As we approach Gobi Partners’ 20th anniversary in 2022, we will be sharing inside looks into the workings of Gobi and its portfolio companies. This edition of 20 Questions features Kay-Mok Ku, Managing Partner of Gobi Partners ASEAN, who has been with Gobi since 2010. Every 20 days, we will be releasing new, Gobi-exclusive interviews with movers and shakers in the Asian startup ecosystem.
The seeds were sown years before, when I moved back from Silicon Valley to Singapore, and stopped by Shanghai to meet a VC guy and his family. This guy, who had been introduced to me by a US colleague, was Tom Tsao. Business partnerships always start with personal relationships. Our families met and liked each other. When I reached Singapore, I worked at IMDA (Infocomm Media Development Authority) and Mediacorp. In the course of my work, I ended up helping Tom as a few of his portfolio companies were located in Singapore.
Later in 2010 when I left my corporate job, I wanted to found my own startup focused on executive book summaries, because e-books were just starting back then. At that time, Tom wanted to expand to Southeast Asia and he approached me. But I suggested he take a look at a few other entrepreneurs. He went with someone else, but unfortunately, that discussion broke down. I had to step in and take over his position. My first fund was Gobi’s Singapore fund, which invested in a digital magazine called Scoop. Scoop was founded by Willson Cuaca (now East Ventures managing partner), who was still a part-time VC then. Our fund also invested in BaBe, which was an Indonesian smart news aggregator. It was later acquired by Bytedance, which also owns Tik Tok.
Mok pictured with Scoop branding in 2014. Scoop was one of the first portfolio companies of Gobi’s Singapore Fund, Mok’s first fund.
In 2013, I referred a hot Indonesian travel startup to our partners in China because our Singapore Fund can only invest in digital media startups. So we courted this Indonesian company, brought the founder to China and showed him our top performing travel companies like Tuniu.
Our partners started negotiating with this Indonesian company about participating in their next fundraising round. Unfortunately, the travel industry in China was different from Indonesia. Indonesia is dominated by low-cost carriers, unlike China, which are typically state-owned, so that affected our valuation. The difference was just a few million dollars, but we walked away from the deal. The round we were discussing was in the region of US$20 million valuation. The next round, they reportedly raised at US$500 million valuation!
The lesson here is very simple: hot startups take off like rocket ships so when that happens forget about measuring the height of the ship. Some interim valuations are not as crucial when rocket ships are taking off. Try to measure them and you’ll miss out on the deal entirely.
My biggest pet peeve is when we offer entrepreneurs a term sheet and some of them take the term sheet and start to shop around. This tells me that they’re not interested in building a relationship with us, and that it’s really all transactional to them. They’re clearly trawling for the highest bidder. For early stage investing, it’s really important to have a strong personal relationship between a VC and entrepreneur. In those cases, that relationship is missing.
It’s very easy for VCs to fall in love with their own deals. So one of my cardinal rules is to always have someone else on my team structure the deal. The terms will be fairer, since the guy is not enamoured with the deal, so you get the right downside protection and come up with a cleaner deal. It’s just good governance.
For me, it’s Carsome. Remember the Indonesian deal we missed out on in 2013? Years later, Carsome came to our attention just as we launched the Gobi MAVCAP ASEAN SuperSeed Fund. Carsome was referred to me by Willis Wee, the founder of Tech In Asia. When Carsome came to us, the valuation wasn’t cheap. It was around the same price as the Indonesian travel company. But this time round, I insisted that we invest in the deal. I learned a lesson with the earlier startup and applied it to Carsome.
A good VC is part economist, part anthropologist. When you’re travelling in emerging markets, you have to live like a local, in the trenches. It’s a vital way to understand problems in emerging markets and figure out investment opportunities. It’s rather difficult to get good deals if you just operate out of an ivory tower.
Since Chinese New Year, I’ve been out travelling for about eight months and everywhere I go, I bring along my telescopic stool. It’s an ingenious invention and really helps me keep my legs up for comfort during flights.
Mok (right) with Philippine president Rodrigo Duterte (center) and Poh Tiong Choon Logistics group CEO Poh Kay Leong in 2019.
