Latest / SEA of Startups / Who Owns the Scarce Thing?

Transcript

Who Owns the Scarce Thing? · SEA of Startups

• 0:00
  SPEAKER_01: the question that decides who gets rich in the next 10 years and who just gets used
• 0:08
  SPEAKER_01: who owns the thing that is actually scarce think the timing is as good
• 0:14
  SPEAKER_01: as it has ever been the world is trying to diversify where its chips come
• 0:20
  SPEAKER_01: from nobody wants every advanced part made in one straight that could close on
• 0:27
  SPEAKER_01: a bad tuesday it has always worked this way ai or no ai
• 0:34
  SPEAKER_01: uh value accrues to whoever controls the scarce thing
• 0:42
  SPEAKER_01: this week
• 0:43
  SPEAKER_01: the two biggest stories in southeast asian tech were a chip program and a cable
• 0:52
  SPEAKER_01: not a funding round not a unicorn not somebody's ninth super app pivot
• 1:01
  SPEAKER_01: or whatever it may end up being it's a government-run ship incubator in penance and
• 1:12
  SPEAKER_01: a 3 600 kilometers of fiber being dropped on the seabed between india and singapore
• 1:20
  SPEAKER_01: and i want to tell you why those two fairly boring stories laid side by side are
• 1:26
  SPEAKER_01: the most honest picture of this region that we're seeing right now because both
• 1:31
  SPEAKER_01: of them are asking the same question the question i ask in every partner meeting
• 1:36
  SPEAKER_01: at indelible the question that decides who gets rich in the next 10 years and
• 1:43
  SPEAKER_01: who just gets used
• 1:46
  SPEAKER_01: who owns the thing that is actually scarce
• 1:52
  SPEAKER_01: i'm kevin brockland this is sea
• 1:54
  SPEAKER_01: of startups real raw relatable now let's get into it so
• 2:01
  SPEAKER_01: to kick things off let's start in malaysia because on the first
• 2:07
  SPEAKER_01: of july something happened that would be very easy to laugh at um
• 2:13
  SPEAKER_01: the government through mtdc the malaysia tech development corporation or whatever
• 2:21
  SPEAKER_01: that stands for launched the first cohort of
• 2:23
  SPEAKER_01: a program called semi-con start malaysia 10 companies picked from 39 that applied
• 2:29
  SPEAKER_01: a pot of 10 million ringgit for the first phase up to a million ringgit per company
• 2:35
  SPEAKER_01: a structured program to help some local semiconductor startups get off the ground
• 2:40
  SPEAKER_01: kazana the sovereign wealth funds money in the mix now million ringgit
• 2:45
  SPEAKER_01: a piece is basically 250 000 so we're not talking massive funding
• 2:49
  SPEAKER_01: but we're talking funding above the other grants now if you've been in this region
• 2:54
  SPEAKER_01: as long as i have your first reaction to government launches a program to build
• 2:58
  SPEAKER_01: a high-tech industry is a small tired sigh
• 3:03
  SPEAKER_01: because we've seen this film we know how it ends we know the history malaysia has
• 3:12
  SPEAKER_01: a graveyard
• 3:14
  SPEAKER_01: of these grand corridors mou signings innovation valleys state venture funds
• 3:21
  SPEAKER_01: that wrote checks in the slide decks and got slide decks back
• 3:26
  SPEAKER_01: the pattern is always the same big announcement big number a ribbon a photo
• 3:33
  SPEAKER_01: a handshake and then two years later you go looking for the companies
• 3:38
  SPEAKER_01: and there's nobody home it's been that way on repeat so when i first saw
