Latest / Connected With Latham / Episode 119 – The Growth Rocketship: How Rakuten Capital Masters Diplomatic Capitalism

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Episode 119 – The Growth Rocketship: How Rakuten Capital Masters Diplomatic Capitalism · Connected With Latham

• 0:03
  Haim Hello and welcome to Connected with Latham, where we discuss ideas, legal developments and business trend shaping in global economy. I'm Haim Zaltzman, Partner and Global Vice Chair of Latham's Emerging Companies and Growth Practice. In this episode, I'm joined by Saemin Ahn, Managing Partner of Rakuten Capital and Executive Officer of Rakuten Group. Rakuten Capital invests in innovative startups across fintech, e-commerce, AI and high growth sectors, leveraging Rakuten’s global ecosystem, Saemin, overseas Rakuten Capitals investment activities.
• 0:31
  Haim Identifying and supporting innovative startups that align with racketeers broader ecosystem strategy. Saemin, welcome to the podcast. Really happy to have you on.
• 0:40
  Saemin It's a real pleasure. And of course, Haim, I've known you for now, almost a decade. You know, we have seen each other, you know, grow gray hairs. So really honored to be here and happy to talk about tech and everything else.
• 0:51
  Haim There's no video, but I just want to be clear. I'm the one with gray hair. Saemin has none, and he's a total gym rat. He's also giving me some great pointers over the years about workout regimes. So I'll take the compliment statement. And it's been an amazing decade of working with you, but I honestly, I wish, I wish I had your hair.
• 1:08
  Haim That's what I'll tell you, that's for sure.
• 1:10
  Saemin Because you're not unlimited right now. You can embellish, but I am. My face is cringing right now, folding in half. So for everyone in the audience.
• 1:17
  Haim I love it. I love, I love it. So before we jump into Rakuten Capital, which is a brand name that I think most of our audience will know very well, including all those that that, that chop and love, anything that's related to fintech, etc. I would love the audience to know something about you and what makes you so exceptional.
• 1:33
  Haim Can you give the audience a little bit about your background, your career before Rakuten, where you came from, where you're at now? We're actually a very large ocean apart right now recording this, so we'd love the audience to get a glimpse of of what you're looking at actually, and where you came from.
• 1:50
  Saemin Well, so for me, I'm calling in from Singapore right now. I've been in Singapore for the past 15 years. I'm Korean by descent, and in my earlier life as a as a working individual, I spent a lot of time in sales and marketing, and I quickly pivoted into things in relation to ship. I later joined Google Korea during the post financial crisis period, and I quickly moved to Google Singapore.
• 2:17
  Saemin So I spent most of actually my working life in Singapore and kind of watching Southeast Asia grow from a hub of great trade to now a hub of fintech, a hub of massive wealth, and all of the other geopolitical kind of strengths. It's actually able to prove the past 15, 20 years, and it's been a privilege to actually work globally with people like yourself and also different partners.
• 2:42
  Saemin Definitely. One of the things that we've been looking at in the past, maybe 4 or 5 years, is changed drastically because we've also, as a corporate venture capital firm, come capital organization, really matured in their viewpoints about how to look at capital and how to augment that, help the company move much more decisively and productively. I think one of the things that we've learned is understanding how to really deep dive into a specific vertical we want to invest in, because it's so important.
• 3:11
  Saemin But more importantly, what is the actual appropriate depth that we deep dive so that we can jump into peer verticals that add more value not only in pattern recognition capabilities, but helping other founders understand the bigger picture of things. So going back to kind of the interest, we are indeed really interested in AI infrastructure things in relation to energy infrastructure, just because right now you see a lot of the energy geopolitics coming in.
• 3:36
  Saemin But these things were actually looking very deeply at cool.
• 3:39
  Haim We'll get to some of the the investment themes you're following now and how you think about them from a micro and a macro perspective. Before we do that, though, I wanted to focus. I mean, you said that you would look deeply into verticals. I obviously know you and our experience over the years has been very deep into the tech sector.
• 3:57
  Haim Rakuten’s been an investor and you've led investments in Lyft, Pinterest, Kareem, cab, some amazing names, particularly outside the United States, but also inside the United States. What is Rakuten thinking right now about the broader tech scene, aside from the AI semis world? Obviously right now, the the semiconductor, the hyperscalers there have been taking up a lot of oxygen, obviously huge valuations.
• 4:24
  Haim But there is a broader theme to rack initial tech investments, particularly in fintech mobility. We'd love to hear about what Rakuten is thinking about them now and if it's different for us investments versus outside of the US investments, I think our audience would love to hear that.
• 4:42
  Saemin Yeah, I mean, these are really very, very good questions. I mean, one thing that we could say up front is indeed how we view the local domestic investments in Japan are very different in terms of how we look at overseas investments. Japanese investments that we make indeed need a very strong or synergistic bend in terms of how it benefits the ecosystem.
