DBS Economics & StrategyKopi Time E098 - Prem Bhatia on shifting sands in the tech start-up scene
Prem Bhatia, co-founder of Graas, a tech solution provider for e-commerce, joins Kopi Time to talk about the direction of data driven e-commerce and issues facing start-ups at the current macro backdrop. He draws on his decades-long experience as an entrepreneur and investor to make the case for data and artificial intelligence-driven solutions in the fragmented ecommerce markets in India and South-East Asia. He recognises the dark clouds looming as market correction and banking sector difficulties translate into substantially higher cost of early stage capital. Consequently, growth above all has been replaced by a welcome focus on profitable growth. At the same time, Prem remains encouraged by the wide range of promising ideas and solutions percolating around the region. He is keen to press the idea that innovation requires capital looking for both value and growth. Current selloff and higher cost of capital may well differentiate and lift up some of the best companies in the region. He considers the convergence of e-commerce and advertisement, catalysed by data analytics, as a major, consequential trend. We then discuss the present and future of data privacy, regulation, Tik Tok, and generative/predictive AI. Final word: “the ability to increase productivity is what AI delivers... AI will kill process managers by automating process management.”
Welcome to COVID Time, a podcast series on Markets and Economies from Ds Group Research. I'm chief economist, welcoming you to our 98th episode.
Today, we will put aside most of global macro. There will be a little bit of it, but mostly it will be not the usual global macro that we talk about because we will delve into the world of tech startups. PAA is co-founder of Grass, which was recently named by C B Insights to its annual retail tech 100 list showcasing the 100 most promising private retail tech companies in the world. According to Grass's website, it is a growth as a service technology solution provider using predictive A I to help enhance the growth of e-commerce businesses.
Its proprietary platform integrates previously siloed e-commerce data, but more about them about all that from Prem in a second.
But before Grass Prem founded several companies served at the board of several more and has been deeply involved in tech investment. Prem. Pat. Welcome to Kobe Time.
Thank you very much, big fan. I started listening back in the early days of COVID and I haven't stopped. So pleasure to be here. I've
spoken with your partner and some of your employees and that has made me a fan of yours as well.
Um uh Prem uh we will talk a lot about your journey as a tech entrepreneur, uh grass the startup scene and so on. I really would love to hear about your in and all of that. But first, um we're discussing this in the middle of March. A few things have happened in the form of Silicon Valley Bank and a few other banks that have got under. So talk to us about its impact on the tech startup scene.
Um Well, I mean, I think two lenses to it, I think uh as a depositor, it's really quite worrying that you can deposit money in, in uh in a bank that you trust and then one day wake up and not be able to withdraw. Right? Um That is obviously extremely worrying. Um I think the other lens is that um as a a technology startup,
uh if this were to continue, um along with high interest rates,
I worry about the venture capital ecosystem and the ability for other entrepreneurs and startups to, to raise money. Uh things have fundamentally changed since from 12 months ago, since we raised money at rest.
Right? And so let's stay with that a little longer. So my understanding is two Fridays ago when the S U V issue was front and center. A lot of V C
lobbied Washington DC. Very hard. And their point was that in S E V you have a lot of startups and tech companies with much more than $250,000 deposits and S E V going under without taking care of those depositors would be very, very problematic. What were you hearing from your peers? Or perhaps even you had some exposure to S E V? I mean, what was the mindset in those days?
Fortunately, no good. We are D BS born and bred. Um No, I mean, I think, you know, everyone's worried about,
uh
what if they have made this mistake or what is the mistake? The mistake is they manage risk badly, right. Um I don't know where D Bs is my bank. I don't know where D Bs invests, right? Um And everyone is now worried it's fundamental, right? This is existential almost uh that if you have to now double click on where your bank invests and whether there's timing mismatch
do your deposits. Um Are they at risk? Right. And that's really what is scaring everybody. Um I mean, I think that, you know, at a more macro level,
we're sort of just seeing the after effects of the COVID hangover. Uh And, you know, we saw a prolonged period of zero interest rates. Uh We saw a lot of liquidity in the system. Uh We saw some uh fast and loose bets being made, uh during that, you know, uh 0% interest rate regime.
