Alibaba to Lazada: The Stunning Future of Interconnected Asia (Tech Strategy – Podcast 25)

In this class, I talk about Lazada, the SE Asia ecommerce champion. And about how Asia is both at scale and increasingly interconnected.

You can listen here or at iTunes, Google Podcasts and Himalaya.

Podcast on the future of digital is located here.

The McKinsey Global Institute papers about the future of asia are here.

Note: The term emerging markets was coined by Antoine Van Agtmael, author of The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World

Companies for this class:

  • Lazada


I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.

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Welcome, welcome everybody. My name is Jeff Towson and this is Tech Strategy. And the topic for today is from Alibaba to Lazada and why the future of Asia is so exciting and interesting. And really something every business person should be aware of and thinking about. Now this is gonna be a little bit of a departure from the typical class. If you’ve been following along, you’ve… You probably get the sense that I’m sort of a micro person. I really don’t do macro. I don’t do economics. I don’t know anything about interest rates. I don’t, I can’t tell you one why one developing economy is going to progress this way versus another is it’s not my thing. I’m not very good at it. I don’t really think it’s a great use of time. I’m the exact opposite of that. I’m micro. I want to study KFC in Chongqing. I wanna study what JD is doing in logistics in Thailand. I’m looking for small but important topics, micro, micro analysis, individual companies, things like that, that I can really figure out and get my brain around. And then my standard approach is, I come at it from multiple directions. I like to apply like. five, six, seven different types of frameworks or thinking against a small problem. And usually within those, I kind of end up getting most of it and I feel like I can figure it out. So maybe looking at JD in Thailand, which is partnered up with Central, which is a big retailer here. You know, I might look at the unit economics. I might look at the consumer view, which is something I’ve talked about. I might look at the competitor view. I might look at the psychology of the key decision makers. I might look just at incentives. Governance, you know come at it six or seven different ways and then usually between that you capture the most important stuff But I found that no one approach gets you everything Sort of different snapshots. Okay, this is gonna be a bit of a departure from that in that I’m gonna talk about some macro stuff. I’ll go through Lazada quickly there’s not that much to know and then I will talk sort about the future of Asia And I’ve done this once before, which was podcast number 11, which was titled, Why Digital is Disrupting Business, Politics, Media, Culture and Society, which is a terrible headline. But it was a high level view of why you should be really excited and paying attention to digital, by which I mean software and data. And this is kind of the, you know, where I’ve bet my career and where I’ve bet my life that there’s two big things happening. in the business world that I think are so exciting and so important that that’s where I focusing in the first one was that previous podcast number 11, which was software, the economics of software, data, data technology, all of this. You know, I’ve said over and over in country after country around the world, if you’re a business person, you have to accept that we are all becoming software people. You just have to accept it. Start learning. Take some steps. and you’ll get there over time. But you don’t want to be a business person five to 10 years from now, or even really today, if you don’t really understand software and that’s the entire point of this class. However, within this class, there’s also, that’s why it’s called Jeff’s Asia Tech class. That tech is shorthand for digital. But the first part of that is Asia Tech, because the other macro big idea trend event that I’m really excited about is the rise of Asia. I think it’s absolutely stunning and the numbers are overwhelming. So I’m gonna go through that today and that’ll be kind of really the only other high level talk I’ll probably give during any of this and then I’ll scurry right back to micro where I’m happy and content. So that’s gonna be the talk for today, sort of high level macro about why you should be excited about Asia and in theory, Asia plus digital which is kind of my area. So let’s get into the class. But first, if you haven’t subscribed, please do so. Go over to There’s a free 30 day subscription. Sign up, doesn’t cost you anything. See if I can convince you over the course of that month, 30 days, that this is really worth your time, which I think it is, but you know, I really love this stuff, so I’m biased. Anyways, go over there, sign up, it’s great. There’s a ton of content coming and it’s. is a lot about the learning goals and the course structure for this. That this the goal of all of this is to add up over time and to get smarter and smarter step by step which means you need an outline of course structure which subscribers get. All right let’s get into the subject. Now Lazada, arguably the number one e-commerce player in Southeast Asia but it kind of depends how you measure that