The Overly Competent Junior Employee

“Yes, I have an urgent meeting with a client in the countryside tomorrow. Don’t worry too much. Yes, I’ll be back up tomorrow.”

Beep beep-

“Alright. Make sure to have dinner. Yes, see you tomorrow.”

Dokyung ended the call as he entered his private hideout. Right after finishing the due diligence on Tribe, the startup investment target, Dokyung had come straight here after leaving work.

He had things to organize in his thoughts and documents to sort through.

Although he felt guilty about lying to his mother about a business trip…

“Phew…”

Sighing, Dokyung grabbed a beer from the fridge and went straight to the study. He sat down at the desk and pulled out the documents from his bag.

“Tribe… Tribe.”

Dokyung mulled over the name of the startup he had visited for due diligence today, then took out his phone to check the messages in the app.

[This is the VIP Service that always cheers for you.]

As soon as he shook hands with Heo Jun-soo, Tribe’s CEO, during the due diligence, his smartwatch on the opposite wrist had vibrated.

The content of the message he checked had left Dokyung uneasy throughout the entire due diligence process.

[After the bell tolling the end of the era of great liquidity, the party is over, and the time of truth has come for us.]

When the economy faltered due to COVID-19, the United States, a global economic powerhouse, implemented unlimited quantitative easing as a fiscal policy to supply unlimited liquidity to the market.

In other words, the U.S. directly supplied dollars to the market through policy, increasing the amount of money circulating in the market.

Simultaneously, they also implemented a monetary policy of lowering the base interest rate.

[The only word penetrating the current asset market is ‘crisis’.]

The monetary policy of the United States, which leads the world economy, naturally began to affect the entire world.

More countries followed the U.S. in lowering their base interest rates, and as the base rates fell, the market interest rates set by commercial banks naturally fell as well.

With market interest rates falling, savings and time deposits yielded interest rates of only 0%, and the interest on loans from banks was also low.

In other words, the number of people borrowing money increased, while the number of people depositing money decreased.

Naturally, this money had no choice but to flow into various investment markets.

This was the era of great liquidity that the message spoke of.

[In the era of ‘crisis’, many things that have been blinding our eyes begin to become visible.]

[As the time of tightening approaches, there is only one demand pouring onto startups that have been generously valued until now.]

[“Prove your profitability. Not tomorrow, but now.”]

Real estate, stocks, and even investments in startups—all investment markets skyrocketed during this period, creating bubbles that began to obscure the essence.

And as always, problems started to arise when the bubble was at its peak.

Despite economic indicators improving due to quantitative easing, countries were lukewarm about exit strategies as they enjoyed the party. At this time, an unexpected black swan—the rise in energy prices due to war and supply chain bottlenecks—hit, causing inflation due to loose liquidity in the market to strike the entire world.

[Can the person in front of Yoon Dokyung-ssi prove the company’s profitability?]

The solution to inflation was, as everyone knew, to withdraw the loose liquidity from the market.

If consumption decreases, demand will decrease, and price increases will stop.

In other words, it’s a matter of reducing quantitative easing that supplies money to the market and raising the near-zero base interest rate.

If this happens, commercial banks’ interest rates will rise, money that had been heading to investment markets will return to bank savings and time deposits, and those who had taken out loans will start to repay them in the face of rapidly rising interest rates.

[What can the person in front of Yoon Dokyung-ssi prove?]

Dokyung stared at the message with a serious expression. The message seemed to be continuously asking questions as if trying to make him realize an unprecedented level of seriousness.

[Yoon Dokyung-ssi must be able to demand from the man in front of him.]

[“Prove yourself. Not tomorrow, but now.”]

[This is the VIP Service that always cheers for you.]

As the message ended like that, Dokyung’s worries deepened even further.

Naturally, in an era of tightening, the perspective on investments also changes. As Dokyung had recently told Han Dahyun, the era of discarding those with only dreams was approaching.

