We’re gazing into our crystal balls to try and figure out if new technologies like cryptocurrencies, NFTs and the metaverse are the future of commerce, and how can organisations prepare for the future of eCommerce?
Commerce Talk with SmartOSC podcast host Adrian Wakeham spoke to the perfect man to enlighten us as to what the future may hold: Axel Winter, one of the brightest forward-thinkers and technology strategists in Southeast Asia.
Axel has a long track record of bringing business operations into the future. He’s been working in Southeast Asia since the early 1990s and even helped build the early internet in parts of the region. He’s the CEO and Founder of Pivot Digital, a Strategic Advisor for Tokenizer, the Chief Digital Officer at Siam Piwat, Senior Advisor at Fat Projects Acquisition Corp, and Venture Partner at Alpha Founders Capital.
You can subscribe and listen to the full episode on Spotify, Apple Podcasts, Google Podcasts, and elsewhere podcasts are found.
You can also check out this Q&A from the episode (edited for clarity and brevity).
Adrian: The metaverse has obviously been a big topic of discussion across many sectors recently, so how do you see it developing in the world of commerce specifically?
Axel: This is a difficult question. If I go by what Mark Zuckerberg’s view is, then it's using normal glasses, and just by the merit of having a special glass we’ll be immersed in the metaverse. These glasses don't exist today and I struggle a little bit with understanding how they’ll work because I do have an Oculus 2 set. When I wear it, the idea is it blacks out all the vision that I have and you can just see these two small monitors in front of me. This blacking out thing and having this clunky thing in front of you, while it offers opportunity and excitement, and a lot of people use it for gaming and so on, but is it going to become a mass product where everybody has one like a mobile phone? I’m not sure. This is where the glass idea comes in. So there has to be some more R&D there to create a better entry point.
If I go back in history, my hometown Hanover used to host the biggest IT show in the world. Silicon Graphics (SGI) had a stand every year and I remember it was fascinating. I was 17 and 16 or something and we would queue up at their stand to try and get an opportunity to use the headset, which actually would allow you to watch a bit of a 3D environment. And of course, the glasses had to remain at the stand and the headset was connected to a very heavy pair of cables and so were the glasses. So there was some effort there. Now, from that perspective, we’ve moved quite far forward with the Oculus as I don't have to have a mainframe next to me anymore. But on the other side, I still have a clunky headset. People have been trying for a very long time to make this fully immersive VR type of environment.
Now, the other part that Mark Zuckerberg mentioned was the overall integration across corporations. So you could have common standards, more or less like our APIs and even some UI standards that exist today for mobile, for the metaverse. But will that happen? Because now I'm hearing Microsoft is going to do their own thing, Facebook is obviously becoming an infrastructure provider and who knows what Google and Amazon and others are going to do, and new entrants. So for me, it is already doubtful that we can create really such a standard in today's world, because it's not like the internet when we started. Everybody wanted to work together. A lot of the people there were from universities to begin with, or government institutions and they love doing standards and linking up with each other. Today there are a lot of people who also see this more like a, “Well, if I create the island isn't that much better than if I'm part of the city?” type of attitude.
Now what’s happening today though is there’s an on-ramp where people are engaging in avatars and trying smaller worlds, smaller interactions out. And I think that's good because that's the way we start defining and refining how the space in the future is going to look. But it's too early to say where the value is and how business models could be easily established. It will take time, and if the past has taught us anything is that it's neither black nor white, it will evolve into a mesh of things.
Adrian: Do you think digital banking, open banking, or whatever you call it is the way forward for both consumers and businesses? Or are cryptocurrencies potentially going to be the future for payments?
Axel: Yeah, this is actually it seems like an easy division but actually it becomes a complex question. I think the first thing is that today already we see digital payments online are the far majority, even offline. Of course, I think Thailand is around 20% offline as in stores. My guess is actually it's more but it's tricky to recognize all transactions easily. If it's a credit card, is it a an online-only credit card? Is it prompt pay, or did you pay with a debit card? So it's not always simple to get the numbers correct. The question is how is this payment space at work today? Even though there are many digital wallets what we see is that the likes of PayNow in Singapore seem to be taking the lead because it's a common standard. That makes it much easier for everyone to interact.
