.

What Alcohol Does to Your Body, Brain & Health - Andrew Huberman [Apple] [Spotify]

Enough to make me swear off alcohol after this silly season.

Raghav Kapoor, Disrupting Investment Research with Smartkarma [Spotify] [Apple]

Raghav has a unique set of experiences and he shares valuable insights on how the investment research space is rapidly changing and why.

Harsha Bhogle on The Grade Cricketer [Spotify] [Apple]

This is the Asian Century, and we’re all just living in it. Not just a cricket interview, Harsha gets philosophical around India’s relationship with the West and it gets pretty deep. Harsha is an amazing speaker and thinker.

Video essays that will make you smarter and satisfy your curiosity. All from 2022.

The most efficient way to share videos is through a YouTube playlist. I’ve tried to include a mix of both larger and smaller channels. But there is definitely a bent towards Asia-Pacific based content and creators. I like what I like okay!

Admittedly I only read a few books published in 2022 (~28 books read overall). But they’ve been highly recommended reads!

Shrimp to Whale: South Korea from the Forgotten War to K-Pop by Ramon Pacheco Pardo

Super fun read that covers South Korea’s incredible rise over the last 100 years.

Chip War by Chris Miller

Only a quarter in, but already highly recommend. How he’s made the history of chips and their strategic importance into a page turner I’ll never know.

Down and Out in Paradise: The Life of Anthony Bourdain by Charles Leerhsen

Accused of being defamatory, this book has copped a bitta flak in some reviews1.

But reading this after I read Bourdain’s long-time producer’s book, In the Weeds: Around the World and Behind the Scenes with Anthony Bourdain by Tom Vitale2, it does help paint a more well-rounded picture of Bourdain. Less demi-god, more mortal. I still love Bourdain, his work, and his ideals. But he’s only human after all.

Personally a very good year. Half the year spent travelling through Southeast Asia3. Launched the Allocators Asia YouTube and have 700+ subs. Compounding Curiosity was downloaded more than 20,000 times4 in 2022 even with my extended break. Most importantly of all though, I am fucking loving every second of what I do

I don’t have to do this. I get to do this!

Wishing you, ya families, and every man and his dog a good chrissie, and a happy new year.

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join the cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

4

Inspired by Dickie Bush’s tweet. What is the single best podcast episode you listened to in 2022?

The format for each episode linked is: Episode and podcast linked to trancript / YouTube [Apple Link] [Spotify Link]

Enjoy!

Business, Investing & Markets

• Billion Dollar Business Philosophies With Hubspot Co-Founder Dharmesh Shah [Apple] [Spotify]

• David Senra on Invest Like the Best [Spotify] [Apple]

• Enron | History and Strategy on Acquired [Apple] [Spotify]

• Guy Spier interviews Gautam Baid: the author of The Joys of Compounding [Spotify]

• How Tracking Every Second Took Rob Dyrdek from 0 to $405M in Exits on My First Million [Apple] [Spotify]

• Kunal Shah: Core Human Motivations on The Knowledge Project [Apple] [Spotify]

• The Unbelievable Story of Alex Hormozi's $100M+ Business Empire

• TransDigm: Foundations with Nick Howley on 50x Podcast [Apple] [Spotify]

• Paul Enright – Inside Long-Short Equity Investing on Capital Allocators [Apple] [Spotify]

• Shishir Mehrotra on Lenny's Podcast [Apple] [Spotify]

• Shreyas Doshi on Lenny's Podcast [Apple] [Spotify]

• Will Thorndike - The Power of Long Holding Periods on ILtB [Apple] [Spotify]

Health, Science & Tech

• ADHD & How Anyone Can Improve Their Focus on Huberman Lab Podcast [Apple] [Spotify]

• Andrew Huberman - TRT, PEDs, Maxing Out Natural T, Supplements, Diet, Sleep & Hormones Deep Dive on More Plates More Dates [Libsyn]

• Dirty Coms - Darknet Diaries [Apple] [Spotify]

• Tom W. Bell on law as the software of society [Spotify]

• What Alcohol Does to Your Body, Brain & Health - Andrew Huberman [Apple] [Spotify]

Behavioural & Self Improvement

• Arnold Van Den Berg on the Power of Your Subconscious Mind

• Boyd Varty — The Lion Tracker’s Guide to Life on Time Ferris [Apple] [Spotify]

• Cormac McCarthy, The Road, and Carrying the Fire on Art of Manliness podcast [Apple] [Spotify]

• David Perell: Writing, Leverage, & Living With More Joy on The Danny Miranda Podcast [Apple] [Spotify]

• Die With Zero: Net Fulfillment Over Net Worth with Bill Perkins [Apple] [Spotify]

• Gordo Byrn: How To Design Your Best Life on Rich Roll [Apple]

• Marshall Goldsmith: The Essentials Of Leadership on The Knowledge Project [Apple] [Spotify]

• Mastering Mindset: A Deep Dive On Mental Toughness on Rich Roll [Apple] [Spotify]

• Neil Pasricha: Simple Rules for Happiness on The Knowledge Project [Apple] [Spotify]

• Oliver Burkeman – Time Management for Mortals [Apple] [Spotify]

• Rich Roll — Reinventing Your Life at 30, 40, and Beyond on The Tim Ferriss Show [Apple] [Spotify]

• World Leading Mindset Expert: How To Reach Your Full Potential - Matthew Syed on The Diary Of A CEO [Apple] [Spotify]

Misc

• Anticipatory Grief - All There Is with Anderson Cooper [Apple] [Spotify]

• MrBeast Shares What It Really Takes To Become THE BEST On YouTube [Apple]

• Praveen Mohan - Indian History Retold & Rethought on The Ranveer Show [Spotify]

• Todd McFarlane — How to Make Iconic Art, Reinvent Spider-Man, Live Life on Your Own Terms, and Meet Every Deadline on Tim Feriss [Apple] [Spotify]

• Slavery At Sea - The Outlaw Ocean [Apple] [Spotify]

You can find my previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

"The past makes you wanna die out of regret and the future makes for depressed out of anxiety. So, by process of elimination, the present is likely the happiest time."
- Hikigaya Hachiman

One of those months where I blinked and missed it. Some bloody good content within here, hopefully, you enjoy it as much as I did.

