Jay:  This week’s show guest is serial entrepreneur Peng T. Ong, who is the co-founder and managing partner of Monk’s Hill Ventures. Monk’s Hill Ventures is a technology venture fund based in Southeast Asia. Prior to that, he started and exited three companies in the US, including Match.com, and has extensive experience in China and Southeast Asia as a venture capitalist. Peng, welcome to the show.

Peng:  Thanks, Jay.

Jay:  For our audience listening in, if you could give us a little bit of background, maybe a little bit of career history of yourself. Obviously, you’ve been a very successful entrepreneur, and now you’re an investor. So maybe you could share with us a little bit of your journey.

Peng:  I’ll just give you a factual landscape of my past until now. I grew up in Singapore, born and bred there. I went to Texas as my undergraduate after Singapore and then my graduate was in computer science at a University of Illinois. I started working in startups right after school, after grad school, and ended up in the Bay Area in several startups and then finally started one with my first startup partner, Gary Kremen, and that was basically what became Match.com.

A few years after that, I started a company called Interwoven, and that went public on NASDAQ in 1999, about a year before the bubble burst.

Jay:  Excellent. Obviously, very well-seasoned and experienced. What was the reason that you decided to go into startups and tech right out of school? I ask this because a large part of our audience is from Asia or has Asian heritage, and it’s not necessarily the conventional path. My parents wanted me to be a doctor. I’m just curious.

Peng:  I don’t know why, but I asked myself this question very early on, I think in my teens or, at the very latest, when I was doing the army. What is the purpose of my life? What am I going to be doing that’s going to be meaningful? So I asked that question pretty early on, and I realized… I’m a tech geek, so I like technology, but I also like to build things beyond technical things, like companies and teams and working with people. I think I decided to become an entrepreneur way, way early, probably right after high school or during high school. My dad’s an entrepreneur too, so you understand that world a lot better if you grew up in it.

Jay:  There you go. That was my next question, was how receptive or supportive were your parents. But it seems like they were very supportive if your father was an entrepreneur as well.

Peng:  No problem at all, even when I dropped out of grad school.

Jay:  Wow. That’s fortunate for you. But you’ve obviously parlayed that into several successful ventures. And then after having done the startup and building a company from the bottom up and even seeing a listing as an exit, which most entrepreneurs, by statistics, never actually see that. So it’s actually a very rare thing. And having done that, after that, what made you then decide that you wanted to step away from that and go on the other side and start to be an investor?

Peng:  It’s all about thinking about what would be meaningful to do, back to that purpose thing. If you spend enough time thinking about what it’s all about, at some point you go, okay, this is how I can make a difference. And what I realized after a few years of working with other more government-type of funds, and then spent a few years in China with a VC, GSR Ventures, I realized that I could actually, number one, have a lot of fun and, number two, make a big difference investing in companies and being a VC. I never thought I would be a VC. That was not one of the obvious career choices for me, even just 15 years ago. I kind of stumbled upon it, but it made sense that, I guess, I would have fun doing it since I would be working with entrepreneurs and building companies.

Jay:  Absolutely. And do you ever feel… I feel like if you’re a born and bred entrepreneur, which you obviously are, there is always a side of you that’s itching to start a company or build something again. Do you feel fulfilled just playing that investor role where you actually do get to be hands-on and help these companies. But is there ever a time where you’re kind of like “Oh, I want to build something else now”? You know what I mean?

Peng:  First of all, building a new VC is kind of like a startup except it’s not as operationally intense. But every time I think about “Wouldn’t it be nice to start another company” — I’ve done three of them as a founder and a few more as an early employee — I remind myself every time I think about that how hard it is. It is really, really hard. And frankly, I think I’m more leveraged now that I have that base of experience. I can actually help a whole bunch of people do it instead of struggling through it myself.

Jay:  Right. This is sort of the dark side of entrepreneurship, which a lot of people don’t actually know until they’ve tried it, is literally how difficult it is. It gets glamourized by media and this sort of thing. Ever since that Facebook movie, Social Network or whatever it was came out, everyone wants to start a company and live that life. But it’s actually the opposite of that. It’s a lot of hard work and grit.

So before we move into talking about your VC now, the last question on your background is, of the three companies that you started and subsequently exited, which one was your favorite.

Peng:  It’s like asking a parent in front of their kids, “Who is your favorite kid?”

Jay:  I have three children so I know it’s an impossible question to ask you.

