Where Will the Next $10B Monopoly Come From? 3 VCs Debate | LINE SCALE UP × BSA

0:00 Hey there. Welcome to our very first podcast collaboration between Line Scaleup and the BSA, the Bangkok Startup Association. Today we're going to be talking about a hot topic called the next $10 billion monopoly. And today I'm joined by three amazing guests. We have Ankit Twwo and Matt. So let me tell you about Ankit first. So, Ankit Upadhyay is a founder and general partner at A2D Ventures where he invests in earlystage startups across Southeast Asia and connects founders with a global network of angels, VCs, and family offices.

0:33 Before A2D, he had a leadership role at Shoppee, Thailand, and India. We worked at Mckinsey and has a background spanning e-commerce, advanced electronics, manufacturing, and technology. He's also a senior adviser to Mckinsey and is a driving force behind Venture Spark, helping early stage founders in Thailand go from idea to scale. Welcome Ankit. Happy to be here. Next up, we have Matt Windsor. Our next guest has spent more than a decade in Southeast Asia starting his career at Bain and Company where he worked across technology, financial services, consumer, and now private equity. He then spent seven plus years at Open Space Ventures, one of Southeast Asia's leading venture and growth investors, working across sourcing, deal execution, portfolio management, and exits. During the time, he was involved in investments including SCB, Abacus, $12 million series A, Finnomena, Fresh Kit, and more. Today's he is a venture partner at Open Space, and he's also doing something pretty interesting. He founded Region Capital Partners, a Thailand focused search fund looking to acquire and operate an exceptional Thai company.

1:39 Welcome, Matt. Thank you. Thank you. And last but not least, two Twwo Jaruthassanakul. He spent nearly a decade looking at Southeast Asia through one very specific lens. Which founders are actually going to win? Two is currently a principal at SeedStars where he leads investments across Asia. And before that, he was investment director at 500 Global Thailand, where he helped lead investments and worked with hundreds of startups across the region. His portfolio spans fintech, SAAS, e-commerce, enterprise tech, and includes companies that have gone on to become unicorns and Soonicorns. He's also behind investments like Cinch, Imotorbike, and Rolo Robotics, including Rolo's recent $3.45 million oversubscribed seed round. So if you want to know about what separates a startup that sounds good to one that's that's going to win Twwo is your guy. So with that I'd like to welcome our guests.

2:38 So firstly I'd like to ask all of you, when a trend comes along that might be in the news or in the media, what do you look for? How do you see one as okay this is something interesting or this is something not to pay attention. Let's start with you Ankit. Sure. I'm trained as an ex-consultant. So is Matt. It's something I think for most consultants, you're very hypothesis-driven in your approach. So when a trend comes along, if you're a good VC, I believe and and if you're a good investor, you should be A) catching the trend long before it becomes a trend. So you could ride that wave and make money on it. By the time it becomes retail trend, the ball's passed and other investors have jumped in and now this product has achieved product market fit. So as an investor, you want to catch it early. And second when I see a trend on the early stage side I always try to leave within a hypothesis to say what what is the underlying levers for this trend how will the impact be generated whether you're serving a business or a consumer in sort of a multi-fold strategy right I mean how how are you going to be part of someone's daily life is this going to be an operating infrastructure for an enterprise and is there a clear ROI on this product so for me I think these three are important when I look at a trend and if it's just trending, I know it's not structural. It's not going to last. unless it meets that criteria and then sort of I pass.

3:56 Thank you for that. Twwo, what do you look for in a trend? I mean, I think for for us a bit of context. So our fund SeedStars as a whole, we invest in emerging markets across the the globe, right? So from from LATAM down to Africa, South Asia, and obviously Southeast Asia. So as as a venture capital investor, we have very longtime horizons, right? our our average holding period of investment is probably closer to 10 years, 5 years at least. Seeing these kind of trends that comes in and out through phases, we look at those trends in the context of this underlying I would say long-term secular trend or demand and analyze it through that lens.

4:40 So I want to come back to it. We'll come back to it later in the conversation, but how do you know that? Because in today's trends, I feel like a lot of it is inflated by by media, by PR, any person in the top 30 under 30, not going to say the name, right? Like how does an investor, how can an investor see through that? because there's something really important you said like how do I know if a founder is the real deal the one that I'm investing in even though he's showing me what I want to know because I and in a recent I can't name the founder but what this founder was doing is they were getting editable spreadsheets from their account and just like adding zeros to send to the investors because that's what the investors wanted like how do you see through that I think with with all of us the amount of meetings that we've had with with founders, we've kind of honed and developed this kind of BS detector and skill. So, just by having a meeting, I think you can tell a lot as well.

5:46 But versus maybe them doing marketing or PR to kind of the general public who might not have spent enough time in in the space as as we professionals do, but also just looking at the journey of and the background of a person, right? can tell a lot from that if you've not done the work or or studied it with anything related to the topic that you're talking about at all. You can tell by just looking at that background, but also within the conversation, right? I think it shows. Okay, Matt.

6:17 Yeah. So, I mean, I think there's two main things you look at to to isolate trends from hype. I think the first which is a little bit harder to quantify is impact. So I think if a particular product has limited impact on its customers, there's a high chance that that is a short-term hype and not really a long-term trend. And so I think the first thing is the impact on the customers and on users as a whole.

6:39 Secondly, I think it's on product market fit which Ankit mentioned. I think product market fit is very important also from an investment and sustainability point of view. companies which have strong product market fit for example tend to stay around longer. They can scale with less capital. They grow faster. they have loyal customers. And so I think product market fit is one of the main concepts we look at when isolating whether something is a short-term hype or a longer term trend.