Um And now you've got a fed which is basically taking up interest prices and interest rates fast. Right. And, uh,
and, and, and you're going to see the after effects, not just in banking, but in every single sector. Um but I would have thought that, you know, banks would have been able to manage risk better. Uh long story short. Um And now I think you're faced with a sort of a question on whether, you know, banks that invested in crypto, for example, should they be back, stopped by the government or their depositors be back stopped? And uh
Yeah, it's uh it's an interesting time. It's reminiscent of 2008 in some respects, hopefully nowhere near as bad. Uh where in 2008, a lot of it was banks and, and housing, right? And now it's sort of banks and technology. Um and uh
I think that, uh you know, a lot of people have climbed all over venture capital. Um And I don't know, I, I have a fairly contrarian opinion.
Right. Right. Now we're going to get into that in greater detail. Um, talking to people in Silicon Valley, which I'm sure you didn't during that time,
was your sense that there were a lot of companies which only had business with S U V and therefore, if S V V collapsed, they would not be able to make payroll or was it exaggerated that actually companies had multiple
banks. No, I think it was quite the opposite. I think TB was, was home not just to funds, um but also to their portfolio companies and
uh hindsight's a, a great thing. But look at the end of the day startups, uh uh they've got a lot to worry about. It's a bit like, um you know, dancing between raindrops trying not to get wet and the last thing you need to worry about is managing multiple banking entities.
Um So, yeah, I think most of them
uh struggle with payroll. Um and uh are still worried about when the money and how it's going to come back. I don't think it's a straightforward process,
the guarantee is there, but that doesn't mean that everything can be.
And I think right now uh for startup founders, uh you know,
I think 2020 2021 was very much about growth at all costs.
Uh 2022 2023 very much about survival runway cash flow margin. Um And, and yeah, cash flow is cash flow. That's a good thing.
I agree. I, I think at a fundraising level, uh we've raised 50 million bucks so far. Um Let me just put it this way. Uh 40 million, the 1st 40
Uh much easier than the last 10. Um and um yeah, investors, their LPS everyone is looking at the unit economics um and profitability with a magnifying glass and that was not the case two years ago. I
Mean, one wonders whether the
good thing also has some downside, which is that you do want a lot of creative destruction and free uh, germination of ideas and very eager money. If that were to get constrained a little bit, maybe that
put some dark cloud for the outlook that, you know, we won't have that many interesting things percolating through the system because the fear of failure would constrain money going in.
Yes, I mean, look, uh
I think if, if, if you look, if you total up all venture capital globally, right? It's
uh 2021 was about $700 billion right? Uh uh
But I think it's settling that, that $400 billion 400 billion
on a global GDP of 100 trillion, right?
That is your investment and innovation. And if that dries up,
um
I think that,
you know, innovation in its truest sense, whether it's climate change, whether it's health, whether it's commerce, whether it's financial inclusion.
Um that was slowed out. Um So
yeah, there's some larger, much larger implication than, than um short term blame. Right.
Right. Now, which is, I think why we have seen regulators particularly in the us? Uh not necessarily go with the playbook of just letting people who have more than $250,000 under the bus because I think those are the concerns echoing through them to some extent, right from your journey. Are you, are we going to start talking about cricket or are we going to talk about something even before that?
Um Yeah, I mean, we can start anywhere you like um how, where would you like to start?
Well, tell us about your journey. What brought you to grass? What are going back to say 20, years?
Oh man, loaded question. Uh
So I guess my journey to borrow from Hollywood has been um
I went from Mad Men and Maguire
to today, Money Ball and Minority Report. I
hope everybody got that. I got
it right. So uh grew up in a um uh very much in a marketing family that was one job only all his life at Unilever mom worked at an agency, started off in, in, in advertising, moved into what embarrassed my father, which was something called sports marketing.
Um and uh managing celebrities like the likes of Tendulkar and Ganguli. And um and he was embarrassed
Until the movie Jerry Maguire came out and then it became the new sexy thing to do. Um and yeah, I ran that. I was fortunate had an exit uh early in my 20's. Um and then went on to found uh
uh tech and digital marketing companies across India and Southeast Asia and the Valley um are now very firmly sconc in the world of data and artificial intelligence. Uh But with a marketing twist. Uh So marketing has run through my, I said the common thread, I guess that's run through my existence.
Right? Listen, I want to talk about grass of course. But before that, so staying with that issue of your sort of journey over the last few decades, I see that, you know, you also advise a lot of companies and you also act as a direct investor in certain stuff. So those things are also with the marketing lens or you do some other stuff as well.