• 3:47
  SPEAKER_01: the semi-con start headline i had that sigh ready to go too
• 3:55
  SPEAKER_01: and then i honestly stop because this this one has the potential to be different
• 4:00
  SPEAKER_01: so i have to do a little bit of positive spin it has a potential to be different in
• 4:05
  SPEAKER_01: a way that actually matters and i need you to understand exactly why because
• 4:08
  SPEAKER_01: the difference is the whole point of of why i'm doing this topic on this episode and
• 4:14
  SPEAKER_01: the difference is that this time there's already a real industry sitting underneath
• 4:20
  SPEAKER_01: the program
• 4:21
  SPEAKER_01: there's already a semi-con industry in malaysia penang is not a hopeful press release
• 4:28
  SPEAKER_01: has been doing semi -kon assembly and testing for for decades a serious slice of
• 4:35
  SPEAKER_01: the world's chips
• 4:36
  SPEAKER_01: pass through malaysian hands on their way to being packaged and tested that
• 4:41
  SPEAKER_01: that is not a pitch that is payroll that is factories that have run
• 4:45
  SPEAKER_01: for 30 years that's experienced that is a workforce that already knows
• 4:49
  SPEAKER_01: the difference between a a good and a bad so the malaysian bed is not let's conjure
• 4:59
  SPEAKER_01: a chip industry out of nothing
• 5:02
  SPEAKER_01: the bed is much narrower and you know potentially much smarter depending
• 5:08
  SPEAKER_01: upon how executed it is we already own one rung of this ladder the packaging
• 5:13
  SPEAKER_01: and test rung the lower margin rung can we climb one step up into design into
• 5:19
  SPEAKER_01: the part where the money is actually at now mind you this is not their first program
• 5:26
  SPEAKER_01: but here's the part that made me sit up
• 5:29
  SPEAKER_01: a little bit more it is already been happening without the program well
• 5:36
  SPEAKER_01: without this program um just recently in a not past episode we talked
• 5:41
  SPEAKER_01: about panam company sky chip which listed
• 5:44
  SPEAKER_01: on versus main market they do chip design real design high bandwidth memory chiplet
• 5:50
  SPEAKER_01: work the genuine
• 5:51
  SPEAKER_01: a homegrown malaysian design house went public on the malaysian comp on
• 5:57
  SPEAKER_01: the malaysian exchange and actually before recording this i saw a story
• 6:02
  SPEAKER_01: that was insinuating that service that the u.s chip company that just went public
• 6:07
  SPEAKER_01: as well maybe leveraging sky chip for some design i haven't
• 6:11
  SPEAKER_01: validated that but it was in my news feed immediately before recording this
• 6:17
  SPEAKER_01: and there's other ic design programs there's the imd licensing deal
• 6:22
  SPEAKER_01: that malaysia did there are a handful of other things that have been happening over
• 6:27
  SPEAKER_01: the last couple years trying to build off an industry that already exists so
• 6:33
  SPEAKER_01: there is proof that the ceiling is real that that is a local company that climbed
• 6:39
  SPEAKER_01: the exact rum the government is now trying to help 10 more companies climb so
• 6:49
  SPEAKER_01: And it sits on the top of the national semiconductor strategy from
• 6:56
  SPEAKER_01: a couple years back,
• 6:57
  SPEAKER_01: which said out loud that Malaysia wants to move up from the low value into design
• 7:04
  SPEAKER_01: and research.
