Today’s guest is Khailee Ng, the managing partner of 500 startups in Southeast Asia. Khailee is a rockstar entrepreneur, investor, and startup founder with a long history of success. Starting from his very first substantial exit, which was a five-month old, daily deal group buying website that he created called GroupsMore. He sold his company to Groupon in 2011.

Two years later, Khailee found his second exit, which was a social media, news sharing website called SAYS.com. This one, he sold to a Malaysian media giant, Catch Media. And after he did that, he spent some time angel investing, very successfully mind you, and then he went on to full-time investing by joining the 500 startups group.

I met Khailee several years back, probably around 2012, when he had first joined the 500 startups collective as an entrepreneur and resident and we’ve just remained friends the whole time. He is a very interesting guy, super smart and towards the end he goes pretty deep into some spiritual stuff, how he sees the world playing out and the dramatic lifestyle change that he’s made recently after having achieved success and wealth.

I think you’re going to find this one very interesting. Khailee is no stranger to the crowd here in Southeast Asia. Let’s get right into the show, you’re going to like this one.

Jay: Khailee, thanks so much for joining the Jay Kim Show. We’re really excited to have you on the show, you’re quite well-known here within Southeast Asia and Asia, Greater Asia, and probably the US, you probably have a pretty decent following as well. And, why don’t you, just for the guys tuning in, guys and gals tuning in from overseas or people perhaps that haven’t heard of you, maybe you can give us a quick, quick intro of yourself, a quick background and how you became a successful entrepreneur.

Khailee: Aw man, the excitement is all mine. I just hitting the big time, man. I’m on the Jay Kim Show now. Watch out world, coming at yah. Yeah, you’re right, I’m doing this for all my fans, all my fans out there, all these screaming 8-year-old girls and boys in kindergarten. Yeah, okay, I’ll give you a quick spin. I know you’ve accused me of being a successful entrepreneur, I identify myself more with the word “creative spirit”. I been creating things from a very young age, maybe writing little poems all the way to writing songs. You know, little things, and fast forward you discover the powers of the internet and you’re hooked. Next thing you know I created the … I grew up in Malaysia, spent most of my life doing stuff out in Malaysia. First business, I kind of got lucky with was an eCommerce business. It was the second largest eCommerce operation in my country and we built it in three months. And then Groupon decided to acquire it when they were expanding internationally.

Jay: Wow, was it a group buying site as well?

Khailee: Yeah.

Jay: Okay.

Khailee: It was a straight-up clone, dude.

Jay: Right.

Khailee: I just decided to rip it off, my partner and I.

Jay: That’s funny because I had Danny Yeung on the show who did You Buy, I Buy here in Hong Kong. He also [crosstalk 00:04:06] exited to Groupon.

Khailee: Same. Danny and I we’re like brothers. We’re part of the same Groupon Asia mafia-

Jay: That’s right

Khailee: Who kind of got lucky with some of those. But I’m really proud of the other business that we’re building simultaneously. It’s a media business called SAYS.com. Now, what I love about that business was that it was kind of like BuzzFeed before BuzzFeed and it became the largest news website in my country and no other online news site has as much audience as SAYS.com and its sister sites, different languages that Malaysia has. And Malaysia’s got Malay language, it’s got the Chinese language, and it’s got English language, so we got them all. And we don’t make any money from banner ads at all. We’ve been selling sponsor contents, sponsor stories from earlier on and yeah, I’m really proud of that business. We kind of merged it with a few other sister sites as I mentioned and now exists as a listed entity in the Malaysian stock exchange. So, after doing those two businesses, I wanted to spend more time with creative people.

Jay: Right.

Khailee: Want to do things. And I gave them money and spent some time with them building other businesses. You could accuse me of being an angel investor at the time, so I did some of that. So that went well for me. But I’ll tell you one thing Jay, At that time though, being like this Malaysian kid who just wanted to do fun stuff, I always looked up to Silicon Valley. Silicon Valley was like the Mecca of entrepreneurship, you go there, you want to pay homage to the gods of entrepreneurship and tech over there, and be like [inaudible 00:05:41].

Jay: That’s right.

Khailee: I kind of have that in my mind and I said, “you know what?” All the stuff that I’m doing out here in Malaysia is fun but, if I make it in the big leagues, I got to go to the Valley. So, that was the idea I had at the time.

Jay: So just for some context, what age were you? What year was this and what age were you?

Khailee: I’m 32 right now. This year I’ll be 33 so this was 4 or 5 years ago, I was 28, 29.

Jay: Right.

Khailee: 28, 29, yeah. And so I got myself there by chance and I kind of identified who I’d want to meet and who I want to jam with and at the time it was funny because most of the big Silicon Valley names and all the stuff that you read on TechCrunch, no one gave a shit about the outside world.

Jay: Right.

Khailee: TechCrunch was primarily covering American news and a lot of it is very Valley-centric.

Jay: Yes.