• 5:01
  Saemin But if you look at things like investments in the US, like we did an upstart and things like lift, we're thinking about how do we actually potentially partner up with very large startups that we can terraform, maybe an alliance of companies and peers and build our own other platform inside those ecosystems, specifically in us. And I think that's kind of the generalized kind of approach that we take overseas.
• 5:28
  Saemin We want to actually build an alliance of companies that we build platforms on. And then in Japan, we want to further harden and strengthen what the Japanese ecosystem provides, going back to kind of what we view outside of the AI infrastructure ecosystem, definitely. As mentioned before, we're looking at energy infrastructure. There's a lot of fascinating topics, of course, that you've seen coming out of the US, specifically in relation to small modular reactors.
• 5:53
  Saemin Now, what's interesting here is that while other people are focusing on things like developing the right shell and developing the construction and the overall licensing agreements and whatnot, what we look at specifically, if we were to look at energy infrastructures, actually, how is everyone actually sourcing the uranium, specifically uranium? 235 this is something that has a lot of geopolitical connectivity, because we actually do globally, a lot of the fuel actually comes from Russia.
• 6:20
  Saemin And of course, with obvious tensions, there's a lot of the stringent and constrained capacity to actually source from there. So there's a lot of companies out there right now in places like Europe and the US, where they're trying to develop new technology and IP around trying to codify new clarification technologies. How do you go from a 10% concentration to a 20% concentration?
• 6:43
  Saemin Because that's where you get the ability to put that into small molecule reactors and have productive gigawatt terawatts growth. If you look at things such as fintech that you mentioned, this is also very interesting. We're looking a lot at stablecoin and a lot in relation to how to make transactions have less facilitators. And this is interesting because I humorously call a Rakuten Super point, which is basically the inside kind of the Starbucks point mechanism that we use in Rakuten that I believe was one of the first modalities, the true stablecoin, the true kind of Bitcoin modalities.
• 7:19
  Saemin Because interesting. It's funny because with rocket and super point, you can actually buy a house with super points and in the rock with an ecosystem in Rakuten. So we of course have a lot of interest in terms of what does the next series of fintech innovations provide us, potentially in the future. And I think one of those things, which is which is, of course, stablecoin and how that relates to cross-border transactions.
• 7:44
  Saemin So really looking at a lot of those specifically in relation to mobility, the most recently, we've become a lot more interested in the autonomous vehicles, specifically because the deployment capital necessary and the deployment effort necessary has become much more lower even than a year ago. So we're looking at a lot of companies that we actually touch upon. And then most likely we're going to look at robotics a lot more clearly.
• 8:07
  Saemin Again, this is beyond the perspective and scope of AI and energy. These are things that we might look at in the future quite soon.
• 8:15
  Haim Interesting. So first of all, for the audience, I got caught with the question, doing what every American centric investor I was, you know, do you think of it the US and the other world, and that's just the wrong way to think about it. And same incorrect to me immediately because for Rakuten it's Japan and then the rest of the world.
• 8:32
  Haim And you know, that viewpoint is very every every investor knows their backyard really, really well and has different criteria for it than it does otherwise. And it's not necessarily the US that is the other territory or investment field. So apologies for that. In terms of the areas you noted, it seems like you're focused on energy technology. And we'll talk about that in a little bit when we go into one to fuel the AI stablecoins in the blockchain, mobility and robotics.
• 9:04
  Haim Out of those four, if I made a non A's, what percentage of your attention is getting internally. And obviously it's now negative because you know, as someone who you know you follow the the flow in the world. And right now the flow is definitely to AI and everything that's with it including the energy. What percentage is AI and anything related, including the energy needs for AI to GPUs, etc. versus these other four sectors that you've noted in terms of your time?
• 9:32
  Saemin Gotcha. Really good question. Again, on the basis that AI infrastructure actually takes up more than 50 to 70% of my mind share if I were to rank the other ones. Definitely. Things in relation to fintech. One thing that I did mention also were very much into aerospace. We have a large stake in AST mobility, so we have a really strong outfit in terms of how we want to look at telco industry, TMT industries and specifically communication.
• 9:59
  Saemin So we also have a strong outset of how we look at aerospace and of course robotics. Robotics specifically because this relates to Japan, more and more automation will need to take place in the country, and it's important that we actually are able to have some purchase and agency over some of the companies that we work with, so that we can actually deploy that into the domestic marketplace.
• 10:19
  Haim And is that mostly because of the demographics in Japan? Is that what you're saying more and more robotics will take care of? Is there more just a strategic focus in light of the, you know, the deep tech, physical AI?
• 10:30
  Saemin I think it's really all of the above, because if you look at even robotics, it's been heavily, heavily augmented by AI, right? With with world models, with physics models. So to be able to actually short circuit and really quicken the overall deployment of robots, it's becoming an industry that if anyone works at tech, it almost becomes irresponsible just to miss or not.
• 10:52
  Saemin Not actually to pay attention to.
• 10:54
  Haim Yeah. No, I mean the robotics and I do, by the way, for whatever it's worth, it's very sad for me. But when I think of Japan and its leadership in the world, I think of unbelievable coffee on one end and then on the other end, and obviously the sushi comes with it. But the coffee is really the stuff, like the Japanese coffee, its second to none.
