Highlights Don’t use yesterday’s formula on insurtech or fintech…The next [formula] is, how are we going to create integrated, multi-structured financial products, which basically glue onto digitized physical assets and also intellectual property? We’re now beyond that invention stage. We’re in the consolidation phase right now for sure. And if you’re not consolidating or leapfrogging […]

S03E09-E10: Paul Schulte, CEO of Schulte Research and Author of “The Digital Transformation of Property in Greater China”

Highlights

  1. Don’t use yesterday’s formula on insurtech or fintech…The next [formula] is, how are we going to create integrated, multi-structured financial products, which basically glue onto digitized physical assets and also intellectual property?
  2. We’re now beyond that invention stage. We’re in the consolidation phase right now for sure. And if you’re not consolidating or leapfrogging to a new type of integrated, crypto-based, blockchain-based, getting ready for large scale tokenization of things…you’re dead.
  3. That’s what’s happening around the world. Please don’t think you’re a country or we will put you in your place…But I think right now in Southeast Asia, I think that we are looking at welcoming national champions right now. We are in a national champion formation stage, which tends to be very healthy and very lucrative. 
  4. The largest asset class in the world is property. The property market is far, far larger than the equity market or the bond market. It’s multiples larger than the crypto market. And it basically forms the foundation of every single bank. Think of the property market as a bunch of paper sitting around…Think about what that means when you digitize homes, smart cities, buildings, warehouses, and ports.
  5. The crypto world is a world of smart contracts and programmability. And this is the massive thing people miss about the blockchain rollout of BSN. It’s not just for the digital coin of the central bank. It’s not for crypto coins. It’s for multiple uses. 

So in this episode we have with us a very esteemed guest. He is a friend of Yinglan and for the past few episodes we’ve been having founders and investors on the show and he’s going to be our first guest who’s more on the research side of things, but has had a really wide and deep scope in terms of looking at markets, looking at technology, and everything that’s been happening at least in the last 30 years. 

So we have none other than Paul Schulte, who is our guest today. He’s a veteran equity researcher in the financial services industry. He’s also a government policy advisor and a prolific author. His latest book is “The Digital Transformation of Property in Greater China“.

About our guest

For the past 30 years, Paul Schulte has worked in global equity or bond research in emerging markets. And more recently he has been working with some of the largest sovereign pension, mutual, and hedge funds globally as founder and editor of Schulte Research. So they provide research on banks, financial technology, and bank and credit algorithms. 

He’s also authored three books on fintech and digitalization in China. The newest one was published just this year. He has also taught nearly two decades of MBA and graduate programs from Tufts University to HKUST, to Zhejiang University in China, and is a regular source for publications like Wall Street, New York Times, Financial Times, and the Economist. He’s also served as an advisor to financial institutions across Southeast Asia, including the Thailand SEC, Indonesia’s OJK, and Bank Indonesia. 

Timestamps

Part 1

00:29 Paul Schulte intro;

01:57 Why Paul Schulte’s latest book on fintech is about proptech;

04:22 Formulas of yesterday and formulas of tomorrow for fintech;

05:21 Why the book focuses on China’s tech ecosystem;

07:46 An era of financial services consolidation in Southeast Asia

11:21 The unbanked challenge and finding the Linklogis of Southeast Asia;

13:45 US-China tensions and China’s lead on edge technology;

15:47 Impact of China lead on edge tech on Southeast Asia;

Part 2

00:29 Paul Schulte intro;

01:53 Regulation in the US and China vs Southeast Asia;

04:09 Banking Innovation in Southeast Asia;

05:25 Creating Fintech Super Agencies;

09:46 Gaps in the BSN;

10:32 Property as go-to-market for next wave of fintech;

12:27 Rapid Fire Round;

Transcript

Part 1: Property as the next frontier for fintech innovation and Entering an era of consolidation in Southeast Asia’s tech ecosystem

Paulo: So very glad to have him here on the show. It’s my first time meeting him actually. I’m really excited to learn a lot. Hi Paul! Welcome to the show. How are you doing? 

Paul: I’m great. Thanks for letting me be here.

