#TIASG2016: Fireside chat with Eduardo Saverin

I don't know, who am I? Is this... I am who I am. It's, you know, one of those big questions you always ask yourself and you never have an answer to.

Thank you very much. I definitely wouldn't characterize myself that way. I'm just a young kid, grew up quite nerdy to say the least. Playing chess and other things was the most popular guy in school, to be quite frank. But I'm someone that's incredibly impassioned to change the world around me. I would call it a definite optimist. I have a very optimistic viewpoint on the world, but I actually want to get up and help it take place. I just don't sit there and watch. So everything around me that I'm frustrated about, I try to see if there's a solution to, and I either try to solve it myself or invest in entrepreneurs that are doing that.

So I'm ultimately first and foremost a family man. Happily married this year, so things are absolutely great and I'm always smiling. I really care about my family and my family's happiness and welfare. But in terms of a profession, I invest in entrepreneurs today that are trying to change the world. I know that's a very broad characterization, but hopefully that helps.

That's a very important question. I think it first comes down to the roots of who I am. I'm someone that has always attempted to discover and see the world around me. And the first thing that we need to do to be a discoverer is to actually travel the world and actually see it in real life. So I've always been passionate to travel and not stay put necessarily in one particular place. And during the early days of Facebook, I grew fast fascinated by the Southeast Asia region, in particular because for a long period of time the second largest community inside of Facebook was a country by the name of Indonesia. I had friends in college that were from Indonesia, but that's as far as my background went. So I had an interest to see the region. And then one of my friends actually from the US decided to set up shop in Singapore, and I decided to invest in the business and come over initially temporarily to advise him in the business as well. And a temporary move turned into a permanent settlement. And it really happened because, if I wanted to joke about it, I finally was able for the first time ever to enter a real-life SimCity, which was my favorite game when I was growing up. Clean city, beautiful in every way that you can describe. And really from my interest of technology and how technology will help change the world, it's a gateway to the next big centers of innovation in the world, including it has the possibility and opportunity and is currently an innovation center in the world as well. From Singapore, you're basically five and a half hours away from close to two-thirds of the world population and a large portion of the world's innovation centers. And we can talk more about that if need be, but that's a long-winded answer. But it's personal discovery and at the end of the day, it's also the center of the tech world going forward.

There's many things to be excited about. First and foremost, this is an extraordinarily large and growing market. If you think about it, Southeast Asia is arguably five years behind the development cycle of India, and India is about five years behind the development cycle of China in terms of the startup ecosystem. And if you look at the middle class, you're talking about just in Southeast Asia itself, excluding India, over 400 million people in the middle class by 2020. With India, you're talking about over 1 billion people. So it's an incredibly large market. That's point number one. But point number two, which is incredibly exciting, is it's truly a mobile-first environment. Cheap mobile devices are making access ubiquitous, and you're talking about over 850 million handsets in Southeast Asia by 2020 with increasingly growing consumption of data across those. And this truly mobile-first environment enables you to really innovate from a zero-to-one perspective. As an example, a young girl in a rural village in Indonesia will soon have more information than I had when I first started college at Harvard in her fingertips with her mobile device. You can recreate physical distribution in places and regions of the world where physical distribution is quite challenging through the mobile ecosystem as well. So it's a very large market, truly mobile-first, and the infrastructure in many of the countries across the region is lacking. And instead of looking at that as a negative, I view that as a positive because it drives entrepreneurs to truly be innovative and think outside the box. So if you're starting an e-commerce business in Indonesia, you're not just in the business of e-commerce, you're in the business of last-mile delivery. In some cases, you're in the business of looking through the payment gateway and the payment mechanisms as well. So it really drives and fosters ingenuity across the space. And on top of all these things, from an investor's perspective, it's a less crowded market as well. It's a white space. There's a lot of investors, and I know a lot of you in the room happen to be investors as well, but if you look at the crowding today in Southeast Asia versus Silicon Valley and other parts of the world, we're not there yet. So it's a wide-open opportunity, and it's an opportunity that's getting deeply supported by the local government as well, including here in Singapore. So there's a lot of things to be excited about here locally, many of which and most of which are here in this room today.