• 11:14
  Haim I wish I could get it every day. I would be even more hyper than I am now. And then obviously the robotics, I mean, Japan is really known as a leading manufacturing hub and robotics to come out of it. That's actually a great segue because, you know, sometimes I'm told that I act very robotic like and same in you are an investment robot.
• 11:34
  Haim If this guy, just so you guys know, notwithstanding me being spending a lot of time in the Bay area where I live, San Francisco, as well as New York and Saemin being obviously traveling a lot, but being in Asia mainly, so always we were always dealing with time zones. He is always up. I've never not caught him up, so I will give you kudos for that.
• 11:53
  Haim I do think you're a robot, legit a robot, but but that aside, I asked this question always and robotics is a great segue to it. Who is the biggest nerd at Rakuten? Who is the person that you? If you have something that's like very deep down, I need to get an answer. I need to get like a thought processing, next level type stuff.
• 12:14
  Haim Understand deeply who do you go to a Rakuten and get it?
• 12:17
  Saemin This is a really good question outside of robotics, but generally if you want to look at doing investments, you're absolutely correct in terms of you want to look at the bigger picture, how the actual whole cog works, the whole machine. I specifically work with three executives, maybe four executives here. Of course, that has been an amazing sounding board every single time we actually bring a topic to the table.
• 12:38
  Saemin And this is because his fire hose that he brings from is very different from the firewalls that I drink from. Even in the same organization. There's also a gentleman here called Kentaro, who's essentially the number two of the organization. He brings an immense amount of clarity in terms of how to break things down. My direct manager is actually a person called and he's actually in charge of the synthetic organization.
• 13:01
  Saemin So anything fintech in relation to he has massive amounts of information that we could actually gain from, especially on the wisdom side. On the AI side, we have Ting, who is the head of the aid organization, all of AI, and we talk very, very often about specific strategies and deployment methodologies. Just to go just to go back to the robotics topic, just to look at Japan specifically.
• 13:27
  Saemin It's a fascinating market because not only are you dealing with a demographic that's changing and shrinking that demographic and changing and shrinking is also affecting SMB employment directly. So if you look at last year, these figures are quite stunning. Last year alone, there was 50 to 60,000 business closures in SMBs in Japan. That's a quite high number already, but almost 50 to 80% of the bankruptcy was actually occurred because of human resource deficiencies.
• 13:58
  Saemin They couldn't find a successor or people to actually work in those factories or those businesses.
• 14:04
  Haim Is that right? That's that's an unbelievable number of when the audience are here again, that 50 to 80%, and it's actually a larger number than, than I would think. But there are a lot of small and medium sized organizations in Japan. It is it is their core that serves a lot of the larger manufacturing giants that we all know of that 50 to 80% of them were because of human resources and lack of personnel.
• 14:29
  Haim Is that is that right? Wow.
• 14:31
  Saemin 100%. But just to be sure, they're SMBs, they're actually more important than corporations because SMBs. Yes. Yes, sir. SMBs employ, you know, close to 85, 87% of all of Japan's working demography. So this is a this is a very specific issue that could be resolved in different ways. But at least how we view it is it should also be resolved by the power of automation, robotics and something that we can deploy in the future I think could help very much.
• 15:01
  Haim Well, so takeaways from the from from Siemens. Answer number one is there are a lot of nerds at Rakuten. He's not going to just give anyone one medal. You always try to pin it on one person in the United States as a he's he spread the love around, which is why your organization, I think has been so successful.
• 15:17
  Haim And then the second one is, you know, back to the robotics and the numbers. It's shocking constantly, notwithstanding the fact that we're all very focused on the headlines, The Wall Street Journal, Danika Daily, whatever it is that covers the main large organization, be it Rakuten or in video or Google or wherever it is, but really the core of employment, both in Japan and in the United States, are small to medium sized businesses and how they function, their ability to source labor and capital is really going to shape, continue to shape.
• 15:54
  Haim It's been shaping our world forever and always saying that the headlines and we'll continue to shape in the next world. And, you know, Rakuten focus on robotics is partly because of that SMB focus, which is pretty amazing. Same. This is actually, again, a great segue. And we talked about generally the investment thesis obviously, we all know reckons extremely active all across the world.
• 16:16
  Haim We've mentioned quite a few companies already that you've touched have been lead or key investors in people who are part of the ecosystem tell me racket and does and plans to do this here.
• 16:27
  Saemin Rakuten as a corporation, has always looked towards the aforementioned ecosystem development. And, you know, when I look at our corporate goal points, number one, we really want to make further harden our leadership position in Japan. And we've also developed an amazing business in the telco sector. So we have broken mobile, which has been doing very, very well in the industry.
• 16:48
  Saemin And if you think about the whole share of wallet that we have in Japan, the mobile, now we have the actual telco mobile piece that we can actually put together. So our goal point obviously is to consistently make our our customers and our retail segment happy. This is kind of a relation to what we call in Japan, really giving our full hearted support to our retailers and our consumers and our customers, and making sure that we can develop a great long term relationship and a partnership with everyone in the ecosystem.