Now, what's the next step for these digital wallets? Well, with tokenization or cryptocurrencies the governments themselves, the regulators, they will want to have a digital currency at some point. That is because they need to control the amount of money in circulation to manage the economy. So the government has a vested interest not to have Bitcoin become a global currency, because then who's going to manage the money supply? In a sense, the current payment system is actually from the late 50s and more or less, we really haven't changed payments altogether. Now, of course, we have WeChat Pay and Alipay which are very successful in China but they haven’t jumped out of China where there are only two very strong companies that divided the market. But in all the other countries, we have so many players now, so it’s not easy to get to common standards. That's why some of the government efforts have been more successful in East Asia. Now, that being said, parallel to what the regulators there are cryptocurrencies. And they are also loyalty points and things in between and asset-backed tokens.
But at some point, when the amount becomes meaningfully big, what will be regulated if governments cannot control the money supply? Because all things like token credit cards are packed into a local currency. These credit cards, to my knowledge, there actually is almost two accounts on the card, one is a crypto account and then there’s a currency account and you just transfer back and forth, so it’s a bit like a cash voucher you might get from a commerce site. So let's see how this plays out as I don't think anybody really knows how this is going.
What we see is in the investment space, the movement away from traditional investments into token-backed investments or crypto investments. It’s so significant that the big banks are also moving into this space. So you see that all the banks are definitely interested in extending this and a lot are becoming sizable players in this space.
But in the long term, we need to see what the opinion of the regulators is but it's fair to say that tokenization on one end and also, let's say innovation in retail, and the combination will probably be seen first in Asia before elsewhere.
Adrian: Shifting gears a little bit but staying on preparing for the future, you talk a lot about creating a startup within a larger corporate environment. How does doing that help to future-proof that larger organisation for the future?
Axel: There are many ways you could try it and mine is not the only way. I have tried out a couple of different options, as in, can we change an existing organisation as is? Or can we open a new entity within a conglomerate, a new team and give them different rules and so on. Which one would work better? Having tried both I would definitely say that the internal startup and then owning some things is an easier way.
Why? Because you have a number of factors. It starts with recruitment, starts with salaries, it starts with job titles, and even finance processes and procedures, budgeting, all of these things, before even talking about the innovation itself. These things are part of the culture of an older organisation and many people have been there for a long time and rightly so as they’ve been doing a good job for a long time. But if you hire a tech team of people who know what NFTs are then they may not fit so well together at all times. So you need to think about a model to enable these different ideas, staff, and working methodologies. Corporates also tend to have a certain time for approvals and a certain way to micromanage, to disempower staff from making decisions, and so on. All of these things together then create an atmosphere of hierarchy. It's my belief that this is why Europe is really not catching on with startup culture and digitization.
So for me, then we open a company, give them Macs and Linux or whatever they want to use on their laptop and if keep it a bit more flexible it's so much faster than if you do that into a combined entity then if you integrate and change all the processes first in an existing organisation. It's inconceivable that big corporate would be able to do that well without making some adjustments to the organisation and with some empowerment of certain team members.
I want to be careful with that because you can always philosophically argue for and against something and again, I'm happy for people to make it work. But the experience shows that if you get a KPI on delivery and a KPI or revenue and the total team is being managed by a certain sense of new revenue that startup creates, you get a certain sense of urgency. That can definitely create significant benefits faster than if you start changing the organisation and teaching people. Now that does not mean you should not do that. It’s kind of a dual track. You do both.
Adrian: What are your top three tips for someone trying to build a company culture that is ready to embrace things like crypto and the metaverse or whatever the future of commerce may hold?
Axel: First of all, there has to be trust. This is critical. Even if you’re an older company, whoever is at the top team of this new unit there has to be a trusting relationship, an open relationship and no fear. For me, this is the first and most critical step. Because if you are behaving with the key people, as one team, all the problems can be solved.
The second one is that you must create free space and open opportunity for people to experiment, but also at the same time work very hard at goals which the team sets. You need to do both, you need to have an ability to experiment a bit but also work on a goal.
The third one is don't be disheartened by setbacks but take them as learning experiences. Most times, it's not black and white. It's not totally unsuccessful or totally successful, it’s somewhere in between. Setbacks don’t mean you're going to go out and start blaming people, but you go back to the first two tips and figure out the next step. Who has to do what better? And anyone csn contribute because as long as you keep it, keep it constructive and professional, then you can quickly evolve and adjust. That is what gets you successful. If you look at the startups they’re not winning because they have the best team or they're doing parties every other day. They're winning because they're working well together in almost all cases. It's just working towards that success and adjusting fast.