Sea founder and CEO Forrest Li in conversation with Tyler Bryson

Great. Yeah, thank you, Tyler. Thank you for the nice introduction. Before I answer the question, I just want to take the opportunity to say hello everyone. I'm Forrest. It's great to see everybody here. I really look forward to having this session together with all of you. And actually, thank you Stripe to bring the Stripe Tour to Singapore. I think this is a great opportunity to bring the entire tech entrepreneur community together. So I see a lot of very young entrepreneurs and founders in the audience today. This reminds me of about 15, 20 years ago about myself, being one of you sitting in the audience, trying to get experience, get advice, and maybe a little bit of inspiration. So yeah, thank you for doing this in Singapore. We hope we'll do our best job so we can bring you back every year.

I myself am a gamer. Before coming to Singapore, I spent the time studying in the States. I must admit, I probably played too many games, spent too much time in the...

Yeah, in the game compared to in the classroom. And when I was here, I realized there's such a strong gaming culture, and people love to talk about games and play games. Still, we're talking about back then, even before the mobile game times, still the PC time. And the famous games like World of Warcraft and then later on League of Legends—those times, I'm not sure if this is too old for the audience, but that's the game we had back then. Everybody played in the cybercafes. All the cybercafes traveling in the region, you saw a lot of passion. But if you asked any executive from the game industry, they'd say, "What's your plan? Have you ever thought about Southeast Asia being a very, very good game market?" And nobody thought about it. They said, "We never see any revenue, and we never see any kind of a business case from Southeast Asia." Actually, then we dived into more details. So we said, "Okay, it sounds like there's a gap. You have such a big user base, people love the games, there's no business case." And actually, interestingly, Stripe is doing fantastic as the best payment solution provider. Back then, we realized actually this is a payment issue, because most of the gamers were teenagers. And again, this is about 15, 20 years ago, credit card penetration was super, super low. People loved to play the game, they wanted to experience the full experience of the game, full functionality, but the thing was they had no way for them to pay because most of the gamers didn't have a credit card. Then we saw that as a challenge. I still remember the early days, we came up with a very kind of bottom-up, manual solution. And then we decided, "Okay, if that is the case, let's do something, try to do something differently." So we designed our own prepaid card, and then we distributed our own prepaid card. I still remember our first office in Chinatown in the shophouse. Every day I walked into the office, I walked into a warehouse. Half of the office was filled with bags, and all the bags were our self-designed and self-made prepaid cards. And then we had some very, very talented, ambitious computer science graduates from NUS, and it turned out they signed up for world-class coding, but ended up driving a small van just going around Singapore and delivering the prepaid card, not only to convenience stores, which was more common back then, but actually delivered to every single cybercafe where gamers played the game. And because of that, gamers had easier access to payment solutions, and they could pay for the game. I think it was mutually beneficial. The game developers started to see revenue, and the gamers, by paying, got a chance to have the full experience of the game. So yeah, that was amazing. It's interesting—talking about we were very much into the game, but it ended up that the payment thing became a critical breakthrough for us in the early days.

Throughout our company history, I think we were just enabled and driven by the strong entrepreneurial spirit. I think that is very, very important. So we have a very long history and tradition. Every year, we went to top universities, starting from Singapore, but over the years pretty much all over the world. We have a fresh graduate program called—we call it the GMAP, like a Global Management Associate Program. We pick young talents. Every year we select 10 to 20, and then we put them into a kind of two-year rotation program, allowing them to experience different parts of the business and travel to different places. Every year, the top leadership is involved in the final interview. And also, I just spent time with the graduation, the latest batch graduation. And actually, the one thing I told them: if you are here today and if you forget everything about this whole-day workshop graduation ceremony, the one thing I hope you all remember, no matter what you do with the company after graduation, is remember you are joining a startup, you are not joining a big company. So that's the key message. So I think that is a wave across the entire organization, from the top leadership till the fresh graduates. So that's the thing I think keeps us progressing and keeps trying to do things differently and innovate. On the other hand, I think it's related to the thing I just said about the payment thing. It's not just like, "Oh, I want to be an entrepreneur." I hope entrepreneurship is not just a lifestyle or a thing of being cool, being a co-founder. Yes, this is a cool thing, but still you need to go back to the fundamentals to identify what is the specific issue, what is the specific problem you are trying to solve. This reminds me when we started the e-commerce business, right? This was five years after we were into the game business. How come a game company could start an e-commerce business? But actually, it was hard for me back then to swallow the fact that there was no such e-commerce marketplace platform in Southeast Asia, when things had been done so well in the US and in China. Why didn't such things exist in Southeast Asia? I think that is a kind of fundamental belief we had, and we said, "Okay, yeah, if this is an opportunity, let's not limit ourselves. Let's try to take the opportunity." Yeah.

Yes.

In a way, if you look at Southeast Asia as a market, there's a lot of fantastic things, right? It's a very young population, and the quality of life is getting better and better. It's a very big consumption market, and there's a large population. So, there's a lot of things. But on the other hand, it's also a very fragmented market, and you cannot just think about all Southeast Asia as one market. If you think about the difference between Singapore and Vietnam, right? It's a two-hour flight distance, but in terms of the economic development stage of the economy and people's quality of life and lifestyle, there are so many diverse things. I think it's very, very important to come up with bottom-up solutions for each specific market. For us, if you look back, we benefited a lot by being a Singapore startup, a Singapore company. We were competing over the years with a lot of competitors originally coming from either China or the US. That is pretty much the two very big superpowers in the tech industry in all the things we are doing. But a lot of them already have a very successful, proven playbook in their home market. Okay, this is how they win the US market, and this is how they win the China market.