• 17:18
  Saemin I guess one comment that I can actually dovetail on to what you just talked about is 100%. We think that the US, outside of Japan is by far one of the most critical pieces of our overall future, and it's just because of the strength of the US economy and strength of the US consumer that we really need to focus on.
• 17:36
  Saemin What's next for the overall vision of rock and international in the US. So we're putting a lot of effort behind that. And this is where our focus into fintech focus into kind of loyalty and whatnot are coming into view. So I think if you think about it in 2 or 3 big pillars, number one is further optimizing the customer satisfaction in the domestic and international markets that we have.
• 17:58
  Saemin And again, I know this is kind of very a fuzzy goal point, but that accretion, that hardening is so important for us that we view it as one of our key cygnets of success. Are we making and making our partners and customers lives better is something that we hold to our hearts daily, and secondarily, making sure that the markets that we view as important as the highest upside, markets such as the US, really stay in tow and help us actually generate this virtuous cycle of consumption.
• 18:26
  Saemin And again, this is where we also go into the ideas about how do we now execute a cross-border sales strategy that makes sense for all the people involved. So I guess those will be kind of the fuzzy goal points that we have. I guess the third discussion point here, or the third point that we talk about is on the investment and acquisitions.
• 18:44
  Saemin I potentially we essentially want to look at what can be actually virtuous and nutritious to the Rakuten ecosystem and the next 5 to 10 years. So just to emphasize, even though what we talked about in robotics is a small share of what we focus on, just because we want to look at AI and infrastructure and so on, so much deeply.
• 19:05
  Saemin We do view these things in relation to aerospace and robotics and energy as a very important kind of the milestone to what we want to look at maybe in the next 10 to 15 years.
• 19:17
  Haim Interesting. So pretty amazing that your forethought and it's really key. You look both for what you need now as well as what you look at the future. And you try to to make sure of a dovetail that being notwithstanding on the macro side, want to give my crow for a second? What's your most exciting investment for a project that you have done in the last six months in Japan and then outside of Japan?
• 19:43
  Haim Can you let the audience know? What are your most excited about the Rakuten is doing in Japan? It can be either a project or investment. And then outside of Japan, in a company, we'll focus on the larger infra AI stuff in a second, but I'm focused on companies or specific projects.
• 19:58
  Saemin Gotcha. I mean, some of the stuff, actually, most of the stuff I'm a little bit it's hard to talk about specifically because we're even if it was completed, it's actually, you know, it's still confidential. But maybe one thing that we were very happy about, and this is in relation to the more US markets.
• 20:15
  Haim Yeah. As your lawyer don't share any non confidential stuff on this audience. Yeah. It will not be protected by the attorney client privilege.
• 20:22
  Saemin All right. Indeed sir. But I guess one of the most fun projects that I did over the past maybe 5 to 6 months is something that was just announced in raccoon, USA with Rocket and Impact. So impact is amazing. SaaS company that does martech affiliate technologies and whatnot, and we were able to work with them to develop really, really interesting roadmaps in relation to how do we build the next level of Rocket International, specifically the US market side.
• 20:49
  Saemin The team at impact, the CEOs and the executive teams were just tier one people. That enabled us to actually build this vision together. And maybe it was interesting because of our of of my team's background in venture capital and as well as corp dev rule to weave really, really productive deal structures together. That would not have been possible if it was just a corp dev team were just the investment team.
• 21:13
  Saemin But you'll see a lot more interesting stuff coming down the pipes with that partnership, and we hope to make those kinds of partnerships in the future much more relevant than maybe this is going back to kind of the discussion point about what is Rakuten Capital. And we might do things that and partnerships that are immensely meaningful, but they actually might not have a upfront capital or upfront acquisition component just because we're able to kind of weave the ideas of developing business.
• 21:40
  Haim Interesting.
• 21:41
  Saemin We've the ideas of developing long term partnerships and kind of codifying that in the contract. So that business development segment will also be a very important part and continues to be for Rakuten Capital.
• 21:52
  Haim Interesting. And I'm sure that ties a lot into the Rocket and Capitals network and the companies and relationships you have, which is, you know, something very important I've seen from you guys past. It does it. Nothing ends with the initial project or investment. It's also the type of support you provide afterwards. Can you can you share with the audience some key pillars of the continued support that Rakuten Capital provides for its portfolio companies or projects or the partnerships that you do?
• 22:24
  Haim How much of your time is spent on that relative to investment? I won the audience to get a good sense that it's never just about the initial investment. It's always about helping execute afterwards. And I've seen it. I've seen you do it for a decade, so I'd love to the audience to hear more about your strategy in that front.
• 22:42
  Saemin This is such a good question because you're absolutely correct. What's really good about Rakuten Capital is it never ends at just an investment or an acquisition, especially if the investment we wanted to do initially didn't really go through because of specific things in relation to, oh, it wasn't a good fit or whatnot. It's so important that we are able to maintain that relationship and maybe pivot into a different deal set.