Khailee: And all the DC firms that I would want to meet or reach out to, no one cared about what was going down here in Southeast Asia. But there was one [inaudible 00:06:45] which stood out. It was 500 startups.

Jay: Yup.

Khailee: Dave himself had made multiple trips down to Southeast Asia and he’d be on Haji Lane in Singapore, smoking shisha with entrepreneurs and that kind of got him into companies like Viki, which eventually sold for 200 million US dollars and other things. So I kind of respected that. It kind of didn’t fit the negative stereotype of being too American-Centric sort of and I said, “I have to meet Dave McClure.” So I tried all ways, different ways, different intros, and I couldn’t really score a meeting with him but eventually through some US embassy connections, somehow I managed to trick his PA at the time that I was somebody important.

Jay: Nice.

Khailee: Yeah, so they granted me an audience and early in the morning, it was like 7 a.m. after he did a Geeks on a Plane trip. Like two weeks out in Brazil, something crazy like that.

Jay: Yup.

Khailee: So it was a morning slot, he was sleepy as shit, he’s like, “who the fuck are you, why am I meeting you again?” I told him, “that’s because I tricked your PA man, I told her I was important.”

Jay: That’s hustle right there, man. That’s props.

Khailee: Man that’s it. We jammed for a little bit, he really liked my story and how I got to the Valley. You know what, I’ll tell you how I hustled, I’ll tell you about that specific hustle.

Jay: Tell us, tell us the story.

Khailee: I’ll tell you. OK, so SAYS.com as I mentioned was a media company and we did some work for the US Embassy. We had this one program called the IVLP, International Visitor Leadership Program. It sounds boring as shit but, what happened was, the US Embassy in Malaysia wanted to nominate me for this program. So I started Googling it, I was like, “Wait a minute, Tony Blair’s been on it, Nicholas Sarkozy’s been on it, all the Prime Ministers of my country’s been on it.” This is something that you …

Jay: Somewhat legit.

Khailee: Legit, yeah. It’s legit. You go for it before you become Prime Minister so I was like, “Why me?” And so, it turns out there was a time where Obama was big on Muslim country entrepreneurship and developing bilateral relations. So I’m not Muslim, but I’m in a Muslim country and I happen to be an entrepreneur and I did some good work for the Malaysian US Embassy in Malaysia. And so they wanted me on this program. And so, when I got to the states under this program, the program basically means they would connect me with people I wanted to be connected with.

Jay: Mm-hmm (affirmative).

Khailee: They’d take me on tour to multiple states and meet with important people in case I become an important person someday. But what the people in the US didn’t get at the time was that they didn’t get the memo that I wasn’t going to be Prime Minister. Right?

Jay: Right, yeah.

Khailee: I wasn’t in a political career, I’m just a local entrepreneur.

Jay: Right.

Khailee: A lot of people thought I was somebody pretty important. And so, I used that card to hustle my way to Dave.

Jay: I love it.

Khailee: That [inaudible 00:09:30]. But there were a few things though, Jay, I’ll tell you. When I started to spend time in the Valley, I got Dave to invite me on one of his famous Geeks on a Plane trips. We went to Tokyo, Hong Kong, China together and they [inaudible 00:09:42] based on the relationship, he invited me to become 500 startups first entrepreneur in residence in their [inaudible 00:09:51].

Jay: Right.

Khailee: [inaudible 00:09:53] famous accelerator batches.

Jay: I think that’s when I met you. Yeah.

Khailee: That’s when we met and that was it. That’s when we met.

Jay: That must have been, what? 2012 I want to say? 13?

Khailee: Yeah, kind of. It was in that period, yeah.

Jay: Yeah.

Khailee: It seems like a blur to me now. So, when I started to spend time there working with “Silicon Valley Entrepreneurs”, I was shocked. I was shocked because number one, it’s almost as though there’s no such thing as a Silicon Valley entrepreneur. These people came from all around the world, you know? In the accelerator itself, there were Russian accents, there were Japanese accents-

Jay: Right.

Khailee: People came from everywhere to Silicon Valley to build companies. It was more rare that you find someone who had lived and grown up on Mission Street in San Francisco or something and became and entrepreneur. I didn’t meet as many of those. I met a lot of international people, people who came from out of town, just number one. Second thing I found out was that a lot of people in Silicon Valley were not any more smarter than the people I met in Malaysia, Singapore, Indonesia. They were not any smarter than the people I met in Hong Kong. Everyone was just hustling and so we all had to come in. We’re all in the dark and we’re all trying to figure things out. But the third thing I realized is that in Silicon Valley, there was a world of difference, than anywhere else in the world, was that Silicon Valley, if you built a company there, you would likely have some very useful friends.

Jay: Right.

Khailee: You have would have friends that you could meet at a bar who was a product manager at Facebook or [inaudible 00:11:20] who would give you some advice which was actually applicable. Whereas if you grew up in Hong Kong or you grew up in Malaysia, Singapore, whatever, at the time, most of your friends are doing things which were less useful to you.

Jay: Correct.