stuff. Let’s say definitely in the top two, two to three. They would claim number one, but you have country by country, the Singapore versus the Philippines versus Indonesia versus whatever. Definitely here in Thailand, they’re a big deal. And clearly number one. Now, this is really an extension of Alibaba. So that’s sort of why the topic of today’s lecture is from Alibaba to Lazada, because it’s really an extension of them, same data. Alibaba owns them now outright. And that’s kind of a big part of the Asia story is this expansion from developed Asia, advanced Asia, China to developing Asia, which is something we don’t see in like the US. You know, half the US is not sort of developing and the other half is advanced. We’re seeing that there’s a lot of diversity in terms of type of economy in Asia and culture and language and a lot of other things. It’s actually really kind of fascinating. But Lazada, okay. It’s exactly what you think it is. If you are familiar with Lazada, I’m probably not gonna tell you anything staggering in the next couple minutes. I just wanna get the basics here, which is like it’s an e-commerce company. Founded in 2012 out of Singapore and started out kind of closer to Jingdong than Alibaba. Remember Alibaba started out as a pure marketplace. Well, actually they started out as a B2B and then they went to B2C, but they were always a… digital platform player first. They’re really a pure breed, which is why I think they’re so interesting. You know, Jingdong JD, they were an online retailer. You buy the goods, you put them in your own warehouses, you sell the goods, your revenue shows the sales, your cost of goods is the purchased items, blah, blah, blah. Okay, that’s kind of how Lazada started out, 2012, by Rocket Internet. Rocket Internet is a really interesting group because they copy business models that come out of the develop. economies like in this case probably more Amazon than anyone else and they apply them to developing economies and they build local versions. Now historically that strategy has meant copy stuff that comes out of Silicon Valley, build it in Mexico, build it in Brazil, build it in Eastern Europe. More and more that story is becoming copy what’s coming out of China not Silicon Valley and build that in Asia or Brazil or Mexico. because it kind of turns out that those business models are more applicable. I think they’re better suited to a lot of these environments. So when it was Southeast Asia, Amazon not terribly strong back in 2012 in Southeast Asia, Alibaba as well. So open field, get in there fast, run hard and try and be the local champion of this. And we see this pattern all the time. We see… let’s say Grab in Southeast Asia, which is a local version of Didi and Uber, but then we also see Didi and Uber there as well. So you kind of see the international giants going into these localized economies, competing against a local champion who’s copied the business model initially and then tends to adapt it very quickly and customize it. So that’s Rocket Internet. Fine, very cool. They launched 2012, 2013, they have their own warehouses, they buy the goods, they’re operating like a retailer. They don’t really start the marketplace model where they don’t obviously own the inventory until 2013. And you fast forward a couple of years, 2014, 2015, okay, 60, 70% of their gross merchandise value is now marketplace. So they did shift to a marketplace model very quickly, but they started out doing both. Now their economics are kind of what you’d expect when you do logistics as opposed to say booking hotels. You have a lot of physical infrastructure you have to build. You have to build the warehouses. You have to have the distribution points. You have to have the delivery people. All of that costs a huge amount of money. and Sinao in China and JD spent billions and billions of dollars developing the smart logistics network that now exists in mainland China. That’s kind of why this is more capital intensive and they go through a lot of capital raises in this period and they start to build out the logistics infrastructure. Okay, how is Southeast Asia different and it turns out when you do e commerce in Southeast Asia, it is actually significantly different. than say Amazon in the US, Alibaba, JD in China. For the first thing is, you’re not dealing with one big country. You’re dealing with five, six, seven, eight, nine different countries, depending how many you go into. You’ve got the Philippines, which by the way, is a huge number of islands. You’ve got Singapore, you’ve got Indonesia, you’ve got Thailand. You’ve got all these different cultures. They speak different languages. They have different political regulatory. situations and they’re all at different stages of their development in terms of e-commerce. To launch e-commerce you do need a couple things. You need a certain basic level of regulation that enables this to happen. You know, are there laws in place that allow e-commerce? Well some countries like Indonesia, Vietnam, moved faster and obviously Singapore was more advanced. They were further down the road but other countries like Myanmar the Philippines, I mean, they were behind. So you have the regulatory differences. You have the physical infrastructure. You need roads. You need warehouses. Now in China, that was actually kind of easy because you have a massive number of