“This One Can Make Money Or Not?”

Note: This is Part 17 in a series of articles and cases on Asian Conglomerates. Read Part 16 here. You may read more about the Asian Conglomerate Series here, or view all the published cases here.

This marks the end of the Asian Conglomerate Series.

We’ve studied a whole bunch of Asian tycoons over the past year. These include:

• Stanley Ho, who cuts his teeth during WWII, and then ran Macau’s casino monopoly for decades.
• Robert Kuok, whose navigated two world orders and whose super power was to borrow the political influence of other tycoons in the region.
• Jamshetji Tata, who was idealistic, and in the process accidentally built a moat-protected, six generation family business empire.
• Dhirubhai Ambani, who was exceptionally good at acquiring and then keeping government favour.
• Lee Byung-chul, who created Samsung, benefiting from early South Korean government policies.
• Lee Kun-hee, who took his father’s business into semiconductor manufacturing and therefore electronics, and suffered from a change in political forces in South Korea.
• Kwek Hong Png, the erstwhile smuggler who became a shrewd businessman, eventually buying a skyscraper in downtown Singapore for cheap.
• Kwek Leng Beng, his son, who became a world class hotel operator by playing the capital cycle.
• And a whole bunch of smaller tycoons, in passing, especially when we discussed Richard Lawrence’s activist investing in Asia.

There were a couple of other tycoons where we’d done the work, but I wasn’t confident enough in their stories to turn into cases. These included Liem Sioe Liong (Sudono Salim) whose close ties to Suharto made getting straight narratives about him difficult; I also read Hyundai founder Chung Ju-yung’s biography with interest but found too many holes in the narrative to be comfortable putting into a case. Perhaps in the future the best thing we can do is to build a tentative case, with ‘contingently true’ narratives that are limited to whatever is published publicly, and set them to update aggressively whenever new information surfaces.

But that’s an exercise for a future project.

The main synthesis piece in the Asian Conglomerate series is How to Become an Asian Tycoon. If you only have time to read one essay in the entire series, make it that one. It proposes two things: a core arc that every first generation Asian tycoon goes through, and a way to evaluate tycoon skill, given the nature of business in Asia (weak institutions mean corruption, which mean distorted markets where one can build a lucrative business that is protected from competition).

The most important idea from that piece is a business pattern that is actually universal: once you build a cash cow business, you are set for life and can expand indiscriminately or make bad capital allocation decisions without much consequence. We back this up with examples from the West, pointing out that market distortions from government regulation is not an Asia-only thing; if you build a moat-protected cash generative business (whether through government-assisted monopoly or no) your ability to expand into other business lines is protected even if you’re not very good.

But there is one other major idea in the entire series, woven into all of the cases, sitting there in plain sight. I want to wrap up by talking about it.

Being ‘Commercial’

There is a concept called ‘being commercial’, which is ostensibly from Goldman Sachs. I think a good definition for ‘commercial’ is something like “you want to make money over the long term.”

The two clauses of this definition are equally important:

• “You want to make money …” — you really really want to make money, as opposed to wanting other things.
• “… over the long term” — you believe that making a fair deal with counter-parties will allow you to make more money over the long term, because it puts you in a repeat iteration game.

Almost all the tycoons we’ve examined in this series are commercial, to varying degrees. This is more profound than first meets the eye.

I first learnt of this terminology from ‘seeder’ Graham Duncan. (In this context, a ‘seeder’ is one who seeds new investment firms. Duncan has the reputation of being one of the best seeders on Wall Street — a role that requires him to be a very good judge of character).

In Duncan’s interview on Invest Like The Best, he says (all bold emphasis mine):

Patrick: Can you define commercial? It's such an important term in our dialogue over the years. Why is that word so incredibly useful?

Graham: So the term originates ... Adam [Shapiro] used it at Goldman, other people at Goldman I’d heard it from. And it connotes all the clichés. Moneymaker. I think what's in there is one way I've ended up defining it is it's the ability and the intent to create more value than you capture. So that would be a kind of abundant version of it.

I feel like there are people who are signaling that they’re in a repeat iteration game and they're not going to grab every penny on this transaction because they know that there's a sense of proportion about it somehow. Goldman has that phrase “long-term greedy.” It’s like I want to make money, but I'm going to do it with the knowledge that we’re going to see each other again. And that sense of “I’d rather make money than be right” is another core tenet of it where there are people who seem to me to be in the game in order to experience the satisfaction of being right. And that's the primary goal. And that works some high percentage of the time. But then it can be disastrous, of course, because your ego and your portfolio can get caught up with that goal instead of just making money.

When you meet someone who is explicitly commercial, there is a sense of “hey, let’s go make money together.” And there’s a very clear-minded focus with that stance. If you’re working with someone, you can usually sense if their desire to make money is pure.

This sounds a little … dumb. But if you pay attention to the people around you, if you watch what they do, you’ll quickly realise that many people in ostensibly commercial positions are actually not commercial.