Khailee: Right, so you didn’t have any friends in high places, any kind of [inaudible 00:11:35] you have capital or resources or finding your next CTO or something. You just had less useful friends.

Jay: Right.

Khailee: If you were building a startup. And it was then, I said that it kind of deemed [inaudible 00:11:49] Silicon Valley for me. It was in a place where everyone are unicorn magicians running around. It’s just a place where hustlers meet, except that there’s more friends. So I told myself, I said, “This can’t be right. We need to be in a world where everyone has friends who can help them.” You know? It can’t be concentrated in one place and coincidentally, that’s how a lot of people at 500 felt as well. And it’s how Dave felt and it’s what the mission of 500 was to do was to wire up the rest of the world so entrepreneurs can be supported by other entrepreneurs in peer circles and everyone can build companies a little bit higher degree of success, higher chance, higher probability of success. So that way, the innovation and the proliferation of wealth creation didn’t need to be concentrated in one place in one country. We have a world where income disparity and wealth distribution is more equitable, or at least you have more access opportunity. And again, it’s something as simple and making sure people had useful friends who could help them.

Jay: Yeah, that’s a pretty interesting point and story that you come up with because one of the reasons that I was attracted to your crew there at 500 startups was just that, was the sort of international aspect of it. And I remember distinctly Dave talking to, I want to say it was either PJ or Sam Altman at one point and I see guys who are obviously like, “Okay, Silicon Valley is the only place that you can build a startup.” Kind of like Wall Street is the only place that finances happen in the world.

Khailee: Yep.

Jay: Dave obviously is on the other end of the spectrum and it’s very enjoyable. And I enjoy sitting back and watching his crusade around the world, basically spreading the gospel that there’s tons of pockets of innovation globally.

Khailee: Absolutely.

Jay: I think it’ll be quite interesting to see how the game ends. It’s not going to end, but what the score’s going to be in say 10, 15 years.

Khailee: Oh, it’s going to be such a different world, man. I’m telling you.

Jay: It is, right?

Khailee: And even the world that we spoke of in 2013 and what not, it’s already changed so much. Today, you’ve got other crusaders like Jack [inaudible 00:14:13], for example, showing you you can build a company out of China and it’s bigger than Amazon and Ebay combined.

Jay: That’s right.

Khailee: And  [inaudible 00:14:22], you know? He’s clearly funding and fueling some of the biggest companies around the world with [inaudible 00:14:32] invests and more and more, you’ll see other business leaders around the world tell their story. You see, a lot of it is interrelated to media because the whole world consumes a lot of American media, right? It’s a fact. A lot of the perception of what the world is goes through that lens. And so the Jack [inaudible 00:14:55] and the [inaudible 00:14:56] are getting more coverage by global media/western American media and hence, these stories are starting to become more mainstream.

Jay: Right.

Khailee: So this is the beginning. Because the innovation already exists everywhere and these big companies exist everywhere and now the stories are being told. So it’s not to say that these large companies and innovations, they do not exist, it’s just that the stories are less told. And now the stories are getting more told. And so I think the story telling is as important as the actual existence of all of this innovation that we talk about. And I’m really proud to be able to be fighting this crusade alongside other individuals who are out to build these companies to fund and support these companies as well as to tell their stories.

Because 500 startups, we pride ourselves to at least be a bit marketing centric. To have a very large angellist following, a large Twitter, Facebook following. We have a few personalities within 500 startups who are local legends. And maybe this is where we can segue the story to the next phase of it where I got myself more involved with 500, I just fell in love with what they wanted to do for the world. So I decided to come up with an idea. I told Dave, I said, “Dave, why not you let me run the 500 show in Southeast Asia.” And he’s like, “Okay, that’s an idea, but I’m not sure if you’re the right guy.” I said, “You know what Dave? I’m not sure I’m the right guy either. But it’s going to be fun.” And so from that, we came up with a little MVP to create a fund called 500 Durians.

Jay: Ah right, yes.

Khailee: Yeah, so that’s a Southeast Asia dedicated fund. It was only ten million US dollars, it’d be easy enough for me to raise. I raised that pretty quickly. I used that as a working model of a microfund that if it works, we will have a playbook that we can replicate in many parts of the world. And that was the idea. So I went to work. Within a short span of a couple of months, I was investing in, I think it was 70 companies in the first year, and so we expanded the fund to twenty-five million US dollars. We ended up investing in a total of 120 companies in two years, which represented about 20% of all the publicized deals in the region at the time. We were fortunate enough to be early in companies like Grab, which is a trillion-and-a-half billion dollar company today.

Jay: Yep.

Khailee: [inaudible 00:17:18] and [inaudible 00:17:20] and these companies are what we call centaurs which are a hundred million to almost a billion. And the stats, the odds are looking pretty good. Out of 120 companies, we had 40 companies who have [inaudible 00:17:31], 1 company is written off, 3 companies are later going to die, but for the most part, 40 of them have gone to the next stage and a lot of them are still very new. So things are looking pretty good. Now, as a result of doing all of that, what we discovered was the playbook itself on how we can replicate that.