people, hundreds of billions of people, hundreds of millions, I’m sorry, who are all living in fairly dense cities on the Eastern coast. Well, that is a very different scenario than say the Philippines. where you have tens of millions of people, but they’re all scattered across thousands of islands. And it turns out you can’t drive trucks back and forth when everyone’s on islands. Indonesia, same problem. All these islands, how do you move packages around? Well, suddenly you’ve got planes and you’ve got boats, and you’ve got to have roads, and a lot of these places didn’t have very good roads. So the logistics aspect is dramatically more complicated. Plus you’re moving stuff between countries, from Indonesia into Vietnam into Thailand. So you’ve got all the landing situation and all the customs aspects, which you really don’t have if you’re just shipping between Shanghai, Beijing and Chongqing. So the logistics side is dramatically more difficult. The political side is different. And then you’ve got the consumer side, which is also very, very different because people are speaking different languages. They want different things. They don’t have credit cards. China, you didn’t really have credit cards, but you had some and people were used to paying cash. And people had a very rapid adoption rate for going from I’m gonna buy stuff in a store to I’m gonna buy stuff on my phone. We don’t see that same level of adoption that quickly in other places for the most part. So if you’re in Indonesia, your biggest problem is convincing people to start buying stuff on their phones as opposed to. in the store and that takes time. I mean it really can take years and years to get that to happen. People really forget how fast adoption happens in China versus other places in the world. And it’s not just okay they start to buy on their phones. How do they pay for things? Well they don’t have credit cards in somewhere like Vietnam. But you also don’t get rapid adoption of mobile payment. but you also got that in China. So that enabled e-commerce because people not only adopted e-commerce, they adopted mobile payment. So you’ve got all these hurdles to rolling things out on the logistics side, the government regulatory side, and on the consumer side. And it’s more complicated and depending which country and it could take a long time or it can happen very quickly. So it was actually, I think a much harder fight. to get e-commerce to start to happen in Southeast Asia as opposed to mainland China. I’ve talked about this before in classes where I talk about the China Digital Consumer Network where it really was a unique situation where you had 800, really a billion people all on their phones under one language, under one regulatory environment, all who have payment and who are all very active, rapid adopters. That was China. That is a very unique scenario. Most countries don’t have that. And these companies like Lazada, they’re not going after one country, they’re going after six, seven, eight, nine countries. So it’s just a more difficult scenario. And the other part to keep in mind about Alibaba is, I’m sorry, not Alibaba, Lazada. Okay, fast forward to about 2016. So just four years after founding, they are then claiming. $1.4 billion in annual GMV, $1.4 billion US dollars in annual GMV across six main markets of Southeast Asia, which according to them makes them the largest e-commerce player in Asia. And then we see something that we’ve seen many, many times. We see this local champion saying we’re number one. We see Amazon as the international giant coming out of the West, and we see Alibaba as the international giant coming out of China. you know, that’s where it starts to become somewhat of a bidding war. You know, do we fight it out? Or is one of these two players gonna buy this company? And basically, it’s kind of game over. And that’s pretty much what happened. Is Alibaba was invested in this company. 2016, Alibaba invest some more and basically says, we’re taking controlling stake. They go over 50%. They later up that to 83, 84%. But they effectively take over the… the company. The China giant plus the local champion, that’s a pretty powerful play that puts Amazon at a huge disadvantage. And we saw almost the exact same scenario play out when Didi was focused on grab in Southeast Asia, but so was Uber coming out of the West. Now what’s interesting is what happened after Alibaba bought and basically took over Lazada. Well the CEO of Lazada stepped down or moved onwards around 2018. Around this time, Lucy Peng, who was one of the founders of Alibaba, took over the company, become CEO, starts running things. The anecdotal information I get about this, which is just anecdotal, so I’m not 100% sure it’s true, but I think it is, is Alibaba more or less replaced the software and the digital architecture of Lazada with its own platforms, which makes sense. So they injected all their software, they injected their senior management, they injected And that apparently took quite a long time to replace the current architecture that Lazada had built over four years with Alibaba systems out of China. I’m not 100 percent sure that’s true, but that’s what I’ve been told. Now, Lucy Peng actually is someone who’s worth keeping in mind. She’s actually a Peng Lei, who is a Chinese name. She’s one of the 21 self-made William, I’m sorry, 21 self-made women billionaires