Digital Innovation in Asia

Digital Innovation in Asia Benjamin Joffe | CEO, Plus Eight Star Institute of Systems Science, National University of Singapore | 2010.10

Introduction

@benjaminjoffe

4 years 1 year 5 years

• CEO, Plus Eight Star | www.plus8star.com – Best practices from Asia’s digital space – Research, Strategy & “Innovation Arbitrage” • Clients

Angel Investor, Advisor, Keynote Speaker • Speaker 100+ talks in 16 countries • Advisor • Investor in Asia-based global companies

My Interests • Technology, Sociology and Anthropology • Virtual economies • Digital third places • Artificial artificial intelligence (AAI) • Online social dynamics

Plan 1. Introduction 2. Orientation – Definition – Why foreign companies fail in Asia – Why Asian companies fail overseas 3. Background on Innovation 1. Misleading appearance 2. Techno-Darwinism 3. Innovation catalysts 4. 5Cs of Innovation 5. Innovations in web & mobile 4. Q&A

Orientation Test

Question #0 Define “Innovation”

Definitions Entrepreneur Inventor (Business) Idea (Prototype) (e.g. Chocolate + Hemp)

Question #1 Something innovative from Asia?

Question #2 Google is the world’s largest search engine. Its market share is 1.5% in Korea. Explain. (here)

Question #3 Why Did Japanese Handset Makers Fail Overseas? (Where are Sharp, Panasonic, Fujitsu, NEC, Sanyo, Mitsubishi…?)

Background on Innovation

1. Misleading Appearances Aggressive?

Quiz: Top 10 websites? USA China Japan Korea #1 #2 #3 #4 #5 #6 #7 #8 #9 #10

Alexa Ranking USA China Japan Korea #1 Google Baidu Yahoo JP / SB Naver #2 Yahoo Tencent FC2 Yahoo #3 Facebook Sina Google JP Daum #4 YouTube Google China YouTube YouTube #5 MySpace Taobao Rakuten Google #6 MSN Netease Livedoor Cyworld #7 Live Google Ameblo Nate #8 Wikipedia Sohu Mixi Google KR #9 Craigslist Youku Wikipedia Live #10 eBay Yahoo Goo Facebook

Are you on Facebook?

More than Facebook and USA • Facebook • LinkedIn • QQ (Tencent) • Qzone • RenRen • Kaixin001 • Xiaonei • 51.com • Mixi And more… • Mobile Game Town • Gree • Cyworld • Friendster

Billion Dollar Brands $B $B • Facebook • LinkedIn $B $B • QQ (Tencent) • Qzone $B $B • RenRen • Kaixin001 • Xiaonei • 51.com • Mixi $B And more… • Mobile Game Town • Gree • Cyworld • Friendster

Market Caps (2010.10) $780M $3.3B $4.2B $43B

Simplification vs. Understanding

The Appearance • Naver = “Google of Korea”? • Rakuten = “Amazon of Japan”? • Tencent = “Facebook of China”?

The Reality • No real equivalent • Powerful ideas get overlooked • It’s all in the details! • More concepts not yet ported

2. Techno-Darwinism

Charles Darwin “The Origin of Species” (1859)

Voyage of “The Beagle”

“Diverging” from common ancestors

150 years later…

IT Infrastructure 100% Avg. 7 Mbps 80% Avg. 15 Mbps 60% 3G users 40% C hi n 20% a Avg. 4 Mbps www.plus8star.com 0% 0% 20% 40% 60% 80% % of Internet connections measured above 5Mbps (Source: Akamai, 4Q08)

“Japan’s cellphones are like the endemic species that Darwin encountered on the Galápagos Islands — fantastically evolved and divergent from their mainland cousins” Takeshi Natsuno Inventor of i-mode

Internet Mobile 1.3 billion 3.3 billion Source: Morgan Stanley, 2007

Digital Population Country USA China Japan Korea Population 300 mln 1,300 mln 130 mln 50 mln Internet users 225 mln 400 mln 100 mln 35 mln Mobile users 260 mln 700 mln 100 mln 45 mln x5 Total x2 x3

Why did those countries diverge?

3. Innovation Catalysts

What do you think?

Key Catalysts • IT infrastructure • Market potential • Talent • Capital

4. The 5Cs of Innovation

5Cs of Innovation 1. Copy 2. Competition 3. Constraints 4. Combination 5. Context

1. Copy Entry barriers Technology? Capital? Talent? Intellectual Property? Censorship?

2. Combination Will it blend? Tencent (US$1bln)

3. Competition What happens with 4 Facebook 20 YouTube 10 MySpace 5 Match.com 3 Yahoo 4 Twitter ?

4. Constraints Low GDP/capita Limited advertising No credit cards No legacy industry

5. Context Scale / Geography / Demography make some services viable

1. Some Asian species are fit for global markets 2. Learn from them to evolve successfully

Question #4 When was it invented?

Europe Gutemberg | ~1450 Korea Metal | ~1230 China Wooden | ~1040

Who came first?

The Arbitrage Opportunity 1. Identify 2. Analyze 3. Leverage

5. Some Examples

Looking more closely Zhenai.com vs. Match.com • “On the shoulders of giants” – Started as Match.com – Raised capital – Business model issue • “Each new user costs us money!” • Develop new model – 350 people call center – VIP service – Metrics & analysis

Rest of Asia

Time-Shifted Markets • Vietnam – ~$150M from online games – 86 million people – 4-5 years behind china • Indonesia – #3 on Facebook! – 238 million people! – Behind Vietnam • Other places: Thailand (66M), Philippines (92M), etc. Virtual Goods Time Machine • Biggest potential: online games & mobile SNS

Mig33 “We have decided we want to be like QQ for mobile in the rest of the emerging world.” – Steven Goh, CEO Source: VentureBeat, March 2010

Mig33 Made in China “We have decided we want to be like QQ for mobile in the rest of the emerging world.” – Steven Goh, CEO Not iPhone! Not rich countries! Source: VentureBeat, March 2010

About Mig33 • Nationality • Founders from Australia • Moved to Silicon Valley • Relocated to Singapore • Users • India, Indonesia, Bangladesh, Vietnam, South Africa…

From Asia to the World Durian Strudel (Singapore)

Paradise Paintball by Cmune • World’s first FPS on social networks! • Over 500,000 users in open beta – “Paradise Paintball – you feel like you’re playing a console game.” - Gareth Davis, Games Platform Manager, Facebook – “Abandoned my clan, crops have withered and my cafe has gone bankrupt. Thank you for creating the first real game on Facebook!” – Facebook user

Paradise Paintball | World’s First Social FPS! www.facebook.com/paradisepaintball www.cmune.com

Conclusions • Yes, you can! • Asia is a tremendous growth market • Inspiration from everywhere • From Asia to the world!

Questions?

Thanks! More about “Innovation Arbitrage” www.plus8star.com benjamin@plus8star.com +81 | Japan benjaminjoffe +82 | Korea +86 | China http://twitter.com/benjaminjoffe Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value * High quality www.slideshare.net/plus8star

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Digital Innovation in Asia

by Benjamin Joffe

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