CHART OF THE MONTH:

READ:

Legoland Korea Is Wrecking South Korea’s Bond Market

Absolute bonkers headline. Essentially a story of financial contagion. Because a local government built an unprofitable Legoland and said local government threatened not to repay the loans, the entire Korean municipal and corporate bond market is now at risk.

the fallout is not limited to local government bonds; it impacts the whole of South Korea’s bond market, worth more than $2 trillion. Corporate bonds are considered less safe than local government bonds. If few buyers are brave enough to buy local government bonds under these conditions, even fewer buyers can muster enough courage to buy corporate bonds. One of the safest corporate bonds in South Korea is issued by Korea Electric Power Corp. (KEPCO). The returns for KEPCO’s three-year bond had climbed from 2.184 percent to 5.825 percent since the beginning of this year. But in its latest issuance, the KEPCO three-year bond worth 200 billion won (about $146 million) could not find a buyer.

and,

To prevent the credit market from seizing up completely, the South Korean government stepped in by providing a liquidity facility of more than 50 trillion won (about $35 billion). The Bank of Korea also injected 42.5 trillion won (about $31 billion) to stabilize the short-term bond market, and South Korea’s five largest banks also pledged to provide up to 95 trillion won (about $67 billion) in liquidity. There is an absurdist quality to these measures: On the one hand, the Bank of Korea has been aggressively raising the benchmark interest rate to curb inflation by reducing liquidity, but on the other hand, the South Korean government is injecting liquidity to the market to stave off a total economic collapse.

China's Secret Reason for Electrification

Love this article. Doesn’t mess around. Gets straight to it:

China is electrifying its economy at breakneck speed. But the way it does it makes little sense if carbon emissions were the reason.

So why are they doing it?

Because they are busy making China more resilient to THE geopolitical threat that could bring the country to its knees.

China’s leaders are (rightly so) obsessed with the threat of a blockade. How would a blockade manifest first? By cutting China off the energy supplies from overseas.

Instantly, the flow of 10 million oil barrels per day would stop. So would the 15 billion cubic feet of gas per day. And the 250 million tons per year of coal. […]

There is, and will not be for at least 20 years, no valid alternative to fossil fuel to run a military force efficiently. Electric buses are possible, electric tanks are just not an option.

So in the case of war + blockade, you would need to save ALL the local gas & oil production for the war effort (military + industrial production of weapons).

Starbucks pins their recovery on a strong domestic consumer and a China recovery

Excellent coverage of Starbucks’ China presence.

Starbucks is quite particular about which markets they like to run company-operated stores in, and in China every store is company-operated. This is in contrast to Starbucks’ licensing model, where the operating margins are higher (licensed stores are responsible for OpEx & CapEx) but the revenues (mainly royalties and margin on branded products) are smaller.

Despite making up 49% of the global store count, licensed stores bring in just 11% of Starbucks’ revenues. Licensing tends to carry less immediate risk and offers a capital-light method of rapid expansion.

Out of the 83 countries where you can find a Starbucks, just 8 have company-operated operated stores. Of those 8 markets (home to 18,250 stores), China accounts for 33% of the total; up from 23% just four years ago and is second only to the US (51%) and lightyears ahead of the third largest company-operated market, Japan (9%).

Standing at 6,021 stores (as of Q4 2022), Starbucks has expanded their presence in China at a compounded annual rate of 25% over the last eleven years.

Further recommended reading:

• Zhang Yiming’s Last Speech [Part 1 & Part 2] - “The most basic thing is to realize that everyone, including yourself, is an ordinary person. Some media want to add drama when they report on startups and people's stories, either by making the experience seem legendary or by dramatizing people’s characters. […] most things, in my opinion, have reasons and justifications. Nothing is particularly that difficult or unusual to explain. […] if you keep an ordinary mind, accept yourself as you are, and do well for yourself, you can often do things well.”

• Scaling a European medtech start-up in Asia - “for up-and-coming surgical robotics companies in Europe with dreams of Asian expansion, proper research on what local governments are doing and coordinating carefully with local partners on the ground will be essential.”

• China's zero-COVID policy is dead - “No longer are local governments judged favourably if they implement strict lockdowns as Shanghai did in March 2022. Today, local government officials will be penalised if they take things too far. In practice, this means a sequential loosening of the COVID-19 control policy.”

• Furusato Nōzei: Get Local Gifts & Tax Breaks by Donating to Japanese Small-Towns - This is such a sick initiative. Because rural-to-urban migration is growing, fewer working citizens are paying taxes in their hometowns, leaving municipalities with little funds. So there’s now a tax program where people in cities can donate to independent producers in the countryside in exchange for a credit on their income and resident taxes. For this “donation”, you can get anything from premium meat and cheese to pottery and other artisanal goods from just about anywhere in Japan.

LISTEN:

Rob Sheridan of Uluwatu Limited, a Hong Kong-based investment manager on Longriver podcast [Spotify] [Apple]

Rob’s story is an interesting one, but there’s also some sage investment advice here. Talking about his investment process, the art of portfolio construction, and finishes off by discussing a Japanese ERP software provider. What’s not to love!?