Jay: Right.

Khailee: And so I went to work to help to replicate that. Working alongside Dave, we recruited fund managers in Thailand specifically, Vietnam, Japan, Korea, Middle East, Turkey specifically, Canada. We start to recruit fund managers for vertical specific funds like Fintech and Mobile. We sprouted out ten different microfunds and we’re putting the playbook to work. You know?

Jay: Wow.

Khailee: And the playbook to work where if we can get local legends, serial entrepreneurs, and experts in their field, and turning them into a fund manager and operate a microfund to invest at scale and to create these communities, local committees are entrepreneurs supporting each other. When we seed enough companies, it creates a critical mass. It sparks a startup revolution that will extract series ABCD investors invested in that region on that vertical. So that is the thesis. And we’re in the midst of it right now-

Jay: Right.

Khailee: Going through the kinks, working out the kinks. As with any startup story, not everything goes to plan, so we’re kind of navigating around things, augmenting, iterating this playbook. And in 2017, you’ll see version two of the playbook and we’ll be piling on some new funds based on the learnings we have from what I call batch zero of what I call 500 VCs. And at some point, we talk about how the world will look in five, ten years, I’d like the world to have 500 VCs operating on a model where we can turn entrepreneurial and expert talent into fund managers to support the next generation of startup revolution in every part of the world.

Jay: What do you say to people who critique, that come in and say, “Look, these guys at 500, they are all over the map, they are spreading their selves too thin. They are spraying and praying. They don’t know what they’re doing. How can you be a master of all?” What do you say when you hear things like that directed towards you directly or to 500 in general?

Khailee: Well, I’ve heard critiques like that all my life about me so I’m kind of an expert in ignoring a lot of things in my life. And I think that to the extent you can ignore unimportant things to your mission, it correlates with your success. At the same time though, that a lot of these critiques are very valid and important because we see a lot of these struggles internally as we try to do what we do. I’ll tell you a bit about scalability. What scales well is when every single new customer you take on, the experience gets better. That’s scaling. If every customer you pile on the experience per customer gets poorer, you’re not scaling. And so with that in mind, to scale 500 startups to the ambitions that we have, to be able to fund hundreds and thousands of startups on every corner on earth. Successful startups, I might add.

Every new startup we pile on needs to have a better and better experience. And so this is something that we’re trying to work through and we’ve got different cases where it is very, very true and cases where it is not true. And so how can we deal with it and work with it? What I do is I love paying attention to the internal critiques from my team, from my portfolio, from my entrepreneurs, and from my investors. From the LP’s who invest in us, you know, that’s when I met you at pre-money and I really appreciated the support because I know you invested in [inaudible 00:21:11]. I think it was, right?

Jay: Yep.

Khailee: I really appreciate early believer right here is that when we interface with you guys when we have the LP events where hundreds of you come together and we hear you out. That’s the stuff I want to pay attention to. Now, the people who don’t matter as much, “The haters gonna hate, the players gonna play, you just gotta shake them off.” Wise wisdom of Taylor Swift right there. That stuff will continue forever. And the way the media machine works is the more successful you get, and the more in the public eye you get, the more journalists want to pull you down, the more people who comment [inaudible 00:21:47] want to pull you down and that’s okay. That’s just part of the game.

Jay: Right.

Khailee: It’s part of the journey. I’ve got to be very cognizant of what I’m paying attention to and how do I sequence and prioritize what to fix. So that’s the general philosophical response. And a corner of it, the direct response to the spray and pray, our fans have been delivering consistent returns and in the world of fund management, a lot of LP [inaudible 00:22:17] that reciprocation which means they don’t know, even if it’s a good VC, they don’t know which fund is actually going to return money because if they didn’t strike the Googles and the Facebooks, they may not return as much money. So they try and invest in many multiple vintages of the same fund so they can diversify across. While we are baking that reciprocation into one fund by investing in many companies and it’s producing many predictable returns. This predictability is a mean thing for something as risky as startup investing. This predictability and diversification is a brand new thing for seed investing which is perceived to be even riskier. Well, taking that risk away is our intention.

Jay: That’s right.

Khailee: And it will take another five years to show across multiple funds that we’ve launched and we’ve achieved this, but this is what we believe in. And this is what we work on every day.

Jay: Okay, so let’s take it down one further level. Let’s take it to the more granular level of what Khailee does on a day to day basis.

Khailee: All right.

Jay: You’re obviously, whatever you want to call it, it’s savvy investing. Let’s call it savvy investing. You probably see hundreds and hundreds of pitch decks that cross your desk every single day.

Khailee: Yep.

Jay: So what differentiates a company that comes across your desk? What makes it a good product versus a fund-able product?

Khailee: Okay so first off, you’re talking about granular level, what I do day to day. Building quality deal pipelines I would say is as important, or even more important, than this whole nuance of selection. I’ll tell you why. Let’s say, Jay Kim, you are a popular guy with a popular show and so people know you, they want you. They want you in their deals because you’re well-connected. You’re going to see more deals and you’re going to see more deals, hopefully, from people who are good entrepreneurs.