• 23:09
  Saemin Maybe if it was M&A, but that didn't work out. We want to investments. If it was investments, we could also do something in between in relation to things that we think about as as a business development case. And that's kind of been kind of our secret sauce is that when we actually do these projects, we always think about statistics.
• 23:26
  Saemin Will this investment topic go through? If it's not, then how do we further codify and hypothesis this business relationship into something productive? We're actually doing something right now where we thought about an investment. The specs kind of didn't work, but we were able to maintain such a good relationship. Now we're doing a business development relationship that could have equal amounts of dollar USD impact for the company.
• 23:49
  Saemin So that's sort of kind of balance between being able to be a very good diplomat and a very good capitalist. It continues to be immensely, immensely important. So if you were to put a label on Rocket and Capital, we are in many ways the internal investment bank for the organization because again, it's not only about doing deals and executing things, it's about building those soft touch modalities internally, externally, bringing all these parties across so that they can mesh productively together.
• 24:18
  Haim Interesting. I mean. Can I coin the phrase diplomatic capitalism right here? Is that is that a great phrase for you guys? I mean, and if you do put it on t shirts, I want to if you Nicolas, of attribution to me, but that seems to be perfectly summarize what does that the capitalism you the investment. But you make sure that diplomacy is there and you do it with the soft touch, creating a network that keeps them feeding itself.
• 24:39
  Haim Pretty amazing. Well, look, speaking of not diplomatic, I'm a segway to what you wanted to start with Saemin, and what's been taken up. Basically, I feel like every day around the world, all the oxygen, which is AI, AI, AI, infrastructure. Would love to hear from you. When I say AI infrastructure, what does it mean at Rakuten? Because it means different things for certain folks.
• 25:06
  Haim I have a great chart, by the way. I'll send you a map of a data center that has all the different components that make it. When I look at AI in for investing, it's every component of that. It's not just the data center itself, it's the energy that goes into it, the TPUs, the TPUs or whatever, the energy stock, all the security.
• 25:24
  Haim What is AI infrastructure mean at Rakuten?
• 25:27
  Saemin For us, when you look at AI and AI infrastructure, one of the things we want to delineate is it's not necessarily about the transformers or the substations or the server RECs or whatnot. It's everything. In relation to what does a market provide us that could be interesting for us to invest in and further build a portfolio of investments that in relation to AI infrastructure.
• 25:48
  Saemin So just to delineate an AI infrastructure topic could be as well as a liquid cooling startup like a sub nerd that that that could be interesting for us. Or it could be an AI gym that people are building out right now in San Francisco in relation to building very, very high spec reinforcement learning modalities. These two for us, we equally see them as infrastructure because one is on the top of the funnel and one is at the middle of the funnel before the application layer itself.
• 26:19
  Saemin So I guess this we can do that because for us, we're very fluent in what we look at and how things fit together. And as long as we look at how these things become the building block of a output, that to us is the infrastructure layer of artificial intelligence.
• 26:36
  Haim Interesting. So if I can do that further and I'm going to I'm going to focus on the Japan versus on Japan. You know, I spent a lot of time in this area, as you know, and one of the concepts that keeps in coming up because, you know, epitomized by our conversation here and our relationship and the work we've done together as global, I happen to be in the US, but we have offices everywhere.
• 26:55
  Haim We work with clients everywhere. And sovereign AI is a concept that is constantly coming up owning it. I mean, it comes up with Europe with great companies like NCL and Mistral. It comes up obviously in the US China discussion, it comes up with TSMC and Japan and obviously comes up with all the major large language model leaders in the United States, from anthropic to OpenAI and others down the line.
• 27:23
  Haim What is Rakuten’s view on sovereign AI? Being a Japan centered company that also has an amazing global footprint, and what do you see Japan doing differently on sovereign AI than some of these other countries and regions that I mentioned?
• 27:39
  Saemin Every single country will need sovereign AI and sovereign compute either way, specifically because we're looking at what the token economics of AI and models and world models are becoming, they're essentially becoming much more expensive than we thought, specifically because of of supply constraints. Right. You look at anthropic model, a lot of the model evolutions have not necessarily come with the best of economics, because the best model output does not relate to the most cost effective token economics, of course.
• 28:06
  Saemin So sovereign compute and sovereign AI and and whatnot, it becomes fundamental to, in many ways, making the utilization of AI much more economical for the domestic population anyway. So I think that's one thing, and that's why we think that sovereign AI and sovereign compute will become much more important. And hence the the infrastructure that supports it will become very, very important.
• 28:29
  Haim And what about Japan strategy towards is Japan's strategy different from others or is it still the same and once to have its own and it's working around it?
• 28:37
  Saemin Yeah, I think for the time being, the Japan strategy has been pretty congruent with the West in terms of what it wants, what it needs to build out. We have, in many ways, a homegrown AI start up right now. That's the most visible called AI. It's a US based startup, but they're based out of Japan, and they're doing very good stuff with a lot of the fintech organizations and even the sovereign kind of government organizations.