“But Tribe is making money.”

Saying this, Dokyung used the computer to search for Tribe on an internet portal.

Various reactions to Tribe popped up, showing that the number of users was increasing every month, and there were even comments saying that if you wanted to watch famous creators’ broadcasts, you had to go to Tribe.

“I wonder why it gave me such a message at this time.”

Dokyung quietly recalled the content of the message and began reading the documents spread out on the desk.

These were materials containing Tribe’s business structure and finances that he had obtained from today’s due diligence.

When investing in stocks in the stock market, various aspects were considered, but traditionally, investments were made based on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

In other words, the most important factor was how much cash a company could generate through its business.

Many people invested in advance based on this to create future value.

“The problem is that startups don’t make profits.”

Startups were companies at a stage where they needed to realize their business ideas with the investment money they received, let alone make profits.

As a result, they had to estimate future profits based purely on imagination for these business ideas.

They estimated future profits for as short as three years ahead, and if it still didn’t look profitable, they would project ten years into the future.

It might seem absurd in a way, but this is how startup investments are actually made.

“But Tribe is making money.”

Of course, it was still a company with a small profit margin.

However, Tribe had successfully penetrated the difficult red ocean and could be seen as a startup success story that had turned a profit in just six years, reaching the stage of investment recovery.

“Net profit of 300 million won this quarter.”

It might seem paltry, but the important thing was that a company that had been full of deficits had turned a profit for the first time.

Turning a profit meant that the business viability had been recognized.

“But sales of the main product are declining.”

Looking at Tribe’s financial statements, various thoughts came to mind.

Dokyung, leaning back in his chair lost in thought, got up and stood in front of the whiteboard in one corner of the study, starting to organize everything.

“Sales have increased every year, and they turned a profit for the first time in the previous quarter this year.”

Coincidentally, Tribe had turned a profit of 300 million won in the quarter just before investment recovery.

This level was sufficiently acceptable if one considered that they had made efforts for investment recovery.

“The exchange fee for T-coins, their main product, has decreased. But they’ve broken through with other products like NFTs.”

From a management perspective, this deserved praise.

When their main product declined due to economic conditions, they found a new breakthrough.

“The sales graph is a perfect J-curve.”

Dokyung looked at the financial statement with fascination.

Tribe had achieved an ideal startup profit growth that anyone could see.

It had risen in the shape of a ‘J’.

“Let’s see, fixed costs…”

Fixed costs referred to expenses that were paid regularly, such as labor costs and office rent.

The reason why startups with IT technology receive more attention and higher company valuations is that they have lower fixed costs.

While other companies might have fixed expenditures like running factories for production, the fixed costs of IT companies were mostly labor costs.

“Last year’s fixed expenditure was about 12 billion won, and the previous quarter was also about 12 billion won. This is it.”

Dokyung looked at the financial statement with fascination.

In the era of liquidity, people would have looked at such financial statements, thought it was a perfect startup, and proceeded with investment, but not now.

“It seems they’ve played some tricks.”

Dokyung chuckled.

To achieve the ‘J-curve’, which is called an ideal profit increase, one must reduce costs or increase prices.

However, Tribe’s exchange fee ratio for its main product had been fixed at around 10% every year, and the sales from exchange fees had decreased.

Even if they started a new business, it was just beginning.

Just because sales occurred doesn’t mean they should be considered fixed sales.

“So they achieved profitability by freezing fixed costs.”

In other words, Tribe had frozen their fixed expenditures.

They would have reduced their workforce to cut the annually rising labor costs and reduced marketing expenses.

Naturally, the deficit would decrease, and profits would improve.

This was evident from the financial statements.

“But something’s a bit odd.”

Dokyung tilted his head and looked for other materials.

“Last year, Tribe had about 50 employees, now it’s about 80.”

Dokyung furrowed his brow as he looked at one page of the document.

Most of an IT company’s fixed costs come from labor costs.