Peng:  They’re different. They’re very different creatures. Match was my first company, but we were basically dinking around with social before social was a term in the internet. So that was fun that way. We learned a lot of lessons about what not to do in a startup. In the end, that got sold, and the entity just went public a couple of years ago. It’s still a pretty interest exit, although I’m not responsible for the IPO. I still know some of the guys running the company. Great bunch of guys there.

Interwoven was great from a building something really significant from scratch. People that went through that company always have fond memories of it, almost anyone I talk to who has gone through that. I think we had a lot of things right. We had a few things wrong which, in the end, were maybe somewhat fatal, but we were a public company before we sold the company. We were public for almost 10 years before we sold it. So that was Interwoven.

Encentuate was a smaller one. It was hard because it was post-bubble burst. That was about 10 or 12 years. It was really hard to do tech. In the end, it landed safely in IBM. It’s now part of IBM’s offerings.

Jay:  Each one is different and, like you said, it’s like picking children. I’m sure you’ve drawn on all those experiences now to being on the other side where you’re an investor. Let’s jump right into Monk’s Hill Ventures. Why don’t you give us… Let’s start with a name. What is the name? How did you come up with that name? And what’s the significance of that name?

Peng:  It’s pretty easy. First, we could get the dot-com.

Jay:  That’s a big thing.

Peng:  This is a big thing. Both Kuo-Yi, my partner, and I have gone through this school. I went there for my high school, and he went there for his German classes, so we both spent some parts of our life, some point in our lives, about four years, through that system. It’s a school. It was a school. It’s no longer, and we thought we’d keep the name alive.

It’s monks. There’s a lot of historical innovations related to monks, actually, both in the East and the West. So we thought that was relevant to the business we were in.

And ultimately, this is probably less known outside of Singapore, Monk’s Hill is actually not one of the top schools in Singapore. It’s a reasonable high school, but we call it a neighborhood school. Our point here, naming it… When I first went back to Singapore, I would give talks. I was living in the US for the longest time, then went back to Singapore. I would give talks to kids about what I did and all that. One day I mentioned I was from Monk’s Hill secondary school, and my friend heard this, my classmate heard this and said, “You should always remember to say that when you’re talking to kids.”

What’s the big deal?

He said, “You might not realize this, but a lot of kids, when they don’t get into the top high schools — not college, high schools — think they’re done for. The point is you can go to an average high school and still do really, really well. Your life is not over at high school.”

Jay:  I love that. That’s very significant, actually.

Peng:  Yeah. So that’s one of the reasons also that we decided to pick that name.

Jay:  That’s excellent. Yeah. I think especially now with the way the world is turning and with the advent of the internet and this sort of thing, I don’t know if traditional… You’re from Singapore. I live in Hong Kong. I have three kids. I know exactly what the struggle is with getting into schools and this sort of thing. But I think that’s a great name that picked.

And then how about a mission statement or a goal, a strategic vision that you and your partner had? There must have been something from the get go. It wasn’t just like “Let’s get in the VC game, and let’s roll the dice and see what we can do.” What was your mission from the beginning?

Peng:  I’m doing this very simple. I want to build Southeast Asian globals. I want to help build Southeast Asian globals, meaning companies that were built in Southeast Asia, started in Southeast Asia but are global names. It’s like how LinkedIn is a global name. It’s how Baidu is a global name. Can we have the equivalent from here? I think it’s starting to happen. Who doesn’t know about Grab in the tech world today?

Jay:  Absolutely.

Peng:  And GO-JEK is also coming up, and there will be a bunch of others that will be visible.

So I want to be part of doing that. I was part of doing that in China, and I saw the impact on the confidence of entrepreneurs, the confidence of engineers, when China started to become really successful globally, becoming visible globally. And I think there’s something to be said for being able to build a world-class product company in the tech field that gives you that stature and that confidence to stand up on the world stage and go, “Yeah, we are just as good as anyone in terms of being able to do this.” And I hope we can get that sooner than later for Southeast Asia.

Jay:  Absolutely. And I think you touched on a pretty good point there, Peng. I think that traditionally, outside of Silicon Valley, the traditional VCs, they always think about Silicon Valley as the Mecca or the Wall Street of early stage investing. And then when you look at the ecosystems outside of Silicon Valley, oftentimes what it takes is a significant exit, whether that be a big IPO or even an acquisition such as Waze in Israel. And these sorts of things actually help put the country on the map. So I think this is the sort of thing we all need here in Asia, particularly in Southeast Asia. I think you’re on the right track.