Pacheco Pardo, Shrimp to Whale: South Korea from the Forgotten War to K-Pop [Spotify] [Apple]

Ramon is the author of Shrimp to Whale, which is easily one of my favourite books this year. Also a genuinely nice guy. Interesting point I took away was that chaebols1, for all their criticism, have played a key role in South Korea’s growth:

“of course there was corruption, and some felt that the government was telling them basically what to do, at least until the 1980s. but they had upsides as well, which was you had these very big companies that were able to receive the capital from the state, but then they were able to become internationally competitive. And if they had been small-medium size enterprises, it might be me, have been very difficult to scale up sufficiently to be able to export”

TSMC and Taiwan’s Semiconductor Industry with Tim Koay, Historian on Taiwan Early Stage Semiconductor Initiative [Spotify] [Apple]

Absolute banger of a podcast on Taiwan’s Semiconductor Industry origins. Next level good. There’s a funny tale about when how in TSMC’s early days, companies that had to invest were so bearish on the companies future, that stock certificates were thrown out or filed away assuming they possessed little value, only to be found years later. A smidge better than finding old lunch money I reckon!

Value Punks, Global Value Investing [Spotify] [Apple]

My interview with a coupla good mates! Balkar and Daye talk about value investing and what it means, and the case for investing in international markets.

We don’t think there are any hard truths out there in investing. And maybe that’s lost on some people because value investing seems to have increasingly become like a dogmatic field.

Just look at how many accounts there are on Twitter that do nothing other than quote Ben Graham and Charlie Munger, Buffett and all that, right? So like people think you just follow these timeless principles and you can do okay.

What’s interesting though is that when you look at the reality, right? And what you tend to see is that so many investors lose money and get hurt by being so dogmatic with these principles.

WATCH:

I need to highlight the above video. “Neon Taipei, a Dying Beauty”, is a deep dive into Neon's history from its discovery, to its commercialization, use in film and video games and its current downfall. Rice Noodles’ storytelling, editing, and attention to detail are legit phenomenal. One of the best things I’ve seen on YouTube this year.

But as usual, for all my video recommendations, the most efficient way is through a YouTube playlist. I highlight both popular videos and undiscovered gems. But mostly, I want to showcase some of the most insightful and interesting videos related to Asia-Pacific for November.

BOOKS:

[READ] A New Idea of India by Rajeev Mantri and Harsh Madhusudan

Admittedly, I am a (regretful yet improving) noob on the topic of India. So this book was a steep learning curve, but well worth it.

India's economy should boom not so that Indians can feel superior, but because it is reasonable to want the average Indian to be at least as well off as the average human. But for that India will have to make prosperity, and not merely the removal of poverty, the overarching aim. Indian society will be free and open when it focuses on self-improvement as our mantra. Indians should take responsibility for their destiny, channelise their energies towards preparing to win, and as Krishna advised Arjuna, do so without worrying about the outcome

Keep an eye out for Rajeev’s appearance on my podcast later this month!

Gearing up to be a big last month of 2022. Lots of podcast episodes being recorded. Lots to look forward too. My favourite time of year!

Lastly, I did my first ever interview. Gotta admit, took a little getting used answering questions rather than asking them! But John asked some incredibly thoughtful questions, yet kept it conversational which I thoroughly enjoyed.

So if you want to understand better who I am, what I do, and why I do it, worth a gander :)

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Leave anonymous feedback, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Recommendations are from Patrick OShaughnessy's tweet: 5 books to build big, worldwide perspective

1. Lessons of History (Durant)

2. Factfulness (Rosling)

3. Ten Global Trends (Bailey & Tupy)

4. How the World Really Works (Smil)

5. Against the Gods (Bernstein)

Bonus. The Prize (Yergin)

What else?

Note: I was unsure how to best present these recommendations, so if someone in the comments gave 5 suggestions, I compiled and linked to the books like that. But also sorted all book recommendations into categories individually in the latter half of this post.

Individual Recommendations

Patrick OShaughnessy (@patrick_oshag)

• The Lessons of History by Will & Ariel Durant

• Factfulness: Ten Reasons We're Wrong About the World--and Why Things Are Better Than You Think by Hans Rosling

• Ten Global Trends Every Smart Person Should Know: And Many Others You Will Find Interesting by Ronald Bailey and Marian L. Tupy

• How the World Really Works: The Science Behind How We Got Here and Where We're Going by Vaclav Smil

• Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

• Bonus: The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin

Kevin Martelli (@KevMartelli)

• Tyranny of Experts by William Easterly

• The Key Man: How the Global Elite Was Duped by a Capitalist Fairy Tale by Simon Clark, Will Louch

• Seeing like a State: How Certain Schemes to Improve the Human Condition Have Failed by James C. Scott

• Discourses on Livy by Niccolo Machiavelli

• For Good and Evil: The Impact of Taxes on the Course of Civilization by Charles Adams

Thomas Aviles (@thomasjaviles)

• Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge and the Teachings of Plants by Robin Wall Kimmerer

• An Immense World: How Animal Senses Reveal the Hidden Realms Around Us by Ed Yong

• The Order of Time by Carlo Rovelli

• The Dawn of Everything: A New History of Humanity by David Graeber, David Wengrow

• A Thousand Brains: A New Theory of Intelligence by Jeff Hawkins

RM (@Ry_Mackay)

• Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu

• World Order: Reflections on the Character of Nations and the Course of History by Henry Kissinger

• The Origins of Political Order by Francis Fukuyama

• Political Order and Political Decay by Francis Fukuyama

• Confessions of an Economic Hitman by John Perkins

• Bonus: How Asia Works by Joe Studwell

Categories

Investing, Markets, Economics

• Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

• Confessions of an Economic Hitman by John Perkins

• How the World Became Rich: The Historical Origins of Economic Growth by Mark Koyama and Jared Rubin