Jay: Right.

Khailee: You have a lot of good friends, so your friends would share deals with you. Now if you pick ten deals that your high profile friends that you’ve had on your show, the Danny Yeungs the Gary Bies, if they’re going to pass you a deal, you know they’ve looked at it. And their reputations’ at stake if they pass you a piece of turd.

Jay: Right.

Khailee: Now, they’re not going to pass you some turds, they’re going to filter that through before they pass it to you. If you get ten deals from your friends versus ten deals that are spam or ten deals that you just randomly bumped into at some event, even if you are a shit stock picker or you’re terrible at selection, you would pick from a pool of ten good companies.

Jay: That’s right.

Khailee: Right? So, with that kind of extreme example in mind, what we do at 500 is with a very visible media brand and with very tight relationships with co-investors, I pride myself in respecting these relationships and respecting the media attention we get, especially in Southeast Asia where I operate 500 Durians. Especially now in our second fund. I respect that a lot and I cultivate that because that’s the source of a lot of good deals. And my entrepreneurs, now we have 100+ attending companies in [inaudible 00:25:24], we’ve got 130 companies. Now my entrepreneurs, they get a lot of deals too because they’re the local heroes.

Jay: Right.

Khailee: They get deals from their [inaudible 00:25:33] network and what not and they will only pass me deals that they think is good, and their reputation is at stake. I respect those relationships, I look at those deals. Now having an influx of highly recommended deals is privilege. And the ability to invest in many companies becomes easier because I’m selecting from a curated pool of deals. And this takes years. Dave, he spent twenty years in the Valley to build this relationship network.

Jay: Right.

Khailee: I spent years building it in Southeast Asia and that’s something we cultivate on respect. When we “select a lot of companies”, we are selecting from a very good pool.

Jay: Right.

Khailee: So number two, now the filters we have, we [inaudible 00:26:18] the filters we have and this may go against a lot of conventional filters. And so you ask a question about a good company versus a fund-able company. I like companies who understand unit economies, who are a very clear sense of who the customer is, and who have returning customers, and who has an idea on how to spend money to get them. Classically, this is the 500 way.

Jay: Right.

Khailee: Now, will these companies, will they have huge grants, scheme huge unicorn-level ambitions, ideas. Sometimes yes, sometimes no. But what we do know is that they’re pretty fund-able if they can get themselves a working product and they’ve got options and they can grow from there. Because of this, today I look at my portfolio and we have a lot of companies which can weather any storm. Some are in a position where they don’t need to even fundraise because their cashflow will break even.

Jay: Right.

Khailee: I’ve got companies where when I invested in them, they’re profitable, and today they’re still profitable. And so even though I’m a seed investor, I seem to be only check in there because they just don’t need any more money. And I love being part of these companies.

Jay: That’s such a great, yeah.

Khailee: It’s not to say that I avoid companies who spend a lot of money to grow, I’m obviously invested in companies that grab, right? These fast growing machines and the time of seed investing, you just never know which one’s going to be the big one. All of them look kind of the same. Strong entrepreneurs, good teams, got a clear sense of the product, a business model you may be familiar with. But which of them will become the fast growing unit [inaudible 00:27:44] is so, so hard to know in the early stages. So hard to know. And that’s where selecting from a good pool [inaudible 00:27:50] many of them comes in.

Jay: Right. Okay, so not to pick favorites now, but from the companies in your portfolio, let’s not talk about grab, we obviously know about that one or the centaurs, can you give us one or two companies that you’re very excited about? Not to pick favorites, again, I’m a parent now so I fully understand that, I love both of my daughters equally.

Khailee: Most of the time.

Jay: Yeah, right.

Khailee: So you’re asking for me to pick out some of my companies I’m most excited about. Okay, I’ll tell you, I’ll give you two things. One, is a trend impacting emerging market eCommerce investing and that needs to become [inaudible 00:28:32] I really like. Now, what we see how eCommerce developed in the [inaudible 00:28:38] markets is you start with a lot of horizontal marketplaces, the Ebays and Amazons.

Jay: Right.

Khailee: And then later on, you see the Honest company, you see kind of neat companies built on verticals. Well, with Southeast Asia, what’s happened is that a lot of the platform companies, the Lazaras and Google Outbox and [inaudible 00:29:00], they are kind of like platforms to sell anything and everything. They’re kind of there. Right now, we’re going into the age of verticals. Now, with this vertical is spread by some analysis that customer acquisition cost has never been this high. Facebook and Google are bidding platforms, so the more players there are, the more expensive it gets.

Jay: Right.