At a very top level, when I look at investing, I think about three core themes. The first one is I view that the world is becoming increasingly more global in the sense of technological innovation. You can no longer as an investor simply isolate yourself to one city, one postal code, even necessarily one country. It's incredibly important that you have a global perspective and that when you invest in a payments company in Southeast Asia, you understand what's happening in that space across the world. So the global perspective is a key one, and it's not one that necessarily has been yet widely adopted across the venture community because of the complexities of deploying a global strategy as a venture capitalist. So that's number one, global. Number two is really, and I know I'm wearing a suit right now, but I myself was an entrepreneur, and the real hard work begins after you invest. I want to roll up my sleeves, of course not with this jacket on, and really be supportive to the entrepreneurs. So capital is becoming commoditized. It's about what you can bring with the capital and what type of support you can provide to entrepreneurs, which leads to the third overarching theme that I look at right now today, which is the intersection of the technology world, the really fast, nimble, innovative technology coming out of entrepreneurs like yourselves in the audience, and the assets, the brands, the distribution platforms of the largest companies in the world, and how we could marry both of them. Especially as technological innovation, because we're very early in the process, we're less than 1% of the way, starts going in the direction of highly regulated or more traditional industries like healthcare, insurance, I believe it will be very critical to invest in entrepreneurs that are willing to partner with very large corporates earlier on in the evolution to accelerate their path to market. And frankly, from a corporate's perspective, that would be their pathway to innovate. So those three underlying themes really drive my investment decision. But at a more granular level, it comes down to something more typical. I look first and foremost at team and people, then you look at technology and product, market, recurring revenue growth, and the sustainability of the revenue. And at the end of the day, how I can be helpful. And the one thing that I would say from a team and people perspective is that it's critically important that the entrepreneur has real passion for what they're doing. It's a very difficult job to start a business, and if you're not willing to crawl through glass to get your business to be successful to its ultimate mission, you shouldn't be doing it. So passion is key, and it's important through that passion that you're armed with the ability to listen, listen to your customers, iterate and evolve as you fail, get back up and adapt. But broadly, that's my focal area from an investment perspective.

Well, you can look at that process similarly as to how you would look at developing a relationship with anyone, be it a friendship, be it a romantic relationship. I'm done with that forever and I'm happily married, but broadly speaking, at a very top level, it comes down to investing in lines versus dots. It might sound like a very lofty goal in the venture world because some very good deals come to you and you have a very short period of time to win those deals, to evaluate those deals, and get the relationship. But the first thing that I would do is develop relationships with entrepreneurs way before they even consider raising a round. And I recommend entrepreneurs to do that across the investment community as well, way before they're considering raising a round. And that way, time can tell. First impressions, gut instincts can be valuable, depends on your instinct meters and how effective those are for you personally. But definitely a relationship run through time is in my view the best mechanism to be able to tell if there's real passion, if it's an entrepreneur that's willing to iterate, do it leanly, is willing to delegate and grow a team that they empower around them, etc. All those factors are very important. But definitely take your time. And I know you might ask, or a question always comes to mind about investments that you might regret passing. And the one thing that I will say is if you do a deal too quickly, you don't know the entrepreneur, you don't frankly allow the entrepreneur to get to know you, that's when mistakes could happen. You might pass on the next Facebook or the next Dropbox or the next GrabTaxi or the next... But ultimately what I will say is if you have not had time to spend time with the entrepreneur and there isn't a limit of interest and this is merely capital, don't do it.

Well, for me, and hopefully for everyone in this room including yourself, I think it's a critically important goal and live aspiration as it's coming to life to have Singapore be a very big contributor to technology innovation in the world. And a big part of not just Singapore but Southeast Asia and India, a big part of establishing a healthy, thriving community is to have content creators and community builders like yourselves. So in my view, an investment in tech in Asia is an investment in the ecosystem locally.