• Incerto: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile, Skin in the Game by Nassim Nicholas Taleb

• Principles: Life and Work by Ray Dalio

• The Birth of Plenty: How the Prosperity of the Modern World was Created by William J. Bernstein

• The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

• The Key Man: How the Global Elite Was Duped by a Capitalist Fairy Tale by Simon Clark, Will Louch

• The Rational Optimist: How Prosperity Evolves by Matt Ridley

• The Origin of Wealth by Eric Beinhocker

• The Wealth of Nations by Adam Smith

• The World for Sale: Money, Power, and the Traders Who Barter the Earth's Resources by Javier Blas and Jack Farchy

• Tyranny of Experts by William Easterly

Science, Tech, and History

• A Short History of Nearly Everything by Bill Bryson

• A Thousand Brains: A New Theory of Intelligence by Jeff Hawkins

• Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge and the Teachings of Plants by Robin Wall Kimmerer

• Civilization: The West and the Rest by Niall Ferguson

• Guns, Germs and Steel by Jared Diamond

• Helgoland: Making Sense of the Quantum Revolution by Carlo Rovelli

• Sapiens: A Brief History of Humankind by Yuval Noah Harari

• The Future Is Faster Than You Think: How Converging Technologies Are Disrupting Business, Industries, and Our Lives by Peter Diamandis

• The Lessons of History by Will & Ariel Durant

• The Order of Time by Carlo Rovelli

• The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin

• WEIRDest People in the World by Joseph Henrich

Government, Politics & Nations

• Discourses on Livy by Niccolo Machiavelli

• For Good and Evil: The Impact of Taxes on the Course of Civilization by Charles Adams

• How Asia Works by Joe Studwell

• Political Order and Political Decay by Francis Fukuyama

• Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail by Ray Dalio

• Prisoners of Geography by Tim Marshall

• Seeing like a State: How Certain Schemes to Improve the Human Condition Have Failed by James C. Scott

• The End of the World Is Just the Beginning: Mapping the Collapse of Globalization by Peter Zeihan

• The Origins of Political Order by Francis Fukuyama

• Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu

• World Order: Reflections on the Character of Nations and the Course of History by Henry Kissinger

Self-Improvement / Philosophy / Psychology

• Factfulness: Ten Reasons We're Wrong About the World--and Why Things Are Better Than You Think by Hans Rosling

• The Story of Philosophy: The Lives and Opinions of the World's Greatest Philosophers Mass by Will Durant

Misc

• AI 2041: Ten Visions for Our Future by Kai-Fu Lee, Chen Qiufan

• Ten Global Trends Every Smart Person Should Know: And Many Others You Will Find Interesting by Ronald Bailey and Marian L. Tupy

• War and Peace by Leo Tolstoy

Disclaimer: I’ve used Amazon Affiliate Links here. Feel free to help out by using them, much appreciated! 

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Leave anonymous feedback, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Recommendations are from Patrick OShaughnessy's tweet: What are the best books about designing cities? Or about what makes for great cities?

Books

• A Pattern Language: Towns, Buildings, Construction by Christopher Alexander , Sara Ishikawa , et al.

• Asphalt Nation: How the Automobile Took Over America and How We Can Take It Back by Jane Holtz Kay

• Better Places, Better Lives: A Biography of James Rouse by Joshua Olsen

• Crisis in the Built Environment: The Case of the Muslim City by Jamel Akbar | “This book is a whole new perspective, and stand alone thesis on built environments organization, spoiler alert: it is all about rules and rights” - @maso9ich

• Confessions of a Recovering Engineer: Transportation for a Strong Town by Charles L. Marohn Jr.

• Emergent Tokyo: Designing the Spontaneous City by Jorge Almazán

• Golden Gates: The Housing Crisis and a Reckoning for the American Dream by Conor Dougherty

• Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability by David Owen

• Happy City: Transforming Our Lives Through Urban Design by Charles Montgomery

• Heart in the Right Street: Beauty, happiness and health in designing the modern city by Nicholas Boys Smith

• Introduction to Urban Science: Evidence and Theory of Cities as Complex Systems by Luis M. A. Bettencourt

• Le Corbusier & Pierre Jeanneret: Chandigarh, India by Patrick Seguin

• Order without Design: How Markets Shape Cities by Alain Bertaud (also a few bonus podcast episodes - Apple Podcasts - Spotify)

• Project Japan by Rem Koolhaas | “I found the portion on group form (emergent urban conditions like favelas, Santorini, and Yazd) especially interesting in the context of modern urban planning.” - @alexisxrivas

• Seven Rules for Sustainable Communities: Design Strategies for the Post Carbon World by Patrick M. Condon

• Scale: The Universal Laws of Life, Growth, and Death in Organisms, Cities, and Companies by Geoffrey West | “Cities are complex adaptive systems that can’t be designed top-down.” - @evancharles

• Streetfight: Handbook for an Urban Revolution by Janette Sadik-Khan and Seth Solomonow

• Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity by Charles L. Marohn Jr.

