Asian Eye For the Startup Guy

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What can a startup do in Asia? How are the big Internet guys faring? And what is Asia anyway?
Presentation given at Geeknrolla in London on March 2011.

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Asian Eye For the Startup Guy

  1. 1. Asian  Eye   Startup   Guy   the   for  @benjaminjoffe  |  Geeknrolla  |  London,  March  2011  
  2. 2. 1984  
  3. 3. 1984   2010  
  4. 4. Karate  Kid!   1984   2010  •  Los  Angeles   •  Beijing  (jobless  in  Detroit)  •  Japanese  master   •  Chinese  master  (karate?)  •  Mysterious   •  Bilingual  talented  (Chinese)  kids  
  5. 5. HELLO! MY NAME IS@benjaminjoffe
  6. 6. “Mister  Asia”                  –  Mike    Butcher  
  7. 7. CEO,  Plus  Eight  Star   www.plus8star.com   Best  pracQces  from  Asia’s  digital  space  Research,  Strategy  &  “InnovaQon  Arbitrage”  
  8. 8. Co-­‐Founder,  Mobile  Monday  Beijing  (38  events,  130  speakers,  3,000  parQcipants)  
  9. 9. Angel  Investor,  Advisor,  Keynote  Speaker   •  Speaker    100+  talks  in  17  countries   •  Advisor   •  Investor  in  Asia-­‐based  global  companies  
  10. 10. 4  years   1  year   5  years  
  11. 11. #HowAsianAreYou?   4%   2%   2%   Chinese   8%   Japanese  8%   42%   Korean   French   American   33%   German   Singaporean  
  12. 12. Bacon  1.   Our  #1  Problem  2.   What  is  Asia  3.   Local  Leaders  4.   Foreign  Players  5.   Local  InnovaMon  6.   Where  is  the  bacon  for  my  startup?  
  13. 13. Our  #1  Problem?  ons  
  14. 14. The World According to the West!The West   The Russians   Revolutions   Orkut?   Offline   Asia   West (sort of)  
  15. 15. Common  AssumpQon  #1  Everything  from  USA  is  great
  16. 16. Common  AssumpQon  #2  Everything  from  Asia  is  weird
  17. 17. Common  AssumpQon  #2  Everything  from  Asia  is  weird (and  someQmes  funny)
  18. 18. Biggest  Issue  with  Asia:   Illiteracy   Foreigners  can’t  read  a  word!  
  19. 19. Western  Framing  
  20. 20. Which  Movie  is  This?  
  21. 21. The  Lion  King   Kimba  the  White  Lion   (USA,  1994)   (Japan,  1965)  “Even  our  lawyers  are  not  that  good”   –  a  Disney  animator  (rumor)  
  22. 22. Where  is  it  from?  
  23. 23. Origins   Red  Bull   KraMng  Daeng   Lipovitan  Austria,  1987   (“Red  Water  Buffalo”)   Japan,  1962   Thailand,  ~1970  
  24. 24. Which  Game  is  This?  
  25. 25. FarmVille  Copied  from  China   1.  Five  Minutes  (China)   2.  Slashkey  (US)   3.  Zynga  (US)   4.  Playfish  (UK),  etc.  
  26. 26. Who  Came  First  •  Harvest  Moon  (1996)   –  Super  NES,  by  Victor  InteracQve   –  Inspired  Happy  Farm  •  Where  is  the  innovaMon?   –  Not  in  the  game  concept,  but  in   viral  &  social  mechanics  
  27. 27. 2.  What  is  Asia?  
  28. 28. Pick  up  your  jacket!  