Absolutely. It's the most important question, and frankly, I strive to not invest in businesses unless I can really roll up my sleeves and be helpful to the entrepreneurs. I think first and foremost is in the form of mentorship and advice. Being a CEO and a founder can be a very lonely position, and sometimes you really need someone that you can relate to that has started a business themselves that you can speak to, be it to simply just vent, all the way down to talk about broad strategies, how to work with your fellow co-founders, to how to build out your team and scale the people element of your business, which is critically important and very challenging. So mentorship is very key and one of the key things that I bring. It's also very important to be there for them to help them curate their brand, their story. And this is not just outward-facing brand, but it's really the internal story. What are you building? What are you trying to achieve? This really enables the team to trust you, to create a consistent story of where you're going, enables your customers, your clients to also trust you, and allows you to focus when you have a very strong sense of what your path is as well. And it's important to curate that upfront. All the way to things that are more common but it's quite critical, to operational advice, to how to best manage your capital, when should you fundraise, what valuation should you fundraise at, should you fundraise even though you might not need money given the market cycles. And most importantly, the go-to-market strategy across the board. If you look at startups, the key number one point of failure is go-to-market. You can build phenomenal technology, but can you get enough people to utilize it or pay for it? And that's a focal area where, as I described before, one of my emphases today is opening the eyes of entrepreneurs to partnering with very large businesses as a path to accelerate their growth. It's something clearly during my early Facebook days that we did fine without doing, and frankly, I understand that a lot of entrepreneurs might not naturally gravitate towards working with CEOs of Global 500 companies and the DNA match might not be there at the surface. But my viewpoint is that's an example of a path in certain regulated industries and very traditional verticals that might end up proving very successful. But you need to be there to help the entrepreneur and hold their hands if need be.

Absolutely. Talking about Facebook, I'm always humbled by where the company is today and the type of impact that it really has made on the world by democratizing voice and innovation. It can be quite distracting sometimes, it could be an overpowering, always in-your-face thing if you want it to be. But we never could have imagined from our dorm rooms where this would have taken us, which drives really one of the key early lessons and learnings from the experience. The first one is really about product-market fit. We were college students at the time and we were building a product to serve ourselves, so we could truly listen to our customers. We were our customers initially, especially in the very early days. And we were also doing something very simple, it's very important for you to start with a simple concept as well, which was basically taking a physical handbook called the Facebook, particularly at Harvard at that time they had a physical printed book for the freshman class. I actually happened to have not existed because I missed the picture submission deadline, so I wasn't even part technically of the college on that basis. Just taking that simple Facebook and digitizing it and transferring the ownership of the profile to the students, which basically meant that I existed and people could actually know that I'm a student there if they wanted to reach me. And second, it could make sure that as an example, people that hated that first-day photo that they took didn't have to live with it for all four years of their college time. So we empowered students in that way. But this product-market fit enabled us to grow and in particular enabled us to create a community that had real trust from the get-go. One of the key innovations for Facebook is really building the first real identity community at scale. And the way we did that was by aggregating small tight-knit communities. And the innovation was very simple: .edu address to authenticate and replicate a physical written notebook. So the product-market fit stuck with us. And as we went from colleges to high school students to work networks and eventually to the public, this philosophy remained. Not because we were our users across all demographics, across all religions, languages, etc., but because we were listening to them through data analysis, through fast iteration, and through A/B testing. So we always remained listeners, be it because we were our own consumers or because we were deploying data analytics to assess it. And that was, I would say, a really critical early point for Facebook. But the second one was our decision to not build everything ourselves but open up to the world, which was a realization that not all the smartest people worked for us. At that time, in fact, very few people worked for us. And we had built a key asset, which was the social graph and eventually the interest graph, which is basically the connections of individuals with other individuals and connections of individuals with things of interest. That was valuable for us, but our users would get the most benefit if anyone from the world could deploy their application on top of the platform. And that key decision enabled us to have staying power for the long term.