• 7:05
  SPEAKER_01: the higher value penang has put its own money behind it too
• 7:09
  SPEAKER_01: with design programs and a chip design a cap made to fix
• 7:13
  SPEAKER_01: the talent cap we have similar efforts going on in selling
• 7:17
  SPEAKER_01: or they've just set up their own they're doing a state-run fund as well
• 7:21
  SPEAKER_01: so do i think this works
• 7:29
  SPEAKER_01: i think the timing is as good as it has ever been the world is trying to diversify
• 7:36
  SPEAKER_01: where its chips come from nobody wants every advanced part made in one straight
• 7:43
  SPEAKER_01: that could close on a bad tuesday malaysia is neutral capable and already in
• 7:49
  SPEAKER_01: the supply chain if there was ever a decade to try this climb
• 7:53
  SPEAKER_01: it is the one we are seeing a large demand for atoms and not just bits
• 7:59
  SPEAKER_01: and this is moving into semi-con and moving into the exact right timing
• 8:08
  SPEAKER_01: but i am going to say the hard part out loud because that is what this show is for
• 8:15
  SPEAKER_01: capital is not the thing that was ever really missing here now founders
• 8:21
  SPEAKER_01: that have ever tried to raise capital may start arguing with me
• 8:23
  SPEAKER_01: but malaysia has never actually lacked money
• 8:27
  SPEAKER_01: for ambition what it has lacked every single time is patience and expertise arriving
• 8:34
  SPEAKER_01: in the same envelope as the cash
• 8:39
  SPEAKER_01: a million ringgit and a short program do not necessarily build a chip design house
• 8:48
  SPEAKER_01: chip design is a long-term sport played by people who have failed at it
• 8:54
  SPEAKER_01: a few times first have iterated pick themselves back up if sima can start as a check
• 9:00
  SPEAKER_01: in a demo day it will join the graveyard if it comes
• 9:04
  SPEAKER_01: with real design mentors real customers introduced real follow-on capital
• 9:09
  SPEAKER_01: that does not vanish when the photo op ends then it has a shot
• 9:15
  SPEAKER_01: so the thing that i will be watching and the thing
• 9:19
  SPEAKER_01: that you should be watching too is not
• 9:22
  SPEAKER_01: the 10 million ringgit amount that's being put into this program it's
• 9:28
  SPEAKER_01: whether anyone attaches whether anyone attached has expertise in it
• 9:34
  SPEAKER_01: money is easy you know it sounds hard but there's plenty of it knowing what to do
• 9:39
  SPEAKER_01: with it is the more scarce part on behalf of the programs and on behalf of
• 9:44
  SPEAKER_01: the recipients so hold that thought money is easy knowing what to do
• 9:50
  SPEAKER_01: with it is scarce we are going to come back to exactly that point you started
• 9:57
  SPEAKER_01: a company to build a product not to run a back office but here you are you paying
• 10:02
  SPEAKER_01: you buy an accounting firm every month and once a year you get a clean set
• 10:07
  SPEAKER_01: of accounts that is compliance it's not clarity it will not tell you if you run out
• 10:13
  SPEAKER_01: of cash in March it will not tell you what one new hire does to your runway
• 10:20
  SPEAKER_01: and it will not answer
• 10:21
  SPEAKER_01: the question every investor asks where's this business heading
• 10:26
  SPEAKER_01: so i built your cfo your back office in
• 10:30
  SPEAKER_01: a box your books keeps your accounting books current
• 10:34
  SPEAKER_01: and your cfo puts your forecast forward in one login your actuals flowing straight
• 10:41
  SPEAKER_01: into your outlook link your strategic initiatives like a hire or a price change
• 10:48
  SPEAKER_01: to exactly what it does to your runway before you commit investor ready
• 10:56
  SPEAKER_01: operationally ready in the currency that you work in it is the back office i run
• 11:02
  SPEAKER_01: across my own companies get your finances settled for your business today
• 11:07
  SPEAKER_01: at yourcfo.tech that's yourcfo.tech
• 11:15
  SPEAKER_01: but now let me transition to the c-band
• 11:21
  SPEAKER_01: um here there's an interesting story because this week it was reported
• 11:26