7:03 Can you give me an example of something that people thought was a long-term trend, but it was actually a short term trend? Yeah. So I mean this is going to be a little bit controversial, but I think crypto was a little bit boom and busty. So I think my own learning within crypto was that the market grew really quickly. you could generate quite a lot of value by listing your tokens very quickly. There were like a bunch of companies listing, doing their ICOs very quickly. But I think what we learned also is that these companies couldn't generate long-term value or long-term customer impact. And so you see that actually these tokens all crashed very soon after that because there was no lasting value that they were generating, right? And so that to me was a very clear sort of view that this was more hype than a long-term trend. But I think for AI for example, the product is much more impactful in my view than crypto.

7:52 The productivity gain that you're seeing from Chat GPT or claude is significantly higher than another move to earn. Yeah, that's right. And so I think because the value on the customers is higher, you see actually the use case and the usage of AI is much more sticky. And so I think when something is more sticky, there is a core target customer using this product for a long time all the time, that is a good sign that something is more of a trend than a hype. What do you guys think about that? I want to add something to this. Right.

8:22 So but there even with all this that we said there could be outliers and and there could be circumstances and major technology shifts that disrupt something that we thought will match the pattern. And then there's a perfect example that just happened recently, right? So if you look at large technology shifts over the last four decades, there was the dotcom, the internet, right? 2000s. Then there was mobile or let's say mobile internet. And now we're in this AI era, right?

8:52 A company that did extremely well in mobile and I'm going to take an example. Let's take AirTable as an example. It was valued at 11.4 billion and just two weeks ago it got acquired for 1.4. A perfect company. $1.4 billion. So one-tenth their value, right? Perfect company, long-term, creating impact, solving the right problem, was mass adopted, sticky customers. But a major technology shift happens that is macro in nature, could disrupt anything that was a great pattern before.

9:23 So you could you could have circumstances where this major shift happens and disrupts everything that was ahead of it because it wasn't there, but it wasn't great enough. and now you could do it at half the cost get to better customers and just better product with this technology shift right, so these kind of patterns no one can predict and and sort of nail down to say I know AI is going to happen in 10 years and it's going to be this big and you know I'm going to switch my strategy whether on investment side or as an operator I'm going to switch my strategy you just have to be agile and adaptive enough even as a founder or an operator to say I see it coming let me see how far it is do I adopt Is there a tangible ROI if I adopt it or should I just wait for everyone else to jump in? And I think that's what differentiates it.

10:10 That's something here that I feel that's an unspoken thing that's underlying trends is timing. I'd love for all of you to speak about your approach to timing and trends because you said it the short you said it short-term versus long term. You said it retail, right? Like how do you guys know when to jump in or like when not to jump in, right? Yeah, I mean I think timing a trend is actually very tough. I think if we could time it all perfectly, we would all be in our castle somewhere or super rich somewhere and you know I guess retired, right?

10:42 Sounds like a good deal, right? I would love actually timing it is extremely difficult and there is nobody who can actually time it correctly. I think what we do as investors is that we try not to get in when it's already overhyped, right? And so I think as VCs we meet a lot of founders all the time and so we most often will see trends ahead of them actually happening. But when it's too late or when things have popped or boomed too much, I think you have to have the courage and the resistance to also say no, right? I think if you look at this example, for example, in Southeast Asia in 2020 and 2021, there were a lot of big US funds. These large crossover funds came in, right? And they really popped the market. They, you know, invested in companies at significant valuation uplift, right? And so all of them have now lost money and have left the market, right? So they were a little bit late to this hype of Southeast Asia. And so I think timing a trend is tough. I think as VCs especially seed and series A we usually see these trends early but also the key is to resist when something is already overhyped as well. Yeah.

11:46 Twwo you look like you have opinions. I mean when we when we looked at at individual investment like the the timing has to be right for that company for us to make an investment as well right. I think sometimes being too early is not good as well. and obviously being too late more often than not is also is also not positive. So I think an example I can give is this company Rolo that we actually co-invested together. They're building autonomous robots that cook fresh food. right. And if they were starting this a couple years ago, we probably could not make a good investment case for them because the timing just wasn't right.

12:29 Right. The cost of the robotics, it was still high. and then the AI advancement is not where it is today. But then when they were raising last year, I think it was, timing seems to be right for us. So sometimes you can't really time it because you're limited by when your fund starts, when you have to exit. But it's something strategic that we have to think about as well in terms of where and when we exit our investments.

12:55 That's a good question to Matt and Ankit is how do you know when to leave? How do you know when to leave the party? Actually, when do you get an offer haha The funny thing here is that many founders sometimes are given offers to leave or exit, right? And then when they're at their peak, they're not exiting because they think they can get more. And so when you're actually on on the hill and you're doing really well, you know, all you see is going up, but actually very actually most often it always comes back down, right? And so actually it's very tough in practice to know when to actually leave the game. and so I think that I guess the advice we usually have for founders is to always, in each round, always lower your risk a little bit. So exit a little bit at each time.

13:35 I think you're never going to get the timing correct, but I think if you're just decreasing your risk, you're taking some money off the table. That's usually what we advise our founders to do. Yeah. What signals that if you could list your top three signals that you look for that guide your thinking, what would they be? so I think it's not just the trend alone. I think we look more holistically at the business itself. And so I would say maybe the three main things most VCs would look at, but I look at quite a lot. I think not in any particular order, but I think the founder's grit is usually top three. And So can this guy weather the storms? Can they pivot if things are not going well? Are they going to stick with this business for more than just two or three years?

14:15 I think that's very important. secondly is the market size. And so I think if the market size is not sufficiently large, even if you do great, you're not going to get to be a hugely scaled company. And so I think we look at the market opportunity whether it's large enough and worth their time. And thirdly, I think this is more important for series A and series B investors is product market fit. And so we look very closely at retention. And so for example, are customers staying longterm? Are they happy with the product? If you onboard them, are they here once and they leave or are they sticking around for a while?