I know this is quite cheesy, but I started by speaking to my father and learning from what he went through during his lifetime, to speaking to my friends and their parents, to of course reaching out and speaking to advisers that were looking to either invest or partner with the business. So it was a myriad of sources of mentorship during those very early days. But at the end of the day, our key ethos was listen to our customers, and that kept us in check. Which goes back to what I would say is relentless focus. If you focus on listening to your customers and basically deploying your technology on that basis, you will go somewhere. It's important that as an entrepreneur you keep relentless focus and you iterate, you remain lean, and you're willing to push things out that might not work and you very quickly adapt and evolve your product.

Well, definitely for Singapore, since we're near the equator, we can wish, and if winter comes here, I don't know what's happening with the world. But broadly, when it comes to the technology world and the venture community, I would say definitely if you define winter as a crunch of venture valuations and fundraising, I definitely think that we're getting there. I think valuations did peak in 2015. But it doesn't mean it's this cactus bubble that will burst. It's quite the opposite. As an investor, if I take that hat initially, we like to enter into companies and exit companies on the basis of cycles. So cycles like this present an incredibly unique opportunity for us to enter into very good businesses. And frankly, I will say that the best businesses stand the test of time irrespective of cycles. That's a very important and critical point as well. And really, in a time like this, my suggestion to entrepreneurs out there that have very sustainable businesses, which I assume is every single one of you sitting here in our panel, that this is the time for you to grow your business. While others are being defensive, it gives you a phenomenal opportunity to expand as well.

Well, it depends on the philosophy, but at a top level, if you're capitalized and you have positive unit economics, I would say you can raise money today. And if you're a great business, you can raise money in any cycle, irrespective of the cycle. I think that usually will always be the case. So what I broadly mean is you should continue growing your business. Don't alter your game plan on the basis of market jittery or what your competitors are doing and becoming defensive. Move forward and continue to operate for success as you had previously planned. And if you are looking for money, money will come if you're a dynamic, profitable business.

Yes, yes.

There's a lot of verticals, industries, and particular sectors that I find incredibly intriguing and I look to back entrepreneurs in right in this part of the world. Logistics is an example of a very interesting market, as is insurance, which is a very old-school category that has not really seen much change over the last several decades to say the least. There's multiple waves of disruption and innovation that are coming to a category like insurance, starting with marketplaces and altering the way through which consumers purchase insurance and how claims are managed internally by the companies themselves, all the way to alternative underwriting models, which is a pretty big disruption to an industry that was born and lives on the precept of selling you something that hopefully you will never need. To sell you something on the basis of need, like selling you insurance for a car by the mile that you utilize, all the way down to the connected home, quantified self concept, and how that will impact the insurance category as well. Clearly, as you start gravitating towards self-driving cars and machine-to-machine communication, conceptually cars will start crashing a lot less. And the only person that probably that scares is the insurance owners that are selling car insurance. So this is an example of a category that I would say is in a highly traditional industry vertical that entrepreneurs are starting to innovate in that I'm focused in. But I'm focused in a bunch of others as well.

Yeah, it's always good to be precise. Not to put the spotlight on any entrepreneurs I'm currently speaking at, but broadly speaking, to go back to some of the points that I made before, I'm speaking to a lot of entrepreneurs currently in the healthcare world as well, which is also a very traditional vertical. In the insurance space, including insurance marketplaces. In last-mile logistics, particularly in the Southeast Asia region where that's a very pivotal requirement to alter last-mile logistics realities to enable the e-commerce boom here locally. All the way down to categories around e-commerce, but in particularly not the front end of e-commerce but the back end of e-commerce around big data and persistent intuitive commerce. And some names? Well, I don't want to give names of companies that I'm currently speaking to because you know how that goes. I don't want to put the spotlight on those entrepreneurs.