Yeah, I mean, myself and my co-founder, we've been advising and investing in a multiple startups for a few years, but
more often than not, it's startups that, you know, where we can add value uh that typically seed stage investments anywhere up to like half a million dollars. Um And yes, I would say marketing is the common thread because we're investing in companies that have some consumer facing business. Um uh advertising included.
OK.
All right. Let's talk about Grass and let's see how that sort of culminates everything that you've been doing the last two decades.
Um Yeah. So Grass actually is a sort of an acronym for growth as a service, which is a nice play on. Um And uh they simply put where
uh we help companies grow online. Um We help them grow topline and we help them manage margin. Uh And we use artificial intelligence and automation to, to do it. Uh So we take
gut instinct out of the equation and, and we automate we automate their decision making via data.
Um We're not your typical startup. Um
You know, grass uh raised money in April 22. Uh we acquired two software companies. Um our thesis was that uh
um
retail
and e-commerce and advertising are gonna become one and the same thing. Um And, and our thesis from two years ago,
I think it's come true. Uh And we go into that in a second. Um And
yeah, I think we're also
geography is important unlike the US, which, you know, when you look at,
you look at a country's GDP, uh you look at, let's say, at a global level, let's say the, the world does 100 trillion and, and GDP retail is probably about 30 trillion. E-commerce is probably six on that 30 trillion, right? Uh It'll vary by country region. Uh But we play in from Mumbai to Manila where you're looking at
A combined GDP of about seven trillion. Um
um
30% of that maybe is retail. Um but e-commerce is only $200 billion. Uh and so there's a lot of room for growth. Now, what's peculiar is that
in this part of the world, unlike the US or China and the US
to, to do well, online, you sort of, you know, you have Amazon, you have maybe Shopify and in China, you have Baba and you have G D dot com. And,
but for some reason in India and Southeast Asia, you have a very peculiar um, scenario where you have, uh, some of the world's largest companies going head to head for two things. Uh, one is e-commerce wallet spend, the other is advertising dollars.
And so you have, uh, Amazon that you have reliance, you have 10cent, you have Alibaba, you have the C group, you have Tiktok, you have Google, you have Facebook, you have all these juggernauts um playing in this arena.
And so when players of that
intelligence capitalization and sophistication play in the same arena, um
the only people who lose out actually are the people selling online, the brands, the companies, the, the small and medium sized businesses.
And so we're here to try and level the playing field uh via A I
OK. I'm going to give you a hypothetical. It's not entirely hypothetical because I know the company. So this friend of mine, he's trying to set up as a fledgling company. Uh It's about uh sports content based out of Singapore, broadcast sports content, but he has to face ESPN S and the, you know, big TV networks of the world. And so if he were to come to you and say that, you know, I have, you know, some approvals from the regulators to capture local sports content,
but I have no idea how to monetize this. You know, who in Singapore wants to watch like school sports or premier League of Singapore for football or something like that.
Um Again, we have not prepared for this at all. I'm just completely extempore. What kind of, you know, sort of strategy would you help a company like that do? Because you're talking about smallish
companies. So he's not doing e-commerce, he's doing content,
right. But he wants to, hopefully, you know, get a subscription service and sell it to people and that sort of stuff or sell it to other large content managers in the world
that so that I think is more sort of under or subscription services. And, and uh
yeah, I mean, it's, it's, it's, it's not easy, it's not
notice that already
you're seeing. So you've got basically two, essentially two monetization models. You have
uh subscription, uh and you have advertising and sometimes you have a hybrid. Um and advertising is obviously based on, um, it used to be based on eyeballs and how many people watch today. It's based on how many people buy. Correct. Right. Um So a little more difficult for a generic content operator like a Netflix to, to make the, um,
to tie the, the, the loop between watching something and buying something, right.
So that leaves the other business model which is subscription as a service or SAS. Um, look, the reality is, is that in India and Southeast Asia, um SARS has just started, um, you literally have, you know, a handful of companies that have uh exited uh IP O or in terms of acquisition.
Uh But the important thing is that it has started, um you know, and uh it doesn't, the region doesn't have the depth of, say A US. Um
uh But where,
But it's, it only started 234 years ago, maybe five. and we're seeing a lot of innovation in the space uh in terms of our monetization model.