14:48 And so I think if these three characteristics are met well, usually we see that they can grow into these startups can grow into decent series B, series C, and series D companies. All right. Twwo, what are your signals? No, I think I think Matt covered it well, but I I'll just add maybe on top of what he said on on point one and two on the the founders and the and the market size. And I think this becomes clearer at the later stages, but when we're the the ones making the first or the second investment into into a company, it's actually, also looking at the founders ambitions and and making sure that aligns with what we want as an as an investor because there's founders out there who would be happy with a $10 million exit, $50 million exit, even a 100 million exit, right? you know, each founder would pocket a few million dollars each.

15:37 It's a, you know, it's a great life in a market like Thailand, but for VC funds like ours, we need way bigger outcomes than that, right? So, it's talking to the founders, making sure that there's that ambition to scale a company to, you know, potentially a unicorn size or at least somewhere close to that because that's the only way that we could make the maths work for us as a fund. How do you define a unicorn? I mean the technical description is a billion dollar company right but the bar we look at internally is you know if a company has the potential to reach at least 100 million in revenues okay what are the red flags you guys look for those are the signals what are the what are the red flags I can just share from my experience right I've been like my own personal capital as an angel I've been investing for 16 years now across predominantly US, India and now Southeast Asia sometimes the angel check is the first check and this is not a fund so I'm not looking for a unicorn I think just to add one more point to what Twwo and Matt mentioned I think from a pure founder standpoint at that stage, does the founder understand the problem statement well enough sometimes they think they know the problem but so if they if they if they're talking to you and it's clear to you they don't really understand this red flag, right? They want to build it and they don't understand their own problem. So, as as soon as you start digging and peeling some layers and saying, "Well, do you understand customer behavior A and why that happens because of a problem B, right? Let I'll give you like let me contextualize this, right? So, going back to Rolo Robotics as an example. So, they're they're great founders. They're building these autonomous robots for autonomous kitchens. One of the founders has spent 20 years in the food industry. He understands food safety. He understands pallet. He understands customer behavior. The second founder has spent 15 years in robotics. two come together to build autonomous kitchens. Makes sense, right? So, and the problem that they're defining is the cost of labor to run standalone kitchens, right? In either high labor cost markets or areas like coal mines where it's hard to get fresh food, right? So, so then you peel through those layers of asking them different questions like where else do you think you can sell this?

18:06 Can you sell this on a army or navy base? Can you sell this on a ship? Right? And then then you kind of say okay the founders has figured out the problem. They understand my use case and and they keep answering in that pattern. And on the flip side, I've met founders where the same question I asked them, why are you building autonomous robots kitchens? And they think, oh, it should work because I've seen Tao Bin in Thailand work. So that's not like trust me, bro.

18:34 Just trust me because everyone's buying coffee from Tao Bin. So I think if I put up a machine next to Tao Bin and assume everyone's going to walk in and buy chicken and rice, it'll happen, right? So, so they haven't peeled to the depth of the problem statement. For context, for people who don't know what Tao Bin is, could you tell us what Tao Bin is? Tao Bin is the the white coffee machine you see everywhere in Bangkok where you just go and pay 40 baht and autonomous meaning the machine makes a coffee and gives it to you for 40 baht, right?

19:03 so that that's one red flag and I think the other one I see this more in Southeast Asia, not so much in other markets, is exaggerating the proprietariness of what they're building. There might be no proprietary data set a workflow that understand AI wrapper I mean that's what we see a lot but claim that this data set is proprietary and you know only we have access to this but it's not true I mean you could just go on Google and do a bit of searching and figure out that this data set is public data anyone could have access to so so trying to be unique when you're not and not understanding the problem I think those for me are the two biggest red flags. Anything else you guys want to add to red flags that I mean everybody needs to know about this red flag. I would say most of the trends that we're seeing there's always a substance behind the the trend right I think it's more looking at at the micro level whether you know the founder is the real deal whether they have you know actual deep domain expertise in in what they do versus you know a founder that jumps from from trend to trend right so a guy who four five years ago was crypto now is AI and you know the next hot things come and he's going to be hopping on that I think I think these guys shared like quite good concrete red flags but I think I'll share something a little bit more soft which is actually just don't be a**hole right I think like when you meet founders a lot of times like when you invest in them the journey you have with them is like five or 10 years long right like you're on calls with them the whole time you're speaking to them quite a lot and it it's a long-term journey and so I think we do think at least I do think very carefully like whether I want to spend 10 years of my life working with this founder and if I don't, then the answer to invest is most likely going to be a no so actually the softer side of things also matters. Even like small things right like for example I met this consumer goods company recently and when you are running a startup which is a physical goods company you should always bring your product to a pitch because it actually helps a lot when you're closing the sale they get to try your product but this guy didn't even bring his product right and it was kind of like a small thing but like I felt like because he didn't do that he wasn't a good salesman enough that I wanted to back him So there's a human side to it yeah and so there is a human side to it and so are you nice are you courteous? You know, and so all these things also matter.

21:19 That brings up an interesting question. Is do you think then that that could be manipulated with someone who's like like they just studied how to charm the out of investors like I'll say your name a lot. I'll dig up your LinkedIn. I'm like, "Oh, hey, your family's name." Like, "Hey, I remember you like, you know, this type of coffee." And I think that's been you see that a lot right in especially ones that make the news that were super charmers but they were just– like that's a cultural nuance right I mean I think in Thailand Southeast Asia I see that but to on contrary to what Matt said some of the startups that I invested that actually made me money were the a**holes were either out of US or India and and and you meet them and you I probably don't want to sit on the plane with this guy I don't want to spend an hour with him but he'll make you money But they were so laser focused. They exactly know knew what they were building and they were arrogant enough to believe they can they can do it despite of all there's no capital technology. They're a bit ahead but they were sort of visionary and delusional in their own way and and you go for that ride and the arrogance and made that investment and the returns were great. So I think the cultural nuance is important. I think in in maybe Southeast Asia context this is a bit more relevant where how nice you are and how nice you greet but in some other markets you could be arrogant as hell you could say no to VCs because I don't want I don't want your money or they ask they flip the table and ask you what value you bring to the table otherwise I don't want any money and it could be money. You bring up a good point and you bring up a good point right the things that work in Thailand might not work in the US if anything as as also part American is like the abrasiveness might show more confidence like, "Oh, this guy's a real a**hole He can probably do it." You know, like he is, he's crazy enough to make it happen.