  SPEAKER_01: that microsoft together with a singapore company called lightstorm is leading
• 11:32
  SPEAKER_01: a group building a new sub c cable they are calling it i2c
• 11:39
  SPEAKER_01: assuming that's how you're supposed to pronounce that it's it's it's roughly
• 11:43
  SPEAKER_01: a 3600 kilometer of fiber linking india to malaysia and to singapore targeted
• 11:48
  SPEAKER_01: to go live around 2029 built for one reason ai and data center demand
• 11:56
  SPEAKER_01: now standard disclaimer for me because i read these announcements the way i read
• 12:01
  SPEAKER_01: a pitch deck this is a 2029 project consortium details on these things move around
• 12:07
  SPEAKER_01: and i have not seen anything final paperwork just a news story so treat
• 12:11
  SPEAKER_01: the specifics as direction not gospel or not final word
• 12:15
  SPEAKER_01: and do not let anyone quote you a finished number on a cable that is not in
• 12:20
  SPEAKER_01: the water yet but the direction is what matters and
• 12:24
  SPEAKER_01: the direction tells you something
• 12:27
  SPEAKER_01: the direction is telling us that every few weeks now there is a story like this
• 12:35
  SPEAKER_01: a new cable a new data sensor a new hyperscaler campus somewhere with cheap power
• 12:42
  SPEAKER_01: and a friendly minister and every single one
• 12:44
  SPEAKER_01: of them gets written up somewhere southeast asian digital investment billions
• 12:49
  SPEAKER_01: pouring into the region what a momentous occasion for us celebrations etc but
• 12:57
  SPEAKER_01: let me tell you what i actually see when i read those uh maybe i'm a bit cynical
• 13:02
  SPEAKER_01: but i see the region being wired up as a very good place
• 13:06
  SPEAKER_01: to host other people's compute the fiber lands here
• 13:09
  SPEAKER_01: the data sensors sit here they use our power or water
• 13:12
  SPEAKER_01: and i'm not pretending it's nothing but that's not where the value comes out
• 13:21
  SPEAKER_01: but i ask the only question that matters who owns the compute layer who owns
• 13:25
  SPEAKER_01: the demand sitting on top of that cable um
• 13:31
  SPEAKER_01: and generally it's it's it's not it's not the it's it's it's not us uh
• 13:36
  SPEAKER_01: the demand is offshore the models are somebody else's the margin the part where
• 13:40
  SPEAKER_01: the value actually compounds is captured in uh redmond and san francisco
• 13:45
  SPEAKER_01: not in johorobatan we are the landlord renting out the ground floor
• 13:51
  SPEAKER_01: and it's being told to feel grateful for the rent now i am
• 13:56
  SPEAKER_01: a capitalist obviously rent is not a dirty word collectively
• 14:00
  SPEAKER_01: and collecting rents on land you own is perfectly good business singapore has run
• 14:05
  SPEAKER_01: that playbook for
• 14:06
  SPEAKER_01: 50 years and it worked but do not confuse being the landlord with owning the building
• 14:12
  SPEAKER_01: do not let a country tell itself it is climbing the value chain when what
• 14:17
  SPEAKER_01: is actually doing is leasing out the basements of the people who own
• 14:22
  SPEAKER_01: the value chain and this is where the cable and the chips rhyme because they're
• 14:28
  SPEAKER_01: the same story pointed in opposite directions um malaysia with its chips is trying
• 14:36
  SPEAKER_01: to climb one rung up from doing the low margin work to owning a bit of
• 14:41
  SPEAKER_01: the high margin design trying to own more of the building
• 14:48
  SPEAKER_01: the cable is the region agreeing
• 14:50
  SPEAKER_01: to stay one run down very comfortable very well paid renting the grounds of
• 14:55
  SPEAKER_01: the people who own own the compute um but one of those is a strategy
• 15:03
  SPEAKER_01: the other one is a lease dressed up as a strategy um now so which which one are you
• 15:11
  SPEAKER_01: building where is the opportunity so this brings me to the thing i actually wanted
• 15:19
  SPEAKER_01: to talk about the thing underneath both stories who wins the ai decade
• 15:26
  SPEAKER_01: in southeast asia
• 15:29