Whenever I get home, I go to the hawker center in Ghim Moh for Teochew porridge. When I was young, my father’s business failed and he went bankrupt. He never recovered from it. My mom, who was illiterate, effectively became the family breadwinner by working as a cleaning lady. So when I was 10 years old, I could finish 10 bowls of Teochew porridge for lunch. There were no dishes, just Teochew porridge and soy sauce. All these years later, it’s become my soul food.
Growing up in a village called Punggol in northern Singapore, my grandmother tasked me every day with cleaning up pig shit. So at 5 years old, although I didn’t really know what I wanted to become, I have developed two very important life skills. First, I can walk into the dirtiest toilet anywhere in the world and walk out with a smile. Second, I am good at cleaning up OPM at work. That’s not other people’s money, but other people’s manure.
Angela Merkel. She’s the most powerful leader in Europe, yet she leads a very simple lifestyle: she does her own grocery shopping and washes her own dishes. In fact, she has this awe-inspiring Gandhi-like quality. If I were to collaborate with her, it would be an impact fund to show the world that we can enrich other people’s lives, without enriching ourselves at the same time. Merkel is a great example of that.
It fits my personal minimalist philosophy. Since moving back to Singapore, I’ve lived in the same two-bedroom apartment. For the last 10 years, I’ve never bought any physical books or DVDs since I only read e-books or watch YouTube. Even when I was in Silicon Valley, I actually never had to buy any casual clothing because I get them for free when attending conferences!
The world today is too driven by consumption. Social media makes everything look glamorous, so a lot of people are stuck in an endless loop that’s all about meaningless accumulation of assets. Fast fashion has turned clothing into diapers. We have to educate people that it’s not just about the end product. You have to think about the process to produce it, the labor involved, and the carbon footprint. At some point, we will be taxing carbon footprints generated by-products just like the way we tax alcohol or tobacco.
My mother was the sole breadwinner, and to this day I am a firm believer in women power. Almost 60% of the boards I sit on were either founded or co-founded by women. In my 11 years at Gobi, I’ve met some very incredible women entrepreneurs. One of the founders was sending emails just hours after giving birth.
I’ve survived several near-death events, including a car crash, drowning, a forest fire and even a 7.0 earthquake. I’ve been through quite a bit so by the time the pandemic hit, I saw it as a once in a lifetime crisis that shouldn’t be wasted. I became a ‘pande-nomad’ or a pandemic-nomad. While everyone was stuck in their home countries, I left Singapore earlier this year, and since then I’ve travelled to 10 countries. The pandemic is essentially a World War, only this time it’s a war between a virus and humankind. To really understand what’s going on, it’s important to be in the war zone.
I’ve observed a few things in my travels. First, the dearth of Chinese tourists and businessmen is obvious. This is a striking parallel to the Ming Dynasty. In the early 15th century, Admiral Zheng He was sent to trade and barter with other nations. Decades later, China had gotten so rich from all that trade that they shut down the country and focused on wealth redistribution instead. We’re seeing something similar happen in China today with the focus on ‘common prosperity’. It’s definitely worth monitoring.
My second observation is that countries have to view this pandemic as a war. There’s going to be casualties and collateral damage. I’m now in Dubai, which has handled it best among all the countries I have visited. Once they got their vaccination rate up early this year, they proceeded with opening up their borders. Some countries which are too cautious opened up too late, so even though they have high vaccination rates, vaccination efficacy has dropped and they are now faced with a new wave. Dubai only blocks arrivals from certain high-risk countries, and runs a highly efficient testing on arrival for medium risk countries. They had only one lockdown in 2020, but in 2021 things are pretty much back to normal. They have 2,000 cases a day but they don’t shout about it. That’s the right way to handle things in an endemic world.
Pictured at the GITEX Global 2021 trade show in Dubai, (from left) Yahya Aqel, co-founder and CEO of Aumet, MENA’s largest B2B healthcare marketplace, Mok, and Mahmoud Adi, founding partner of local VC Shorooq Partners, which just celebrated its 4th anniversary.