• The Architecture of Community by Leon Krier

• The City in History: Its Origins, Its Transformations, and Its Prospects by Lewis Mumford

• The City of Tomorrow: Sensors, Networks, Hackers, and the Future of Urban Life by Carlo Ratti and Matthew Claudel

• The Death and Life of Great American Cities by Jane Jacobs

• The New Geography of Jobs by Enrico Moretti | “One interesting observation: strong employers and great jobs attract great workers, but the converse usually does not work nearly as well; jobs must come first.” - @KGolyaev

• The Power Broker: Robert Moses and the Fall of New York by Robert A. Caro | “because it's about the forces that actually design and shape cities i.e. politics, power, influence and private interests. Reading it and using Charlie Munger's inversion principle might be a good way to design future cities.” - @PossibleValue

• The Rise of the Creative Class by Richard Florida

• The Timeless Way of Building by Christopher Alexander

• Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward Glaeser | “It dived into some great world cities and their characteristics and what makes them great and what holds them back in some cases” - @ScalewagJim

• WALKABLE CITY: How Downtown Can Save America, One Step at a Time by Jeff Speck

• Water 4.0: The Past, Present, and Future of the World's Most Vital Resource by David Sedlak

• Where We Want to Live: Reclaiming Infrastructure for a New Generation of Cities by Ryan Gravel

Articles, Journals, Newsletters, PDFs

• A Fluid-Dynamic Traffic Model on Road Networks

A Fluid Dynamic Traffic Model On Road Networks

2.41MB ∙ PDF file

Download

Download

• Bloomberg CityLab

• Chris Kempes and Geoffrey West on 'The Simplicity and Complexity of Cities' (starting from page 64 of the PDF below)

Winter 2020 Issue Of The Bridge On Complex Unifiable Systems

1.61MB ∙ PDF file

Download

Download

• Liam Young - Planet City -- a sci-fi vision of an astonishing regenerative future

• Not Just Bikes YouTube Channel

• Paul Romer: Lessons From Burning Man

• Startup Cities Newsletter - Startups should build cities.

• Urbanized [Documentary] “Urbanized is a feature-length documentary about the design of cities, which looks at the issues and strategies behind urban design and features some of the world’s foremost architects, planners, policymakers, builders, and thinkers.”

• WrathOfGnon’s Newsletter - Traditionalism, sustainability, localism, urbanism.

Disclaimer: I’ve used Amazon Affiliate Links here. Feel free to help out by using them, much appreciated! 

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Leave anonymous feedback, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Special thanks to Jon from Asianometry for the inspiration, motivation, and help to put this post together.

In the first quarter of 2016, Berkshire Hathaway purchased 9.8 million shares of Apple Inc for the first time at around $109 a share. 

The next quarter, Buffett revealed his investment to the world and by then it had already dropped in value from $1.1 billion to about $888 million. He had already lost $220 million. 

In April of that same year, legendary hedge fund investor Carl Icahn announced he had sold all of the 45 million shares he had at the end of the year. So what was Buffett thinking?

The media could smell blood. Was an investment legend starting to falter and resorting to tech investing to save him? What was his investment angle?

Yet fast forward to today and you could snarkily say that on a dollar amount returned, Buffett's big bet on Apple has made him the greatest tech investor of all time. But there may be a grain of truth to this initial outlandish statement.

Since Berkshire’s initial investment, Apple’s value has more than tripled from ~$700B to $2.4 T. Berkshire’s stake in the Tech giant is now worth $122B for an unrealized gain of over $80B. Apple’s recent quarterly dividend from Apple gave them a cool $200m+ alone. 

So this is a case study into Berkshire’s big Apple bet, and how he and his new Berkshire buddies were able to do it…

Coca-Cola

To understand the Apple investment, you need to understand one of Buffett’s OG investments. The time-tested, and easily understandable investment in Coca-Cola back in the ‘80s is a value-investing favourite.

Why? What’s so special about this beverage bet?

Buffett began buying shares of Coke through Berkshire Hathaway in 1988 and now owns more than 400 million shares, just under a 10% stake of the entire beverage giant, and is their largest shareholder today.

So why does Buffett’s investment in Coca-Cola so well-known and loved? Because it’s easy to understand. Coke possessed an incredibly strong brand paired with intelligent asset allocation, combined with a fair valuation and Buffett’s long-term time horizon. A solid recipe for success. 

It’s a story every value investor knows and loves to draw upon when claiming their own investments are fairly valued and have a strong moat-like Coke.

Yet Buffett’s greatest-yet-most-underrated investment would be in a sector he was famously out of touch with and lacking interest in, technology.

The Setup

Buffett is not a tech nerd. I can’t stress this enough. His work office has a landline phone, no computer, and throughout his entire life of 92 years on this earth, he’s apparently only sent one solitary email, to Jeff Raikes of Microsoft1.

In his 1997 letter to shareholders on the topic of low enthusiasm from shareholders about Berkshire’s ‘fancy’ new website, Warren remarked: “being a life-long sufferer from technophobia, I can empathize with this group.”

So I think it should be clear from this point that investing in Apple was not a Warren Buffett-driven endeavour. And to understand the Apple investment, you need to understand a couple of Warren’s understudies.

Let me introduce Todd Combs and Ted Weschler.

Todd Combs is a former hedge fund manager who joined Berkshire on the back of cold calling Warren’s right-hand man charlie Munger, meeting charlie at breakfast and chatting for hours, before being introduced to Buffett where they also hit it off. During their extended conversations, Buffett began talking about his plan to hire a money manager. Combs — who even admits this is true — started thinking about another person he could recommend. Before Buffett dropped, ‘Well, I think we’re kind of thinking of you.’ Thus cementing the unlikely fairytale career journey for Combs.

Ted Weschler is also a former hedge fund manager now managing money at Berkshire and arrived in a similarly strange way. 

Ted Weschler first met Warren Buffett over dinner. A rather expensive one at that. Through a charity auction, Weschler had made the winning bid for a bite with Buffett.

“I was expecting a stiff hour or so meeting, and it ended up being this long visit at the office and a terrific dinner,"

Not quite full, the following year, the madman did it again, bidding and winning on a second meeting. All up, both meals cost Weschler more than $US5m. After peppering his new friend Warren with questions, he got one of his own: Would he be interested in coming to work for Berkshire?