  SPEAKER_01: and i'm gonna give you my answer directly because i have i have money
• 15:35
  SPEAKER_01: on it obviously because uh because of the fun that i run
• 15:38
  SPEAKER_01: so i better believe it now none of this is investment advice none
• 15:43
  SPEAKER_01: of it is it could be construed any of that way but i think that
• 15:47
  SPEAKER_01: the winners will not be the companies that lean with the letters a and i
• 15:53
  SPEAKER_01: in their deck
• 15:56
  SPEAKER_01: and i know that that is not a fashionable thing to say
• 16:00
  SPEAKER_01: in 2026 every second founder i need opens with the model they are building on and
• 16:06
  SPEAKER_01: the ai native this and the agentic that and
• 16:09
  SPEAKER_01: the funding tallies love it somebody counts up all the ai startups
• 16:14
  SPEAKER_01: that raised this quarter and puts out a chart and and everyone nods and it's not
• 16:20
  SPEAKER_01: that i am not bullish on ai because i am
• 16:27
  SPEAKER_01: every company is ultimately gonna move that way and i think it's table stakes
• 16:31
  SPEAKER_01: but here's what
• 16:32
  SPEAKER_01: the chart is is measuring it is measuring ambition it is not measuring durable
• 16:37
  SPEAKER_01: revenue those are very different things and the gap between them is where founders
• 16:42
  SPEAKER_01: and their investors they go to die
• 16:45
  SPEAKER_01: is between those those numbers
• 16:48
  SPEAKER_01: because here is value here is how value actually works
• 16:52
  SPEAKER_01: and it has always worked this way ai or no ai value accrues to whoever controls
• 17:02
  SPEAKER_01: the scarce thing
• 17:06
  SPEAKER_01: sounds like a classic economic lesson that is that is
• 17:09
  SPEAKER_01: the whole game find what is scarce own it and the money flows
• 17:14
  SPEAKER_01: to you own something abundant and you compete it down to nothing it commoditizes um
• 17:22
  SPEAKER_01: and so the only question that matters is
• 17:26
  SPEAKER_01: in southeast asia right now what is actually scarce
• 17:34
  SPEAKER_01: and i will tell you what is not scarce technology is not scarce anymore
• 17:43
  SPEAKER_01: the model is not scarce anymore the model is becoming commoditized as we see
• 17:48
  SPEAKER_01: the big competition there we see open source and it will ultimately get cheaper
• 17:54
  SPEAKER_01: and better every single quarter whether you do anything or not building your mode on
• 17:59
  SPEAKER_01: the model is like building your house on the tide
• 18:04
  SPEAKER_01: what here is what is scarce
• 18:08
  SPEAKER_01: the customer who already trust you the physical network that took years in real pain
• 18:14
  SPEAKER_01: to build the license from a regulator who does not hand them out twice
• 18:18
  SPEAKER_01: the distribution into the towns and villages and the small shops that no hyperscaler
• 18:23
  SPEAKER_01: in the world is ever going to bother to map the relationships the routes the nuance
• 18:30
  SPEAKER_01: of workflows the position that took 10 years of unglamorous work to build
• 18:35
  SPEAKER_01: and cannot be copied in a weekend of clever prompting
• 18:39
  SPEAKER_01: those are difficult to replicate and that is the scarce layer that is
• 18:46
  SPEAKER_01: a thing worth owning and now go back and look at our two stories through that lens
• 18:53
  SPEAKER_01: because it lights them up
• 18:57
  SPEAKER_01: malaysia is climbing the value chain from packaging into chip design that is
• 19:02
  SPEAKER_01: a country trying to move from an abundant thing cheap capable labor
• 19:07
  SPEAKER_01: which everyone has to a scarce thing design capability which very few have that is
• 19:13
  SPEAKER_01: the right instinct exactly own the scarce wrong
• 19:18
  SPEAKER_01: and the founder version of the same move the winner is not the one who owns the ai
• 19:24
  SPEAKER_01: and goes hunting for a customer the winner is the one who already owns the customer
• 19:29
  SPEAKER_01: and quietly adds ai on top the lending business that already
• 19:33
  SPEAKER_01: has the borrowers and now underwrites them better the logistics operator
