Me & My Money

Win-win way to get rich: Help others make money

Mr Joseph Phua set up dating app Paktor with two others in 2013. He has also invested in four businesses in various sectors overseas.
Mr Joseph Phua set up dating app Paktor with two others in 2013. He has also invested in four businesses in various sectors overseas. ST PHOTO: LAU FOOK KONG

Our revamped Sunday Times Invest includes a new set of questions for Me & My Money focusing on investment strategies and portfolios. This week, we talk to Paktor co-founder Joseph Phua in the first of a four-part series on young people.

Passive investing holds no appeal for entrepreneur Joseph Phua, who is very hands-on when it comes to managing his money.

It starts close to home with his own business, dating app Paktor, and other enterprises as well, all with the aim of influencing how his investments perform.

"In a casino you don't have control over the odds," he says. "You don't have control in an asset class in itself and you've control over your decisions whether to invest in it or not.

"But you do not have control over how your investment does as a whole unless you're an activist investor like Carl Icahn."

Mr Phua, 31, set up Paktor (Cantonese and Hokkien for dating) in 2013 with co-founders Charlene Koh and Ng Jing Shen.

Mr Phua started learning about investing in start-ups and non-listed firms in 2012, when he attended the University of Chicago's Booth School of Business for his master's degree. His parents, who founded high-end furniture retailer Da Vinci, also started teaching him about investing early.

He notes that various metrics, such as the number of users and time spent by users on the app, have been growing by 100 per cent or more since the beginning of this year, and the team has grown from 15 to 50 people.

Paktor is also expanding into Indonesia, and Mr Phua adds that the app is becoming the "No. 1 app in the country to meet new people in metro cities".

VALUE IN PROPERTY

We may live in this day and age where it's no longer sexy to invest in property any more, and it's only for the flippers, but there are so many ways to structure your property investments such that they make sense for your purpose.

MR JOSEPH PHUA

He says this is the type of investing that makes sense to him after having tried different financial instruments that didn't pan out the way he hoped.

"When I was younger and investing in equities, I never always made money. I started out with day trades, realised it was a quick way to make money but it was essentially gambling.

"It's very difficult to beat the market. I made money but it wasn't scalable, and I wasn't 100 per cent confident that I was going to make money."

He wanted to invest in equities but did not want to spend 24 hours a day monitoring the markets.

That led to a decision to focus on strong, mature companies with good fundamentals, including blue chips and companies like Amazon and Google.

Mr Phua started learning about investing in start-ups and non-listed firms in 2012, when he attended the University of Chicago's Booth School of Business for his master's degree. His parents, who founded high-end furniture retailer Da Vinci, also started teaching him about investing early, even though he applied those lessons much later.

 

  • Best and worst bets

    Q What has been your biggest investing mistake?

    A How I spent my early years, and how I invested my time. It's never too late to start investing, and you must start early because time is very precious.

    The more time you have, the more mistakes you can make, and the more you learn. I've made multiple s**tty investments, including buying the wrong shares or something that I thought I needed but never really did. You're always going to make such investments every single day, like taking the wrong bus and wasting 15 minutes of your life.

    Every day we make decisions and they are all investments, but the key is to get over the lousy ones quickly and never do them again.

    Q And what has been your best investment move?

    A My company Paktor, which is doing OK. I've more control over its success or failure, relative to other investments.

    My initial investment was US$200,000. We've grown about five times in the last six months in terms of operational metrics of the company. It could be the number of users on the platform or number of daily active users, different things like that. Paktor has four million users, mainly in Singapore, Taiwan, Indonesia, Vietnam, Thailand and Malaysia.

    We're focused on the user experience and building the product for users at this stage, and this has helped us over the two years to outgrow our competitors.

    When we started, there were more than 10 equal players in the market, but now we're the leading player with few or no competitors within our core markets.

    We're still in value creation stage, so profitability will come later. When product is mature and we're satisfied that we've achieved a certain bar for user experience, that's when we'll focus on profitability.

    Rachael Boon

"I used to follow them for their work. I lived in Indonesia for a few years and travelled to furniture fairs with them until I was 12," he says, adding that they would tell him about various market crashes they experienced in the past and how they overcame them.

"There was a period when the rupiah crashed, and my parents were doing business heavily in Indonesia; a lot of their assets were in cash.

"They made the mistake of not hedging anything and keeping it in rupiah, and overnight it became nothing. I learnt that holding on to cash doesn't mean you'll always be rich because of currency changes."

He could have kept his stable job at Da Vinci - which sold the Da Vinci building at 191 Upper Bukit Timah Road for $58 million last year - helping his parents build a furniture empire, but was determined to strike out on his own.

Being able to effect change in a company interests Mr Phua, leading him to invest in four companies overseas in various sectors, including gaming.

"It's exciting because I can help people grow their business at the same time and grow my money."

Q Moneywise, what were your growing-up years like?

A When I was younger, I wasn't very prudent with money and I was never the type of kid who'd save my hongbao. That was always the case even throughout college.

My parents always taught us we needed to save, and they used to put $60 a month in my bank account as savings. But beyond that I never really saved.

It was only in college, when I started working at a news outlet in school selling ads, that I realised how difficult it was to make money, but even then I didn't start saving.

Q How did you get interested in investing?