And in a bold decision against the oracle of Omaha, Weschler initially rejected Warren’s offer to work at Berkshire, electing to stay in Charlottesville due to family and work. But three years later, he sent a careful letter interested in that prior offer and received a response that Warren would be happy to have him and he can manage money from the moon as far as he was concerned.

And this is how Todd and Tedd became assets of Berkshire and Buffett.

Buffett speaks of both highly2, “They're both absolutely terrific. [...] They are assets of Berkshire.”

And between Ted and Todd at the end of 2021, they were managing $34b of Berkshire’s investments between them.

But where does the interest in an Apple investment begin?

Getting Buffett on board the Apple investment was in part thanks to Combs.

The story goes that Combs would often visit Buffett’s house on many a Saturdays to talk, and there is a litmus test they frequently use. Warren will ask

“How many names in the S&P are going to be 15x earnings in the next 12 months? How many are going to earn more in five years (using a 90% confidence interval), and how many will compound at 7% (using a 50% confidence interval)?”

In this exercise, you are solving for cyclicality, compounding, and the initial price of an investment. Combs said that this rubric was used to find Apple, since at the time the same 3-5 names kept coming up. 

And the business case for Apple was explained by Ted Weschler in October 2016 in an interview with a German business magazine, Ted mentions that he considers the iPhone to be more effective than Coca-Cola at creating a loyal customer base. And that once people bought an iPhone, they seldom switched because they didn't want to have to learn a new operating system. 

“Once you are fully invested in the App ecosystem and you have got your thousands of photographs up in the cloud and you are used to the keystrokes and functionality and where everything is, you become a sticky consumer.”

Weschler had recognized that Tim Cook was taking the ecosystem that Jobs had created and wringing more revenue out of it, turning the iPhone into a subscription-based business that would generate cash for years to come.

The Payoff

So there comes a time to take the leap, put your money where your mouth is, and invest in your thesis.

But it’s unknown exactly whether it was Combs or Weschler who initiated Berkshire’s Apple investment. But by the end of 2018, this initial one billion dollar bet by Berkshire had turned into 255m shares, at a cost of $36B.

Fair to say that Buffett had bought into Ted and Todd’s vision and valuation of Apple.

Buffett at the time:

"Apple has an extraordinary consumer franchise, I see how strong that ecosystem is, to an extraordinary degree. You are very, very, very locked in, at least psychologically and mentally, to the product you are using. [iPhone] is a very sticky product.”

No doubt able to see how strong their ecosystem thanks to two very handy proteges.

By 2018, Berkshire’s Apple position was its second-biggest public holding, only behind Wells Fargo (which has since been sold off). And there were no other tech companies in Berkshire Hathaway's top 15 holdings by value.

Today, Berkshire’s Apple investment now accounts for over 40% of their total public portfolio! Unsurprisingly, their largest public holding. At the end of 2021, only Berkshire’s insurance division was a larger portion of their overall business.

And Berkshire still isn’t done with Apple, having bought an additional 3.9 million shares of Apple in Q2 2022. Bringing their total investment to just under 900m shares at over $120B at the time of writing.

But what are the actual eye-watering monetary returns on this Apple investment I hear you ask?

Overall, Apple’s value has more than tripled from ~$700B to $2.4T and Berkshire’s stake in the Tech giant is now worth $122B for an unrealized gain of over $80B. Apple’s recent quarterly dividend from Apple gave them a cool $200m+ alone. 

Berkshire’s Apple investment, whilst not as crazy when compared to the VC investments of Naspers/Prosus’s $34 million investment into Tencent in 2001 or Masayoshi Son’s and Softbank's $20m investment into Alibaba. It does hold a candle in terms of total $ returned and already being a public company.

For an 86-year-old technophobe [at the time of original investment], who most would write off as having his best years behind him, Buffett has arguably saved his best for last with this Apple investment.

Lesson here?

Buffett’s Coca-Cola investment story has always been the stuff of legends. But that investment parable has been surpassed. Bill Smead, chief investment officer at Smead Capital Management, "Buffett is having his Coca-Cola moment on Apple." Which mind you, this is being done on a much larger dollar scale!

It’s probably fair to say Buffett’s Apple investment is the greatest public market tech investment ever made.

My takeaway? Surround yourself with curious people. You never know what may eventuate.

So just as Dewey from Malcolm in the Middle wisely said:

And Berkshire's big Apple bet has shown that.

You can find my previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

Inspired by Patrick OShaughnessy's tweet: What’s the edgiest book you’ve ever read?

Note: Patrick said “Interpret edgy however you want”

Self-Improvement / Philosophy / Psychology

• 12 Rules for Life: An Antidote to Chaos by Jordan B. Peterson

• Anti-Oedipus: Capitalism and Schizophrenia by Gilles Deleuze , Felix Guattari

• Private Truths, Public Lies: The Social Consequences of Preference Falsification by Timur Kuran

• The Anarchist Cookbook by William Powell

• Spiritual Enlightenment: the Damndest Thing by Jed McKenna

• Zen and the Art of Motorcycle Maintenance by Robert M Pirsig

Classic Literature & Fiction

• 1984 by George Orwell

• A Clockwork Orange by Anthony Burgess

• American Psycho by Bret Easton Ellis

• Atlas Shrugged by Ayn Rand

• Catch-22 by Joseph Heller

• Child of God by Cormac McCarthy

• Crash by J.G. Ballard

• The Dice Man by Luke Rhinehart

• Fahrenheit 451 by Ray Bradbury

• Fierce Invalids Home from Hot Climates By Tom Robbins

• Filth by Irvine Welsh

• Finnegan’s Wake by James Joyce

• Flowers for Algernon by Daniel Keyes

• Geek Love by Katherine Dunn

• Gravity’s Rainbow by Thomas Pynchon

• Haunted by Chuck Palahniuk

• High-Rise by J.G. Ballard

• IT by Stephen King

• Last Exit to Brooklyn by Hubert Selby Jr.