23:08 So, I would move more to personal stories from each of you. I'd like one story about an investment lesson that permanently changed your thinking. You take a moment if you want to and I would like to know the situation, what you believed at the time, what happened, what you believe differently today as a result. Maybe I can share. so I think for me, we touched about product market fit earlier, right? But I think the retention point actually to me is very core to my DNA in doing deals or in investing because we meet a lot of companies which have project based And so I noticed maybe like three to five years in my VC career that the companies that have done best in my portfolio very simply have the best retention. And so what that means is that when you acquire one customer, next year you're not losing them and actually you can work with them again, they pay you again and it's ongoing.

24:08 In that equation, has any experience in it changed like it permanently changed the way you thought about investing as particular investment or not investment? Yeah, this one was something deep. Never fall for a pedigree. Never fall for a pedigree. Say more. I fell for a pedigree. two PhDs in computer vision. Graduated from top universities out of UK. Come back to Thailand, build a computer vision company. they wanted to do XR, VR, AI combination with and headsets and everything, right?

24:43 I said, "Okay, two guys who really know their domain. They're experts, right? They got PhDs in this." and went ahead and made an investment. it it didn't turn out well because I think what they lacked was A) ambition, B) commercial sense of of how to to scale and sell this business to anyone or this solution to anyone. And the third one integrity and when I say integrity is the ability to bring your investors on that journey. If you're going to shut the company down, fine. Shut it down.

25:14 but do it in a manner that's respectful. and in this particular case, one of the founders went ahead and started another company even before he had left this one and I found out about this other company through another pitch I attended. So I'm like, well, I invested in your other business. What happened to that one? Oh, well, it's shutting down. Right. So So I think integrity is important. So So again, I fell for pedigree and and felt that's good enough in a founder, but it wasn't right. I imagine it's like the metaphor that comes to mind is like falling for someone who's really good-looking without being sexist. like, "Oh, this person is really great-looking." We must be like, "Oh, wow.

25:48 They're crazy." You laughed a little too much at that one. Personal experience. Personal experience. Oh, the mighty Twwo. Okay, before we move on to our next topic, quick quick top three hot trends that each of you think that we're not seeing right now or the ones that you think are hot trends. All right, we'll start from this side. Yeah. so I think climate, it can be quite controversial because there's been no company that has scaled in the climate area yet really.

26:20 but I do think it's the next mega trend of the next 10, to 20 years. I think the demand is definitely there. The impact is definitely there and we have no choice but to live in this earth right and so I think there better be some solutions that will improve the climate in the world. So I think climate is one of the next big areas. Yeah. Secondly, I think one layer down from AI is basically helping SMMES to adopt AI. And so I think this is the sort of second generation usage of AI is how do you get These old traditional businesses to be more techsavvy and so I think that's the second mega trend of investors that we're looking at as well. and Thirdly, I think healthcare it's been hot for a while but I still think it'll be a hot sector going forward. So yeah, Twwo?.

27:08 Yeah, similar just piggybacking off that I think healthcare definitely I think we're going to see really amazing breakthroughs in the next few years. whether that's investing in this area of the earth. I'm not sure. one space that we're actively looking and we have invested in is these new AI native companies that are basically service companies, right? delivering services to SMEs and enterprises. So rather than you know your traditional SAAS companies that are building tools to enable the the workforce or the staff at these these companies, they're actually delivering the outcomes acting like the labor or the employees themselves but are just using AI to do that. So I think the the market for this is way bigger than the the SAS market and we've already seen plenty of examples of AI being able to deliver you know quality of work on par and often times at a much higher quality than you know a manual human being. So one investment we made in the space is Yobo Labs.ai started off in Indonesia but are now expanding to the US. So essentially they deliver a growth marketing agent that acts as you know a growth hire in your team at a fraction of the cost. The last bucket I think that is exciting is offline AI or hardware and robotics.

28:44 But again I think the question is, is Southeast Asia competitive enough? Do we have the talent pool and the infrastructure to support these kinds of companies? And I think we can find rare finds like Rolo, but they're not coming out in high volumes. So mine are slightly different. They're not so VCish, but these are my three trends, right? Number one, anything that's touching health, wellness, longevity. I mean, look around us. Half of us are wearing a Whoop or health tracker. How can you use this data? Now this insane amount of data is on everyone's wrist. How can I consume this and produce something that I can actually do meaningful with it?

29:24 Hyrox 21,000 people just raced at Hyrox Thailand the biggest in Asia it's a mega trend if you're not catching it I mean yes you could build a unicorn build a great startup but you could be a small high growth business capturing this trend right so I think for me health wellness longevity is one bucket if you can build in there. Second is applied AI for industrial manufacturing 30% of Asian GDP contribution is from manufacturing. In Thailand that number is 54%.

29:56 large medium manufacturing facilities here. It's an amazing manufacturing base. Over 30% of people in Thailand are going to be above 60. Labor wages rates are going up. So, how can we now use AI to bring it to manufacturing? And the third one is to look at what's happening in the world. We're in the middle of two wars. There's a China versus US situation happening. a lot of countries now or China cannot sell to the US and a lot of countries cannot sell to the US. Can you do and make something that's happening in China but do it here even if it's a bit higher cost and now there's markets space tech defense tech communications could be small products but can I sell them to India because China doesn't buy from India US doesn't buy from India there's this whole geopolitical thing happening right so even if I don't meet China pricing and quality can I build something where I can sell to a market where China cannot because of regulatory issues So taking advantage of that and this is something that's top of mind for many CEOs. I mean you see this happening today. It used to be a China plus one strategy where a lot of this global manufacturing was being set up in Vietnam, Philippines, Malaysia, Thailand and now everyone's already talking about China plus two and and India is just committing billions of dollars into semiconductors as an example. Right. So can you catch something there? And there's a lot to be done there.

