Supply Side Hailing by Kay-Mok Ku

“The pandemic is truly a World War, between a virus and mankind. It will end when our weapons of mass vaccination are fully deployed. Post-war, countries which are the healthiest will enjoy a first-mover advantage in rebuilding their economies… and entrepreneurship will be their greatest competitive advantage in the creative construction of new industries.”

2020 is the proverbial best of times and worst of times. It started with doom and gloom for the general economy yet ended with bloom and boom for the digital sector. The contrarian investors who bought into AirBnB at the start of the pandemic will be as legendary as the “big short sellers” during the global financial crisis.

While the blockbuster IPO of DoorDash should be a cause for celebration, it will also probably mark the end of the mobile Internet-driven VC boom. What uberization has done is to aggregate consumer demand at scale through mobile applications. In some tightly regulated industries, such as transportation, it has even overwhelmed regulators’ ability to enforce using outdated frameworks, such as taxi medallions, thereby forcing regulators to deregulate. Scale is the fine line that separates “ride-hailing” from “pirate taxiing”, which are still present in parts of the world less touched by smartphone apps.

Now that most consumers have been locked into a handful of winning mobile platforms on the demand side, what’s next for venture capital investments? Perhaps we need to pay attention to these 3 supply-side trends from the 80s that have the potential to be reincarnated in the future:

1. “Lab-grown” Products: Semiconductors were all the rage in the 80s, with Intel dominating over the industry through a brilliant “Intel Inside” consumer marketing campaign, which relegated all PC manufacturers as clone makers since it was the brand of the processor inside that matters. Well, microprocessors are actually transistors which are lab-fabricated on a tiny chip! This trend will now broaden into various high-value products, starting with diamonds, where lab-grown versions now make up roughly 20% of the market. In the future, we will be consuming lab-grown meats and receiving artificial organ transplants, and these will be marketed as branded products, over their traditional farmed counterparts.
2. “Hardware” for the Physical Environment: The Personal Computer fostered the creation of various hardware peripheral companies, ranging from disk drive to sound and graphic card makers. The coming IoT (Internet of Things) deployment on top of 5G networks in the physical world, to enable intelligent automation of tasks ranging from manufacturing to driving, will likely spawn new peripheral companies in batteries and sensing technologies.
3. “Software programming” for the Human Bodies: Early computer programs were written using binary machine language, which is often presented as 16-bit hexadecimal for easy readability. Similarly, our bodies are biological machines that use 4-character nucleotides as the encoding language to program proteins. Underneath the hood, the CoVID-19 vaccine is nothing but a 4284-character genetic program. Now that we have figured out how to use messenger RNA like a USB drive to transfer the code safely into our bodies, we can look forward to new genetic programs that are written to combat cancer and other hereditary diseases.

So it seems like as 2020 draws to a close, we are headed “Back to the Future”. Hopefully, this time around, the future will be as predicted by Doctor Emmett Brown, “Where We are Going, We Don’t Need Roads”!

About Gobi Partners
Gobi Partners is one of the longest-standing venture capital firms with a Pan-Asian presence across North Asia, South Asia, and ASEAN with over US$1.1 billion in assets under management (AUM). The firm, headquartered in Kuala Lumpur and Shanghai, supports entrepreneurs from the early to growth stages and focuses on emerging and underserved markets.

Founded in 2002, Gobi has raised 13 funds to date, invested in over 270 startups and has grown to twelve locations across Bangkok, Beijing, Ho Chi Minh City, Hong Kong, Jakarta, Karachi, Kuala Lumpur, Lahore, Manila, Riyadh, Shanghai, and Singapore.

For more information, please visit www.gobi.vc