• Less Than Zero by Bret Easton Ellis

• Lolita by Vladimir Nabokov

• Naked Lunch by William S. Burrough

• On the Road by Jack Kerouac

• Perfume by Patrick Suskind

• Portnoy's Complaint by Philip Roth

• Reflections of a Nonpolitical Man by Thomas Mann

• Super Sad True Love Story: A Novel by Gary Shteyngart

• The Fermata by Nicholson Baker

• The Flamethrowers by Rachel Kushner

• The Fountainhead by Ayn Rand

• The Kindly Ones by Jonathan Littell

• The Mars Room by Rachel Kushner

• The Painted Bird by Jerry Kosinski

• The Road by Cormac McCarthy

• The Trial by Franz Kafka

• Tropic of Cancer by Henry Miller

• True Evil by Greg Iles

• Ulysses by James Joyce

• Under the Roofs of Paris by Henry Miller

Maths, Markets & Investing

• Fooled by Randomness by Nassim Nicholas Taleb

• Statistical Consequences of Fat Tails: Real World Preasymptotics, Epistemology, and Applications by Nassim Nicholas Taleb

• Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

• Treks into Intuitive Geometry: The World of Polygons and Polyhedra by Jin Akiyama and Kiyoko Matsunaga

Science and Tech

• Final Exit: The Practicalities of Self-Deliverance and Assisted Suicide for the Dying by Derek Humphry

• Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari

• Sapiens: A Brief History of Humankind by Yuval Noah Harari

Misc

• History of Sexuality: The Use of Pleasure by Michel Foucault

• Hummingbird by Jude Angelini

• Mein Kampf by Adolf Hitler

• River of Darkness by Buddy Levy

• The Basketball Diaries: The Classic About Growing Up Hip on New York's Mean Streets by Jim Carroll

Disclaimer: I’ve used Amazon Affiliate Links here. Feel free to help out by using them, much appreciated! 

You can find my previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.

I just stopped worrying about stuff.

You only get one go around, I reckon. When you're dead, you're dead. So you can spend your time thinking about how things haven't gone perfectly, or you can just get on with it, and have a laugh.

That's what I do, and I'm pretty happy.

- Neil, The Inbetweeners

A week late I admit and I’m sorry, but I’m finally home after 5 months in Southeast Asia! Boy, it feels good to be back. Let’s crack in!

CHART OF THE MONTH:

READ:

Chips and China

With China’s chip sanctions announced by the US, what does this all mean?

In the medium term, the impacts will be significant, particularly in terms of the stated target of these sanctions — AI. Only now is it becoming possible to manufacture intelligence, and the means to do so is incredibly processor intensive, both in terms of quality and quantity. Moreover, not only does AI figure to loom large in military applications, but is also likely to spur innovation in its own right, perhaps even in terms of figuring out how to keep pushing the frontier of chip design.

In the long run, meanwhile, the U.S. may have given up what would have been, thanks to the sheer amount of cost and learning curve distance involved, a permanent economic advantage. Absent politics there simply is no reason to compete with TSMC or ASML or any of the other specialized parts of the supply chain; it would simply be easier to buy instead of build. Now, though, it is possible to envision a future where China undercuts U.S. companies in chips just like they once did in more labor-intensive industries, even as its own AI capabilities catch up and, given China’s demonstrated willingness to use technology in deeply intrusive ways, potentially surpass the West with its concerns about privacy and property rights.

The big question that I am raising in this article is the short run: […], this move has in fact raised my concern level significantly. I am still, on balance, skeptical about a conflict, thanks in large part to how intertwined the U.S. and Chinese economies still are: any conflict would be mutually assured economic destruction.

How Thailand Became an Auto Export Giant

Another banger from Asianometry. Incredible that he’s able to put out work like this alongside his usual Semiconductor pieces.

The big problem with this exporting success however, is that it is all owned by foreigners. 100% of the management decisions and equity profits from selling Thai-made cars flows up to companies in Japan and the United States.
This traces back to that critical policy change made in the early 1990s. The one that allowed foreigners to own 100% of their joint ventures in the country.
Many of Thailand's auto-suppliers are owned by Thai people, but they remain trapped within the influence of the final assembler - the automaker. Their engineering, design and marketing chops in the consumer space are not competitive. And the sheer size of companies like GM, Toyota, and Honda have kept a Thai-owned brand from ever emerging into prominence.

How the Yakuza took hostage Corporate Japan's Annual Shareholder Meetings

The title is no joke! Not a long one so worth clicking on for a fun read.

Defining “Sōkaiya” is as difficult as defining Geishas. They could be fixers for a firm, making bad press go away. Or extortionists, demanding money from a company to keep quiet. […] Their activities followed a standard procedure. Purchase the minimum number of shares to be eligible to attend a company’s AGM. Before the AGM contact executives threatening to troll them personally or the company in general at the shareholder meeting. Think: real/ imaginary facts about product liability claims, irregularities and payoffs and/ or pointing to personal misconduct, love affairs, etc. If the company had an interest in the AGM proceeding smoothly, they would have to pay off the racketeers by purchasing absurdly expensive subscriptions to useless magazines, paying rent for office plants, etc.

If companies refused, an armada of trolls would stir up the AGM

Legends Of Market History: Tokushichi Nomura II

Tokushichi II is the founder of Japan’s Nomura Holdings, and an OG newsletter writer! He pioneered the Osaka Nomura Business News, a daily newsletter that highlighted the previous day’s trading, stock analysis, and articles on current economic trends. Overall, just a super interesting dude.