Paulo: Again congratulations on the book. And I’ve had the opportunity to actually read a teaser of it at the very least, and I’m sure a lot of people would be excited to get their hands on the whole thing as well. And from what I’ve read so far, it’s quite a treatise on this particular proptech sector, which you’ve mentioned is also the next industry of disruption for fintech. So would love for you to share with the audience, how you zeroed in, given all these other things that fintech is disrupting, why proptech in particular and how you got to writing this book.

Paul: Yeah. So in 2013, I began to think that there was something going on outside of the banking system. And so I wrote this book called “The Next Revolution in our Credit Driven Economy”. Then many years ago — actually that’s when I met Yinglan Tan — we did an all-day session with one of the big banks in Singapore. This was maybe five or six years ago and we were [telling the bank], “You need to get ready and you need to prepare for what’s going to come because if you don’t, you’re going to be in trouble.” And so I wrote that book in 2014. And I happen to think that the fintech phenomenon I think is sort of, we’re at the late stages of playing that out — that was very 2019. And then 2020-21 has sort of been the insurtech [wave]. 

And I think that next year and after that is what my book’s about. It’s going to force all the entrepreneurs that you guys deal with to be saying to themselves, “Don’t be using yesterday’s formula on insurtech or fintech. That’s gone. The next one is, how are we going to create integrated, multi-structured financial products, which basically glue onto digitized physical assets and also intellectual property?” And so that’s the next chapter. 

And that’s why I wrote this book on proptech, because I got the idea that the rapid evolution of edge technology — 5G, the rollout of crypto coins from central banks, and the way in which these are going to be placed on new digital rails — requires a new understanding of how financial assets glue onto digitized, tokenized, tradable assets running along central bank driven rails, accessible to cryptocurrencies, and can have a multiplicity of uses in terms of working capital inventories, receivables, insurance products for physical activity for humans, for transportation, for homes, for buildings and for ports. That’s chapter three.  

Don’t use yesterday’s formula on insurtech or fintech…The next [formula] is, how are we going to create integrated, multi-structured financial products, which basically glue onto digitized physical assets and also intellectual property?

Paulo: I think it’s been interesting since the title is about property, but it has really far-reaching impact. The implications of what you’re talking about in the book and it’s quite interesting what you mentioned that founders should not dwell anymore in the formulas of yesterday. I just want to ask, what is that formula of yesterday and how has it changed?

Paul: Yeah, so the fintech formula of yesterday is, we are going to create a better, faster, cheaper gadget, which is going to make it easier for people to divert away from their traditional banking website and allow them to do some cheaper, better, faster trading of equities, some portfolio investing, some savings products, payments and e-commerce stuff. And I think that’s like very like five years ago. And so I think even robo-advisory fits into that. I think we need to go much, much further into the future. So that’s a short answer to your question, but we can go into more detail as we progress.

Paulo: And another focus of the book is the fact that most of the narrative takes place in or focuses on the developments in China. Obviously you’ve worked a lot in China, but are there any other particular reasons why you chose China to be the focus of this book?

Paul: Yeah, so I worked at China Construction Bank for a couple of years. I helped to create their global research product for banking services and did some M&A stuff for them in the outside world for their acquisitions. And I would say that other countries need to think really big because China has been thinking really big for the last six years. Basically China knew that blockchain was going to be big and important. It knew that America was probably going to start pushing back, and perhaps using China as a punching bag for their domestic ills. It knew that the integration of crypto into currency activity was going to be coming, and it knew that 5G was an important element of this. And so China has put all that in place. 

And so what I always say, and I’ve been doing some work with some of these policymakers in Washington DC recently — if you think that the private sector is going to do this by itself, you’re kidding yourself. We’re building a new set of digital rails. This is much bigger than the interstate highway system in America. It’s bigger than the Apollo program right in the 1960s, 70s, and 80s. We’re talking about laying a new combined element of satellite, transportation and telecommunication systems all in one unit. So 5G edge technology, China has it right now when the other countries are very far behind. 

Now, Singapore has placed itself in that camp. Interestingly, Singapore has had a lot of foresight on this, and the MAS has also been very early on the uptake of a lot of this technology. I remember talking to the MAS years ago and they were already on top of this. And one of the reasons I moved to Singapore was exactly for that reason, because I felt like I was living in Hong Kong for 10-11 years before that. I just felt like the HKMA just wasn’t with the program on this. And so a lot of other central banks have just not been with the program. The Federal Reserve has not been with the program on this. The ECB has been very late in the uptake. The Bank of England also, they’ve been dealing with their own problems. And so this is what we’re with right now. The wake-up call that countries are going to either have to have their own rail system, or they’re going to have to jump onto somebody else’s whether it’s the US or China or the Euro system, again, which is lagging very far behind.