Khailee: A lot of people don’t model this in into their projections, and as a result, you may have a lot of eCommerce companies which are going through a tough time. Now what I’m really pleased about is a pool of companies that I’ve selected, because I kind of knew that was the case in a lot of the global markets and major markets would go in this path. I picked a lot of product companies who create their own products or have any, say, exclusive set of products so that way they don’t have to play the commodity game and fight with other people who have the same products. Because if you wanted to buy a pair of Nike shoes, you could go on Zappos, you could go on Amazon, you could go on Nike shoes, you can go anywhere. You can look for the cheapest price. It’s a commodity game. But then you get Warby Parker, you’re going to get it from Warby Parker. Let’s say you get Warby Parker off Amazon, that’s because you still get it from Warby Parker anyway. You know what I mean? So, investing in the Warby Parkers, that’s something that I care about.

One such company is a company called Bro.Do. When I met these guys, they hadn’t even heard of venture capital then. They were like kids in University who thought it’d be a cool idea to make their own shoes.

Jay: Right

Khailee: And that’s what they did. And sold it off Instagram. And the first run of thirty shoes, which was completely sold out on Instagram. And it continued selling on Instagram, selling eCommerce. Now, when I told them about venture capital and talked to them, they didn’t believe it. They were like, “Not interested, I don’t know what kind of weird scheme you have, not interested.” Six months later, after cajoling them and friends and working through common contacts here and Indonesia, they decide to take a closer look at what I had to offer. So I went to put together a round with other VCs, a lot of VCs who looked at them said, “Hey, you’re not a tech company, you’re a shoe company.” And that’s right, Jakarta itself has twenty-five million Facebook users you could advertise to and of which eighteen-million are millennials. And Bro.Do has a cult following, every shoe they produce gets sold out. They’re onto something.

And so I did the deal alone and that’s rare for 500 startups because we kind of like investing with other investors as well. But I did it alone. And so when I invested in them, [inaudible 00:31:37] their million plus US dollars, [inaudible 00:31:39] and profitable, now they just closed off 2016 [inaudible 00:31:41] three million US dollars and still profitable and based on modeling after their return users and the [inaudible 00:31:48] of returning users, without any additional funding in 2017, they’ll easily clear five million US dollars worth of Sales.

Jay: Wow.

Khailee: So why do I love a company like Bro.Do? Is it because I can tie in venture debt? Venture debt is still quite new in Southeast Asia, but the folks who provide venture debt, they’ve been provide venture debt for a lot of my companies as well. And I can jack Bro.Do up to venture debt, and I don’t need to rely on other VCs to put money in. That way, as a seed investor, I don’t get that you did so much. And a founder doesn’t get that you did so much. And we may do a very large VCR much later, but for now and the following one or two years, they can grow in organic profits and they can grow on getting debt. And in venture financing.

Now this is a beautiful position to be in when you look at Indonesia and you notice that most of the shoes are imported. That most of the expensive shoes are imported. [inaudible 00:32:37] high, they’re pretty expensive. And so Bro.Do is making expert quality shoes with a cult following and not even six stores. When they opened their stores, I saw pictures of it. It was like the launch of the iPhone 8 or something. People were lining up all the way to the center of the mall. And they’re so innovative, they were giving a free, lifetime shoe cleaning. So you buy a Bro.Do shoe, you come back, they’ll clean your shoe, they’ll fix your shoe for free. You may need materials, then maybe you need to pay for the material, but having their customers bring their other shoes to them to fix. And they’re like, “Yeah, all right, we’ll fix the other shoes for free too. You don’t even need to buy from Bro.Do, but you’re a Bro.Do customer.” So, they’re building this following of returning customers straight to their business and it’s cool. It’s so cool.

Jay: It’s back to basics, right?

Khailee: Yeah, man. So this is just one example. I’ve met another one doing headscarves, you know Hijabs? Hijab is two months away from cash, it’ll break even, all the seed investors we cut … we merely put more money on insiders round into it because in December, we had 77% of returning buyers. And that’s trailing off a whole average of 60% returning buyers. In December, they cleared 300 grand [inaudible 00:33:44] in one month alone spending only eight thousand in fully-loaded customer acquisition costs. And there’s another baby wipes company, kind of like the Honest company of Southeast Asia called AppleCrumby. They produce their own organic wipes with margins up 70% as well. And these companies, I’m telling you, they create products that people love and want with cult following, they don’t have to be slaves to the Facebook and Google platform game. They don’t need to spend too much money on customer acquisition because they spend it once and the customers keep coming back. It’s as simple as that. Back to basics.

Jay: Yep.

Khailee: So I picked out these three companies just to tell you a bit of a story, an insight into emerging market investing and every single emerging market has a lot of people who don’t want to pay import prices for foreign products who want good stuff. Who want really good stuff and who will be loyal to this good stuff.

Jay: All right man, listen, I don’t want to keep you too long but I do have a couple more questions for you, okay? You’ve been, I’m going to label this again to you, you’re not going to like it but you’ve been a successful entrepreneur, a number of companies you’ve exited them, you have pretty much proven yourself to be a very successful angel investor and institutional investor. For the audience that doesn’t know, you’ve also been featured on the cover of Men’s Health. I’ll just plug you there. So it seems like you have done quite a good job and you’re only turning 32, 33, so what do you have in store for 2017, what are your goals, and what do you want to achieve in this next several years while you’re there at 500?