Tokushichi II’s life was characterized by relentless determination, massive bets, and innovative ideas that brought credibility to Japan’s investment industry. Initiatives like an in-house research department, daily market news journal, and an evidence/research based approach to investing revolutionized finacial services. There is much to learn from Nomura that is still applicable to all investors today.

Other recommended reading:

• Nvidia - Part 4: Valuation and Returns
  “the moat that Nvidia has established in its core businesses of gaming and data center currently appears robust, however the risks of competition cannot be ignored. As such I feel it is prudent to reflect this in lower growth rates and lower multiple going forward. The stock is down over 65% from its highs, and I believe annualised returns could be north of 10% from here under the base case I’ve spelled out above, however everyone should take these projections with a grain of salt. There is a wide range of outcomes with a business like Nvidia, and I completely understand that readers may take either a more bullish or bearish view. For me personally, I would wait it to drop closer to $100 for a greater margin of safety.”

• As US-China relations worsen, expect supply chain chaos
  “if the U.S. and China decide to pursue a policy of mutual divestment, we should expect a more diverse, less China-centric trans-Pacific trade. There are other exciting economies in the region that the United States is connected to, including Vietnam, the Philippines, Taiwan, Korea, Japan and Indonesia. Eastbound freight flows may have more widely distributed origins as China’s share diminishes. Ports like South Korea’s Busan, Malaysia’s Port Klang, Taiwan’s Kaohsiung and Japan’s Yokohama could become relatively more important.”

• Why Chinese students are falling out of love with US universities ($)
  “student visas issued to Chinese mainlanders fell 45 per cent in the six months to the end of September from the comparable period in 2019, […] Mainlanders are still going overseas to study, but more are choosing the UK, Singapore and Hong Kong, educational consultants say. Chinese students in the UK rose by 50 per cent between 2016-17 and 2020-21. And India displaced China in US student visa rankings over the past six months. F1 visas for Indian students rose to 87,029, well above China’s 49,959, and almost three times the figure for India before the pandemic.”

• Ross & Van Compernolle’s country fact sheets for the ASEAN region
  You gotta click through to get each report. But a small price to pay for some valuable stats.

• Shipbuilding 101 ($)
  “Environmental regulation will also increase the demand for shipyard capacity, as existing vessels need to be replaced or upgraded to meet the 2050 green goals set out by the industry body IMO. While shipyards have been burdened by rising wages and prices for steel, those headwinds are now disappearing. New-build prices have also gone up, suggesting that yard profitability is about to improve.”

LISTEN:

Asianometry discusses TSMC and the global chip shortage on Analyse Asia [Spotify] [Apple]

If you’re looking to learn more about TSMC and the chip shortage crippling the world, this podcast goes a long way.

Murray Hunter on The Dark Forces Changing Malaysian Society [Spotify] [Apple]

A sobering look into some of the challenges Malaysia is facing today. But the quote I’ll share is a bright spot, and a criticism of Australia I wholeheartedly agree with:

“when I arrived in Phnom Pnom Penh at the airport, I saw the Maybank ATM, and then I saw Malaysia influence in the local economy. And I’ve seen that in Thailand, I’ve seen that in Indonesia. So I see Malaysia’s business expansion into the region. and I look at it through the lens of being in Australian, who in my heart wish that we as Australians had have had the influence that we should have had in Southeast Asia, […] So seeing Malaysia’s taking the opportunity that we missed out on it’s positive for Malaysia, but as an Australian, I’m sad that we missed that opportunity.”

Rei Saito on Japanese Stocks and Tokyo Real Estate [Spotify] [Apple]

Overall banger of an episode that gives a great breakdown of investing in Japanese stocks and the Tokyo real estate market. And Rei’s radio voice is buttery smooth too! My big takeaway:

David Senra on Invest Like the Best [Spotify] [Apple]

Ok, not Asia-Pacific specific. But it is terrific. And David is prolific and obsessive about his content so it isn’t a gimmick. And I’ve run out of crappy rhymes. But seriously, this is one podcast you will likely re-listen to. The nuggets of knowledge and accumulation of so much information about founders and entrepreneurs are second to none.

I’ve written a thread with all my takeaways. But the point below is my favourite:

WATCH:

Same spiel but a different month, the most efficient way to share my video recommendations is through a YouTube playlist. I’ve curated what I’ve found to be the most insightful and interesting videos related to Asia-Pacific for this month. Always open to any suggestions you have though!

BOOKS:

[READ] Defying the Dragon: Hong Kong and the World's Largest Dictatorship by Stephen Vines

Great read, very topical and timely. Steve documents Hong Kong’s recent struggles with the "One country, two systems" model, places it in the wider context of the CCP’s history of dictatorship, and explains Hong Kong’s values of protest and identity.

“Hong Kong has been a place of refuge. A place of opportunity. A haven of stability. And a place famously described by the journalist Tsang Ki-fan as ‘the only Chinese society that, for a brief span of 100 years, lived through an ideal never realized at any time in the history of Chinese societies. A time when no man had to live in fear of the midnight knock on the door.’”

As mentioned, I’m finally back home in Aus! Back to the grindstone (which I’m actually enjoying lol)

Will eventually get around to writing a few pieces based on this experience. Most keen to share how life as a digital nomad is kind of meh. Holidays and travelling? Fuck yeah, amazing. Digital nomad life is bliss and expecting quality work to be done? Good luck to ya.

Overall, I had a blast. But stoked to be home. So from now until the end of the year, expect my work to start ramping up. Hoping to share some quality learnings and takeaways with you again soon!

You can find previous posts here. I also interview legends at Compounding Curiosity, lurk on Twitter @scarrottkalani, and have a Discord server for everything Allocators Asia (I’d love for you to join our cool little community we got going).

Want to get in contact? Reply to this email, comment on Substack, or send a letter via carrier pigeon and trust that fate will deliver it.