If we apply this to the startup world, for instance:

• The startup founder who gives interviews, attends events and hosts fireside chats, whose startup has clearly not hit product market fit — is not being commercial. They are likely driven by something else — perhaps the desire to be seen as successful.
• The startup founder who spends a lot of time on Twitter, getting into irrelevant arguments, is not being commercial. They are likely driven by something else: looking smart, or getting things right.
• The founder who is on two dozen podcasts when there is no clear link between the podcast appearance and their commercial interests (i.e. there is no way their ideal customer is part of most of the podcasts’s target demographic), is not doing it for commercial reasons. They’re doing this because they’re driven by something else: perhaps they like the attention.
• The founder who pulls stunts to draw attention to their B2B startup is not being commercial. Or perhaps they are; perhaps they don’t yet understand that attention does not equal purchase intent.
• The founder who is belligerent about creating a successful business and who actively gets into fights with others in their home market (or, worse, their startup ecosystem) is not being commercial; they probably believe that creating a successful startup redeems their outsider status or are acting from a chip on their shoulder; perhaps they believe that success will finally let them feel safe. But this can get in the way of actually building a good business.

To put it more simply: many people say they want to make money but their actions show that they don’t actually want to make money. Once stated like this, it’s actually very obvious wherever you look.

The context matters more than the actions, of course. If the person in question has a business or commercial interest that benefits from their attending events or posting on social media or being interviewed, then it’s possible that they’re being commercial. But you can usually infer the stance of the person by looking at their actions over a period of time. Are they actually driven by a desire to make money?

Because, two things: first, you can bet that the tycoons we’ve studied in this series are commercial as hell. Second, if your job is to seed new hedge funds, it makes life a lot easier if you partner with commercial people.

There is another, more subtle form of this. Graham has this thing where he says:

The line between the two is exceedingly thin. I have met folks like this, and it is likely that you have as well. With these folks it’s harder to tell if they are commercial. One way I’ve found is to compare with the investor Charlie Munger at the end of his life.

Munger was a remarkably commercial person:

For decades, [Munger] barely looked at coal stocks, friends say, but in 2023, these companies grabbed his attention. Coal usage was in a long-term decline, and investors saw a bleak future for the industry. Yet many producers remained profitable, trading at inexpensive levels. Coal will remain necessary as global energy demand grows, Munger argued to friends and others.

“He read an article that said coal was down the chute,” Borthwick recalls. “He said, ‘Horse feathers.’”

In May 2023, Munger purchased shares of coal miner Consol Energy. Later in the year, he bought shares of Alpha Metallurgical Resources, which produces coal for steel production. By the time of Munger’s death, Consol had doubled in value. Alpha had also surged. Together he scored paper gains of more than $50 million, friends say.

Munger died in December of 2023, mere months after he made that trade. He was 99 years old. He was also a billionaire. $50 million is chump change compared to the total sum of his net worth. If you were in the last year of your life, and you had only a few months left to live, would you investigate coal companies and make such a bet? Would a person who ‘relates to money in a conceptual way’, who sees money as a ‘grade to earn’ do such a thing? Time and age strips you down to your core self. For whatever reason, Munger simply couldn’t help himself.

As would many of the tycoons we’ve examined.

In the Singaporean or Malaysian context … there is a simpler way to say this: “this one can make money or not?”

Can Make Money Ah?

I’m going to switch to Singlish (Singaporean English) here. Translate to Korean or Hindi or Mandarin as you wish.

Every time someone says something to you, you may channel your inner Singaporean businessman and ask: “this one can make money or not?”

For instance: a manager comes up to you with some fancy strategic analysis of your industry. They outline all the various players, and what each of them have been doing recently, and what new technologies are rising, and who the various factions of the various parties which have resulted from a shift of incentives after ZIRP has ended.

You say: “so?”

“What do you mean by so?”

“How does this help us make more money?”

“Well, if we align ourselves to the hyperscalers …”

“You say these people are making money? Do they really make a lot of money? Or they just raise money?”

“Well Snowflake and Databricks have a lot of revenue …”

“We are not Snowflake or Databricks. How can this analysis make us more money?”

“I think —“

“Show me your sales pipeline.”

“You know we’re still trying to figure out our ICP.”

“Ok do that. I look at your last five deals, I think all of them don’t really need our product. I think they will churn. Don’t give me this analysis. Walau write so much for what? This industry analysis cannot help us make money now. Fixing your sales pipeline can. Don’t talk about things that cannot make money.”

*

You are at the office pantry, making coffee.

“Did you see what the US is doing with Greenland? Oh my god so scary.”

“So? Does Greenland affect us?”

“Well if the US invades Greenland then global markets —“

“Are we in global markets?”

“Well we sell internationally —“

“Yes we sell internationally. Will our customer don’t buy from us if the US invade Greenland?”

“No, but —“

“Go back to work on your XX deal. Don’t think so much about Greenland. Thinking about Greenland cannot make money one.”