As far as the landscape goes in Southeast Asia, obviously it goes above and beyond your mission. You are from Singapore originally, and you want to promote that, but there’s obviously heavy macro tailwinds that are favorable to Southeast Asia. So maybe you could give our audience a little bit of what you’re seeing.

Peng:  If I go really macro, 650 million people, GDP per capita 5 to 7% per annum. Sorry. Not GDP per capita but GDP, 5 to 7% growth per annum. GDP per capita is around $4,000 which, coincidentally is around what China was about 10 years ago. China is now about $8,000, about double that. And so at that level, you start seeing the pickup on the use of internet and the consumption of internet-based services, including financial services, etc. That’s a theoretical statement, but when you get on the ground, you see it happening.

A lot of opportunities — I think more than 50% of the people in Southeast Asia are less than 30 years old. An incredible amount of youth here and growing very fast. Of course, internet and broadband adoption in various countries… There are more SIM cards than there are people.

Jay:  Wow. That’s incredible. The interesting and also very cool thing is that I think a lot of people… I don’t know, for whatever reason, but they’re unaware of the demographic and macro trends that are behind you there in Southeast Asia. So I think this sort of thing is actually the reason that I do the podcast because I like to bring on people like yourself to help educate our listeners.

If we could maybe take a little peek behind the curtain… Obviously, you’re good at what you do, but I think a big question that a lot of listeners, perhaps startup founders are probably asking is, “Peng of Monk’s Hill Ventures, he can choose to invest in a number of different startups. There’s a whole bunch coming up now that are very promising.” What are some of the criteria that you look at? What are some key metrics? What excites you when you see a pitch deck, which I’m sure you get hundreds a day landing on your desk.

Peng:  Maybe hundreds a month but not hundreds a day. But actually surprisingly, this is consistent around the world — whether you’re in the Valley or in China or you’re out in Southeast Asia, we look for great entrepreneurs. It’s hard to see that in a pitch deck. You get a sense of it, but you’ve got to spend time with the entrepreneurs. Great entrepreneurs going after big chunks of the economy. We’re not interested in small potential businesses. Not to say that small businesses are not good, but it doesn’t work with a VC model. We need to go after big, total addressable markets. Big TAMs.

Then, of course, using tech to really differentiate. How do you build up your proprietary data set so that the value of your company grows exponentially as you grow? So it’s not only revenues that is generating value in your company. It’s the data that is generating value in the company. So that’s a very peculiar one, but this is true in any internet play.

Those are the things I look for. We tend to be much more in favor of asset light companies than asset heavy companies like inventory and all that. We say we prefer bits to atoms. Multiple things like that.

We need to know that you as the entrepreneur understand growth hacking, virality, engagement. If we ask, “What’s your engagement like?” or, “What’s your retention like?” or, “What’s the virality like in your user base?” and you give us a blank face, you’re probably the wrong entrepreneur.

These perimeters, metrics that I just mentioned are now sort of the new accounting for the internet. So if you want to be in the internet business, you better understand all these things.

Jay:  Yeah. Absolutely. Is there a particular stage within the growth of a company that you guys like to invest in? Are you earlier seed-type stage, or are you a Series A? Proof of concept is there, and then you guys can come in and maybe lead a round?

Peng:  Yeah. We are basically a stage A investors, Series A investors. We come in when you more or less have a model that we think is scalable. We’re probably wrong in several aspects, but generally it’s kind of scalable, and we come in with a bit more money than the seed round. We typically write a check for two to five, maybe seven million initially, and we help you grow the company.

So you’ve got to be able to spend two, three, four million dollars in a few years in order for us to come in. You’ve got to know what’s going on with your business, how to predictably generate revenue using capital. The year before you get to that stage is what we call the startup phase of a startup. It’s the sales engine construction phase where you’re building the engine that can predictably generate revenues. So you’ve got to be pretty rigorous about it. People that wave their hands and say, “Oh, yeah. We can just make money and grow and have do details to that,” we get very suspicious of.

Jay:  You bring up a very good point, actually. I don’t think this is talked about enough. It’s great that you can raise money, but are you actually able to use it and leverage that capital to grow your business? And the same thing goes on the investor side, which I’m sure you’re familiar with. When you raise a fund, those funds need to be deployed, and there’s a certain amount of pressure. Investors want their return. In the same way, I think a startup founder oftentimes they’re hyper focused on raising the next round, but then they often forget the details behind that, which is essentially what drives the round.