Uh So my advice to him would be um you know, uh
it's difficult uh content is just a very, very difficult business,
very investment
intensive, investment intensive, long payback periods and so be patient, find your niche, right? But you know how you say this and then you and then you have um
what I thought was almost impossible where, you know, you have um
influencers like a Mr beast who every time they put out something is watched more times than the Super Bowl.
My 10 year old is an avid viewer, Kim
Kardashian, another one. Every time she puts out something it's watched by more people than the Super Bowl or the IP L. So,
uh you got to find that skate, right, right. Or you've got to go deep into a niche, I guess.
OK. This might be a little closer to your heart. So I recently was in Bangladesh and we met a B2B company. Uh they are trying to become like the original form of Alibaba, which is bring brands to their marketplace and then connect these brands to retail stores in which they have uh good data and information about, you know, what is the demand side and they're trying to get like say a Unilever to Bangladesh and then market their products.
They probably can benefit a lot from market intelligence and user data and so on. So your A I thread, how does that sort of feed in?
So
I'll, I'll tell you a story about how grass started and, and the moment at which I thought this is now something very real and worth pursuing. Um I was talking to, I'm not gonna name names but uh a very senior chief marketing officer of one of the
F MC G companies in Asia. Um but he said to me, he said,
if you ask me how many chocolates I sold today in Vietnam
on how many different channels uh website marketplace, uh or how much chocolate was like in my warehouse
or how much Facebook or Google or tiktok contributed towards the sale of that chocolate.
He said it would take me the best part of two weeks to find the answer. And I was like, wow, if a company of this size, uh has that problem, I wonder what's happening with smaller companies. And so we went and asked, you know, dozens of, of ecommerce heads and CEO S and the response was identical, which is that it is almost
are impossible for companies to put all the different data sources together. They're very much in silos.
Um
So that's problem. Number one, collecting the data. Problem number two is
what do you do with the data? Right. Uh And that's really where
data science um data engineering uh and A I come in. Um So I think India and Asia
or Southeast Asia where at the start of the journey where companies are, are understanding the power of data um and putting it all together.
Um But I would say if you had,
If you were to ask me, I'd say less than 10% of companies uh in this region have understood, how important data, is
how to put it together and what to do with it. Uh So it's very much the start of the journey. Um
So I am a prime example of this complication. I recognize the value of data. But this podcast, for example, will go out on a podcast platform,
Apple Google, Spotify, et cetera. It'll go out on youtube and there's ad V S website in which there will be some of my clients who will come and download the podcast or what the PDF version or the audio version, I can consolidate all this. I cannot. So for me, if you were to ask me a week from now, how did the podcast go? I'll be able to give you some isolated answers about how much download was done through the a specific class platform, but I will not be able to consolidate. It'll take me also hours, but you're
not alone, you're not alone. Uh I mean, uh
a lot of people won't admit it but they're in exactly the same position. I mean,
I think that, you know, if you again, pull back for a second and you look at what's happened over the last 20 or 30 years, I think that,
um
You know, there have been sort of 3, 4 mass mega trends, right?
Um I think thanks to uh Nokia and then Steve Jobs, I think uh mobile and, and mobile internet to be specific was the big theme
in the 2000s, right? Um I think that
somewhere in the the succeeding decade that mega trend became the cloud, right? Um And then
I think the next trend is A I, I mean, there was a, there was smaller, maybe trends like crypto and web three and, and the metaverse and who knows how that will play out. But I think that A I is the next mega trend and you're seeing with T GP T and all that. Um But I think it all begins with putting all the data together and uh that's really what grass does. We're helping companies put their data together,
we're helping them make decisions based on that data in real time. Um And uh we're taking gut instinct out of the equation and automating a lot of those decisions. No.
So you are at the cutting edge because I think that's, that's a big hold right now. But even in my podcast example, technically speaking, it's all out there, but I don't have a neat set of API S or a consolidator out there to give me a full picture at any real time, a given moment.
Um, OK, so that certainly tells us a bit about grass and you talked about your fundraising round. So congratulations on the 50 million fundraising. So given that
companies right now are going to be struggling either in terms of higher cost for the availability itself. Give us a sense of the startup scene. Um maybe not just what's happening right now, but overall, you know, I mean, are you excited by South Asia and Southeast Asia startup scene right now?
