Happy Birthday, Sea!

2024-5-8

Dear Sailors,

Today, May 8, 2024, Sea celebrates our 15^th birthday.

Some of you will remember this, from the note I wrote to you three years ago today:

“I am grateful for this amazing year. At the same time, I find myself arriving at our 12th birthday feeling a little worried – about how all this success could affect how we see ourselves and how we feel about our work.”

At that time, our share price had just enjoyed an incredible rally. However, I shared with you my worry that we had not yet been tested as a larger company. I wanted us to stay humble despite our successes, always mentally prepared to face challenges to our survival.

Three years later, I feel more assured. We have been well-tested, and not only did we pass the tests, but we emerged much stronger from them! This period was a very difficult one, throwing three huge external challenges at us, one after another:

First, the world reopened after a simultaneous global lockdown, post-Covid. This had never happened before, so the uncertainty and unpredictability of consumer behaviour made planning and operations very difficult.

Second, there was a dramatic shift from great capital abundance to severe capital scarcity in the market, with interest rates rising at a pace not seen since the 1980s.

Third, we saw the entry of a completely new type of competitor – a big social media company – to our e-commerce markets, challenging our market leadership at a time when we had just endured a lot of pain.

Three big challenges: one unprecedented in human history, one unprecedented in this generation’s history, and one unprecedented in our company’s history.

I see these three events as strong currents that swirled around us as we sailed in the sea. After a year of benefitting from the rising tide of accelerated digitization during the pandemic, we suddenly found ourselves in choppy, churning water, threatening to capsize us, making us struggle to stay afloat. We could no longer sail the way we had before: we had to adapt, fast, no matter how painful or tiring it was to do so.

These strong currents are finally starting to ease. The world has resettled into better predictability post-Covid, interest rates are expected to moderate, and we have defended our market share well.

Being forced to battle these currents has made us much better sailors. We have emerged from them more efficient, more adaptive, more resilient. Compared to the worry I felt three years ago, I feel much more confident today of our ability, even as a larger company, to weather any storm.

And now, after these tumultuous few years, what does our future hold?

Change is in the water again, but this time of a different kind. Rather than choppy water, a big, tall wave is approaching: the next technology transition, AI.

Technology transitions are rare, outsized opportunities to capture incredible growth. The last one we experienced was the shift from PC to mobile, and that transition defined, in many ways, the Sea all of you know today.

Most Sailors have not experienced Sea in the pre-mobile world. Back then, we – Garena – were known as a PC game publisher. We did not develop our own games, as PC games were costly and complex to build. Our main business was buying licenses to publish promising games in specific markets: League of Legends, FIFA Online, and others. We also created a PC desktop messenger called Garena+, which was a chat platform built into our game launchpad.

This business carried on well. We completed Series B funding around our 5th birthday in May 2014, and achieved a US$1 billion valuation. This gave us ‘Unicorn’ status in the start-up world, a big accomplishment for a young company!

By that time, we had started to notice a shift in the tech industry from PC to mobile. In response, we experimented with putting out some mobile products: things you won’t have heard of today, like Bee123, BeeRunner, BeePay, BeeBox, BeeShop, and BeeTalk. Some launched and failed; others didn’t even make it to launch. But doing this helped us pick up new knowledge of what worked on mobile platforms, what metrics we needed to track for mobile products, and what users wanted from mobile services.

We felt a growing conviction that mobile was a huge growth opportunity, and decided to launch Shopee as a mobile-first e-commerce marketplace. Our experience with the “Bee” products gave us the capability and confidence to do so quickly: the first Shopee team was formed within a single meeting, comprising just 22 people pulled in from our various “Bee” teams.

We also saw an opportunity to move upstream from game publishing to game development. Mobile games were simpler and cheaper to develop than PC games back then, something we could manage in-house. In a way, this technology transition had a democratizing effect, by making development more accessible to small, young companies like us. And so Free Fire was born: our very own game that we could release everywhere without having to bid for market licenses, enabling us to serve gamers in every part of the world.

Shopee and Free Fire, both native mobile products, took off in a big way. We went from serving millions of users on PC to serving hundreds of millions of users on mobile, and from being a $1 billion start-up in 2014 to being a $30 billion public company today. 30x value creation in just ten years: an amazing achievement, and only possible because we successfully rode the PC-to-mobile wave.

A new technology transition is on the horizon again. Just like the shift from PC to mobile, AI will fundamentally change how we live and interact, perhaps even more profoundly. Bill Gates put it well:

"The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it."

As I shared with you in that birthday note three years ago, “We are a tech company. This means that we fundamentally believe in the power of technology, and believe that the biggest value creation in the future will come from technology.” AI is the next tech revolution that will create a huge, new value pie. If we can capture a part of it, our ability to improve lives through technology could increase by an order of magnitude. We could go from serving hundreds of millions of users to, perhaps, serving billions. And growing our value another 30x becomes a real possibility.

The AI wave has not quite arrived, but we can see it approaching. So what do we need to do in these next few years to best position ourselves for its arrival? What new consumer behaviours will this shift create? What will AI democratize access to? What products do we need to start experimenting with, to get our hands warm and gain the insights we need? What capabilities do we need to build in-house so we retain fine control over user experiences?

This technology transition may be harder on us than the last one. Back then, being a newcomer to e-commerce and mobile games freed us to fully focus on the new platform from the start. This time, we are the ones who will have to adapt to a new technology.

But I am confident that we can do it. The adaptive muscles we have built over our fifteen years – and greatly strengthened in the last three years – prepare us well for this next challenge. And, compared to ten years ago, we are a stronger, savvier, more financially stable company. So even if this period becomes slightly ‘messier’, like the “Bee” time in 2014 when we explored, experimented, and tried new things which failed, that is okay. Such experimentation is necessary to take our businesses to the next level, and may even plant the seeds of a new idea – the next Free Fire, the next Shopee – which can take off, at the right time, in a big way.

Sailing atop a big wave can feel uncertain, even unsettling. But if we can do it, it will bring us to new heights we have never seen before. Technology transitions are huge opportunities that might come only once or twice in a generation, and I am grateful that, at 15 years old, we find ourselves again at the start of a great new adventure. Let us embrace it wholeheartedly.

Happy birthday, Sea!