• 28:59
  Saemin And I think we'll see a lot of these deficits and surpluses being filled up and become very productive. I think if you were to look at this more strategically, one of the things that Japan will have to upgrade in the short term is its power grid. It actually produces about one third to one fourth the power generation capabilities of the US, and about one ninth of that of China.
• 29:21
  Saemin So as long as it's able to actually keep up its overall grid infrastructure further, or it's able to source that sort of grid infrastructure in different places, I think it'll be a very virtuous cycle. The Japan has, has, can actually go upon. One important part about this is that Japan has very, very amazing, super kind of scholastic talent.
• 29:44
  Saemin You know, if you think about just a number of people that have won the Nobel Prize or the Japan ecosystem, hard science is something that is very germane to the Japan industries. We make a joke that the MSG, like the company that produces MSG, Ajinomoto, is now the number one substrate installation company in the world. But it's always been that way.
• 30:03
  Saemin So hard. Science is an amazing benefit that Japan, I think, will continue to have and that can be deployed onto these problems to make it a solution that can be monetized.
• 30:13
  Haim Interesting, and obviously for manufacturing and the knowledge that there Japan's always been a leader. Look, you mentioned power production power grid. So you know, I love your views and Rakuten’s views on the energy that will have to feed into what I call the great AI revolution re industrialization. I refer to it a lot. I think it's going to be a theme that's going to dominate the near term for all of us.
• 30:36
  Haim How are we going to solve it? There's obviously you're already seeing pressures on it in many countries. You know, oddly, China is actually in a great position from electric power consumption and production, although it has many industries are really depend on it. So its ability to shift the electricity off to AI is different. What's Japan's view on how we're going to get the power to where we need?
• 30:58
  Haim What's Rakuten’s view of both in Japan and elsewhere? You're obviously making investments all around the globe. How are we going to solve the energy problem for the great AI industrialization?
• 31:10
  Saemin I think we can kind of build a ternary track in terms of how we discuss this topic. In terms of industrialization, I think Japan doesn't have as much less to worry about compared to like a region like Europe, which has the industrialized itself. For the past 30 years, Japan has always maintained a massively robust industrial base. Specifically, there's a culture and also the way that actually creates export surpluses.
• 31:35
  Saemin I don't think industrialization necessarily is one of the priorities because it's been so strong, right, in terms of all sectors, whether it's chemicals to to alloys to actual outputs and whatnot. But to your question about how do we actually crack the AI nut, it is indeed in relation to how do you crack the overall aspect ratio of making sure that everything computed stays inside the Japanese ecosystem at a great cost?
• 32:01
  Saemin Efficiencies and cost efficaces. If you look at going back to the manufacturing base, in many ways, Japan has already solved the semiconductor conundrum, right? TSMC's Kumamoto plant is one of the most productive globally, which is crazy because it actually maintains and exceeds the yield sometimes of the actual Taiwanese plants. So it's done a very good job already eating some of the actual consuming some of the actual AI supply chains.
• 32:26
  Saemin But going back to the bottlenecks, definitely things are in relation to the power supplies and whatnot really needs to be built up in quick fashion. I think some of the things that we talk about is, is that Japan has been has been wholly depend on LNG post the overall the crisis that we had in the early 2000. But now I think it started to turn back their nuclear power plants on and building out more capacity in the future.
• 32:53
  Saemin It's interesting because if you look at places like Singapore, where I sit there solving it in different ways, not only are they further pushing into their LNG plant diversification, but now they're doing very interesting, almost sci fi like programs. They're trying to source massive amounts of hydroelectricity from Sarawak, which is an island in Malaysia. So Sarawak has a massive they're building up a massive hydroelectric dam that will create 16GW of power.
• 33:24
  Saemin And then they're building this comical power cord cable that are literally plugged into Joe Burrow, which is right next to Singapore and also Singapore.
• 33:33
  Haim That's crazy.
• 33:34
  Saemin So and this is these are aspect ratios around. There is power globally abundant. But how do you source this into the right regions of productivity. And development has always become a very big question mark. So I think those kind of sourcing discussion points, sourcing issues will also be a great chance to build industries on top of it.
• 33:53
  Haim You brought nuclear up quite a few times in this conversation. I'm assuming that IT rack is in, and you really do think is going to be a core part of the solution, both in Japan and globally.
• 34:04
  Saemin Yes. So for for rocket and capital, definitely. We've been persistent in looking at nuclear power. We even have a rock within Energy Department, a business unit in Japan, which which has been looking at different options in terms of how to monetize and how to look at retail outreach. But at least on Rocket and Capital side, we view the like this market as a very important one.
• 34:26
  Saemin How do we actually look at sourcing IP and technology to potentially benefit the Rock and Japan ecosystem, as well as making just the overall good investment for the future?
• 34:38
  Haim Interesting. Okay. Well, look, I'm a huge fan of nuclear generally. I believe nuclear both large and small. I just don't understand. And I would love somebody to explain to me why now that we can bring the data centers basically anywhere, why in certain states or regions where the population is extremely low, we can't build. I mean, one of the criticisms was you don't want to build them close to the major urban centers where there was more risk, but now you don't have to do that.