of China. For those of you who don’t know that China has the most self-made women billionaires on the planet. Huge population of them. Well, they have a huge population of everything, so you kind of have to look at it per capita. But she happened to be, you know, she was teaching at Zhejiang University, which is where Alibaba came out of. And shortly after getting married, she resigned, stopped teaching, and became one of the 17, 18 founders of Alibaba, her and her husband. Which is actually kind of interesting because in the early days of Alibaba, there were a lot of sort of husband wife pairs that joined early on. And even today, you know, they have this sort of marriage day at Alibaba where, you know, couples who meet there or otherwise get married on campus and Jack Ma used to be part of it. And it’s kind of a big deal. It’s a bit of an interesting history. Anyway, so she’s one of the early founders and she creates the original HR department for Alibaba. This is back. 1999. And she stays there forever and she becomes a CEO. Her husband, I think, created Taobao or was the manager of Taobao early on. Lucy becomes CEO of Alipay, which obviously incredibly successful. She took over some other businesses along the way and founded Ant Financial, which is massive now. And then many years later she… You know, she ends up taking over a CEO of Lazada. She has since stepped down from that and is doing other things. She’s a, you know, worth, I don’t know, two billion dollars or something like that. So there’s a lot of interesting history in here. Okay, but I think that’s the other thing to think about is this integration of a Southeast Asian champion with a digital giant of China. And that tends to mean bringing in capital and bringing in knowledge, and knowledge being people and software systems. That’s, I think, the takeaway from that. All right, let’s talk about Asia more generally. Now there was a fantastic report published by the McKinsey Global Institute last year. I’m gonna put the link in the show notes called The Future of Asia. And one of the directors of the McKinsey Global Institute, which is their sort of research arm, is Jonathan Wetzel, who is someone I’ve been teaching classes with for, God, seven or eight years now. And I’ve written a couple books with him and we’re in theory working on another one, but we’re both too busy. He’s crazy busy. Like I’m kind of busy, but like the senior McKinsey people are just, it is insane. Like every day in another country, especially when you get up there because, you know, they’re always flying you around to meet with people. And it was Jonathan was one of the people who more or less opened the McKinsey office back in 1994 in Shanghai. So he was very early. on the ground in China, came out of UCLA. He says he speaks four languages. His Mandarin is unbelievable. It’s shocking how good his Mandarin is. And then English, Spanish, and he says German, but I’ve never heard him speak German. And so he founded this office. So he’s been sort of on the McKinsey team for, since 1994, so what is that? It’s 26 years. I mean, that’s an amazing sort of fire hose of information to be exposed to. And I consider him like the encyclopedia, the almanac of China business. You want to know anything about China, like it’s stunning how much he knows. Hey, what was happening in 1999 with Bao Steele? And he’ll just tell you, well, you know, and blah, blah, blah, and Bao Steele was working on this that month, because he was probably there. He has this amazing level of detail. My knowledge is sort of very narrow in one thing. He’s all over the place. So we actually have a lot of fun writing and teaching together. And it was, he published this report and I read everything he publishes called the Future of Asia and it just blew my mind. I said, very, very well done. Very good analysis, very good way of thinking about things. And that’s really the key to this is not just to start listing off factoids. Oh, this is how many people live here. You know, there’s more single use chopsticks, you know, blah, blah, blah, created and sold in China every day. All these factoids, I don’t think that’s how the brain works. I think the brain works best when you give it a framework for thinking about something, and then you can sort of populate that with various information that you hear. So they put together a very nice framework for thinking about Asia, and they basically said, Asia is for… different types of regions that are in fact very complimentary to each other. And the four they listed are what they call, these are their phrases, Advanced Asia, which is Japan, South Korea, Australia, and Singapore, New Zealand. So these are kind of the advanced economies, a lot of technology, very developed, high GDP per capita. That is one bucket. And they are complimentary to the rest of the region. in many ways, but the two that jump out at you is they provide a lot of capital and technology and other types of knowledge to their neighbors, which I think is pretty true. Second bucket to think about is just greater China. You know, the whole China ecosystem, Hong Kong, Taiwan, Macau, all the special economic zones, all of that, which is just its own thing. I mean, it’s just massive in its own right. It is a large enough economy. to not really need anything else. China, greater China can sell to itself till the end of time and not