Everything is very optimized for that playbook. So it's very natural for them, when they come to Southeast Asia, to just say, "Okay, this is our playbook. This worked in our home market, so it must work here." And it turned out, I think that is not always the case. There's always best practices that can be shared across the whole world, but specifically, there are also a lot of things that are very, very different. Being a Singapore company, the benefit is, at the very, very early days, we had to think about going to other markets, not just trying to be successful only in the Singapore market as a home market. So we kind of remember, you know, we called ourselves in the early days a multinational startup. Another thing is, because we identified Singapore as so different even from neighboring countries, whatever worked in Singapore didn't mean it was going to work in other neighboring markets. So when we go to any market, we have to identify the bottom-up kind of solutions and the cases, and I think that was very critical in our journey. Yeah.

Sure. I'm happy to give you two examples: one is Indonesia and one is Brazil. Both are with our e-commerce business, Shopee. When we launched Shopee, we launched quickly across Southeast Asia. This was about 10 years ago. The interesting thing is we launched the app, people could start to buy things in Indonesia, and then we realized in Indonesia there was a very, very specific challenge. People could make the order online through our mobile phone app, but they could not pay online. Online banking and online payment were not available. So the typical user behavior was they made a purchase online, and then we had to issue them a code, and then they needed to travel to an ATM or a bank branch to make the payment using the code. So it was very much counterintuitive. This was not e-commerce, right? If you had to travel to somewhere else physically to make the payment, then it was maybe easier to just go to the shop to buy things. Why bother to order online? Actually, what made things worse was, at that time, for security reasons, the entire Indonesian banking system, when the buyer paid us, they didn't disclose the identity of the payer. So they didn't let us know what the bank account number was that paid us. So for us, it was like, okay, we sold 10 bottles of water and we received the payment, but we didn't know who paid us.

Yeah, and then we're going to deliver too, right? So I think for those things, sitting in Singapore, even 10 years ago, you probably didn't have such an issue, but this became the issue in Indonesia for us to grow, to continually increase penetration. One thing we did was—we think we were still kind of quite innovative—the way we identified the specific buyer was basically, for the 10 bottles of water, we sold them at 10 different prices. Probably each bottle of water had a difference of maybe a fraction of one rupiah. Economically it was not much difference, the price was the same, but by then the price itself became the identification of the buyer. And then we had hundreds of people sitting in the office, and every day what they did was just do the matching.

Definitely. I think Amazon never had such a problem.

Yeah. Another example I want to mention is Brazil. I always get this question: being a Singapore company, a Southeast Asian company, how come you ended up in Brazil? Why did you build up an e-commerce business there? Actually, this was also by identifying the specific opportunity and the challenge there. In 2019, I brought the entire leadership team to Brazil. For all of us, it was the first time to be in Brazil. The reason we were there was because of our video game business. We have a self-developed game called Free Fire, and the game suddenly got popular in Brazil. We said, "Okay, we need to go there, at least to pay some respect to the market." At that time, we realized one thing: in 2019, e-commerce penetration in Brazil was already behind compared to Indonesia, which actually, if you think about Brazil, e-commerce started much, much earlier than Indonesia. And then we dived into a little bit more details, and we realized the reason the penetration was so low was because the logistics cost was very, very high. For every single parcel delivered in Brazil, it cost more than $5 US dollars. To make that logistics—cover that logistics cost to make the unit economics work, you could only sell expensive things, right? If somebody sells a $100 thing, okay, $5 goes to logistics, you can probably still make money. But if you sell a $10 thing and half of the cost goes to logistics, it makes the thing not work. This ended up being, in Brazil, actually counterintuitively, e-commerce was for wealthy people. You asked people on the street, they could not afford buying things on e-commerce. Here, we always talk about e-commerce offering the lowest price, right? And it was a different story in Brazil. That's why we said, "Okay, this is a fantastic opportunity." We had accumulated a lot of experience in Southeast Asia on how to build up the logistics network, how to bring the logistics cost low. So this specific opportunity gave us the confidence and the conviction so we could probably make something happen in Brazil.

Yeah, this is a great question. I think at the end of the day, it is probably—you are never too early to think about culture questions, and it's also never too late to think about it. I think when we started the company, you basically just lead by example, right? Everybody joining the company will see what is the right thing to do in this company, what is the way to talk about things, what is the behavior to be encouraged or discouraged. We said, "Then we don't need to talk about culture. We just show by example and people will follow." I remember in year five of the company, we grew to a team with a size where it was not the case that everybody could see the leaders, could see me or my leadership team on a daily basis. We started to have multiple offices in different markets. They might only see me occasionally; we were not working together on a daily basis. So then we said we needed to find a way to tell people what the culture was and what this company was about, what was encouraged and what was discouraged. So we brought the leadership together for a weekend, and I said, "Let's work out our culture and what this company is about." We ended up figuring out five things. We defined our culture as: we serve, we run, we adapt, we commit, and we stay humble. So these are the five things. Surprisingly, we only spent half a day to figure this out and reach consensus that this highly describes who we are. Actually, the first one is "we serve." As, Tyler, you just mentioned, always put customer first. And among all the five things, we also believe probably the most important one is "stay humble."

I know this is not always the thing in the American culture setting, right?

Yes, but I think we benefit a lot from that. I think that is a fundamental thing we believe in, allowing us to serve our customers better and allowing us to really identify what is the challenge, what is the gap, and how we can make ourselves better. Yeah.