Paulo: Yeah, you mentioned Singapore being in a unique position not just adopting what China is doing and doing it much earlier than a lot of other markets, but also being within close proximity and having a certain influence in terms of the tech ecosystem within Southeast Asia. 

But going back to fintech. I mean, you’ve talked about a lot of companies still lagging behind when we could actually be moving light years ahead in terms of the technology, in terms of the way of thinking, and so when it comes to Southeast Asia, the conversations a lot around like digital banking, open banking as well. So what are the parallels that you’re seeing in Southeast Asia, compared to China? And what can we expect in terms of moving forward?

Paul: Well, I think what’s going on in Southeast Asia, I think many years ago, there were a lot of the competitors tied to Alibaba and Tencent and the big five. And there had to be a massive consolidation. And I think that is where we are right now in Southeast Asia. I think we’re in line for a massive consolidation, where I think there are like 16 wallets in Malaysia. Well, Malaysia doesn’t need 16 wallets. And furthermore, continue to keep saying that while there’s this unbanked population of 10 or 15% of the population of Southeast Asia that’s unbanked. I think a lot of this mythology about the unbanked is a little bit long in the tooth. And Sea coming along as well and doing a major, major push into financial services is going to put a drag on this. 

And Sea coming along as well and doing a major, major push into financial services is going to put a drag on this. And so I think if you’re a smart, sort of mid-level payments, insurance-type company, I think you want to be thinking, what value can you add to an existing entity like Sea because the chances of going from small to big right now are increasingly falling. The governmental willingness to create national champions is growing. Turning a blind eye to create some sort of monopoly or duopoly to consolidate your position in Southeast Asia is becoming more prominent.

And that’s just because Tencent’s doing that. Alibaba’s doing that. Sea’s coming in. Tokopedia and Go-Jek, that’s a major, major merger. So it causes everybody else to have to react. And so if you’re not looking to join hands or merge or become larger by buying something else, I think the chances are pretty good for failure. So we’re now beyond that invention stage. We’re in the consolidation phase right now for sure. And if you’re not consolidating or leapfrogging to a new type of integrated, crypto-based, blockchain-based, getting ready for large-scale tokenization of things beyond silly payments and e-commerce and savings and investment products, you’re dead. I think it’s a period of leapfrogging, consolidating, or die. 

Paulo: I would say even in terms of how these fintechs start to think about exit options, it will generally be sort of like a gravity well, just like getting acquired, for example, by these bigger players. 

Paul: Yeah, and I was thinking recently that there’s a lot of egos at stake, of course, but I think that mergers of equals to become large enough to be a target of various differentiated products makes sense at this point. Like I said, if you’re not merging or consolidating, getting market share is very, very difficult. Those guys have got tremendous firepower to burn money to gain market share. Sea is going to gain market share through its gamers which it already has. And Tokopedia and Go-Jek is going to be a whole new ball game. And Grab is going to just raise a ton of money. And so trying to compete with that is a fool’s game. 

We’re now beyond that invention stage. We’re in the consolidation phase right now for sure. And if you’re not consolidating or leapfrogging to a new type of integrated, crypto-based, blockchain-based, getting ready for large scale tokenization of things…you’re dead.

Paulo: And speaking of something that we talk about, in terms of untapped markets often in our blog and Insignia is sort of the unbanked and something interesting you mentioned is this mythology about the unbanked. I just wanted to ask you a bit more about that, to explain that a little bit more. And especially with a lot of developments happening in Singapore, with regards to blockchain and 5G and financial technology, how do you reconcile that with what’s happening in rural areas and the unbanked, and do you see it actually getting adopted in those areas or will there always be that space there that that’s left untouched.

Paul: Yeah. So I’m a very big fan of looking at financial services and basically receivables and inventory and working capital for small and medium-sized enterprises in all sectors. That’s the golden horde. For me trying to find one more unbanked individual is just, to me it’s not exciting. And you’re going down the credit curve for each individual, marginal new person. 