• 35:07
  Haim So I really struggle to not understand why the United States and certain very low populated states, such as Nebraska or North Dakota, doesn't build mega areas of nuclear power plants. Same with Japan. I don't know, I guess there's some environmental, but the impact of the environmental and nuclear is is significantly less than anything we do with gas driven cars.
• 35:29
  Haim So I'm sorry if you have an answer for that. I would love to have it. But you know, is the band planning amazing nuclear buildout like I'm mentioning, or is that is that not in the cards for for certain reasons.
• 35:42
  Saemin I don't have visibility. Let's tackle the two questions. The reason why I guess the US there's a lot of pushback is, I think, bad marketing, just because the US is also the administrations have always been persistently egging on the importance of renewable energy, not necessarily nuclear, but other renewable energies. And also the whole infrastructure of of development has been in these renewable energy sectors such as wind farms and so on and so forth.
• 36:07
  Saemin Now, of course, everyone actually knows some of the deleterious effects of these wind farms and other industries. But but it's also important that if there's been money put into that, those parties want to actually make sure that their generalized solutions are much more prioritized. And I think that that overall process will actually work through itself, and the overall market will do well for itself in Japan.
• 36:30
  Saemin What I do know is that I think they're trying to push towards reawakening the dormant power plants, the nuclear power plants that were active maybe 10 to 15 years ago. But I still don't have visibility on whether there's concurrent plans to build up more centers more. It's an interesting discussion point, because if you look at China going back to this discussion point, China actually is still massively reliant on coal power, number one, because they have all the ability to actually build up power plants very quickly as well as they can locally source coal.
• 37:02
  Saemin And it's almost, I think, 60% of their mix. So I think that's going to be an interesting discussion point about do we actually utilize different power plant formats? That is not necessarily environmentally the cleanest, but still the best way to get through to actually kind of solve these bottleneck issues? I think it's an open question to have and try to solve together.
• 37:26
  Haim All right. Well, speaking of open questions, we're we're going to move to the final. And my favorite part of the episode I called the speed poke around. So here are the rules. Saemin I'm going to ask you a few questions here. You get to give me one answer. You can explain the answer, but I won't want answer. I don't want like, you know, hedging.
• 37:44
  Haim I don't want, you know, multiple things. I'll deal with whatever you give me, but I really prefer one answer. So let's start with the top. What's the biggest professional obstacle you faced?
• 37:55
  Saemin Patience. Patience is the biggest professional obstacle. And I think just just to kind of.
• 38:00
  Haim Yeah, give me a little bit more detail. As somebody who is totally impatient myself and as you know, I'm just move. I have a huge bias for action. I constantly want to do stuff. Explain why patience has been has been a big concern.
• 38:12
  Saemin I think this is also endemic towards what kind of person you are, right? And for me, I've always had this issue of trying to be patient and look for the right timing, because in many ways, if you want to get something needle moving done, you can have all the capabilities and knowledge base that you want, but the environment around you just not might accommodate that, that effort and that capability.
• 38:33
  Saemin So I think patience is probably one of the most important qualities that I've tried to persistently not let atrophy. So a lot of the important skills that you have in life, they're like a muscle. They atrophy if you don't use it. So if you express patients, if you express delay of gratification, these are very important skills to keep sharp.
• 38:52
  Saemin And when you actually are lucky enough to have that opportunity, then you're ready to execute. So going back to that statement about why is patients important? Because the right timing amplifies the effect that you can have, whether it's for your personal upside, for your group's upside.
• 39:07
  Haim That's an amazing answer for all my associates and all the people were with. Sometimes it's not about you or your lack of skills or what you're doing. It's the right timing, amplifying your skill set at the right moment and having the patience to whether it out, to sit it out to, to to be really be resilient on these type of things is huge.
• 39:28
  Haim So I hope everybody keeps that in mind. I wish I had more patience, I think I've been resilient, but the patient part of it has always been the tough part for me, so I appreciate that answer. Next question who is your ideal teammate? You get to pick one thing out of these three traits education, experience or temperament. Which one do you care about the most?
• 39:50
  Saemin Saban it will be 1000 times temperament. A person who understands. So when I say temperament, in my mind I'm thinking about the type of orientation and the directionality the person has. And that directionality must be very flexible. So going back to the temperament, this person should have a very flexible temperament, be very active in the assets that I have or vice versa.
• 40:12
  Saemin If the person asks something of me, this person can actually vibe with me, understand where the direction is going. I think that emotional, empathetic kind of IQ is very, very important in succeeding in business.
• 40:25
  Haim I mean, look, the flexibility is always key. And someone who's worked with you and through obviously we had Covid together. We had the post Covid, right? I mean you had like the ability to be flexible during those times, like really redefined you as both a professional and a personal. I mean, right, if you can't handle that type of flexibility, you really start not being great to work with.