31:19 Excellent. Where is smart money moving today from your perspective? And we're going to look at specific sectors, market geographies, which you just spoke about, which I think you had a great segue into that types of companies, investment activity you've observed, and why do you think capital is moving there? So, because you opened it, I think you should continue on with it. Well, my my honest answer is I don't know how smart capital is these days because smart capital should be well diversified across multiple assets geographies. Right? Today what we're seeing is on the contrary capital concentration we're seeing capital concentration in AI in the US and secondaries out of China whether you talk to a VC firm or PE firm all the same. half of the VC funds in in Southeast Asia and someone might even shoot me for this but now they're PE minded they're no longer VC and and VC should be truly venture capital right like taking the bet risk you build a portfolio but today because of the outcomes and and because we haven't delivered outcomes as as as investors and allocators it's all become PE minded which is very cautious risk-free capital right I would only invest it's okay if I'm I'm okay with a mediocre outcome but I'll only invest if I can see some returns, right? So, I think that's that. But a thing where capital I see small pockets of capital flowing back is back into high growth SMEs and and we're yet to see this fruit in terms of IPOs, etc. I mean IPOs are down, right? Thailand used to be a 1.4 billion healthy IPO market. Now it's down to 10 12 million. at least That's the number this year in terms of IPOs. But if you can still build a valuable theme that is profitable, healthy, is still growing, not at a unicorn rate of 2x year over year, but 30-40%. I think there's still capital out there and Matt's building a venture around this as well, right? To invest in such companies and operate, find efficiencies. I think that's where I'm seeing more capital or openness to invest which is profitable reliable companies with healthy customer base that's retained well and we see a path to not a unicorn outcome but maybe $100 million outcome what do you guys think about that do you agree do you disagree actually I agree I think Ankit captured it very well actually I think the market is bifurcating a little bit and so I think a venture is being concentrated in the US in AI in China and I think venture in other parts of the world are struggling even more. They haven't returned capital at scale.

33:55 There has been more limited exits and there's no way a startup in Thailand can fight with a startup doing AI in the US. The capital there is just next level, right? And so I do think that in markets like ours, there is a resurgence of PE money. And so there is significantly more PE money in the market in Southeast Asia than there was a few years ago at the expense of VC actually. And so I think it's unfortunate because we need VCs to fuel innovation. But I think the market is either you're in AI in the US or China or you're in PE.

34:27 which I think is not necessarily a great thing. But definitely it's a clear trend as to what is happening now. What do you mean capital is next level in the US? like the scale is next level? Right. Like for example, Anthropic's latest round valuation is $300 billion, right? That's 60% of our GDP, right? and and SpaceX market cap is what 1.5 trillion 1.3 trillion now that's two and a half times our country one company right and so one company right and so the scale of capital the scale of innovation there is just completely different and I think if you're raising there or building there the access to this capital is significantly more than here and so I think it's just the scale is tough to compete with to be fair and and the US has a 400 million population size everyone is significantly higher earning than even our top tier, right?

35:17 And so the market size also is significantly different. Yeah, we even have companies now with just the situation in Southeast Asia where capital is drying up. Those who can are trying to expand to the US, build some traction there in order to be able to raise from US investors and position themselves as a hybrid US Southeast Asian company. but you know what would be amazing though and and this is this is where I think going back to your question of what can we what is our ideal hunt and if you can find one and I hope we one of us can find us we have one in our portfolio like this but ideally if you can find that arbitrage which is a Thai founder building in Thailand with lower cost selling in the US. Okay.

36:02 And we have two in our accelerator like this. One one is a company that's making a high performance gaming mouse. Okay. So, just like if you're an athlete and that was very cool. If you're an athlete and you buy high performing shoes. Yeah. Why can't you buy high performance? And you spend, you know, you look at an average gamer, they spend $15,000. Wow. On their monitor, on their computer server, on their keyboard, but they use a $20 mouse. Yeah.

36:27 From Logitech. So, this startup is five gamers and they're in our current Venture Spark cohort and they're building a mouse designed for your for your hand. They're all made in Thailand. They're completely sold out. the only market they're selling to is the US. So, if we can create more examples of this, like you have the labor cost advantage here. Talent is relatively cheaper here, right? I mean, Singapore is expensive, but you can find okayish talent here and then can you sell something to the US?

36:56 I think that'll be quite exciting. All right. So, when it comes to market pulse, like is there anything in the past six months to 12 months that has surprised you that that made you go, "Oh, oh." Like, didn't see that coming? I mean, for me, I didn't see the scale of adoption and the speed of adoption for AI in general, right? I mean, today and we do the survey and I'm not sure if you guys resonate, but we've been asking all our founders, how are you using AI and what's the impact of it? Is it is it going to be in reducing cost or expanding revenue and and how much experimentation with AI are you doing? So we're surprised at how it's made a real impact in terms of saving costs.

37:39 Not just them. We serve with some more theme founders as well. People doing small businesses in Thailand selling on They're adopting OpenAI. They're not hiring another content person and they're not hiring a strategist per se, right? Claude is telling them do your ad optimization across Meta, Shopee, and Line this way, spend this much, put your budget this much, and that adoption is phenomenal. I mean I didn't expect a year ago I would I would see that right but I keep meeting founders who are almost using Claude or GPT as their co-founder and in an active business building environment not just hypothetical right so that really surprised me and and the impact of that is great on the other side enterprises are still struggling they don't they're coming to to consultants to get advice right but they still don't know what is the best enterprise use case and how do I scale it and how do I generate ROI that my board will understand or can filter through my balance sheet. But I think within the theme and founder space that's really surprising.