But Linklogis just listed in Hong Kong last week. And Linklogis is a really interesting company. I’m not a great fan, cause it was listed very expensively. So it’s great for the sellers of the private equity side, bad for the public equity holders, but it’s a riveting fascinating company that basically uses blockchain to aid SMEs in any part of any village in the region, in terms of receivables, inventories, payables, working capital structures. And it’s a fascinating company. And that’s the kind of thing where China’s way ahead here. So we’re talking about the next part of the world combining digitized activity of working capital, the movement of semi-finished goods along a logistical supply chain and funding those moveable, fungible objects via the blockchain. This is really interesting technology.

That’s where Asia needs to go really quick. Where is the Linklogis of Southeast Asia? We don’t need another payments company. We don’t need another robo thingy. We don’t need another insurtech. We need a Linklogis for Southeast Asia. That’s what we need. It is really thinking big in terms of integrated receivables, integrated working capital, integrated inventory systems. That’s what we need in Southeast Asia. I think you really have to up your game in order to stay competitive because a lot of people are using PowerPoint presentations from 2019. That’s not good enough. 

Paulo: I guess to all our listeners here, we have some homework to do and really look at these piece companies that are leapfrogging way ahead of what’s happening here in the region. I just want to go back again to another topic: the US-China tensions and then the impact here in Southeast Asia. When you talk about these tensions happening, do you see this as a good thing for Southeast Asia?

Paul: I went to the Fletcher School of International Affairs. I did my international business degree there. We spent a tremendous amount of time on these topics when I was there in the 1980s, I worked at the White House. And so I think I understand the Cold War very well, but I would say to you, the same people who are in power now grew up in the Cold War. It’s what they know. And so I think China is going to be a replay of the Cold War. But a lot more subtle. It’s going to be zero-hour bots. It’s going to be the secret negotiations to reduce these risks of turning off each other’s traffic control systems or water pumping systems or electricity grids. But I think that America pretty much only knows how to do that. And so it’s going to take a Cold War thing. Now, what does that mean? It means that during the Cold War, India was amazingly good. India was fantastic at playing both sides really well. So India got two of everything. India got MIGS, which were Soviet jets, plus they got F16s. And so everyone’s going to play both sides really well. And that’s just what happens during a Cold War. 

So there’s a lot of that going on right now. And countries reserve the right to do that, but it does have consequences for your soft power because people don’t like cheaters and bullies. No one likes that. And so that’s where the world is sort of trying to choose sides right now. And America has been very good on soft power and propaganda and Hollywood and all that jazz. And China’s quite poor at the moment. It’s getting better, but this is a propaganda game. It’s a social network game. It is a news game, but it’s also a technology game. And right now, China’s way ahead in the technology game in 5G, in edge computing, in the digital currency, in BSN, in many other areas. 

Paulo: And you talked about technology being a part of it as well. I wanted to ask, with China being ahead, do you see a trickling into Southeast Asia of what they’ve been able to do? Considering that we just said that, Southeast Asia is largely still behind in terms of what companies are doing and how do you see this competition between these two hegemonies reflecting into tech competition here?  

Paul: So I think that the one country that is carrying the water really well in Asia in terms of keeping up with China, especially in terms of the BSN and the digital currency, the blockchain initiatives is Singapore, Singapore has done a great job, sort of keeping up on this and the Monetary Authority of Singapore and its various research arms that I keep in touch with have done a great job. And they started this many years ago. I went to Jakarta three years ago, to really pound the table on blockchain and nothing happened. And I think Thailand is quite far ahead in this as well. Thailand is doing some very interesting initiatives. I think the Philippines is trying as well, but Singapore is really ahead in Southeast Asia. I would say, and then of course, Vietnam is a real area of technology initiatives, but its system is still very primitive.

Part 2: Fintech Super Agencies, Building on Blockchain-Service Networks, and Digitizing Paper Industries 

Paulo: In spite of all the differences between China and the US I think one similarity, we’re seeing this sort of clampdown on big tech on, on both sides of the Pacific, with the US all these congressional hearings, for example, and then China these big swing actions towards Ant and Tencent, for example. So given the stage that we are in right now, as we have larger and larger companies and more consolidation, as you mentioned, what can regulators in the region learn from what is happening in China and the US?