*

“I once asked my late father, ‘Why don’t we position ourselves as a deluxe developer?’ He said, ‘Why be so silly? You should do whatever that can make money — deluxe, middle, lower end — cast your net wider.’ This is the right strategy. Some people focus on luxury only because they want to create a statement for themselves. But the trick is, a three-star makes more money than a four-star, a four-star more money than a five-star. I choose to cast my net wider so I have better profits and spread my risk.”

In other words: “Why you want to be luxury developer? Luxury developer can make more money meh? Cannot. So why you want? Prestige ah? Don’t be stupid. You should do everything. Do cheap condos, do expensive condos. Do cheap hotels, do expensive hotels. Then you spread your risk and can survive longer. Which means you can make more money.”

*

You find someone engrossed on their phone, arguing in a long thread on Twitter.

You: “Eh why are you spending so much time on that app? Argue on Twitter, if you win, can make money? Does your business need you to collect more Twitter follower? No? Then why you spend so much time there?”

And then, as a kicker: “if cannot make money why you do?”

*

Someone proposes doing something that shafts a partner for some profit.

You: “Are you crazy? Then the partner don’t want to work with us anymore.”

“But you always say you want to make money …”

“Walau. This is the difference between you and me. You want to make more money now. I want to make more money forever. If you don’t treat your partner well, they won’t do business with you again. Then they tell other people, and they also don’t want to do business with you. Then you make less money during your life, amirite? Don’t do so stupid things can or not?”

*

“Johnny ah, this is the fourth time you host a ‘business dialogue’ (pronounced ‘biznes die-log’). You got any new customer or not?”

“No but I think it raises our profile —“

“So the business dialogue got SME people (pronounced ‘peepur’)?”

“No it’s about geopolitical impact on business.”

“So the audience got SME owner?”

“Yes, I think so, I mean —“

“Tell me how many follow-up meeting you got and with who?”

“Not yet but —“

“Walau. You think I stupid ah? SME owner where got time to attend dialogue like this. If I am your customer, you think I got time ah? SME owner are your customer, and they are too busy making money. They where got time go watch you talk so much? So I ask you again: you host business dialogue can make money or not?”

Learning to Become More Commercial?

Nearly every single tycoon we’ve examined was commercial. Sometimes excessively so. The only possible exceptions were Jamshetji Tata (who was commercial enough) and Lee Kun-hee (who had empire building problems, not money making ones).

Why is being commercial useful? There’s a pretty obvious answer here. Life is hard and business is harder. A few years ago, a mentor said to me: “Succeeding in business is — to some degree — a matter of luck. So the secret is to keep at it until you get lucky. The ones who keep at it the longest are the ones who really want to make money.”

Is it possible to become commercial? I come down on the side that yes, I think it is.

Warren Buffett was commercial from a very young age; he bought his first stock at age 11. On the other hand, Charlie Munger, Buffett’s right hand man, had to learn to desire money.

From Poor Charlie’s Almanack:

… my craving for more theory had a long history. Partly, I had always loved theory as an aid in puzzle-solving and as a means of satisfying my monkey-like curiosity. And, partly, I had found that theory-structure was a superpower in helping one get what one wanted, as I had early discovered in school wherein I had excelled without labor, guided by theory, while many others, without mastery of theory, failed despite monstrous effort. Better theory, I thought, had always worked for me and, if now available, could make me acquire capital and independence faster and better assist everything I loved.

Whenever you see Munger talking about becoming rich over the many years he was alive, he usually mentions wanting to be independent, or wanting to help the causes that he loved. Whether or not these motivations are 100% true is more difficult to tell; who knows what lies in the hearts of men. But if you read Munger’s biography, you could tell that he wasn’t as commercial when he was younger. At age 19 he told an acquaintance that he wanted three things in life: a lot of children, a house full of books, and enough money to be independent. The money was a means to an end, then.

Munger became commercial later.

I write all this because (as you might’ve guessed) I am not the most commercial person I know. In retrospect, I think Graham Duncan saw this within minutes of talking to me for the first time. It’s not hard to see this after all: with only a bit of practice, you can spot commercial instinct in those around you.

But I believe that you can become more commercial if you choose to. Especially if you have positive examples. My old boss was that latter thing, for me. He was the sort of person who would poke around business-for-sale listings when he was younger, for fun, and he would visit these sellers to learn more about their businesses. He once told me to buy a single share of stock in a Singapore-listed company if I was interested in the business. If the market cap was below S$50M, it was very likely that the only people attending the annual shareholder meetings were uncles, there for the free food, which meant one could have the entire exec team to yourself for Q&A. He was the type who would go on holiday and find things to buy with an investment yield much higher than anything one could get in Singapore.

I know I like to say that you cannot learn lessons from history. But if there is one last lesson of the Asian Conglomerate series, it is this: it helps to want to make money when you’re running a business. And you can learn to want it if you so desire.

Thank you for reading.