38:44 Yeah, I agree. I think AI has been crazy. things have changed at a pace which I've been in venture for eight years now and it's just unlike anything else previously, right? And so The pace is super quick. Engineers in our portfolio companies are using entirely AI now. And so like in some companies that we invest in, they're not actually coding themselves anymore. Actually in most of them there actually is no line of code written by engineers anymore. Engineers are just prompting and checking code, right? And so that has been a very quick shift which has been ahead of anything we expected to be honest. So that has been surprising.

39:17 Like I'd love to dive in to your perspectives specifically about Thailand, you know, like where we're filming this and what you think are the opportunities are, what you might be seeing that nobody else is seeing, what might even be overrated, you know, touch on some things like that. So let's just kick it off like what do you guys see that are the unique opportunities in in Thailand in Southeast Asia that might be different to the US for example if the US has next level capital, what do we have here?

39:48 I could go first. I mean specifically for Thailand what what I'm looking for today and then some of this some of this you'll see in our accelerator and the kind of startups we picked. So I'm looking for three things. number one tools SMEs. I think Thailand is still home to 3.2 SMEs that contribute 26% of the GDP. So what can you build SMEs to make their life easy? Whether they are e-commerce sellers, whether they're brand owners, whether small factories. So what can you do there? Second, Thailand has an aging population problem. So what can you do to make healthcare affordable? making to give you an example, the 13 million aged population suffers from chronic diseases.

40:43 Could be kidney, could be heart, could be liver. They all need very specific dietary restrictions. There's no startup building for that. We have Grab, we have other food delivery platforms, we have tons of restaurants. But is there someone unifying that fragmentation to say I will make meals for this aging population that has all these dietary restrictions. So I think anything that's in that space of serving the aging population or helping them live longer or healthier. I think that's one. And the third one for me is what utilizes Thailand's strength in in in industrial and manufacturing space. There's tons of manufacturing here. There's tons of industries here. what can serve them? could be regulatory, could be compliance, could be fintech, could be carbon accounting, could be one of these angles, but how can you solve their problems today?

41:43 While I have you kit, what do you think is overrated here? What do you think that people you like you always hear Thailand's great like this but you're like nah Honestly I feel our aesthetic industry is overrated it's a net buyer of aesthetics but do we do we produce any of that I'm I'm not sure what do you mean by aesthetic– like aesthetic clinics products that are being consumed here on the daily right like skin creams skin creams skin care botox fillers you're you're net buyer of all this but But is it creating a lot of economic value? I'm not sure. Right.

42:20 and the other one I think food is mildly overrated. Get out!–– I mean to say food innovation. Food innovation. Like will the next best brightest food innovation come out of Thailand? possibly. But I'm not. Do you think they're still hanging on like Thai food straight and just. Yeah. on the palette, on the flavor, on on creativity, 20 on 10. Yeah. But will food innovation and and expanding Asia across the food value chain and disrupting up disrupting it in a meaningful way and and building products that could be of global appeal outside of just Thai food as you know as a cuisine. that I'm not so sure about.

43:06 Yeah, I think if we take a step back as a country first, right? So I think compared to other peers in Southeast Asia, I think Thailand is almost like a fruit that is a little bit rotten on the outside, but then when you cut it on the inside, it looks great, right? Whereas Vietnam or Indonesia, for example, is the other way around. It looks great on the outside, but then when you cut into it, it's kind of rotten, right? Because the key sort of of differentiating factor that Thailand in my view is, that we have a great balance of governance. Even though you may think that's like a little bit of a joke, but we do have a great balance of governance like with market size, a significant like mass middle income population and also good exit opportunities, right? And so, so that's so I think as a market we may not get the sexiness that Indonesia or Vietnam does, but actually we have decent substance that allows us to create decent midscale companies, right? And so I think that's the overall view for Thailand. And so what I'm looking for is basically SMES which are smaller middle market companies which can be scaled rapidly towards a scale that they can be exited or listed properly. So I think we have that opportunity where there's a lot of companies which are in this middle segment in Thailand which can grow and which have no next generation leader for example right?

44:24 if I could add on ask more is what in that case if beautiful metaphor by the way on the outside so dig a little bit deeper what are what are some opportunities in Thailand that you feel are over might be overlooked–well I think there's a lot SMEs there are 600,000memes companies which have been founded and led by baby boomer company or sorry baby boomer generation people and so these businesses are going to need next generation leaders in the next 10 years and so there's a whole cohort of SMEs which lack professionalization which haven't really seen growth in a long time and which have been operating basically you know by harvesting cash and not reinvesting it and so I think this group of companies is significantly overlooked and actually represents a huge opportunity for our country.

45:13 Yeah, I think I agree with Matt. There's a lot of free cash flow generating large businesses. Yeah. That have a generational shift problem, right? And either that the new gen is not super excited to enter the business or the business itself is not exciting anymore, right? Then then how do you do a consolidation play whether it's PE or not? and I think even going one level beyond that is How do you create these success stories of these folks exiting and then being celebrated? I think maybe the conception is if I leave this free cash flow generating business and exit, I have nothing more to do and no one's going to value me for anything. But how can you celebrate these individuals whether they go into politics maybe and do something there?

46:00 But how do you make that shift and encourage more younger generations to come in and lead these businesses? All right. Almost like a rollup. Yeah, if someone can do like a sectoral rollup, right? A roll up for manufacturing and automotive, a rollup for education, a rollup for XYZ. Talk to me about climate. What are your opinions about that trend and when it comes to building startups and business? I do think it's one of the few spaces where there is a very concerted and focused government effort and money to tackle this, right? And I think you don't really see this in any other tech sectors, right? AI kind of happened more organically. All these other things were more organic by nature. But I think climate overall there's a huge amount of funds being dedicated to solve this issue especially by the Europeans, right? And so there's a lot of money floating in this ecosystem. There's a lot of investors waiting to invest.