really need the rest of the world that much. It’s that big. The US is kind of the same way. It’s better to sell to everyone, but a smaller country like Singapore absolutely cannot survive on its own domestic consumption. It must sell beyond that. And you could argue, which I have, that greater China really is the leader in terms of… connectivity and innovation. And when I talk about China’s, you know, digital China, you know, the digital China consumer network, that billion plus people who are very tightly connected now through their smartphones, that is a China phenomenon we don’t see anywhere else. Could be in India, but we don’t see it yet. Third bucket, emerging Asia. Okay, that’s Thailand, that’s Cambodia, Bhutan, Indonesia. Vietnam, Philippines, everything sort of as you go west, but don’t get into India or Sri Lanka, everything kind of the east of that. And that’s your long-term growth. That’s your, this market’s gonna be big in five to 10 years, but it’s not there yet. The GDP per capita is very low. It’s culturally very, very diverse, something we just talked about. It provides a lot of low-cost labor. things like manufacturing. I mean a lot of the factories are now shifting down to Vietnam, places like that. Apparel has already moved out of China. So that’s a different sort of bucket. And then the fourth bucket which is frontier Asia and India. That’s pretty much everything east of let’s say Sri Lanka, Pakistan, Indonesia, Bangladesh. Sort of a broad emerging frontier, lot going on there. A little more complicated and I think problematic in terms of the rate of adoption and the rate of development of things like e-commerce. You know, e-commerce development is happening much faster in say Indonesia and Vietnam than you know Sri Lanka or a lot of what’s going on in India. So a little bit different. Frontier I think is a good word for that. And that was their four buckets and they basically argued that’s Asia and the different regions are all becoming increasingly interconnected. So it’s not just that there’s four regions, it’s the regions are starting to connect with each other in lots of ways. They’re sharing information, they’re sharing knowledge, they’re sharing goods, there’s trade, there’s movement of people, there’s movement of capital. And that is increasing and it’s happening in very interesting ways like Alibaba, putting capital and technology and knowledge into Lazada. That would be an example of the increasing connectivity, interconnectedness of the different regions. That was their kind of basic pitch, which I thought, very well done, very clear. I think they should have given funny names to it. One of the problems when corporations write stuff is they have to be very formal, they can’t be fun. I think if they’d given funny names to these things, it would be easier to remember, but they don’t do that because they’re, you know, McKinsey and they’re proper and, you know, they can’t be a little weird like a professor like me can be, which is fun. Okay. Within all of this, as you see the increasing connections happening, goods moving around, transportation, people moving around, tourism, people working in one region who grew up or maybe were educated in another, energy, oil, FDI. As you see all those things sort of increasingly move around, you’re starting to see networks be formed. Right, networks are everything from a phone network to a social network, to a protocol network. There’s a lot of types of networks that can exist. Transportation network, rail lines, shipping lanes. As you start to see networks that connect various things, that often creates the opportunity for a platform business model to emerge, which is obviously something I talk about a lot. So as these different regions of Asia start to connect, you’re gonna see more and more networks emerge and that’s gonna give rise to more platform business models and other things. So they went through a couple ideas of various networks that are being created as the region becomes more interconnected. This is all from their report, so none of this is my thinking. First one they talk about, an industrialization network. We’re getting increasing consumption across the region. We’re getting value chains that are very mature within each country. And we’re seeing sort of knowledge being shared across the country. And so the sort of industrial Asia is becoming more connected. And I think that’s been accelerated in the last year because as there’s been these big supply chain issues like the US tech situation with Huawei. One of the big results of that is Asia is starting to look at supply chains that are basically quote unquote Asia for Asia. You know if you’re a big company in Asia let’s source everything from this region and then sell in this region and forget the rest of the world because if they play games out of the West we don’t need them as much as we used to. So you’re seeing these sort of Asia for Asia supply chains being built which I think you are absolutely seeing. We’re seeing a lot of sort of low-cost labor manufacturing going from China to places like Vietnam, Indonesia. And these various countries, when you’re talking industrial, they really are at interestingly different stages of their development within manufacturing. You know, typically when a country becomes a manufacturing company country like China has been, but before them, Japan did it