Billionaire Sea Founder Warns of Turmoil From the Shift to AI

Olivia Poh, Bloomberg News

Forrest Li , Photographer: Ore Huiying/Bloomberg

(Bloomberg) -- Sea Ltd. founder Forrest Li warned of a difficult transition to AI in coming years, but stopped short of outlining the Southeast Asian e-commerce leader’s plans for developing artificial intelligence tools.

Li talked about the transformative technology, comparing it to the PC and mobile revolution the industry has navigated. Now AI could be a bigger challenge than those, the 45-year-old founder said in a staff memo released on the 15th anniversary of Sea’s founding. But he emphasized that the company was in a better position financially than in the previous decade.

“The AI wave has not quite arrived, but we can see it approaching,” he wrote. “This technology transition may be harder on us than the last one. Back then, being a newcomer to e-commerce and mobile games freed us to fully focus on the new platform from the start. This time, we are the ones who will have to adapt to a new technology.”

Li, who is fond of penning memos to Sea’s 60,000-plus employees, didn’t directly address some of his company’s more immediate challenges.

The owner of the Shopee shopping app faces intensifying competition in a Southeast Asian market of more than 650 million people. ByteDance Ltd.’s TikTok, Alibaba Group Holding Ltd.’s Lazada and newer entrants like Temu and Shein are vying for the shoppers that are moving online in countries such as Indonesia and Thailand.

Read More: Sea, Grab Face Slowest Southeast Asia Online Growth in Years

Yet Sea has had some success improving its profitability, helped by cost cuts. The company said in March it expects to earn its second straight annual profit this year. Its shares have advanced 61% this year and are nearing their highest in 12 months. Yet they remain far below historic levels.

To cope with the rising competition, Li said in August he intends to increase investments into Shopee. Besides AI, he’s stepped up efforts to build out its live-streaming arm, an offensive move that could erode margins and trigger a price war with TikTok and Alibaba.

Read More: Sea’s Path to Profit Paved With Layoffs, Single-Ply Toilet Paper

--With assistance from Mayumi Negishi.