46:57 There is debt which is super cheap for companies doing climate, right? And so there's a lot of ingredients which are setting this up to be a great long-term sector. But I think similar to what you guys said earlier, it is one of those sectors where it is still very early and so nobody has really found a way to actually solve these problems that they're trying to tackle. But there is a very focused effort to solve this within the next 10 years.

47:21 Talk to me about fintech because that is one of the areas where Thailand does seem to do well, right? Love to hear strengths and weaknesses or thoughts about where is it going, where is it not going, what do you know about it that other people don't know. Why is Thailand good at fintech? I think the banks in Thailand are very strong, right? I think the top five banks have the majority of the the market share here. They're very digitally inclined. and they're pretty quick and agile in in terms of adopting new technology, right? All the banks have a CVC unit and a huge tech department. Whereas if you compare to markets like Indonesia or Philippines, the market structure is completely different, right? There's a long tail of banks. There's hundreds of banks in those two markets. And obviously with each bank being smaller in size, they have less resources, right, to try and experiment and adopt new technology. I think our banks are also very robust from the Asian financial crisis. So they've been quite I think conservative in terms of their their loan book from the from the lessons in the past. And if you look at fintech it's mainly payments and lending.

48:44 Yeah. Right. So I think the prompt pay initiative has been a great success and Thailand was one of the earlier ones to do that as well. in terms of lending I think we have relative to our peers in Southeast Asia, our credit penetration is much much higher and the reach in terms of the banks and also NBFIs in Thailand is also quite wide as well. So I think the positive is that for consumers, you know, payments work, access to credit is there, but on the flip side, there's not a lot of space for startups and fintech to tackle just because the banks are so strong. Yeah.

49:27 Yeah. I think I take maybe a slightly different view towards that. I do agree that the market is large and that like our country has one of the best penetrations in this region. the market size across multiple segments, wealth management, insurance, payments, they're all leading in this region in terms of Thailand's market size. And so I think it is a good place to build companies. but I do think in if you're competing in a sector without a large incumbent, then maybe you're in the wrong sector because there's nobody that has really built a good business big enough in that sector before, you know. So I think having competition is not necessarily a bad thing in my view.

50:05 because then you're fighting for something worth fighting for. And so I think the market size here is large. Like for example, WealthTech is a huge space in Thailand as well. The AUM of stocks and shares invested by Thai retail investors is 180 billion USD, right? So it's a huge amount, right? And so I think we have one of the largest fintech markets in this region and also very sort of capable and experienced operators also. So yeah, I think my point was that a lot of it is not being done by startups, right? my language. Yeah.

50:35 Yeah. Sure. Sure. Fintech is one area where being relatively small as a country is favorable, right? You're not as big as Indonesia or Vietnam or Philippines, right? the regulatory frameworks are relatively well laid out thanks to the banks. and and it works to your advantage as a startup. I think to Twwo’s point and and I fully agree. Why don't we see fintech unicorns coming out of Thailand is because the banks can incubate them, roll them out and do a better job at startups. Do a better job.. Than startups.

51:08 And that's completely okay, right? and and there's this notion like I don't know you you guys agree or disagree, but if you're a great fintech founder, I'm probably not going to build in talent because the people I'm going to go for funding are the CVCs or the banks and they're just going to acquire me or copy me or move faster than me. and second, there's not there not there's not much to be solved from a big bank perspective. Incrementally you could do a little bit but are you going to create the next promptPay?

51:43 What are some big bank problems that you see?–In Thailand only or regionally? Both. I mean for me there's one still continues is crossborder I mean I think so crossborder payments has been solve for but how do you enable crossborder lending crossborder embedded finance a small business in in Indonesia how can they tap into the liquidity we have in Thailand in the retail market and crossborder retail like stock stuff you you know like I think it's still very difficult for a Thai retail investor to go buy shares in the US right So how can you broaden access to crossborder investment products?

52:22 Yeah. from a wealth tech standpoint, the other problem that is quite large here is that banks in Thailand because they're so strong and they're so built out over so many decades, they have a cost problem as well. They have huge branch footprints, right? Their cost to serve is actually quite high. And so we see a lot of fintech solutions being built out for this mass affluent group which you need a lower cost base to serve. They're usually not large enough to be going to these banks themselves and getting good service, but these people still have a lot of money that can be utilized somewhere, right?

52:53 And so our company Finnomena, which I guess invested in in 2019, their whole model is built on serving this mass affluent customer base which is not large enough to be serviced at a bank well, but too large to be serviced with tech only. Right. And so there is this group mass affluent in Thailand which is quite large and quite undertapped actually. Talk to me about enterprise software because that has come up. What do you guys see about that?

53:19 I think it's dead. Dead. Say more. I mean, who's going to buy SAP and Oracle moving forward? in my opinion and I think that's where the opportunity is today. Can you become a low-cost custom built for you operating system? then I don't need to buy this clunky SAAS with modules and annual maintenance fees and for every module every three years I got to pay another big fee to upgrade right so because software itself is now being disrupted every week by I so can now startups be more tailored mean so in my opinion like large enterprise clunky SAAS it's going to be dead It was not dead already. I think it will be dead. Double died. the example air table, right?

54:16 Smart Sheets, Air Table, there's a bunch of these really good companies that were worth tens of billions of dollars now are priced at one-tenth. Yeah, I think maybe I take a more nuanced view than that. I mean, I know this whole SAASpocalypse has been on everyone's mind, right? I think you're right that software is coming under pressure, but I don't think it's dead completely yet. I feel like these big corporates the change management that goes behind is significant and the switching cost that goes behind is huge. Actually the change management required to switch software is potentially even more costly than software itself. All right. And so I do think that we still have some time to go before it dies. And I think people like Larry Ellison I mean they know what they're doing. They're not ****ing around. Right. And so I think that's why he invested in Anthropic. Right.