Yeah, look, I meet about 100 maybe 50 to 100 founders every month uh across, you know, seven countries that we operate in. And uh it is hot.
I mean, it is,
oh,
In the innovation that's happening is honestly, it's for me, I'm 48 years old. I haven't seen this, the volume of innovation happening at the startup level. Um
But I think that what's happened over the last couple of weeks um is really worrying because if venture capital dries up, um
what happens then um I mean, at the end of the day,
I have a question for you, right? I mean, if, if you were a billionaire
And maybe you are good one. But if you were a billionaire, would you rather put five, uh, put, put your money into a fixed deposit at five
Or give it to a venture capitalist in the hope that he could return 20% IRR triple your money for in five years. It's, it's a tough call right now. And so my question to you is that
I don't think most founders or if any founders have ever seen
Um a global situation in which interest rates may remain between five and 10% for the next five years.
What happens?
Right.
Prem I mean, I don't want to come across as utterly pessimistic because, you know, I am with the founder and I know founders tend to be optimistic. But in this particular instance, I have no way of sugar quitting the answer that the choice that you mentioned, I think the answer is very clear. It's the 5% um
the zero rate environment enabled a lot of things that you and I I think will agree that, you know, whether there was access or not, it create an unleashing of capital to all sorts of projects. And that was
even if there were excesses, it had an overall positive impact to your point that, you know, the scene became hot and there are all these, you know, dreamers and thinkers and entrepreneurs, bringing their thoughts and ideas together. And there was a capital of a flow of capital that was available for them. It's going to be difficult. Uh I spent earlier today talking about the impact of the S E V uh collapse. And we can talk about a wide range of impacts. But the bottom line is it translates into higher cost of capital.
Uh and, and the higher cost of capital changes, a wide range of calculations in terms of R O E, in terms of margin and so on. But that takes me back to my question for you that when you look at entrepreneur, I
Had one question, right? So
the flip side to that is that valuations have halved, right? Uh
It's a great time to be investing in, in, in younger companies, right? And so 5% versus a curated list of investments uh that could be the home run.
It's not that easy a call, right? OK.
So I I met an investor who's on that camp yesterday and that investor was basically saying that, you know, but it was not your typical, it was a family office. They've been successful, they have a lot of cash and they rather bluntly told me that they're waiting for the crash because they want to deploy capital and they want to buy a lot of things to your point because they felt that the valuations were excessive in recent years and they don't think the valuation adjustment is done, but they have a lot of dry powder and they will deploy it
my response to them was that if there are many people like you, then maybe the valuation will not go down much further because people are sniffing around and looking for value.
Yeah. Well, I, I mean, I hope,
uh, one way or the other, I mean, I obviously hope that interest rates do come down, um, which allows LP S of investors and venture capital to, to, to be a bit more bullish. But I do worry. As I said earlier, I said, if venture capital as an ecosystem dries up, um I think it will have a fundamental effect on global innovation and
innovation that, you know, it could be in health care, could be in climate change, it could be in science, commerce, financial inclusion. Um And that really is the worry um because if that dries up and that innovation evaporates or slows down, that's not good for anyone, I think.
So, I just want to stay with that Southeast Asia, South Asia startups a little longer. Um given that, you know, you literally need hundreds of uh founders on a regular basis and you look at their books um or the playbooks rather um margin
are, are these e-commerce businesses in South and South East Asia capable of showing the kind of margin that we have seen in the US tech startup system.
Yeah, obviously, it's a
startups have and so a very wide spectrum. But let me just sort of give you some examples um
of India, Southeast Asia in the sector that I'm familiar with, which is, which is commerce, right? Um So it just so happens that
the success stories, the local success stories are all have a common flavor to it. So Southeast Asia, you would probably say AC group
uh go to um
um grab um in India, um me uh maybe P T M, right? For parts of it.
Um
We've seen C group demonstrate profitability last quarter Q four. And that's great news. We need these local stars to,
to shine because if they don't shine, then, you know, it makes things even more difficult for earlier stage startups.
The flip side to that is, is that,
and this again goes back to venture capital and the ecosystem is that
you look at Southeast Asia and there is a hole and
there are not that many exits,
right? Not yet, not yet, right? Um And so you can't compare it to America because it's still early as a region. Uh and I E commerce as a discipline. Um But
we need the local heroes to shine,
right? Um And
if you break up commerce, let's say, was selling whatever you want to sell ties, right? If you break up your P N L at the highest level,
you'd find that the cost of goods would probably
Be about 30%.