  29. 29. What  is  Asia?  •  Obvious:      Cultures  and  Languages  •  Less  obvious:    Separate  Ecosystems   –  Size,  GDP/capita,  infra,  capital  access,  etc.  •  Beyond:        Parallel  Universes   –  Past,  present,  future,  different  
  30. 30. Users   USA   Japan   South  Korea   China  Unit:  million   +8*  |  www.plus8star.com   2,000   1,500   1,000   500   0   PopulaQon   Internet  Users   Mobile  Users   3G  Users   Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011  
  31. 31. Users   Country   USA   China   Japan   South  Korea   PopulaMon   310  mln   1,330  mln   130  mln   50  mln   Internet  Users   245  mln   460  mln   100  mln   40  mln   Mobile  Users   295  mln   860  mln   120  mln   50  mln   3G  Users   120  mln   50  mln   115  mln   30  mln   +8*  |  www.plus8star.com  Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011.  Numbers  Rounded  for  easier  comparisons  
  32. 32. Networks   100% 3G:  98%   Web:  60%   Avg.  8.5  Mbps   80%3G  Users  (%)   3G:  60%  (W-­‐CDMA  only)   Web:  72%   60% Avg.  14  Mbps   C hi 3G:  40%   40% n Web:  34%   Avg.  5.0  Mbps   a   20% 3G:  5%   Web:  0.5%   +8*  |  www.plus8star.com   Avg.  1.0  Mbps   0% 0% 20% 40% 60% 80% Internet  ConnecMons  Measured  >5  Mbps  (%)   Sources:  Akamai  4Q10,  Japan  TCA,  SKT,  ITU,  IDA,  Internet  World  Stats,  March  2011  
  33. 33. Japan  &  Korea  have  the   Fastest  Internet  in  the  World  Top  100  Fastest  Internet  CiQes   CiQes  Measured  >10  Mbps   1   13   15   North  America   10   Europe   13   Japan   Japan   16   South  Korea   South  Korea   Hong  Kong   61   Source:  Akamai  4Q10  
  34. 34. 3.  Local  Leaders  
  35. 35. Sites  Ranking  Rank   USA   China   Japan   Korea   UK   1   Google   Baidu   Yahoo  JP   Naver   Google  UK   2   Facebook   QQ   Google  JP   Daum   Google   3   Yahoo   Sina   FC2   Nate   Facebook   4   YouTube   Taobao   YouTube   Cyworld   YouTube   5   Amazon   Google  HK   Google   G  Market   BBC   6   Wikipedia   Netease   Ameblo   AucMon   Yahoo   7   Twiver   Google   Livedoor   Chosun   eBay  UK   8   Blogger   Sohu   Rakuten   11th  Street   Windows  Live   9   eBay   SoSo   Wikipedia   Yahoo  KR   Wikipedia   10   Craigslist   Youku   Goo   Joins  MSN   Twiver   +8*  |  www.plus8star.com   Sources:  Alexa.com,  March  2011,  Rankey.com  (Korea)  
  36. 36. Social  Networks  •  China   •  Korea   –  QQ          650M   –  Cyworld      20M   –  Q  Zone        490M   –  QQ  Microblog    110M   •  SE  Asia   –  RenRen        95M   –  Mig33  (mobile)  40M   –  Sina  Microblog    70M   –  Kaixin001      40M   –  51.com        40M  •  Japan   –  Mobage  (mobile)    25M   –  GREE  (mobile)    25M   –  Mixi  (web+mobile)  25M          
  37. 37. Local  Leaders  •  China   •  Japan   •  Taobao  (#1  E-­‐commerce)   –  Web  guys   •  Tencent  (#1  IM,  Games,  $3B  sales)   •  Soibank  (Yahoo,  Apple,  Broadband)   •  11  game  companies  market-­‐listed   •  Rakuten  (#1  e-­‐commerce)   •  Sohu  (#2  portal),  Sina  (#1  Free-­‐to-­‐Play   +“Twiver”)   •  Mixi  (SNS)   •  Baidu  (#1  search)   Games   •  CyberAgent  (ad  net,  games,  blogs..)   •  DangDang  (“Amazon”),  listed   •  Nico-­‐Nico  Video  (“YouTube”)   •  Youku  (listed),  Tudou  (“YouTubes”)   •  M3  (doctor  SNS,  $100M)   •  RenRen,  Kaixin001  (“Facebooks”)   •  Cookpad  (recipe  portal)  •  Korea   –  Mobile  guys   •  Naver  (#1  search  +  portal  +  Q&A)   •  DeNA  (mobile  SNS,  $1.3B  sales)   •  Daum  (#2  portal)   •  Gree  (mobile  SNS,  $600M  sales)   •  Nexon    (Online  games,  $1B  sales)   •  CA  Mobile  (mobile  ads)   SNS  &   Mobile   •  Hangame  (Online  games)   Free-­‐to-­‐Play   •  Commerce   Zappallas  (mobile  zodiac,  $100M)   •  NC  Sox  (Online  games)   Games   •  Xavel  (mobile  shopping+fashion)   •  Cyworld  (#1  SNS)   •  Nate  (#1  IM)  
  38. 38. Beware!  