Peng:  The first question they need to be asking is what are VCs looking for in the next round? How do I deserve the next round of financing? If you ask enough people who are investing, you figure it out. This is not rocket science in some ways. If you ask me, I’ll tell you. Most VCs are that way.

The saddest part is an entrepreneur that actually has no idea because he didn’t ask or she didn’t ask.

Jay:  Absolutely. And how hands-on is Monk’s Hill Ventures with the actual portfolio company? Are you guys very aggressive with trying to leverage non-financial resources as well to help the growth of the company, or do you take more of a backseat and let them just use the capital to figure it out themselves?

Peng:  If we have to be too hands-on, it means we screwed up on the investment, and we shouldn’t have invested. We need people who can… The CEO or founder that we invest in, we want to see the potential of that person running a $100-million-a-year business or more. So that’s a huge business. 100 million in revenue is a huge business. And we want to see you be able to do that. Sometimes we screw up in assessing people, in which case, there’s not much we can do because we’re in the deal, whether we like it or not.

But ideally, we don’t have to do much. We’re board members. We sit on the board when we invest in a deal. So we’ll do at least what board members need to do.

The other set of things we do is we like to think of ourselves as thought partners for our CEOs and our founders. We’ve been there, done that. That’s the main differentiator of the Monk’s Hill Fund. There’s only a couple of us within Southeast Asia that have taken companies public, etc. So we can be very useful sounding boards because of that experience and because we’ve built large companies and because we’ve actually seen lots of different models. We’ve seen the US. We’ve seen China. And now we’re seeing Southeast Asia. We see the whole gamut of possible business models out there. So that’s really helpful to entrepreneurs, not to mention the networks and all that we provide there.

But ultimately, we… And this is the lesson I learned as a first-time VC many years ago. The CEO is no longer you. No longer me. You are a supporter. So stop telling the CEO what to do, giving them whatever they want to figure it out. If they want advice, we give them advice. If they don’t want your advice, then you don’t need to give them advice unless you see them heading for the cliff or something.

Jay:  Absolutely. Every investor wants to protect their investment, so you can understand that side of it. At the same time, you’ve got to let the founder do his thing as well.

Peng:  One very experienced VC said to me once — this was in China — “Sometimes it’s better to bite your tongue and let the CEO made a million-dollar mistake and learn from it instead of trying to stop all that, and then he doesn’t learn the lesson, and five years later, it’s a $100 million mistake.

Jay:  Wow. Yeah.

Peng:  So it is tough. You have to bite your tongue while the CEO is making mistakes that cost money sometimes. If it’s below the waterline, then you try to stop the hole from being formed, but if it’s above the waterline, you just let him blow the hole in the hull, and hopefully it doesn’t cost too much to fix.

Jay:  That’s a very, almost spiritual way of thinking about it, but I like it.

Peng:  It might be spiritual, but this is how big money gets made.

Jay:  100%.

Peng:  I guess making money is spiritual.

Jay:  Yes, it is for many people. Peng, on the flip side of this, maybe you could shed some light or share some of your knowledge, insight. Let’s say I’m an investor, and I’m looking into Southeast Asia. Obviously, like you said, there are very few experienced investors that are doing what you’re doing that actually have experience having exited and know both sides of the coin. If I’m a VC that wants to come into Southeast Asia, what are a couple of things that I should look out for? What are some trends that you might see that you see in the next five to 10 years that we should look out for?

Peng:  I think more important than trends — because trends will change and technology will change trends, etc. — is actually fundamentally what you need to do. If you’re an existing VC in some other geography, you understand how to run a VC fund. So what you want, you don’t need more people that understand how to run a VC fund. What you want is people who understand the local scene. You want people that understand entrepreneurship. So you try to figure out those people. Southeast Asia is not one country. It’s a number of countries. ASEAN is 10 countries, but practically speaking, there’s maybe four, five, six countries you need to really pay attention to in Southeast Asia. And you almost need one local per region. One in Jakarta, one in Bangkok, one in Manilla, etc.