Um You would find that logistics and warehousing and the last mile delivery would probably be about
20%.
And then
The last 50% would probably be advertising costs
50%,
And that's where the game is being played now.
Uh And that's why you're seeing a blurring of boundaries between Facebook, Google tiktok content companies, search engines, social media networks
and commerce companies like Alibaba, Walmart Flip, Amazon, et cetera.
Amazon to give you an example and don't quote me on this. But I, I'm, I'm maybe I'm off 5%. Um Amazon makes more profit from its ads business, which is five years old at best than it does from Amazon web services, which is a 20 year old business
supposed to be the crown
jewel, which is the crown jewel, but has a lot of
uh Capex, correct. Advertising has no Capex. And so you'll see
a lot of these guys look at Walmart's latest report. Um They have never seen the margin like they have in advertising, right? Uh If you look at Alibaba, if you look at the, the C groups, advertising is making up a huge component of profitability. Uh And why is that? Why have they all been able to do it is because
they sit on the data, they know that they are more,
has bought a B and C 21 days ago and is likely to purchase again. They know that has a family account and his wife buys D E N F. Uh And
I would say that the power of balance over the next decade is going to shift from Google Facebook um
To owners of 1st party data.
Uh It could be
retailers like Amazon Walmart could also be banks and credit card companies. Um
I mean, the truth is, is that if you were a shareholder in Apple
and you were sitting next to Tim Cook,
May you would ask him Tim, where's the next $50 billion dollars coming from? I know the answer.
I'd say there's a 5050 chance he'd say it's advertised.
I've been hearing in tech podcast for the last one year that when is Apple going to get in the business? Right. Yeah. And
So I think that we've reached 2023 is the inflection point where commerce and advertising have become the same thing.
I might be wrong and, and correct me if I am. But I think we've reached that stage now.
And of course, all of those things are interlinked with the usage of data and getting intelligent insights and intelligent nudges.
If you have the data, if you sit on the data,
you can command advertising dollars. It's as simple as that because you can prove purchase right
later in the podcast. I'm gonna ask you about this A I driven search will that, you know, disrupt and change the ad industry. But before I go there, um I just want to talk about this issue of
the likely
sort of, you know, the run with that we have ahead in terms of regulation, this banking system and problem the need for regulators to step in or questions about data privacy and the impact of social media interactions on mental health. All these things are being discussed at length in the political corridors of Washington DC and Europe elsewhere. So on, even China sell the tech regulation
that Xi Jinping has undertaken has been in the guise of that anti monopoly behavior, privacy and so on. So how prepared is the tech startup scene to deal with this likely tightening of the regulatory oversight on the sector?
So I think just to pull back again, I think at a more fundamental level, ask me as an entrepreneur,
what would I choose between
interest which a bank provides me on my deposit
or safety
safety
every day of the week? Right. Right. And am I prepared to pay for that? Yes. Yeah. Right. So I think
you got to ask yourself whether banking as a business model needs to change. Right. A little bit. And uh
um
Fundamentally the question is, do you want interest and return on your deposit or do you want 100%?
Exactly.
So I, I tell you as a, as an individual,
I may gamble. I'm not gonna gamble with investor money. I'll, I'll take safety seven days out of seven. Right. Simple. Right.
Um And so then if we want the Ecommerce system, the data that e-commerce companies use that to be also absolutely safe. And we start putting more and more safeguards around that and we make tech companies more liable for the data that they use. Um
I mean, do you see that coming? And if it is coming, you know, how's that? I mean, are, are the other entrepreneurs ready to deal with that?
Yeah. So privacy and data. Let's talk about that a little bit.
What's your favorite restaurant in Singapore?
Well, right now, yes. Uh the revolvers,
but when you walk into a revolver,
you, you like it, when, when the says, hey, here's your table, here's your, they say, oh, we might not have the chicken but we have this. I think you'll like it. You like that. Right. Right. Right.
That's one side of privacy, right? And that's sharing of data.