and South Korea did it. You know, they sort of become industrial manufacturing. They hit about 30% of their employment becomes in manufacturing. And then their GDP per capita goes up. And somewhere along the way, when GDP per capita hits 10,000 to 20,000, we start to see that manufacturing shift out of that country to other cheaper places. And they’ve all sort of gone through this path. Japan went there first, then South Korea came, then China came up behind them. And now we’re seeing the other countries follow path, follow this sort of thing. I think that’s kind of an interesting sort of process happening is this industrialization across Asia. Doesn’t really apply to digital, but I thought it was interesting. Not really my field outside of keeping an eye on the tech supply chains. The second one they talk about, which is the point of this, is you’re seeing sort of a network of capital ideas and technology being formed. That’s the Alibaba-Lazada situation. And the pattern that they say you’re seeing, which I think is true, is we’re seeing innovation and knowledge happening at a local level, like Singapore, but we’re tying that to regional capital and expertise. So it’s like we get some local talent, like a Lazada, being formed. we get some local infrastructure to support it and companies start to take off. Once they get some degree of success, all the capital from the region and all the technology and knowledge from the region can then be levered into them. And I think that’s spot on. It’s what McKinsey calls multi-local innovation. Local talent and infrastructure being supercharged by regional capital and regional knowledge. You know, that’s… pretty spot on in my book. And when you start looking at this, like what percent of the world’s patents are now coming out of Asia? Patents are kind of a crude measure for knowledge, but number of patents is not the same as good patents. So take it with a big grain of salt when people talk about number of patents. But as of last year or so, about 65% of the world’s patents are now being filed by companies in Asia, which is a huge increase. We look at investments into startups. 41% of the world’s investments into startups now happening in Asia. That was not the case 10 years ago. Here’s the stat that blows my mind a little bit. One of the things about Asia, billions of people. The US doesn’t have billions of people. Europe doesn’t have billions of people. Asia has billions. So when you look at STEM graduates, science, technology, engineering, and math, By 2030, this is a McKinsey number, Asia will be 60% of the world’s STEM graduates will be in Asia. The US will be 4%, Europe might be 8%. So where’s the brain power of the world gonna be in 10 years? Overwhelmingly Asia. That’s kind of a big stat. But if you look at the various hubs where this is happening, that’s Beijing, Shenzhen. Wuhan is actually a big one. You know, now it’s more famous for the virus situation, but Wuhan is a big knowledge center. Now Jakarta is kind of rocking and rolling. There’s a lot of these regions popping up, but it’s kind of a local phenomenon, supercharged with regional capital and regional knowledge. I think that’s a pretty good summary of the Alibaba-Lazada situation right there. I think that’s exactly what we just saw. I think we’re seeing it over and over and over again. And I think the reason this all kind of matters ultimately is so much of business is about scale. That if you have more middle class families in a region, there’s just more spending, there’s more cars being bought, there’s more houses being built, there’s more of everything. And Asia is basically already at scale today. Chinese consumers are… already more or less the largest consumer demographic in the world, number one or number two depending what numbers you’re looking at, but they also have the highest growth rates where they’re getting there faster. If you look at middle class families, which is kind of my go-to statistic, 40% of the world’s middle class now lives in Asia. By 2030, 2040, that’s going up to 50 to 60% of the world’s middle class is gonna live in this region. That just kind of powers everything. You go back to 1995, there was a lot of stuff being written about emerging market consumers. Like this was kind of a very weird term that came out of New York City. and London in places where financial people were selling, you know, hey, invest in my fund. We give you exposure to Europe. We give you exposure to whatever. And one of their buckets was we give you exposure to the emerging markets. We give you exposure to emerging market consumers. And this phrase emerging markets was coined by a famous guy. I don’t know how to pronounce his name. And Antoine, I forget his name. I’ll put it in the show notes and I don’t want to mispronounce it. But. It was a fund manager who sort of coined this phrase of emerging markets. And it was really not a useful phrase because if you’re sitting in the, I mean, ultimately Brazil has nothing to do with China in terms of consumers, business markets, Mexico has nothing to do with Thailand, but they were all grouped together because if you were sitting in New York in 1995, all of these places looked a little strange and very far away. So let’s just all put them together. That makes no sense to people who live in Brazil. It makes no sense to people who live in China or Asia, but it was a term. And