The advantage of Southeast Asia is, I think most countries, most cities are used to international businesses. So it’s not as hard as China was 10 or 15 years ago. But there are lots of local nuances that you probably don’t understand coming in from somewhere else, and you need to have a local person working with you. This is not a fly-in game. Again, in China 10, 15 years ago, VCs would be flying in from Hong Kong, especially from the Valley. That worked for maybe a year or two, and then it stopped working because you were not there to make the contacts when they were being made. Same thing here.

Jay:  That’s definitely true. Like you said, it’s regardless of trends, because those things change. But the VC game, it might be nuanced in the different countries or the region that you’re in, but it’s more or less the same. I actually don’t know — and I apologize for this. I should probably have known this before we spoke, but do you raise institutional money on a regular basis with different funds?

Peng:  We’re not a fund management platform, so to speak. We’re a very traditional Series A management company. So we fund one; we deploy that one. When we’re about done with fund one, we raise fund two, and then we start deploying that. We’re about to start deploying fund two in a few months, and then we’ll do fund three, fund four. So we’re not parallel fund managers. We’re serial fund managers, if that makes sense.

The difference, of course, if you’re doing parallel funds, then you have different ages, different industries, different specializations. And your skill becomes finding fund managers as opposed to running the funds yourself. We enjoy Series A investing a bit too much to do that at this point.

Jay:  Yeah. You don’t want to step away too far from the action. You might not be able to answer this or you could choose not to, but is there any portfolio companies that you’re particular excited about? Obviously, it’s sort of the same question as the children one, as your previous ventures. Or is there anything that you’re working on that you’re super excited about, whether it be a trend in Southeast Asia or what have you?

Peng:  One way to do this is I can talk about some of our bigger companies, the more visible ones. So that’s not really discriminating. Well, it is in some cases, but they’re more visible. Like Ninja Van, for example, is one of our first investments. They’re doing more than 100,000 parcels a day now in Southeast Asia. It’s a four-year-old company. So it’s a huge logistics footprint across Southeast Asia at this point and growing at a very, very high clip. So that’s Ninja Van.

C88 just sealed a deal that would make them probably one of the top credit entities, and they’re closing their next round of financing. You see announcements on that. Very quickly, it’s going to be a very, very significant financial player in the region pretty quickly.

Again, we invested in those two companies within weeks of each other.

There are other bigger companies. KKday, for example, based out of Taipei. The Southeast Asia business is huge. They’re also doing launch revenues. I’m not sure if they’ve announced a number, so I can’t… It is double-digit millions, so doing very, very well.

For a fund that is three years and a quarter, I think we’re doing okay.

Jay:  I think everyone listening in would probably agree with you there, Peng. As we look to wrap up — and again, thank you so much for your time and sharing your insights and knowledge, and it’s just been fascinating hearing about your journey. I have two questions left. The second to last one is, look, you’ve been on both sides of the coin, as we discussed. You’ve been a serial entrepreneur with very, very successful exits. Now you’re an investor. If you had to give one piece of advice to an aspiring entrepreneur or maybe a startup founder right now who might be in Southeast Asia or maybe he’s just looking to emulate your success on your three companies, what would that be?

Peng:  Be clear about how you’re going to make impact. The lack of clarity is what kills a lot of businesses. They have fuzzy thinking. This is down to apple pie, but it is so important.

Jay:  Again, we’re going a little bit spiritual here, but I like that. I think that, at the end of the day, as an entrepreneur, there has to be a bigger reason that you’re in it besides the money and the fame or what have you. You said at the very beginning that the reason that you were doing things companies and then you started a fund was for the impact and the difference that you could make.

Peng:  Yeah, but the fact of the matter is the world pays you well for having impact. It goes hand in hand. You create impact, you get rewarded for it. There’s nothing confusing about that. Be clear how you’re going to make the impact.

Jay:  The last question I have for you, Peng, is basically, if I’m a startup that wants to get in front of you, on your desk, or if I listen to this podcast, and I just want to connect and learn a little bit more about Monk’s Hill or potentially what you guys are investing in, what is the best place to do that?

Peng:  Well, we have an email address that you can send things to — reach.us@MonksHill.com, and it will be responded to. Reach.us@MonksHill.com.

Jay:  Great. And we will have that all linked up in the show notes. Peng, thanks you so much for your time. We really appreciate all the insights. Obviously, congratulations on your success thus far, and we’re looking forward to reading about your exits in the future. Once again, thanks for being honest and frank and sharing your thoughts and your wisdom. We really appreciate it.

Peng:  Thank you very much. Take care. Bye-bye.

Jay:  Take care. Bye.