The other side is when it becomes creepy and, and uh advertising follows you around and things like that. Um I, I don't know what the answer is. Um I think that, you know, you ask my kids,
our teenagers, they don't care about privacy like we do. Um And so
the regulators unfortunately are more often than not people in the latter part of their lives. Um And they may not see it the same way as teenagers do. Uh But I think privacy is, is um
um
but
it's, it's changing the definition of privacy. Um
And,
and time will tell, um we've seen what Apple has done to Facebook in the guise of privacy um,
there's the opt in clause that they, after the year
two years ago. Yeah. Yeah. Now it's, uh, every new app you open, you ask whether you want to opt in chances are that you're gonna say no, uh, which nine out of 10 people do and, and then that's affected the companies like Facebook's ability to serve your advertising. Um, and that's what's really caused the stock to implode. Um,
privacy is a pretty big debate. I don't know which will play out.
What about this issue related to national security? So India banned tiktok. The US is getting very tough on tiktok is under the guise that you know, their data may be used. American citizens data would be used by the Chinese government. Um You, your take feel free to be controversial.
So yeah, I mean, I don't know what the answer is. Uh
um I think what I do know is this,
I think that India tiktok is uh
never going to allow them. And if the US and Europe don't allow it, I think Tik Tok will double down on Southeast Asia, this region of 700 million people will become their primary play, play playground and it will become a force to reckon with both on content and ads and commerce. So watch out for Tik Tok and it's
really been transformation, right? The way they deploy their technologies, it's phenomenal.
It's a I at its very best like um Right.
OK. Since you mentioned A I I, I want to talk a little bit about A I. Um Of course, the last three months, the flavor of the last three months has been chat GP T. Uh Even yesterday I asked Chad G V T using just 21 2021 data to give me a synopsis of Silicon Valley banks issues and problems. It was amazing. It was absolutely amazing that just using
15 month old data, they flag the duration risk, they flag the concentration risk and so on. Um so in terms of using a I for search and using a I for the kind of work that you are doing, where do you see the most compelling use cases?
Again? Let me just step back and give you my because I, I'm not a tech guy, I'm a business guy. Here's my um
definition or my understanding of, of A I. Um So
imagine an Excel sheet
with a billion rows and a billion columns
and every cell moving in in real time.
And I imagine a billion of those excels, right?
The ability to
extract the beta and pattern match
is what we call machine learning, right?
The ability to predict what will happen
is A I,
right? Uh Now
GP T uh or open A I, the parent company. Um
We've seen the, we've seen over the last few months.
I mean, it's amazing what it can do. Um But it is, it's still text
I think the next version
uh probably would be a video
or photography and we text image video, right? And that's
uh I, I think that's gonna happen quite quickly.
So I will ask you to make me a movie about such care hanging out with the party in 1997 and I'll do
it. Yeah. Or it can be uh give me um
40 minute episode of Demo in podcasting and doing an interview with the
Yeah.
Yeah. And it'll be then, you know, you have 30 seconds. So what is, what, what you believe is real, is going to change and what is actually real, what is certified? And I think that has impacts on education. I, I worry about, you know,
my Children asking me, can I use GP T for this exam? How schools and universities will react? Um
So I think it's a, it's a game changer and I, I also think that when a company like Microsoft puts $10 billion in it,
it ain't looking for an extra term. It's looking at something substantially more, right? And I think that
it's a very shrewd move because I think it's going to enable them Microsoft to compete with Google or the browser, right? Uh So it'll be Chrome versus whatever Google come up with. Uh It'll help Microsoft compete with Amazon for the cloud.
Um And there's gonna be,
it's gonna be a wild ride the next two years. Sounds
like you've already picked a favorite MS F T.
Yeah, I mean, you know, I think uh I've got,
I tell my Children, I've got two kids. I say one of you
is your, your future is in the hands of Amazon and the other, your future is in the hand of microphone.
Um um Agree or disagree that the advent of the internet was subject to too light regulatory touch. As a result, we saw some of the negative aspects of internet proliferate in the last two or three decades and the issue that we were talking about privacy and so on uh and
chastened by that experience, regulators will be very, very tough on A I companies that start rolling out these provocative things that you're talking
about. Yeah.
How are they gonna stop
it?
They will make companies level if your voice is being used in their platform to create a persona that is not yours
and difficult one to police stack, right? Um It's uh
um I mean,
I'm not,
we saw the senate hearings on Facebook and privacy.
The senators did not wrap themselves in glory.