• 19:37
  SPEAKER_01: that already owns the trucks and the routes and now runs them tighter
• 19:41
  SPEAKER_01: the distributor who already reaches 10 000 shops and now forecasts demand for them
• 19:47
  SPEAKER_01: that get a
• 19:48
  SPEAKER_01: they do not need to they already own the stairs thing the ai is just a sharper tool
• 20:01
  SPEAKER_01: in a hand that already knows the work and here is the uncomfortable part
• 20:09
  SPEAKER_01: the part i want the founders listening to really sit with
• 20:16
  SPEAKER_01: every wave of cheap capital every shiny new toy every drop in the price
• 20:22
  SPEAKER_01: of intelligence it does not close the gap between those two kinds
• 20:28
  SPEAKER_01: of companies it widens it
• 20:31
  SPEAKER_01: because when the tool gets cheap and everyone has it the tool stops being
• 20:36
  SPEAKER_01: the difference and the only thing left that is the difference is
• 20:40
  SPEAKER_01: the position underneath it the distribution the trust the scarce layer
• 20:47
  SPEAKER_01: cheap ai makes owning a real distribution worth more not less so that is
• 20:53
  SPEAKER_01: where indelible puts our own focus i will say it plainly so you can hold me
• 21:00
  SPEAKER_01: to it we are
• 21:02
  SPEAKER_01: at indelible we back the people who own the scarce layer and are climbing one run up
• 21:07
  SPEAKER_01: from it not the people standing on top
• 21:09
  SPEAKER_01: of somebody else's scarce layer we may be seeing people
• 21:12
  SPEAKER_01: that are servicing those specific ones enabling waving a flag renting
• 21:19
  SPEAKER_01: but we are looking at trying to find those niches own that ground or
• 21:24
  SPEAKER_01: at least be climbing towards owning it
• 21:27
  SPEAKER_01: don't spend your life as a founder being a landlord's tenant with a nicer loco
• 21:33
  SPEAKER_01: as i said before money is easy i said it back in the malaysia segment
• 21:37
  SPEAKER_01: and here it is again money is easy knowing what to do with it
• 21:42
  SPEAKER_01: and owning something real to point it at that is the scarce part and it doesn't have
• 21:47
  SPEAKER_00: to be tangible but build the scarce part
• 21:56
  SPEAKER_01: so that is the week a chip program in penang and a cable on
• 22:04
  SPEAKER_01: the seabed two seemingly boring stories that are secretly the kind of the same story
• 22:10
  SPEAKER_01: in my mind one country trying to climb around one region agreeing to rent out
• 22:15
  SPEAKER_01: the basement and underneath both of them the only question
• 22:17
  SPEAKER_01: that has ever really mattered in this work is who owns the thing that is scarce
• 22:23
  SPEAKER_01: if you are a founder go and be honest with yourself this week
• 22:26
  SPEAKER_01: about what you actually own not what is in your headline what is in your foundations
• 22:32
  SPEAKER_01: if the answer is a really good wrapper on somebody else's model
• 22:36
  SPEAKER_01: you may have work to do and it's better to know it now what layer within that
• 22:43
  SPEAKER_01: if you're if you're taking that model is so perfectly okay because those might be
• 22:47
  SPEAKER_01: the commoditized layers it's perfectly fine to use a commodity as an input
• 22:51
  SPEAKER_01: but what is it that you actually own what is your scarce uh resource
• 22:57
  SPEAKER_01: that you are sitting on that you are servicing
• 23:02
  SPEAKER_01: i'll leave you with that i'm kevin brockland this has been sea
• 23:06
  SPEAKER_01: of startups real raw relatable i
• 23:12
  SPEAKER_01: write the i write the check so i have to be right
• 23:15
  SPEAKER_01: about this uh come argue with me if you think i'm wrong uh perfectly open to that um
• 23:24
  SPEAKER_01: and i will see you next week
• 23:28
  SPEAKER_01: and that does it for this episode of sea of startups
• 23:32
  SPEAKER_01: if you've enjoyed what you've been listening to please give it a like give it
• 23:35
  SPEAKER_01: a review subscribe to our channel a little bit of feedback goes a long way
• 23:40
  SPEAKER_01: in allowing us to keep on putting out these kind of episodes