within that, this idea of emerging market consumers got a lot of play. Now, rising consumers around the world, middle-class families, again, not all emerging markets are the same. Not all emerging market consumers are the same. The emerging market consumers that you want are China, Asia, middle-class. That’s the whole ballgame. I love Latin America. Their consumers are not that big as a spending force now, and they’re not gonna be. The whole emerging market thing has been misnamed, it should have been named Asian middle-class consumers. You wanna bet on anything to power the next 100 years, you know, bet on middle-class families in Asia. The same way you might have bet on American families in the last century. It’s just a huge deal because they’re already at scale. Look at international travelers, people who fly out of their country. 40% of them are already coming from Asia. Capital flows around the world, Asia’s 23% of that. Trade around the world, Asia’s 33% about that. Airline ticket revenue, Asia’s 36% of that. Movie theater revenue, Asia’s 38% of that. It’s just a, it’s the biggest percentage of almost any number you choose to look at globally. Asia is going to be number one or number two. More and more it’s going to be number one. And that’s really my takeaway. I’ll put the link into the McKinsey study. It’s great. It is definitely worth your time. It should get you kind of excited about all this. It’s pretty amazing what’s going on. And I think the big takeaways, since I just gave you kind of a lot of stuff. Number one. Asia is already at scale. It’s more or less the number one or number two market for most things related to consumers and that is increasing very rapidly. Number two, within that, it is becoming increasingly interconnected people, knowledge, transportation, goods, services. It’s all starting to stitch itself together. And that’s becoming very powerful in business. And it’s also creating a lot of interesting complimentary effects, like a digital giant in China, investing in a Southeast Asia company, and then pushing in a ton of capital and expertise, and even sending one of the founders down there to run the thing. That’s a good example of all of this playing out, and it’s pretty awesome. So I’m going to keep it shorter today because I kind of ran over long the last couple of these. But yeah, I’m basically still trapped, I don’t want to say trapped, grounded in Thailand, which is increasingly shut down. We’re getting temperature checked every single building you go into, most of which are closed. My own little apartment here, I get temperature checked every time I come in. The 7-Eleven across the street just introduced today. We are completely locked down. To be honest, it was kind of interesting for a while. I’m not enjoying this anymore. It was, I’m so bored, I don’t know what to do. I spent, fortunately the day before the lockdown happened, well, one of the earlier stages of the lockdown when they closed all the shopping malls and stores, the day before that happened, I went down and I bought a PS4 and a bunch of games. So I’m sitting around like… playing PS4, waiting for things to open up. My family asked what I was doing and I basically told them I’ve been learning to drive the Batmobile, which by the way, I’m really good at now. I spent a couple hours learning to drive the Batmobile in Arkham Knight, which is like my new favorite video game. That game is just the best. Like, I really like the superhero video games because I kind of grew up reading comic books. And like, like. Arkham Knight and Spider-Man are just the best video games. I feel like I really got jipped as a little kid. Like when I grew up you had like comic books and these sort of you know earlier video games that really sucked. Now the kids growing up to gay get like the greatest things ever. So anyways that was my day. I learned to drive the Batmobile. If you have any comments, if you have any suggestions for video games please let me know because I’m almost done with Batman. If you have any suggestions on like really good PS4 games, that actually would be pretty helpful. But I’m hoping we are going to lighten up here in Thailand and fortunately, China is starting to now open up. I mean China was the first to get hit and now it is the first to sort of reopen its economy step by step. And I’m hoping businesses, because that’s where I focus most of my time. 75% of my time is… is business out of China. You know, it’s to some degree South Korea and I don’t actually do that much in Japan but I totally want to just because I enjoy being there so much. If you do any business in Japan, you want to do something, please call me because I’m like I just love going there. So I’m looking at that but hopefully if things start opening up in China I’ll be able to get back into business here because it’s yeah I’m getting a little stir crazy now. So that’s it for today. Thank you so much for listening. I hope this was helpful. I know this was kind of high level stuff, which is not really my thing, but every now and then it kind of gets you inspired and gets you psyched up a little bit. So that’s, I probably won’t do many of these, but that’s it. Thanks a lot. If you haven’t subscribed, please do so. You can go over to and have a great day. Everybody stay safe and I will talk to you next week.

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