- A 1000-word internal staff memo outlines Shopee’s 12-18 month plan to become self-sufficient.
- According to the memo, the company’s executive team will temporarily waive cash compensation.
- Once a darling of the investment community, Sea is not expected to raise capital now.
Shopee, a Singapore-based e-commerce giant that was once a darling of the investment world, is facing a bleak outlook for fundraising in the current volatile market — and it appears to be preparing for the worst.
In a 1,000-word memo to Shopee employees on Sept. 15, billionaire Forrest Li, Shopee’s founder, chairman and chief executive, outlined steps the company will take to slash costs.
“Our primary goal for the next 12-18 months is to achieve self-sufficiency,” Lee wrote in the memo. In the memo, Lee wrote that the company will limit employee spending, limit all flights at an economic level, and executives will temporarily forgo compensation.
Shopee’s parent company, Sea Limited, has lost about $170 billion in market value since hitting a new high in October 2021. Bloomberg. This is the same as Sea can safe $6 billion via September 2021 equity and convertible bond sale, This was the largest funding round in Southeast Asia at the time.
The layoffs will affect a low-single-digit percentage of employees, a person familiar with the matter told Insider. The sources requested anonymity because they were not authorized to speak on the topic.By the end of 2021, the company employed more than 67,000 people, each Bloomberg. Shopee was established in seven markets in Southeast Asia in 2015 and has since expanded to 13 markets.
A company spokesperson told Insider that the changes are “part of our ongoing efforts to optimize operational efficiency with the goal of achieving self-sufficiency across the business.”
Below, read the full text of Lee’s memo to employees.
We’ve made some tough announcements recently. I know that many of you will see negative coverage of us in the media, and you may have been shaken by the news that we are closing our business in certain markets. I am writing to you today to explain what is happening and to discuss what we need to do in the next 12-18 months.
As you know, these are turbulent times for our industry. We lost a strong tailwind during the pandemic as countries reopened. Then, the world was hit by a series of macroeconomic blows: wars in Europe, severe supply chain disruptions, soaring inflation, slowing economic growth. It’s been a brutal year for everyone, with capital markets in turmoil. Some economists predict a global recession.
Sadly, we are not immune to these shocks. So far, every team has done their best to weather the storm. We take each new limitation in stride and try to adapt—even if doing so requires painful action. I know many of you have put in the extra time and less time coping and trying to stay positive as we make these difficult transitions. Thank you so much this time.
We can now see that this is not a storm that passes quickly: these negative scenarios are likely to continue into the medium term. Going forward, the leadership team and I are making some decisions to not only help us weather this storm, but to emerge from it in as strong a position as possible. I am writing to ask for your support as we implement these plans.
Our number one goal for the next 12-18 months is self-sufficiency. This means that we want to achieve positive cash flow as soon as possible. Right now, thanks to years of careful action and hard work, we have a solid cash base that puts us in a safer position than many of our peers in the tech industry. However, if we’re not careful, we can easily pass this cash base and we don’t expect to be able to raise capital in the market as investors flee “safe haven” investments.
The only way we can get rid of our dependence on external capital is to be self-sufficient, generating enough cash for all our own needs and projects. If we can do this, it will have a huge impact on our future. We will have peace of mind from the external ups and downs that hurt us today. We will be more determined, less distracted, and able to refocus on our own goals.
This is how I want Sea to emerge from this storm: in a position of certainty and independence, fully able to choose our own path.
In order to achieve this, we need to do two things:
- In the short term, we must do everything possible to reduce our operating costs. The more cash we save each day, the more time we can buy ourselves out of this storm. Every bit counts.
- Now and in the long term, we must build a cost-sensitive culture across the organization. In the past, we focused on growth first, sometimes at all costs. This was not a wrong approach, as the global conditions were ripe and opportunities were abundant. But now global conditions have changed, and we too have to adapt. Controlling costs will be an important priority, not only for us but for the industry as a whole. Whichever company does this best will be the one that emerges from this period of uncertainty.
It is not easy for us to do this. But if we’re all willing to get involved, tighten our belts, and work together, I know we can do it.
Similar to what many others in our industry have announced, we will be tightening our fee policies starting October 1st (though I strongly encourage everyone to follow them now). Full details are in the attachment, but these are the gist:
- Reimbursement for business travel is capped at $150 per night for economy class airfare and hotel accommodation.
- We will limit international business travel meals to $30 per day.
- We will no longer be reimbursed for internal or external meals or entertainment.
- For local car transportation, we will use the most economical service option offered by a local ride booking or taxi service.
These new rules will apply to every sailor, including myself and the entire leadership team.
In addition, the leadership team decided not to receive any cash compensation until the company became self-sufficient.
I know that news like this is hard to accept. We are closely monitoring the world situation and we will need to continue to adapt as much as possible. I hope I can have your support and understanding as we work our way through this difficult time.
You will hear from me more frequently over the next few months. I will do my best to keep you informed about our situation and what we see happening in the world. If you have feedback or ideas, you are welcome to write to me. I may not be able to reply, but I will read and consider every message.
Sailors, thank you for all your hard work in building our company. Without your hard work, we would not be able to touch millions of lives. Now, we need to go through a transition again, which I know can be painful and stressful both individually and collectively. But if we can make the next big adaptation, our company will enter a new realm. Self-sufficiency is the key to our future success.
The next 12-18 months are critical to our company’s long-term health and longevity. Let’s do what we need to do to get through this together.