The Sea Ltd. co-founder outlines strategic financial adjustments, including economy travel for business and budget-friendly local transport options, to steer the company towards self-sufficiency.
In August of last year, Forrest Li held the title of Singapore’s richest individual, with a net worth of S$26.6 billion, according to the Bloomberg Billionaires Index. However, by May of this year, he experienced a staggering loss of over 80% of his wealth due to a market crash that contributed to the world’s 500 richest people collectively losing over $US1 trillion (SGD1.4 trillion).
Li is the co-founder of Sea Ltd., once celebrated as the most valuable tech company in Southeast Asia, encompassing businesses in e-commerce, online gaming, and digital payments. At its peak, the global consumer internet company employed 33,000 people and served as the parent company for Shopee, SeaMoney, and Garena, as well as the football club Lion City Sailors FC.
Like many tech firms that saw significant growth during the COVID-19 pandemic, Sea has faced challenges due to rising interest rates and geopolitical tensions stemming from the war in Ukraine. Investment flows that once surged have now dwindled.
In a memo sent to Shopee employees on September 15, Li detailed the serious cost-cutting measures the company will implement to achieve self-sufficiency, which he identified as the organization’s top priority. He announced that neither he nor the top management team will receive salaries until this goal is met.
“The leadership team has decided that we will not take any cash compensation until the company achieves self-sufficiency,” Li stated in a 1,000-word memo published in full by Business Insider on September 20.
He acknowledged the turbulent climate facing the industry: “When countries reopened, we lost the strong tailwinds we had during the pandemic. Then, the world was hit with a series of macroeconomic challenges: war in Europe, severe supply chain disruptions, soaring inflation, and slowing economic growth. It has been a brutal year for everyone, and the capital markets have plunged into turmoil. Some economists are predicting a global recession.”
Li cautioned that “this is not a quickly passing storm; these negative conditions will likely persist into the medium term.” While he noted that the firm has “a solid cash base that puts us in a safer position than many of our counterparts in the tech sector,” he emphasized the importance of making necessary changes to avoid depleting resources as “investors flee to safe haven investments.”
Moreover, he expressed skepticism about the ability to raise funds in the market. “The only way for us to free ourselves from relying on external capital is to become self-sufficient, generating enough cash for all our needs and projects. If we manage to do this, it will have huge implications for our future,” he asserted.
Specific cost-cutting measures include booking economy class for business travel, limiting hotel stays to US$150 a night, eliminating reimbursements for internal or external meals or entertainment, and opting for the most economical ride-booking or taxi services available.
“The next 12-18 months are crucial to the long-term health and longevity of our company. Let us do what we need to do to get through this together,” concluded the Sea co-founder.
