A rare public interview of Sea's founder-CEO, Forrest Li
Sea’s road to success, peerless time horizon, talent advantage, AI, and Forrest’s personal routines revealed. Why I add on dips.
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Hi sleep-well investors,
I would like to bring to your attention a warm and personal (and rare) interview with Sea Limited’s founder and CEO, Forrest Li, conducted by Nicolai Tangen, CEO of Norges Bank (Norway's approximately $2 trillion Sovereign Fund). Two billionaires (Nicolai reported had a net worth of ~700M in 2020) discussed my favourite company, Sea Limited, a 23% position in the Sleep Well Portfolio.
I highlight my key takeaways, which are: Sea’s road to success, peerless time horizon, talent advantage, AI, and Forrest’s personal routines.
Before that, I reiterate my stance on adding on dips, which I mentioned in the recent Oct Best Buys edition (alongside three other positions at attractive levels).
Key highlights:
SEA’s early focus on building and solving the logistics problem in the region proved to be the biggest reason for its early success in the region, and today it is the most significant barrier to entry for competitors. Localised problems, such as opaque addresses and a lack of credit access to consumers, mean new entrance is required to spend time, money, and acquire local knowledge to develop a better logistical infrastructure than SPX Express (the 2nd largest logistics company in SEA) and better financial solutions than Monee ($7B loan book with rich first-party data from Shopee and Garena) — not easy at all.
Forrest Li’s ‘forever time horizon’ in building a company to solve a personal shopping inconvenience (his daughter’s) and serving the 700 million users in the region is something rare and challenging to replicate. Who’s going to be able to commit decades of their lives to work for ‘Amazon’ or ‘Alibaba’ to build a business that riddles with tough decisions (market share grabbing without profitability insight) while having Sea Limited breathing down its neck? Let me reverse the question: Who is in their right mind opening up a new e-commerce site to compete with Amazon in the US, where habits are formed?
Sea's underappreciated competitive advantage is its direct access to local talent. Forrest shared that when Shopee was created, there was no talent with ‘relevant experience’ as there was no e-commerce or technology company on Sea’s roadmap and ambition (yes, there was Lazada and a couple of local sites, but not with Sea’s DNA). Fast forward 10 years, and relevant talents for such a company are now bred within the Sea’s umbrella, and more are incubated in Sea’s local university’s partnerships. Competitors must either offer substantial sums to lure Sea’s loyal employees or import Amazon-like executives from the US/EU, who also need considerable time to learn the local ways. Not to mention that these execs will need to be committed for at least a decade to build a Sea’s replica and must compete with an incredibly hard-working workforce. I see that as an unlikely possibility, or at least an additional hurdle to overcome for entrance.
AI is the future. Forrest sees AI as a platform to take Sea to a trillion-dollar class, 10 times its current value. Today, AI is already making incremental improvements to Garena’s UX and covers 80% of Shopee customers’ queries. In the future, AI will play a key role in creating new revenue streams, starting with solving internal problems before being applied to the external market. In fact, Shopee was the 6th idea when the company was trying to find ways to allocate Garena’s excess cash back in 2015. With direct and frequent contact with consumers in the region, Sea’s AI will again have the most reliable data to train its models.
A peek into Forrest’s identity. Forrest’s name comes from the character Forrest Gump in the movie of the same name, with whom he shares a humble and kind nature. This is a movie that Forrest has watched over 10 times, starting from his college days, so perhaps the most accessible way to get to know Forrest Li is to watch the movie.
Spoiler’s alert! Indeed, the ending of Forrest Gump aligns with Forrest’s journey so far, ‘nice guys come first.’ Forrest's kindness to people around him is having an incredible impact on the 650 million people in the region. And expect more as his humility goes hand in hand with confidence and ambition. This is someone humble enough to learn from others and committed to serving his customers—very Amazon-like. He works all the time, from 6 a.m. to 11 p.m. He eats less as he gets wealthier :). And he still enjoys the freebies from his own company (free shirt and free pants with Sea’s corporate logo). While he has time, he spends it with his young children, learning how the new generation uses e-commerce and plays games.
Trust - the way he carries himself shows he is an excellent example for his employees. He knows the birthdays and the names of the children of his first group of employees. Now, with a different scale, he still finds ways to build trust with the 80,000 employees at every opportunity, whether that is through letters at the start of every new year, every quarter, or every IPO anniversary, or town hall AMAs with 100 employees, or visits to the local office when he travels. Combining the ‘forever time horizon’ with an 18% ownership stake in Sea’s destiny, customers, partners, and employees can trust that he will do what’s best for the company.
Do I add more shares at this level?
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