Khailee: Good question. This is what I care about right now, I think this is how, not just my story, but the story of tech and the story of capitalism is evolving. And we’re going to get into some deep stuff over here. But I’m going to try to be as open about it as possible. The world’s at a [crosstalk 00:35:46] satisfaction because the middle class is feeling all of these things, and the people will try to make it, they’re trying to move to the sea and they’re trying to get by. They’re powering the sharing economy. They are the Uber drivers and the Grab drivers, you know? But I don’t know how far their succeeding as well. I’m sure you’ve taken Ubers in San Francisco.

Jay: Mm-hmm (affirmative).

Khailee: And you talk to the drivers. I don’t think they’re very happy people.

Jay: Right.

Khailee: In fact, there’s a lot of people in San Francisco who are not happy at all because all the tech bros are moving in, jacking rent up. You know, everything’s getting all gentrified and getting more expensive and it’s creating a lot of distance between the haves and have-nots. I don’t get too political in the US because it’s not my area of expertise, and of course people in the Midwest aren’t very happy and a lot of them did vote for Trump as well. And that’s not just an American story, it’s the same in a lot of emerging markets too.

So I live in Malaysia where there’s a lot of folks who are not happy, in Indonesia they had riots here in Jakarta about the local government. There is a big swath of people who feel that they’ve been left out off the capitalistic machine, they’ve been left out of the new economy. They’re not part of it. And they’re getting [inaudible 00:36:52]. Because the world is in this state right now, I for one care a lot about questioning the rule of capitalism itself. How can we augment capitalism to be more inclusive? How can we be more financially inclusive?

It almost builds a bit of disgust sometimes where you go to some pitch events, let’s say in Silicon Valley, where some entrepreneur is telling you, “Yeah, I’m going to change the world. I’m going to revolutionize food delivery. And that way, your kind of Ramen can arrive two minutes faster than Uber Eats, or something.” And there are all of these people migrating to Lagos and all of the people moving to the city and trying to make ends meet and there’s so much suffering in this world. And you’re going to help some folks in San Francisco get their Ramen two minutes faster. Well, fuck you. You’re not changing the world and I don’t care.

Jay: Yeah.

Khailee: Because it a very noble thing to get your Ramen two minutes faster because I would like my Ramen two minutes faster, but don’t say you’re changing the world. Don’t say that. You’re not, okay? You’re just changing Ramen speed. Okay, so how this gets resolved is that we need to have a conversation around compassionate capitalism where you’re treating people better, where you’re including more people with the businesses you build and you’re including other countries in the tech startup game. You want to get some countries who do not have as many seed investments, make sure they’ve got a ton of seed investments, so they can have a trickle down [inaudible 00:38:26], a ripple effect where local heroes breed more stories of local heroes. Where the saviors of the economy, they don’t have to be somebody from another country. It could be your neighbor. Your neighbor could build a big company so you can build a big company too. You can take the economy in your own hands.

Jay: Right.

Khailee: And that’s going to help more countries. At least you have richer countries, poorer countries. Rich countries become richer, poor countries become poorer, at least you can have a more even countries being satisfied with their financial state. And they’ve got a seat at the table when you’re playing a game that they can be good at playing a game. And so that way, they don’t have to resort to joining ISIS. The people are left out and displaced in the world, they don’t feel they’ve got to resort to crime, they don’t have to resort to petty [inaudible 00:39:17] joining terrorism to be able to make ends meet. We can include them in the winning game.

In short, I would love to spread weapons, mass creation, to everyone. It seems true today that we are spreading math and science, we’re teaching math and science to as many kids in the world as possible and still not enough kids know math and science. Because you think math and science isn’t important. Well, you know what? Taking matters into your own hands and building businesses, now that’s a skill that everybody should learn as well. I think that that’s part of the story. One day, fifteen, sixteen years maybe from now, everyone feels they can be a micropreneur of their own and the whole structure of jobs and employment, sharing economy will be the norm, everyone could kind of freelance multiple gigs, everyone’s kind of like small business owner. Back in the old days, where everyone was kind of a blacksmith or artisanal jam maker or something, everyone started their own game. And everyone was all part of this system that hopefully would be a bit more equitable than the dark ages.

Jay: Right.

Khailee: So that’s kind of where it strings together, but there’s one more thing Jay. Apart from the financial economy game itself.

Jay: What’s that?

Khailee: When does it end? How much money is enough? Right? When you go to Costco, right now, let’s you and I take a walk in Costco, how many bags of carrots do you want? How many bags or carrots do you need to have? How much paper towels do you want? And if the spirit of consumerism overrides everything else, nothing is ever enough. You will buy more paper towels you don’t need, Jay. You’re going to buy more cars, more houses, more whatever, you just buy … And because you’re buying all this shit, companies just want to produce more shit, so they’re going to rape everything, they’re going to kill animals, they’re going to do all kinds of crazy shit just because they want to get your money.