A I started investing in businesses that I could influence when I was doing my Master of Business Administration in Chicago.

I realised the power that one could harness if you applied your knowledge and skills to the business, and the competitive edge you have against other people because of the education or experiences that you've had.

If you can use those to make a difference to the companies that you're investing in, then you're just ahead of the curve by a bit.

I made my first business investment in Chicago, a restaurant chain. When I came back and started Paktor, I started investing in other small businesses that were not within Singapore.

Q Describe your investing strategy.

A Running any business, it's all about the team. The people on your team will help the company overcome the multiple difficulties which will surely occur.

You can do all your discounted cash flow analysis, projections, market studies, assess how big the market is and how you do your SWOT (strengths, weaknesses, opportunities and threats) analysis, but none of this is key.

It's good for understanding where you stand in principle, but won't determine your success.

What matters is how they control the business, overcome the difficulties that they come across every single day, react to market changes and so on.

I've learnt it's not only good but also fun to invest in businesses you can influence, because if you don't have control over what you invest in, it becomes more of a gamble or an educated guess at best, of where it's going to swing.

What I've learnt from investing in small businesses is that it's actually no different from running your own business, which is very difficult. Running your own business is one of the toughest things, so many things come up every day, it's a convoluted experience but work has become part of me.

Applying these lessons that I'm learning to the businesses that I'm investing in is great, because I can see what's coming up.

Q What's in your portfolio?

A After college, I got my first job, and the only investment channels I had access to were brokerages and different banking products. Those are good if you're looking to grow your savings by a couple of per cent a year. It doesn't make you rich or poor, it just helps you get by.

If you want to invest in public equities and really make money out of it, you have to live, breathe and do it. If you try to beat the market, nobody wins, but generally if you invest in blue chips, you'll make some money over a long period of time.

That's the lesson I took from my younger years in trading, so now I'll only invest in blue chips or companies that are significantly mature, without hopes that I will get my returns in a year.

But if I hold them for five to 10 years, I'll potentially make about two or three times and that's okay.

That now takes up about 10 to 15 per cent of my portfolio. When I was much younger, that took up a huge portion of my portfolio.

The other 80 per cent of my portfolio can be broken down into my mortgage and investing in businesses I can influence, which is the part I'm most interested in.

Of the four companies, only a gaming firm in China has had moderate success. The other three are in the United States. The restaurant chain failed, two are still in progress - one's in logistics and the other in e-commerce.

I ply my trade in the Singapore market so if anything, I should be investing in myself, so I invested in Paktor.

Q What does money mean to you?

A When we're in our 20s or 30s, it's a time in our lives when if we can afford to take risks, we should.

We can afford to take a lot of risks right now because even if all our investments were to collapse, we still have a job which can tide us over the crisis.

I'm still young, and I can afford to take risks. It's only in recent years that I realised I have lost a lot of good years in which I could have done a lot with the money and opportunities that I had.

Q What's the most extravagant thing you have bought?

A The only things I generally spend on now are food and transportation, and the occasional night out with the missus (referring to his fiancee, who is from Taiwan).

I hate shopping, I never have the patience. My mum does my shopping once a year during Chinese New Year. I wear the same stuff day in and day out.

Q What is one of your biggest investment regrets?

A I always believed in investing in the person, and when I first invested in businesses, I believed that the fundamentals of the business were not that important. You invest in that person and help that person along the way.

At that point in time, I thought the only important factor was the founder and I invested in the person, who was very good.

I wasn't totally wrong but I was wrong to assume that all other factors were very much secondary. So yes, founders are the most important but other factors too, including timing, what industry you're in, who your competitors are, how much funds are required and fund allocation.

All these different things contribute to the success and failure of the business so there are some factors that I missed out that resulted in the restaurant chain failing.

When I started Paktor, one of the stupidest things was that I didn't find a mentor early on.

If I had, I would have skipped the difficult obstacles. I realised that only late in the game, and now I have many mentors.

Q What are your immediate investment plans?

A Besides investing in private companies, now I'm learning the value of investing in fixed income, recurring income assets like property.

We may live in this day and age where it's no longer sexy to invest in property any more, and it's only for the flippers, but there are so many ways to structure your property investments such that they make sense for your purpose.

I learnt this from my parents. It's about holding power, and capital appreciation there beats inflation in the long run.

However, to grow your wealth in a short period of time - maybe it's my experience, or inexperience rather - I don't think that property is the easiest way to go. It depends on your opportunity and ability.

I only have a condo apartment in Taiwan that's earning rental income. It's a start but it's so expensive. My fiancee is Taiwanese so it also made sense.

Q In the longer term, how are you planning for retirement?

A Retiring never really means to stop working. To me it just means I'll never have to worry about my family, taking care of my kids who I will have in future.

It's about being able to decide what you want to do at any point in time without being constrained by financial needs. I don't have an idea yet of when that will happen.

Q I drive...

A My dad's car, an Audi Q3. I'm seldom in Singapore so I don't see the point of buying a car. I spend very little time in Singapore and I shuttle between the places Paktor is in, like Taiwan, Indonesia and Vietnam.

A version of this article appeared in the print edition of The Sunday Times on July 05, 2015, with the headline 'Me & My Money Win-win way to get rich: Help others make money'. Print Edition | Subscribe