Paul: Let me tell you what I think happened to Ant. When the BSN was being rolled out, all the major companies were very cooperative with BSN, which was based in Beijing, coming from basically the state council and the China Information Service and the five-year program.

And this is the state. Everybody participated in that, including PingAn, Tencent, Huawei, Baidu, everybody except Ant. Ant was going on its own way. And I think that was not welcome. Because Ant never joined the consortium and I think people were like, Oh really? Well, are you going to try to challenge the five-year program? I think it was taken as an act of bad faith. And then when you insult the PBOC, you’re going to get it. And I think that’s what’s happening around the world. Please don’t think you’re a country or we will put you in your place. And so that’s what happened to Ant. And I think that Democrats are probably more inclined to call Amazon and Facebook on the carpet and say, you are not a country. You are a company operating inside of a sovereign nation. And I think that’s going to have to come.

But I think right now in Southeast Asia, I think that we are looking at welcoming national champions right now. We are in a national champion formation stage, which tends to be very healthy and very lucrative. When these national champions become lazy monopolies, that’s why that’s a problem. Cause it’s very hard to tackle a lazy monopoly because they’ve paid everybody off and they give all these goodies and they pay a lot of taxes.

That’s what’s happening around the world. Please don’t think you’re a country or we will put you in your place…But I think right now in Southeast Asia, I think that we are looking at welcoming national champions right now. We are in a national champion formation stage, which tends to be very healthy and very lucrative. 

Paulo: Is there a way to avoid that part of the narrative entirely? 

Paul: Human beings haven’t managed to do that very well for like 2000 years. If you could tell the Southeast Asian and the American governments what to do with a lazy monopoly, that would be great. But I think we are in the early stages of aggressive, innovative national champions being formed, which I think is very exciting. In Indonesia, in Singapore. I think there’s going to be a major, major consolidation in Malaysia. I think we’re looking at national champions being formed in the Philippines and in Thailand and also in Vietnam. The banks have been surprisingly kind of bumbling here. They really haven’t been with the program in terms of bolting on technologies to their platform. JP Morgan has done this very well with Consensys and Quorum. JP Morgan is bolting stuff on, Goldman Sachs created Marcus, the digital bank, from scratch. None of these Southeast Asian banks are doing any of this. This is what’s been mind-boggling to me. They’ve just been sort of sitting there and I’m really struck by that.

Paulo: Which is arguably good for the fintechs. 

Paul: Yeah, I think that’s correct. But suddenly, if the regulator comes along and says, “Hey look, you guys, you need to get with the program here. One of you banks is going to have to swallow up one of these guys and really wake up.” And so we’ll have to see how that works out, but it’s striking how governments have been, how do I want to say this, governments and regulators have been sort of, “Hey, you banks, you should do something and we’re not going to tell you what to do, but you better get cracking here. And by the way, look, what’s going on, and we’re giving these licenses out to fintech companies and don’t you want to do anything? Do you want to call us, here’s our phone number? Give us a call,” and the banks aren’t calling it. There’s a lot going on in the background there, but banks are just ultra-conservative creatures that go very slowly.

Paulo: Do you think this approach to it is part of what you mentioned, this whole clamor around national tech champions that the government will tend to leave these incumbents and traditional players out of the party or not really support them as much?

Paul: I’ll tell you that there’s a real big fight, you know, between the federal reserve and the treasury department about what is the role of Facebook? What is the role of a company like Coinbase? Who’s going to distribute this national currency, the dollar coin that we’re going to roll out? How do we distribute this? Do we need it?  The federal reserve is saying, we need this desperately to compete with China. The treasury department says this is poison, it promotes terrorism and money laundering. And we don’t want it because the treasury department wants to be able to fund the deficit by allowing people to buy bonds. And they think that crypto is a contaminant. That crypto is a deterrent to people buying US government bonds to fund the deficit. And so there’s the real big policy fight. 

And I think every country is having its own set of fights among and between the regulators about what’s important. I’m telling you right now that the countries who are getting it right, have a singular agency, the MAS, the PBOC. The singular super agency is what you need now. Otherwise there are too many forms of technologies and different tracks, as we’ve talked about: insurtech, fintech, proptech. There are different tracks here and you need a centralized think tank, policy, and executive action entity that can move. And the PBOC has become basically a super agency. The MAS has become a super agency and there are very few other countries that have gone down that route.