55:02 Yeah. Exactly. Okay. So, I think these companies biggest over decades and they have weathered storms before and so I do think software is changing and I do think the price that they're charging is going to come significant is going to come under significant pressure but I do think certain software pockets are still going to make it and so there are certain groups of software which need more deterministic code still today right so those that are processing payments for example are you going to trust AI to do payments and payroll for you for example or are you going to trust someone which has built software for this purpose before and so I think it is a more nuanced view.

55:46 I actually lean a bit more toward Matt like on my personal portfolio. actually bought the dip on some of the big SAAS names in in the states and again like these guys have weathered the storm before you know the the management has has proven their ability before but definitely they're they're coming under pressure I think for looking forward I think if you were to start an enterprise SAAS company today definitely it would look very very different from from before but again it with enterprise it's not just about the product, right? It's about going through that process of sales, activation, onboarding. and I think sometimes that's the harder part in enterprise software or SAAS versus actually building the product.

56:38 But, but do you reckon that's going to then cause a lot of M&A action? I think so. Because these big boys have to change, right? Yeah. Yeah. So, I think people will have to get creative from here. and so it's not going to be as easy as before, but software is one of those sectors where the retention and the profitability and the underlying fundamentals of software companies are just so strong that these companies have the runway and the headroom to pivot as well, right? And so like my view is that these guys will actually be in the front running of bringing AI to the masses also. And so if you think about the second tier adoption of AI, I feel like software companies are going to play that role.

57:17 So if they're good at distribution, Yeah. and sales and and they adopt or buy this emerging AI tech, then you basically amplify that, right? So through my channel. Yeah, I think that I agree with that. That makes sense. Yeah. I think Salesforce has like an agentic product already, right? I don't know how that's working, but Yeah. And then I'm going to ask you a question and you have 10 seconds to answer or less and it's going to be either or questions. No explanations.

57:47 No explanations. Just either or. No. No time to explain. All right. Are you ready? Okay. Okay. Yeah. All right. First one. Infrastructure or applications? Infrastructure. Infrastructure. Here. Application. Oh, wow. A little caveat ahah.–– Founder. Founder or operator? Founder. Operator. Yeah. Founder. B2B or B2C? Here. B to C. B2B B2B Thailand or Vietnam?

58:20 Vietnam for growth. Thailand, man. Come on. Thailand. Yeah. Smart answer. Thailand or Vietnam? Thailand. You could say Vietnam just to see what happens. AI or robotics? AI. AI. AI. IPO or acquisition? Acquisition. Acquisition. Acquisition. Okay. Open source or proprietary? Proprietary. Open source. Open source.

58:56 Yeah. Okay. Vertical AI or horizontal AI? Vertical AI. Vertical for sure. Yeah. Vertical as well. All right. The next $10 billion monopoly, which industry, which area mark is it going to come from? Where is the next $10 billion monopoly going to come from? For me, it's going to be AI enabled industrial technology company that combines AI, finance, workflow management, robotics, climate, and sustainability reporting.

59:39 So essentially you want to build an end to an end operating layer of the future for industrial manufacturing. Excellent. It's quite specific. Matt, where is the next $10 billion monopoly going to come from? I also think AI maybe I don't have as like you know clear ideas of like features and like products that they need to develop as Ankit but I do think it is AI or adjacent or AI adjacent services or companies and so I think it'll be in this value chain I'm not sure yet where it will be but it will be in this value chain somewhere for sure.

60:20 Yeah, I think AI as well, but I think more specifically in the robotics space, I think it's a space where you can build a bit of a mode, right? You need both the hardware layer and and the software layer and you can build a lot of proprietary kind of data and mode around that. It's and it's not something that anyone can start and build. And then the opportunity is huge as well, right? because you're tapping into the offline world rather than staying in the digital world. So, I think that's a space to look out for.

60:53 All right. And lastly, before we go, I'd love for you each to share something you'd like to give to people watching. Could be a quote, could be a question for them to lean into or like a saying. Yeah. for me and and I've said this before if you're if you're itching to build or you think you can be a builder operator, this is probably the best time to get going. This is the best time to build companies. the barrier to build is lower. The barrier to distribute is lower.

61:25 so just build. Don't be on the sidelines. You could do it as a side hustle. You could do it over the weekend, but just build and and and again, the cycle will reward you because right now we're entering again this massive technology shift of of a lifetime for humanity. If you start building now, yes, 99% of the probability you'll fail, but you just have to get it right. That 1% if you do, you'll probably be a billionaire, right? Fair.

61:58 Good luck. No, I think for me, you know, with these podcasts and all the content out there today, there's so much talk always about change, right? And the the speed of change. sometimes there's like this AI doom as well. People are going to lose their job or even if you're in a job, it's like your job is going to be replaced by AI, right? But this can create a lot of anxiety in the population. But on the flip side, you know, also look at things that don't change, right?

62:26 and your your edge might be from a true understanding of what will not change in the next 5 10 20 years and you can even have higher conviction on that and build something you know is unique as well. So it's not that you have to use AI in everything. Obviously the tech is real, the potential is there but there's a flip side to it as well. Yeah, that's a good question. And I think I'll take a quote from my previous boss, actually my current boss still, but the time it takes to build something is usually 10 years or more. I think this current generation is so used to seeing things very quickly and so used to getting things very quickly, but they don't really appreciate that things take time to build and if you build them in a hurry, you don't really get anywhere.

63:15 And so for example, you know, things like OpenAI or Anthropic have been around for 10 years, but they've been building silently, right? And so I think patience really is key in building and nothing good happens easily. So yeah, that's great. Well, thank you so much for your time and I wish you all the best of luck. And for those of you interested in for the people listening or interested in Ankit Twwo or Matt, we'll put their details in the information and you can connect with them there. It's been such a pleasure and thank you for your insights. Thank you. Thank you.