There are many difficulties. Ultimately, being an investor, you might think as an entrepreneur that the investors have it easy, but I'll tell you at the end of the day, you're in a position where you have to say no all the time to amazing entrepreneurs that are building great companies that you might believe will change the world. But you need to also focus, just like you tell your entrepreneurs to focus. You have to be focused on choosing and helping companies that you can be of best help to. And ultimately, that requires a consistent reality of saying no to very good entrepreneurs and companies. You also have to wear multiple hats. On the one hand, with the entrepreneur, you grow a very strong relationship with the CEO and with the team, and you become their partner, their friend, their sounding board as I described before. But in periods of time, sometimes you get to a position where you might not believe, wearing your investor and your board hat, that the decision that the entrepreneur is about to make is in the best interest of the company and frankly of himself. So you need to be bold and speak out during those situations. As an example, a B2B company, a SaaS business coming to adopt a B2C model, sometimes it works, but that's an example that I've seen in the past. And I think when you create this very open dialogue where you're wearing these multiple hats, you build a bond that really lasts and a relationship of trust. But it's very difficult frankly because trust, friendship, partnership combined with board role and investor hat and saying no, you never want to be prescriptive. And frankly, the next point is you're not in control. When we were building Facebook, we were the entrepreneurs, we controlled technically our own destiny. But as an investor, you're not. You don't have the owner mentality because you're not the owner. You are really enabling others to change the world. And without control, you need to really navigate how to best influence and provide advice to the entrepreneur as well, which is a very challenging dynamic that you learn through time. And then of course, it takes time as an investor arguably to understand and assess the success and failure of what you've done. If you look at a traditional fund structure, you're talking about 10-plus year horizons. It's not something where initially and intrinsically it's clear this is a success, this is not a success. You can know it internally, but in terms of final outcome from an ROI perspective, if you are an investor with an LP-type structure, it's very much so far into the future.

Well, definitely, don't quote me on this, but in the early days, that goes out to all the media out in this room, on the media, just joking. But as an example, in the very early days of Dropbox, I was out in Boston, knew Drew Houston, and he demoed one of the very early iterations of the product. And I had an opportunity potentially to come into the business, not that he asked me directly, but definitely was something that I could have pursued if I was interested. But at that point, I didn't. But really, that's just an example to give you what you're asking for. But more broadly, what I will say is we're less than 1% of the way there truly in how technology will impact the world, especially in really important fields like healthcare, education, agriculture, and other things. So I'm less worried about the investments that I might have missed. And to be clear, I have missed and probably will continue to miss blockbuster startups because I will invest more in lines than in dots. And it's about the synergy of the investment to myself, to the entrepreneur and the company, versus going just for the stars every single time. So I think there will be a lot of superstar companies in the future, including from this room, and I'm incredibly excited to engage with you guys as we develop the ecosystem together here locally.

No. It's a very important question. It's actually something that I ask myself and continue to always ask myself on a daily basis. Because it's clear that we're less than 1% of the way, that there's a lot that needs to be done. And the main question is, am I best serving and being of a benefit to the ecosystem of the world by being an entrepreneur and building a business from scratch, or by enabling entrepreneurs to change the world? And I came to the realization that given my skill sets, given where I am today in life, that I don't want to change the world myself. And frankly, I never could and I never did change the world myself. And Facebook didn't change the world because of the entrepreneurs that founded it, it was because of its user base and us working together with them by listening. Just to be very clear, I want to continue that type of philosophy and invest, mentor, and guide entrepreneurs in many different fields to change the world. And frankly, it's a learning exercise for me. I learn as much from entrepreneurs as hopefully the little advice that I can give you guys as well. And in life, it's one of my philosophies is you should never stop learning and you should never stop improving yourself. And that was the way where I have more exposures to more interesting fields and more interesting verticals, more interesting people.

Thank you very much.