Jay: Yep.

Khailee: So your money is making them do all this shit.

Jay: It’s a vicious circle.

Khailee: And it’s not going to end. It’s not going to end.

Jay: You’re going really deep here. So tell me about yourself, then. What are you going to do about this whole thing.

Khailee: I mean, I don’t want to fix anyone else’s life. I just want to fix my own. And that’s what I did in 2016. I’m a minimalist now, I gave away a ton of my shit. I operated six or seven units of clothes and me and my partner Eliza, we’ve put on a map of fifty years financial model on how much we can give away every single year. That’s my operating system. So when we’re tracking our finances and how little can we live on so we have more to give away, we’re just building it into the model-

Jay: That’s not something you hear very often.

Khailee: It’s not easy because we’re used to a lot of comforts.

Jay: Sure.

Khailee: I’m a bit under the weather right now, I’ve got a bit of the flu, so I broke my fever and I was sweating and my shirt was damp. And what did I do? I could buy a new shirt because I didn’t want to be cold on this call. I didn’t want to fall more ill. So I’ve got the privilege of being able to buy a new shirt whenever I want, right? But it pained me to go buy a new shirt because I’m trying to live on less. So that’s one. And what I’m doing for myself as well is also the food I eat. True of last year, I’ve been experimenting with dieting and fitness, you know you mentioned the Men’s Health thing. I was eating so much meat just to get my protein, I was eating so much eggs, I was farting at my colleagues in their face all the time. So I cut out eggs, I cut out pork, I cut beef, cut, cut, cut. And now I’ve been vegan for eight months plus, strictly vegan.

Jay: Wow.

Khailee: And it’s easy. Imagine my body fat and my mass. You know, I’m still lean, I’m still fit, I’m still strong. I can still go through what I want to go through physically and I love it.

Jay: That’s awesome.

Khailee: And I can be on the earth and plants is enough for me. I can be powered by plants. I even went for a blood test, I’ve been monitoring, I quantify a lot of my health, I’m great. I’m doing great.

Jay: Amazing.

Khailee: And so, if I can live on earth without eating any animals or hurting any animals, if I can live on earth without needing to buy a ton of shit all of the time, I’m sure that makes a difference to me at least. And the people around me. And if I can live this example and I can go through life without needing more validation, more ego-stroking from other people, I have enough self-love for myself, I think I will have more energy to provide for other people. And so that’s where it’s going to be. And I don’t know what’s going to happen. You ask me five, seven years, I don’t know. I just know that this is the new operating system that I am operating on. I’ve installed the previous system at it so the new features fix a couple of bugs. This is the new release of my iOS app.

Jay: I love it. And it’s so refreshing, especially in this sort of industry that you’re in, that I’m in. It’s just one direction only for the most part. So I like seeing this innovative iOS that you’ve installed. I might need to get a copy of it.

Khailee: I’m telling you, man. And this is the next thing. We’re going to go into this post-capitalistic world, I hope humanity will go through another Renaissance era where they’re going to integrate not just science and arts, but also spirituality.

Jay: Yeah.

Khailee: They’re going to integrate financial know-how. And the more human beings can integrate emotions, their logic, their capitalistic ability with their spiritual quest, and if they can include a lot of people in this quest, the world’s problems are going to be solved by people helping people. By people being kind to people. People just loving each other, loving themselves. That’s how a lot of the world’s issues are going to be solved. And it’s not going to be solved by me. It’s going to be solved by all of us. By Jay Kim, man.

Jay: That’s right.

Khailee: And all the guests on the Jay Kim show. This is the new narrative.

Jay: One podcast guest at a time.

Khailee: Damn right man.

Jay: Thanks so much, man. Thanks for the honesty at the end there, you went really deep. I don’t know what’s in that spinach you’re eating but I want to get my hands on some. I know you’re a little bit under the weather so I hope you feel better. But thanks for your time kindly, I really appreciate it. What is the best place that my listeners can find you, follow you, what-

Khailee: Yeah, Facebook is the center of it all right now. So if you go to Facebook.com/Khailee everything is there. I also have a website called Khailee.com where it links to all my other social media presence. And I’ll be posting up more writing. I hope to do more video this year to kind of include this in a broader narrative.

Jay: Yes.

Khailee: Just include my story in the broader narrative so we can discuss these things as things evolve. Instagram is Khaileeng.

Jay: Nice.

Khailee: Yeah, you can follow me and I would love to meet other like minds who are on the same quest.

Jay: Amazing. Join our quest. Join the quest. All right.

Jay: Khailee, thanks so much. We’ll link it all up for you and I can’t wait to hang out again. Let me know when you-

Khailee: That’s right, I’m down pretty soon, man. I’ll drop you a text.

Jay: All right.

Khailee: Jay, it’s been my pleasure.

Jay: All right, take care buddy.

Khailee: Take care. All right. Bye bye.