However, Tribe had worked magic by freezing fixed costs when their labor costs should have increased.

“This is driving me crazy.”

Dokyung scratched his head.

‘When we form a new business team and succeed in the business, we appoint them as an official team.’

‘Developers usually come in expecting stock options.’

And he recalled his meeting with Heo Jun-soo, Tribe’s CEO.

“Did they give stocks and cut salaries? No, before that, with financial statements like these, a private equity fund is going to acquire them?”

He was doubting the financial statements, and people smarter than him gathered at the private equity fund had moved to acquire Tribe.

‘I have some school connections with the other party.’

Although he couldn’t know which private equity fund it was, Dokyung got a hint from Heo Jun-soo’s words and went back to the computer to search for Heo Jun-soo’s name on the portal site.

“He’s from Seoyeon University.”

“Internet broadcasting platform that survived the red ocean, Tribe.”

“Tribe selected as startup of the month, a place where creators can realize their dreams.”

“Tribe CEO Heo Jun-soo: ‘The most important thing in internet broadcasting is the creator.'”

“He’s extremely media-friendly.”

As he had felt during the due diligence, Heo Jun-soo was an outgoing figure unlike other startup CEOs.

Usually, CEOs of IT companies have a strong ‘eccentric’ image, but Heo Jun-soo was media-friendly, ignoring this convention, and was also a friendly figure to business partners.

“The media evaluations are also very good.”

Indeed, befitting a company that had pioneered a red ocean, the media was also promoting Tribe’s moves.

“A private equity fund CEO from Seoyeon University…”

Dokyung muttered this to himself as he looked through interviews Heo Jun-soo had done with the media.

“Tribe CEO Heo Jun-soo: ‘Learned about management in graduate school'”

“He went to graduate school too?”

“‘Participated in a stock club and learned how investors think about company value and acquired investors’ concerns.'”

“Tribe CEO Heo Jun-soo revealed to be from HMIC, Korea University’s stock club, which currently plays a pivotal role in our country’s economy.”

Dokyung’s eyes widened as he found the answer in the article.

After staring blankly at the article for a moment, Dokyung hurriedly pulled out his business card holder and started looking for a card he had received recently.

He held up the card he found.

“Kang Sung-ho. KFSG.”

Of course, there were many HMIC alumni who became CEOs of private equity funds. But Heo Jun-soo had added the caveat that it was the largest domestic private equity fund.

There was only one candidate that fit that description.

“I should check, shouldn’t I?”

Dokyung, who had been contemplating while looking at the business card, took a deep breath and pulled out his mobile phone.

⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱⊰⋆⋅⭑⋅⋆⊱

“It’s a great discourtesy to suddenly request a meeting, but thank you for seeing me like this.”

Two days later, Dokyung bowed his head in greeting to Kang Sung-ho, who welcomed him in the CEO’s office of KFSG.

“Haha, not at all. I’m also interested in you, so I’m only glad. Shall we sit?”

Kang Sung-ho guided Dokyung to a seat with a friendly tone, and the two sat facing each other in a corner of the CEO’s office.

“I’d like to talk for a long time, but because it was such a sudden request, I’ve only squeezed out some time in between.”

“I’m sorry.”

Dokyung bowed his head again to apologize, as if he didn’t know what to do with himself.

“Haha, no, it’s not something to apologize for. I’d like to finish our conversation within 20 minutes, is that okay?”

Kang Sung-ho smiled as if to say not to mind, and asked. Dokyung, who had been pondering for a moment, looked at Kang Sung-ho and opened his mouth.

“I’m sorry, but I think I need to ask an abrupt question.”

“Haha, what kind of question makes you say that?”

“I saw a press release on the KFSG website about raising a new fund for acquiring startups.”

“Yes, that’s right. The new fund is to acquire startups…”

“Is that startup possibly Tribe?”

At Dokyung’s question, the smile on Kang Sung-ho’s face began to fade, and soon a chill settled on his face.