The Three-Body Problem — by Kay-Mok Ku

4 June 2020

Anyone who has attended classes at the Alibaba University will learn about its unique company culture of selecting a character from Louis Cha’s (金庸) martial arts novels as a personal corporate avatar. For example, Jack Ma is also known as the Lonely Nine Sword Master (独孤九剑), whose offensive skills is so good that he doesn’t need any defensive moves, since offense is his best defense, which is probably an accurate reflection of the way Mr Ma has slashed his competition in the e-commerce sector.

For the uninitiated, Cha is the Tolkien-Martin equivalent of recent Chinese fantasy writers. While Tolkien’s Ring is based on a fictitious Middle Earth and Martin’s Thrones on a masqueraded War of Roses, Cha’s novels are based on true historical events that stretched from pre-Mongolian to early Qing dynasty (circa 11–18th century). On the surface, Cha’s novels appear to be tales of imaginary martial arts sports leagues but deep down, they are really gamified treatise of history, philosophy, literature and even geopolitics, which have found some unlikely parallels with real-world situations:

“Eastern Demon and Western Venom (东邪西毒) are the two most celebrated characters in his novels, and their rivalries have been epitomized into a Hong Kong blockbuster movie of the same title. Mr East is a pharmacist and polymath well-versed with astronomy, astrology, music and the arts. Unfortunately, he has anger management issues and in a rage of fury, crippled all his disciples and imprisoned a visiting priest on his island home for 15 years. On the other hand, his nemesis, Mr West, is a toxicologist who reared poisonous snakes as pets and would resort to any unscrupulous means to get ahead of his opponents. Ultimately, he was tricked into learning skills from a fake sutra and turned into a lunatic.”

While it is clear that the global economy is headed for an East-West split, what is less obvious is that a Three Kingdom scenario might be the most likely outcome. This is precisely what happened during the Cold War, when US-Russian rivalry resulted in the emergence of the “Third World”, a non-aligned group of nations, mainly from the developing world. The post-pandemic “Third World 2.0” may also be updated to include advanced economies from Europe and North Asia which want to stay neutral.

As a result of this de-globalization and supply chain balkanization, the job of venture investment is about to get extremely complicated. Just like the intractable Three Body Problem in physics, the motion of three interacting bodies is likely to be chaotic. In the ensuing chaos, besides the existing superpolies of BAT (Bytedance / Alibaba / Tencent) and FAANG (Facebook / Apple / Amazon / Netflix / Google), perhaps the rise of a third group of tech giants would make a lot of SENSE (Softbank / Ericsson / Nokia / Samsung Electronics)?