• 40:45
  Haim So I appreciate your flexibility personally. So thank you for that.
• 40:48
  Saemin I do also.
• 40:50
  Haim Thank you. I appreciate that too. Next question for you. It's what I call it the poker table question. This kind of sums it all. Imagine you're sitting at Rakuten Capital today and you get to change or adjust one thing. One thing you get to change is that the game itself, i.e. the broad global economy, the Japanese economy, but the game itself, is it the table?
• 41:12
  Haim Is it the tech industry, the AI? And for industry? Is it the industries you're dealing with? Is it the house? Which is what I define as the regulatory regime, government fiat, ability to license do type of things? Or is it the stack of chips, how much capital you have and how you get to deploy it? Or finally, is it the other players as someone not playing fair, not cordon enough in the industry among the individual companies?
• 41:39
  Haim Which one you right now seeing a rack and capital, would you adjust your change?
• 41:44
  Saemin So just maybe this is a very segue answer, but I've actually thought about this question in a very similar light. I would actually change if I could the height of the table. And this is going back to physiology. Right? So for me sitting down, I know that I'll get tired and more unfocused or defocus if I'm able to change the height of the table, I am able to see what's happening in the overall tables perspective.
• 42:10
  Saemin I'm also able to change my orientation so that I become less tired, or I could become much more powerful than specific position. So for me, and I do this because I have a strong belief that how I contain myself, my my ego and my identity is the most important variable to the success of everything else, whether it's the house, whether it's the players across the table, or whether it's the regulatory kind of environment.
• 42:33
  Haim It's an amazing answer. I'm going to have to think about a little bit later. It really sounds I mean, look, to me, the answer is you can try to move the needle a little bit with changing some parts in the table, but really that's not going to change the overall strategy and what you can do in this world.
• 42:50
  Haim Overacting and maybe even personally the ability to have a better view or change the view of what's there and see what's actually there, is more important than adjusting the individual pieces of the table and what this is that, is that a pretty good summary, if I may?
• 43:07
  Saemin Yes, sir. I think and also maybe to add there, this is changing your posture. So in many ways, I know everyone in Silicon Valley has a standing desk, right. They have a motorized desk. You'll notice that if you stand up you have a difference.
• 43:20
  Haim Even as tech lawyers have have the standing desk. So once the lawyers get it 100%, everybody's got it. I just want to know that.
• 43:26
  Saemin So yes. Sure. So even when you're standing up, your posture towards what you're doing changes your level of fatigue changes. So that ability to actually change the height of the table is very parallel to how I view business, and that as long as you can become kind of flexible towards how you view what's in front of you, as well as how you can change your posture in view of what's in front of you, is so core to the success, the kind of success that you want and the success that you want for your company.
• 43:55
  Haim Is this where my wife always tells me that I need to stand up straight and get a better posture? I think this is it.
• 44:01
  Saemin I that's that's you and your wife.
• 44:05
  Haim So speaking of personal, this is the last question. Again, I'm really going to have to think about the whole height thing. That's pretty pretty phenomenal. Speaking of not phenomenal. And you know, I'm I'm a foodie. I like all sorts of food. Good high end. I love the street food, which by the way, no one does better than Singapore.
• 44:23
  Haim I will in my all my travels globally, Singapore street food is second to none. So leads the question what's your favorite food to eat at work and what's your favorite food to eat? Playing poker, which basically non-work personal. What do you say? Saemin? What do you like to eat?
• 44:39
  Saemin I'm just a simple, you know, if you can give me steak and eggs for my whole life, that's what I do. Steak and eggs and steak and eggs. That's that's just it. I'm. I'm a Korean, but I love it.
• 44:49
  Haim Even at the poker table.
• 44:51
  Saemin Indeed, sir.
• 44:51
  Haim Oh, my God, that's like, first of all, there's got to be some Koreans that are dying right now. That's an amazing answer. I will take that. That's that's amazing. Steak and eggs. Do you eat steak and eggs at the poker table is everywhere. Anywhere. You can get steak and eggs.
• 45:03
  Saemin Anywhere. I can get steak and eggs. I’ll eat steak and eggs. Yeah.
• 45:06
  Haim I told the audience when we started this. He is a workout junkie and loves protein, so I'm actually not surprised with that answer. I'll take it. I'm also, I die for eggs. I like steak, but I'm just I'm an egg guy everywhere. So look, Saemin, I really want to thank you for taking the time. I really appreciate you being on.
• 45:24
  Haim So thank you so much, obviously, for the partnership over the years and your time of the day. So thank you.
• 45:29
  Saemin I really it's an honor. Thank you so much for the time today.
• 45:32
  Haim Really appreciate Saemin. Thank you for checking out this episode of connected with Latham. You can subscribe and listen to new and archived episodes of Latham's podcasts on W, Apple Podcasts, Spotify, or anywhere else you listen to podcasts. If you have questions or would like additional information, please email us using the links located in the show description. We hope you'll join us again next time.
• 45:54
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• 45:56
  Haaim Thank you again!
• 46:24
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• 46:47
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