But I think that’s what the times call for. There’s too much noise in the new formulation of regulatory structures. So you need a sort of a super agency to figure it out. Otherwise, you get bogged down in regulatory infighting. 

And I think every country is having its own set of fights among and between the regulators about what’s important. I’m telling you right now that the countries who are getting it right, have a singular agency, the MAS, the PBOC. The singular super agency is what you need now. 

Paulo: And so what does this mean for digital currencies? And in the next few years, just like what you mentioned, all the countries like China with the PBOC that are very centralized have started introducing these digital currencies. Do you think that China has it figured out already, or what are still the gaps that have to be filled?

Paul: Yeah, so the country that’s further ahead than anybody in the world by far is PBOC in China. And so the BSN is, I think, people don’t talk enough about the BSN. You’re talking about a regulatory cryptocurrency structure, which is the digital currency electronic payments, the DCEP. But it’s going to run along the BSN. So think of the sovereign currency as the railroad but you need the rails and the rails have to connect and you need train stations. The train stations are the super apps. Because the super apps are what feeds into all the different areas of our lives, which is where we live, our small business, where we work, where’s our family, what’s going on with the receivables, what’s happening with the inventories, where’s my working capital. The biggest problem for an SME is the working capital. 80% of economic activity in Southeast Asia is small businesses. Small businesses are run from homes with 20, 30, 50, or 100 employees.

BSN is an all-purpose offering using smart contracts, cryptocurrencies, basically anything that can glue onto BSN base.com. And as the PBOC coin rolls out, it’s going to be rolled out along BSN. Nobody else has BSN right now. The idea is this is going to be a challenge to the US dollar primarily because China is not interested in arbitrary sanctions of the US government to basically block it from being able to use SWIFT, which is what happened to Russia. So all the Southeast Asian countries are going to have to get on board with BSN really quickly and Singapore has. 

Paulo: How far along do you see this happening?

Paul: Well the cryptocurrency was just launched last week. It’s been testing for several months. They’ve been testing this stuff since 2015. That’s six years. So if you’re a Southeast Asian country, and if you’re an entrepreneur, you want to create a company that’s going to be able to glue onto BSN in multi-purpose ways including smart contracts, crypto, working capital and receivables. Linklogis is kind of the newest manifestation of that, that was just listed last week in Hong Kong.  

Paulo: So the game really isn’t any more about creating something new, but really finding the infrastructure that’s already there, and what’s going to sort of drive the innovation ahead and riding on top of that. 

Paul: I think that’s right. I think that all of these newfangled fintech things have already been burned on both sides. And I think there’s a lot of disappointment. I think if you really want to get ahead, you want to be able to find out all the ways in which you can use crypto to trade, digitize assets with vast amounts of data through the property market. I think that’s the next chapter.

And that glues onto BSN really well because you’re looking at a quantum increase in what’s going to be tokenizable, double digitizable and tradable. This includes physical property and intellectual property. 

Paulo: And the reason why property will be such a great gateway for this is because of just how scalable it is from that point?

Paul: I wouldn’t say the word scalable. I wouldn’t use the words “economies of scale”. I would just tell you that the largest asset class in the world is property. The property market is far, far larger than the equity market or the bond market. It’s multiples larger than the crypto market. And it basically forms the foundation of every single bank.

So the analogy I would use is, all the people who are using paper, the whole world was based on paper 15 years ago. Think of the property market as a bunch of paper sitting around. It’s a giant 45 storey high pile of paper that has not been digitized. Think about what that means when you digitize homes, smart cities, buildings, warehouses, and ports. All that world is all analog still. The property developers have been one of the worst ones to catch on to this digitization.

The largest asset class in the world is property. The property market is far, far larger than the equity market or the bond market. It’s multiples larger than the crypto market. And it basically forms the foundation of every single bank. Think of the property market as a bunch of paper sitting around…Think about what that means when you digitize homes, smart cities, buildings, warehouses, and ports.

Paulo: It’s quite funny because we just had a podcast with one of our proptech companies, who’s going into financing and collecting all of this data for financing. And we asked them what is one of the bigger misconceptions about the property market in Indonesia, where they are?

And they were saying the misconception is that people think there’s no more innovation left. cause they were saying like the first wave came in, listings and all of that online marketplace, but now they’ve discovered that it’s not just about property transactions. It’s also about the money around it and the value that you can get from mortgages and all of that. So the advice for founders is to look at the paper to use your analogy. 