  39. 39. Global  Shopping  –  DeNA  (Japan)  buys  ngmoco:)          $400M  –  Tencent  (China)  buys  Riot  Games      $400M  –  Rakuten  buys  PriceMinister  &  Buy.com    $250M  each  –  Gree  (Japan)  has  $250M  in  the  bank   This  is  just  the  beginning!  
  40. 40. 4.  Foreign  Players  
  41. 41. Foreign  Companies  in  Asia  
  42. 42. Group  A:  The  Valley  Darlings  +8*  |  www.plus8star.com   China   Japan   Korea   Google   FAIL   BI-­‐WIN   FAIL   Facebook   FAIL   (fail)   (win)   Twiker   FAIL   BI-­‐WIN   WIN   (JV  with  Digital  Garage)   Zynga   (win)   (win)   -­‐   (M&A  for  dev.)   (M&A)   Groupon   (fail)   (win)   (fail)   (but  hiring  150  staff)   Grades:  BI-­‐FAIL  |  FAIL  |  (fail)  |  (win)  |  WIN  |  BI-­‐WIN  
  43. 43. Group  B:  The  Old  Guard  +8*  |  www.plus8star.com   China   Japan   Korea   eBay   BI-­‐FAIL   FAIL   WIN   (buy  leader  then  fail)   (M&As)   Amazon   FAIL   WIN   FAIL   YouTube     FAIL   (win)   (win)   Yahoo!   BI-­‐WIN   BI-­‐WIN   FAIL   (Alibaba  investment)   (JV  with  Soxbank)   Blizzard   (win)   -­‐   BI-­‐WIN   (license)   (cult)  
  44. 44. Group  C:  The  Dark  Horses  +8*  |  www.plus8star.com   China   Japan   Korea   Evernote   -­‐   BI-­‐WIN   -­‐   (deals  with  PCs,  Telcos)   Tumblr   -­‐   (win)   -­‐   MIH  (Naspers)   BI-­‐WIN   -­‐   -­‐   (Tencent  investment)   Skype   FAIL   FAIL   FAIL   FON   FAIL   BI-­‐WIN   FAIL  
  45. 45. Group  D:  The  Mobile  Guys  +8*  |  www.plus8star.com   China   Japan   Korea   Apple   (win)   (win)   (win)   Android   BI-­‐WIN   BI-­‐WIN   BI-­‐WIN   (supported  by  telco)   (supported  by  telco)   (supported  by  telco)   Nokia   BI-­‐FAIL   FAIL   FAIL   (lead  then  dropped)   (never  grew)   (never  grew)   App  Developers   Not  many  foreign   Varied   Varied  
  46. 46. Signs  of  True  GlobalizaQon  •  NOT  Charlie  Sheen  •  Tom  Cruise  on  Sina  Weibo  (local  Twiver)  •  Rakuten’s  CEO  (Japan)  tweets  in  English   –  Company  official  language  in  transiQon  to  English  •  Who  tweets  in  Chinese  or  Japanese  in  the  West?   –  First  step:  MyGengo  :-­‐)  ?  
  47. 47. Summary  •  China:  No  company  won  a  direct  confrontaQon  •  Japan:  More  open,  quality  &  persistence  pay  off  •  Korea:  Advanced  models…  acquisiQons?  
