May 2023 Highlights: The New GateKeepers, Market Trends in Crypto & Web3, Indonesia is the new China & why China Tech missed ChatGPT

May 2023 Highlights: The New GateKeepers, Market Trends in Crypto & Web3, Indonesia is the new China & why China Tech missed ChatGPT
We summarize the key highlights for May 2023 and share the key takeaways. Our recommendations include the most interesting youtube channel in semiconductors and a global community looking into deals on web3.

We summarize the key highlights for May 2023 with four key episodes. We have a global thought leader, Benedict Evans talking about the new gatekeepers and the right set of questions to ask about web3 and AI technologies, followed by the Global Coin Research team: Cosmo Jiang, Jin Kang & Junney Kang who shared the key market and investment trends in Q1 2023. Helen Wong from AC Ventures explained why Indonesia is the new China on tech investments and last but not least, Rui Ma explored the key reasons why China's tech giants from Alibaba to Bytedance missed ChatGPT.  

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Asking the Right Questions on AI & Web3 & The New Gatekeepers with Benedict Evans

Key Takeaways:

  • There are two cycles of innovation: long and short. The short wave cycle takes about 2 to 3 years and the long cycle takes about 10 years. The iPhone jumpstarted the mobile revolution for the next decade while Bitcoin, Ethereum and web3 went in short cycles of 1-3 years. The key question on these technology waves should be: can the killer app emerge and lead to a consumer application built on generative AI, blockchain or AR/VR hardware that allows many to build on a billion scale?
  • The new gatekeepers such as Amazon, Shein and Netflix behave differently and they leverage a more automated and scale model, for example, Amazon can take on e-commerce, advertising and cloud computing as a new gatekeeper. The only way to disrupt a gatekeeper returns to Jim Barksdale's quote, "The two ways to make money are bundling and unbundling."
  • Speculators in web3 and crypto and error rates in generative AI are features and not bugs as these new technologies upend what came before. It depends on whether the specific problems which these technologies are solving can deal with the tradeoffs brought forward by these features.

Has Asia taken the lead in Web3 and Crypto? with Global Coin Research

Key Takeaways:

  • Global Coin Research published its market & investment trends review in Q1 2023.
  • On the investment trends, its deal team saw a total of  70 investment opportunities in Q1, of which ~40% was brought directly from the community and mainly resides in the infrastructure space. Many projects in the crypto and web3 space are struggling to find investors, while a few deals are heavily oversubscribed.
  • On the crypto market trends, Bitcoin’s price appreciated by +72% and Ethereum’s price appreciated by +52%, which compares to the S&P Index by +7% and the more tech-heavy and growth-oriented Nasdaq 100 Index by +21%. Moving forward, cryptocurrency prices will depend on the macro picture of whether the Federal Reserve will continue to raise their interest rates to tame inflation or may be forced to cut them if more bank runs in the US will show up.  
  • Despite the US's aggressive stance against crypto, governments in Asia, particularly Hong Kong, Dubai and Japan are adopting a pro-crypto attitude. The developer activity is increasing in Asia with more blockchain developers leaving the US for offshore locations where crypto regulation is better defined, for example, the European Union's Markets in Crypto Assets regulation or MICA in short and Hong Kong's regulation in cryptocurrencies.

Why Indonesia is the Next China for Tech Investment with Helen Wong

Key Takeaways:

  • Indonesia offers significant opportunities for tech investment due to its large and homogeneous market of around 270 million people with a GDP per capita of around $4,000 & GDP growth rate of about 5%, making it an attractive investment destination. Indonesia has experienced a high level of digitization and rapid internet penetration, reaching about 70% during the COVID-19 pandemic.
  • Indonesia's market is more mature than China was 20 years ago, presenting significant growth potential. The digital infrastructure in Indonesia, including payments and logistics, is ready for companies to leverage and benefit from. Second-tier cities in Indonesia, such as Bandung, are contributing to market expansion and economic growth. The local exit market is attractive, with the IDX (Indonesia Stock Exchange) open for IPOs, witnessing three IPOs, for example, GoTo and Bukalapak in the last two years.
  • AC Ventures is an early-stage venture capital firm focused on Southeast Asia, with its core investment thesis in Indonesia or a regional company within Southeast Asia. They invest across sectors like e-commerce, B2B, and fintech, and believe in early-stage investments for capturing the best value.

Why was ChatGPT not invented in China? with Rui Ma

Key Takeaways:

  • The key reason why China tech giants such as Alibaba, Bytedance, Baidu and Tencent missed ChatGPT is that the generative AI technology requires significant investment and an unknown return on investment (ROI). Due to resource constraints, they did not go further as compared to their US counterparts. However, the Chinese companies have started building their large language models (LLMs) once Open AI launched ChatGPT with an alliance with Microsoft and Google's Bard with investment into Anthropic.
  • The ban on Tik Tok will not solve anything for the US and it is uncertain if the market has priced in the ban if Bytedance will launch its initial public offering (IPO) this or next year, given the complexities in banning the social media platform with potential lawsuits and court orders there.
  • Will Tencent follow in Alibaba's footsteps in splitting up its own set of companies, for example, its cloud arm, games distribution business and WeChat? The company has spun off Tencent Books and Music as separate companies for IPO in the past. It is likely to take a pragmatic approach pending whether the Chinese government will take regulatory action on the company moving forward.

Our Recommendations:

  • Asianometry Youtube Channel and Substack: Jon Y, one of our guests, has built a spectacular channel with video essays specifically focused on business, economics and the history of Asia. He is a well-cited source on the semiconductors industry and dives deeper into the people, technology and business of semiconductors, for example, the other semiconductor players outside TSMC, how EUV lithography works and who will rise to be the next TSMC CEO.
  • Global Coin Research: a tokenized, decentralized community of learners and investors in web3. They have published interesting research and several of their key members have been on the Analyse Asia podcast. Check out their content and Cosmo Jiang's liquid podcast, and be part of their community. Full disclosure that Bernard, our host is a supporter of GCR, and he looks at their deals daily.

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