Paul: Find out something that people still use that is all about paper. And those are the ones that are next to get their heads chopped off by the marketplace.

Rapid Fire Round

If you could be in the shoes of any leader or CEO for a day, who would it be?

Paul: I think one of the guys who just keeps on getting it right over and over again, I would like to spend a week with Peter Ma at PingAn.

Your favorite book (apart from your own)

Paul: Among the books I’m reading right now, Kinzer, one of the great new historians, ex-New York times and a Pulitzer prize winner. Great, great author. And [among] his books [there’s] The Brothers, about the Dulles brothers, about overthrow, about the sort of abuses of the US political-military regimes around the world to overthrow governments that were just not doing things that were kosher for the private companies that, basically ran the government in the 50, 60 seventies and eighties. And I think we’re seeing a lot of that right now. And I think people are tired of that treatment by the U S government and its abuse of its hegemonic powers. Yeah.

Top misconception people have about China tech? 

Paul: That it’s this top-down monolithic thing that just gets money poured into it by the government and the military. The five-year programs are very bottom up and there’s a tremendous amount of input from the private sector. The five-year programs are why, and when, and then the private sector is like, okay, what do we do with this?  The five-year plans are baked in the cake, they don’t change. And it gives a huge amount of signals to the private sector to create these things. Governments around the region should be thinking more about giving better signals to the private sector.

Top misconception people have about blockchain (DLTs)? 

Paul: Yeah, like I said, I think that people, they’re applying modern monetary theory to bitcoin and saying, it’s not a means of exchange, it’s not a store of value. That is just such nonsense. The crypto world is a world of smart contracts and programmability. And this is the massive thing people miss about the blockchain rollout of BSN. It’s not just for the digital coin of the central bank. It’s not for crypto coins. It’s for multiple uses. There are 15 different uses of BSN and it’s going to cause the cost of doing business with China to collapse.

The crypto world is a world of smart contracts and programmability. And this is the massive thing people miss about the blockchain rollout of BSN. It’s not just for the digital coin of the central bank. It’s not for crypto coins. It’s for multiple uses. 

Favorite item at home?

Paul: My favorite item at home has been my iPad because I like to read books and it’s been so awful. This COVID locked down. I’ve just been reading a tremendous amount of books. And so my Kindle is my best friend right now and my dog, my doggy. I’m running with my dog every GD day, you know? So that’s something I do with my dog every day. So my dog keeps me sane.

What do you do to de-stress?

Paul: Every day I do morning meditation which is vital for me. I think we need a lot of mental hygiene right now, because I think there’s a very high degree of mental health, stress and anxiety and depression in our community. And no one’s talking about it. I think mental health is the number one issue right now, much more so than productivity. I think we really need to pay attention to each other’s mental health, to the mental health of employees. Make sure everybody’s okay. And talk about this stuff very frequently, because we’re all going through long periods of isolation, an absence of feedback, an absence of whether we’re doing good or bad, being alone. And a lot of us are being depressed and questioning the future.  We’re coming out of a very traumatic time of a lot of deaths, a lot of people with PTSD without really knowing it. We need to focus on mental health for everybody.

Favorite Southeast Asian delicacy?

Paul: Minced pork and lettuce cups (Thai food)

What keeps you energized?

Paul: I think we have to maintain a sense of gratitude for each day. And I have seven interns right now, all over the world that I’ve met only on zoom. And I always tell everybody, this is a great adventure. Don’t be discouraged. Learn, always look at the opportunity to learn. I’ve always thought that’s important, you know, my mom taught me that, she was a teacher. And so I’ve been teaching in business schools for 20 years. I’ve written six books. I do constant research for my clients. I do a lot of consulting work. And so you always want to be learning. I always want to be learning something new. I think that’s critically important.  

And buy my book. It’s “The Digital Transformation of property in Greater China.” It has the big companies, the midsize companies, and like 10 small companies that we think are very interesting in the book that are coming out of China that are doing fascinating stuff. I think by the way, very importantly, I think people are going to start copying what’s going on in China and bringing it down to Southeast Asia. Pay attention to the proptech companies and what’s going on in China, because that’s going to be exported to Southeast Asia.

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