Latest memo from Forrest Li: $SE

@paulcerro Not knocking on Jaimie, he'll be a great CEO. Just saying if you have to give away ~25% of potential value creation to a new, hired CEO... How much are you really valuing your legacy product? Seems the board's admitting Jaimie's value > than the existing biz in this marriage.

At today's $LTCH share price, that's ~$45M to bring him onboard as their new CEO (or 39% of their ~$115M mkt cap). Granted the conversion thresholds are $2 - 5, and locked for 5 years. But at full conversion, that's ~$172M for a new CEO. 🤯

Well that's an expensive acqui-hire... Latch buying Jaimie Siminoff's (creator of Ring) company Honest Day's Work for $22M in promissory notes (10% annual PIK) + 29M shares. $LTCH

"Sea’s Path to Profit Paved With Layoffs, Single-Ply Toilet Paper" $SE

Original: “卖家充分理解并确认，服务提供方及其关联方有权向卖家收取平台服务相关费用，具体收费标准以本协议约定及相关规则规定为准.” Source:

"The seller fully understands and confirms that the service provider and its affiliates have the right to charge the seller platform service-related fees. The specific charging standards are subject to the provisions of this agreement and relevant rules."

$PDD's Temu preparing to launch service fees. Just changed their merchant agreement contract to include:

- Duoduo has launched a new round of promotions in Q1 2023, to take advantage of Meituan's weakness. This led to Duoduo surpassing Meituan in several regions where it was previously lagging. - In response, Meituan has suspended "Market Share" as a KPI for these regions.

- Duoduo 2022 op margin: -7%. 32M daily order volume. Half the regions are already profitable - Meituan targeting profitability in first region (Guangdong) by Q3 2023. Other regions by YE 2023.

- Article attributes Duoduo's superior execution to PDD's decentralized decision-making. Takes Meituan months to make operational decisions, since needs HQ approval. - Meituan has few white-label products, which leads to high prices on its platform.

Data from Latepost, on Duoduo Maicai ($PDD's Grocery Division): - Meituan shifting to algo-driven procurement in mid-2022 (copying PDD) - Duoduo Grocery achieved ~RMB 180BN GMV in 2022. Meituan was at ~RMB 125BN. $PDD $3690.HK

"Inside Temu: the fiery culture and a perpetual efficiency machine." $PDD #Temu

"Let you start first, and I will go for the kill with the model you have explored, in a market you have educated. In your eyes, I am your competitor; in my eyes, you are my tool." -Duan Yongping (founder of BBK, mentor to Oppo, Vivo, Pinduoduo, J&T) #latemoveradvantage

"Let you start first, and I will go for the kill with the model you have explored, in a market you have educated. In your eyes, I am your competitor; in my eyes, you are my tool." - Duan Yongping (founder of BBK, mentor / investor to Oppo, Vivo, Pinduoduo, J&T)

Shopee likely won't reach the same margin profile as quickly, since they still haven't saturated the potential user base. So expect reinvestment of profits back into marketing over next few years. But perhaps $PDD's trajectory provides a rough blueprint of what to expect.

For context, PDD cut marketing from 2.8% of GMV > 1.8% in 1Q21. Drove a +27% margin improvement in just one quarter. Margins continued to grow afterwards, from 8.7% 1Q21 > 29% 3Q22. Shopee's marketing went from 3% of GMV in 3Q22 > 2.1% in 4Q22. It was 4.6% at peak in 4Q21.

$SE 4Q22 Earnings: inflected op margins by 25% in one quarter (-15.7% 3Q22 > +9.9% 4Q22). Ecom margins improved +35%. Outlined how we suspect they're following the $PDD playbook in our Q3 letter. This quarter confirmed it.

- Question is if direct user rewards can build a lasting user habit, or if DAUs / time spent will fall as subsidies are withdrawn. - Also need to watch conversion rate, as more videos are monetized.

New datapoints on $PDD's Duoduo Video: - ~120M DAUs vs. 600M for Douyin (Tiktok) & 400M Kauishou. Impressive for starting just 2yrs ago. - 30min avg time spent per day

- 33% of videos are monetized (includes product links), vs. 70% with Taobao Live. PDD expects to increase this to 66% this year. - Still not focused on monetization in short-term.

Just published in TIA today . Shopee Xpress Philippines (internal logistics) prices are ~40-80% cheaper than 3PLs, thus pressuring 3PL profitability. $SE

3PLs in a tough spot - either accept unprofitable (at current cost structure) Shopee orders for volume & try to make profits from SMEs, or lose the volume (up to 50% of total volume) & try to reduce fixed costs (hard to do for asset-heavy business that relies on network density).

$PDD's Temu coming to Canada... US momentum giving them confidence to expand after just 5 months.

Thought these were good points on Temu's timing , @ruima . $PDD