Squid Game has a few parallels to the startup world. In the seed stage of a startup, there’s actually a lot of confusion – if you don’t know what to do or make the wrong move, it can be fatal. This is similar to the ‘green light, red light’ game – you make a wrong move and you’re shot. By the end of it, 50% of the players are dead. Likewise, about 50% of the seed startups we invest in will fail.
In phase two, after startups have raised their series As – that’s very similar to the ‘tug-of-war’ game. The CEO is in front: he has to make sense of the situation and give commands to the troops. The CTO is all the way at the back because he has to support the company with very good products and technology. In Squid Game, there was this old man who came up with the tug-of-war strategy. He is the VC.
In the third phase, when you are an established startup and a big player, it becomes a winner takes all situation. This is similar to the ‘marble game’, where players had to figure out who was going to take all the marbles. In Internet companies, the network effect means big players just get bigger and bigger. The number one company will control 80% of the market.
A businessman had seen a mannequin in Taiwan that is frequently seen in Asia to redirect traffic around construction sites. He thought that was the best thing since sliced bread and his pitch was about bringing the mannequin to the US. That was the weirdest pitch.
Now for the weirdest place. In China, it’s very common to have business meetings or even family gatherings in Chinese bathhouses. There, body scrub experts from Yangzhou scrub your back and exfoliate your skin. I was with an entrepreneur and we were doing this body scrub. He then pitched his idea to me for 30 minutes. How funny was that? Two of us naked, being scrubbed. It was like two giant tuna fish being descaled. He was very smart, because he knew I was a captive audience for 30 minutes. I call this predatory elevator pitch – an alligator pitch, because they’re waiting to pounce on you like a crocodile and then you kena (Malay word for ‘get it’). His pitch was related to gaming, but I didn’t invest either.
I’ve been to North Korea, as part of a Singapore Business Federation mission. During my break, I went to the hotel’s sports center because I wanted to play table tennis. I thought I was a good player because I’d won medals playing table tennis while at Mediacorp. So I looked around for someone to play against. There was only this young lady manning the rental counter, and she looked like a college student, so I invited her to play. She turned out to be North Korea’s Emma Raducanu (tennis player and US Open winner) for table tennis. She trashed me in three straight sets — I’ve never had a score so low. Now whenever I meet a North Korean, I don’t dare to ask them to play table tennis again.
Mok at the 2021 U.S. Open women’s tennis final in September, which Britain’s Emma Raducanu won.
Sunset. Because of where I am in life, I have all these plethora of experiences so it (life) really looks like a beautiful sunset. There’s this Chinese saying ‘夕阳无限好，只是近黄昏’ which means ‘The sunset is magnificent, but dusk is near.’ So now, the key for me is passing on all my knowledge.
Cats and hens. Besides pigs, the other two animals I grew up with when I was young were cats and hens. This was when they allowed animals in public housing in Singapore. Cats are very independent and know how to clean after themselves, whereas dogs are needy. I find that workers in our VC industry who are cat-like tend to do well. Since our industry requires a lot of independence of thought and judgment.
I also used to have a hen. Every day I’d go to the rubbish chute to catch cockroaches to feed this hen. Every day, without fail, she would lay me an egg. VCs should invest in entrepreneurs that are like hens. You can feed them a very pesky problem, they will digest it, then come up with a great palatable solution, all nicely packaged!
(Former Singapore prime minister) Lee Kuan Yew. In the 90s, I was a young government officer assigned to take minutes of a meeting between him and Charles Wang, who founded Computer Associates. It was the second largest software company at the time. Lee Kuan Yew had spent his whole life fighting for a larger than life cause, so he had this almost godlike aura around him. But that meeting ended up being like a tech support session. He was complaining about his PC issue to Charles Wang, who was basically doing tech support. *laughs* Now I look at all these world leaders at summits, and I always wonder what they talk about: is it really important stuff?
One time, a property manager was very excited to see me because he said I was an Airbnb legend. Apparently he has come across a lot of people who have scored over 20 five-star ratings, but I’m the only one he has seen with over 60 five-star ratings. So I don’t know what I will be remembered for in the future but right now I am an Airbnb legend.
My prized possessions are always three intangibles: knowledge, experience and relationship. These are the same three things we can never over invest in.