In August of last year, Mr Forrest Li was the richest man in Singapore. According to the Bloomberg Billionaires Index, his net worth was S$26.6 billion.
But by May of this year, he lost over 80 per cent of his fortune due to a market crash that caused the world’s 500 richest people to lose over $US1 trillion (SGD1.4 trillion) this year.
Mr Li is the co-founder of Sea Ltd., which was once widely perceived to be the most valuable technology company in Southeast Asia, with e-commerce, online gaming, and digital payment businesses.
The global consumer internet company once had 33,000 employees and is a holding company for Shopee, SeaMoney, and Garena, as well as the football club Lion City Sailors FC.
Like other tech companies whose fortunes soared when the Covid-19 pandemic began, Sea faced difficulties due to an increase in interest rates as well as the tensions due to the war in Ukraine.
Investments that once poured in came to a halt.
In a memo that Mr Li sent Shopee employees on Sept 15, he outlined the serious cost-cutting measures the company will take in the bid to achieve self-sufficiency, which he called the firm’s number one priority at this time.
In addition to limiting business travel expenses, he wrote that neither he nor top-level management will be receiving their salaries until the goal is achieved.
“The leadership team has decided that we will not take any cash compensation until the company achieves self-sufficiency,” he wrote in a 1000-word memo that was published in full in Business Insider on Wednesday (Sept 20).
“As you know, this is a turbulent period for our industry. When countries reopened, we lost the strong tailwinds we had during the pandemic. And then, the world was hit with a series of macro-economic blows, one after another: war in Europe, huge 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,” wrote Mr Li.
He added that “this is not a quickly passing storm: these negative conditions will likely persist into the medium term.”
And while the firm has “a solid cash base that puts us in a safer position than many of our counterparts in the tech sector,” if changes are not made, this could easily run out as “investors (are) fleeing for ‘safe haven’ investments.”
Moreover, he added that he does not “anticipate being able 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 own needs and projects. If we manage to do this, it will have huge implications for our future,” he added.
Some of the specific measures he outlines were economy class flight fares for business travel, US$150 a night for hotel stays, no more reimbursements for internal or external meals or entertainment, and the most economical service option provided by local ride-booking or taxi services.
“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,” wrote the Sea co-founder. /TISG