  48. 48. 5.  Local  InnovaMons  
  49. 49. Mobile  Social  Gaming  Self-­‐published  +  Open  pla~orms              Some  ads   SNS   +   Free  games   +   Homepage   Virtual  goods  
  50. 50. The  QuesQon  is…   NOT  “who  will  be  the  Facebook  of  XXX”   But  rather   “Who  will  be  the  Tencent  of…”  Indonesia  (#2  FB  populaQon),  India,  Vietnam,   Philippines,  Thailand,  Russia,  Brazil,…  
  51. 51. Korea  surfing  Apple’s  Success  
  52. 52. Shanzhai  InnovaQon:  Mass  customizaQon  
  53. 53. InnovaQon  Awareness  Test  
  54. 54. PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010  ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  55. 55. Hardware  InnovaMon:  “Shanzhai”  ( )  PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010  ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  56. 56. PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010  ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  57. 57. QQ  Farm  
  58. 58. Design  Your  Own  Mobile!  •  Design  teams  <  10  people  •  Factories  take  orders  from  5,000  units  •  Cost  <  50  EUR  
  59. 59. “Shanzhai”  Spirit?  •  Cheap  •  Fun  •  Flashy  •  Fast  
  60. 60. 5.  Where  is  the  bacon?  
  61. 61. Three  Main  Paths  Learn   Build   Compete  
  62. 62. Learn  •  China:  Entertainment,  post-­‐piracy  models  •  Korea:  New  service  concepts  •  Japan:  Mobile  +  alternaQve  models   Digital  goods:  $14B  in  Asia  already!   (USA=$2B?)  
  63. 63. Build  •  China:  Compare,  leverage  (app  bouQques…)  •  Korea:  Case-­‐specific  •  Japan:  For  local  market  
  64. 64. Compete  •  China:  Ultra-­‐compeQQve  •  Korea:  Size  limited  •  Japan:  Yeah!  
  65. 65. Special  Case:  Singapore  (“the  red  dot”)  •  Great  infra   •  Everyone  has  a  smartphone   •  Broadband  +  NaQonwide  free  WiFi   •  MulQ-­‐cultural,  access  to  SE  Asia,  India,  Middle-­‐East,  etc.  •  Ecosystem  growing  fast   •  Barcamp,  Founder  InsQtute,  Startup  Weekend,  etc.   •  Early  stage  funds,  Angels,  …  •  Some  cool  companies   •  Mig33    Mobile  SNS,  40M+  users  in  emerging  markets   •  Viki    Crowdsourced  video  subQtling  community   •  Foound  Group  communicaQon  service   •  Eduardo  Co-­‐Founder  of  FB  (worth  $3B+)  lives  there  
  66. 66. Conclusion  1.  “There  is  no  Asia”  2.  Learn  from  proven  successes  3.  Enter  markets  cauMously  4.  InnovaMon  is  everywhere!  
  67. 67. Made  from  China   the  Cmune  Case  •  Snapshot:     –  www.facebook.com/uberstrike     –  First  FPS  on  Facebook   –  Made  in  Beijing  •  Leverage   –  Best  pracQces  of  Asia’s  free-­‐to-­‐play   –  Best  distribuQon  (Facebook,  App  Stores,  Web)  •  Result   –  Organic  growth   –  High  spending  /  user   –  Largest  3D  social  game  (>500,000  MAU)  
  68. 68. The  Sky  is  the  Limit!  @benjaminjoffe  |  www.slideshare.net/plus8star  
  69. 69. Thanks!   More  about  “InnovaQon  Arbitrage”  www.plus8star.com  benjamin@plus8star.com     +81  |  Japan  benjaminjoffe   +82  |  Korea   +86  |  China  hvp://twiver.com/benjaminjoffe     Telecom  &  Internet  www.linkedin.com/in/benjaminjoffe     +  Added  Value   *  High  quality  www.slideshare.net/plus8star    
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