Uh A I is gonna be infinitely more complicated uh because we're just starting on that journey. So how a regulator or a senator or a politician is going to be able to play out in their own minds? What is coming ahead?
I, I, I don't, I'm not sure they're going to be successful,
but yeah, I mean, as I said, earlier, I think A I is not a pretender, like some people say crypto and the metaverse were pretenders to the mega trend throne, right? I think A I is the real deal.
And I think that at a fundamental level
because it increases productivity.
I, I think it's just gonna be an amazing, great thing for the global economy. OK?
You're convinced that A I raises productivity and I think it's an easy case to make software services. How does it increase productivity or does it not always increase productivity?
How does A I increase productivity?
Well, that I think we will agree that, you know, potentially substantial. So just as software services or the subscription business,
I can see it's very lucrative from the seller of that service. But is it always clear that the buyer of the service is seeing significant productivity enhancement?
Yeah, I mean, I think so, I think at its most atomic level is
you can,
you can pay when you want to, you can pay on a daily basis, you can pay on a monthly basis, you can pay on an annual basis. That's really what soft you can eat as much as you can. You remember the old days of software where,
you know, I B M and Microsoft and you were like buying physical servers and, and C Ds C Ds. Yeah. Um That's all changed because of a, now software is being delivered over the internet and you can pay uh when you want, you can switch it off when you want. And so a is just a sort of a monetization. I think um
I think
his
might,
that is that
I will
if it can become, if you can charge customers based on outcome,
which is
you are selling something.
Um I offer you my software as a service but I say, listen, don't pay me every month,
only pay me when it succeeds.
Um Tough thing to say no to, right.
Um I think that's what A I enables. Um I think that just the
the ability to
increase productivity to automate decision making.
Um I think that's what A I delivers. Um
And it has a another implication on labor uh which uh which no one wants to discuss. Um But the reality is is that
um
you know, most companies, uh I read this amazing article the other day about uh
you have leaders who give vision in a company and then you have front line workers who execute on that vision.
Um And in the middle, you have what is called process managers. I have read the article too.
Yes, it's
amazing. Yes. And that's going to and that is what A I will kill because process management is overhead. That isn't required because
you will tie data into workflows and decision making and it will become instantaneous rather than hours and hours of meetings and, and, and things like that. Um And I think that
at least in the short term uh is what's worrying people uh because it may fundamentally change uh employment and labor.
Well, then my final question is related to that in your company right now. Is it fundamentally changing your notion of labor? And also how globalized are you? I know that your work is based in South and South Asia. But do you have staff sitting in Silicon Valley and Middle East elsewhere?
Um
How has it changed our company? Um
We try and run a lean ship. I mean, we have 350 people across seven countries. Um
But I can tell you that it is already changing our customers and, and how
they perceive it. The customers are turning around to us and saying, um
I had
nine data analysts and with your software, I only need three. Uh we have customers who are saying, um
I have staff who overlooks commerce on Shopify or Magento or Lazada or shop or flip card or tiktok. Um I don't need that many managers because with the also fair solution because I, I, I open my laptop, I look at your software at nine AM and by 9 15, I know exactly what I need to do and, and that's what the A I does,
Right? Um so the final bit. Do you have employees around the world just beyond the seven core
markets? No, our employees are in the our seven core markets and we have consultants and specialists and M L and, and data science who sit elsewhere. But our employees uh we're playing Mumbai to Manila until further notice, until
further notice. Um
Look, I mean, as I said, sometimes I take sort of pessimist end of the argument, that's why I really enjoy talking to our founders who have an optimistic bend. So while I do worry about A I and privacy and so on, I I see where you're coming from from. So, uh thank you very much for your time and insights.
Thank you very much. Uh Good to meet you again. Big fan of the show. And how many episodes have you done? Now? We're at 98 98. Oh my God. It's adding. Who is the guest on the 100?
It will be a surprise.
All right. Well, thanks. Thanks very much for inviting me um
and a great chat. Thanks very
much. You know, I had a great time, learned a lot. Uh Thank you to our listeners as well. Koby Time was produced by Ken Delbridge, Violet, Lee and Daisy Sherma provided additional assistance. All 98 episodes of Coby Time are available on Apple Google, Spotify as well as on youtube. It is for information only and does not constitute any investment advice. As for all our research publications and webinars are concerned you can find them all by Googling D BS Research Library. Have a great day.
