Digital Naturalism

New and Improved Species from China Digital Naturalism @benjaminjoﬀe, ceo, +8* Media Evolu9on Conference | Malmö, Sweden | 2011.08

Introduc;on

My Voyage •  11 years in Asia (China, Japan, Korea) •  Research on “Local Species” •  Innova9on Arbitrage

When was it invented?

Europe Gutenberg | 1450 Korea Metal | 1230 China Wooden | 1040

What does it tell us? 1.  Things can be “invented” more than once 2.  Ideas have no na;onality 3.  Time gap can be bridged Imagine!

China’s Internet

China’s Internet in the Western Mind Censorship Ac9vists 485m users Cyber-‐AZacks Internet Stocks Source: Top Google News on “China Internet”, 2011.08.16

What is missing? Innova9on Users New concepts Startups

#1 Challenge: Preconcep;ons China Innova9on Success

Innova9on is Everywhere!

Digital Naturalism

Digital species are IDEAS Cute ideas visit people everywhere

Understanding Digital Species •  NATIVE driaed “naturally” –  ENDEMIC 1 loca9on –  INDIGENOUS >1 loca9on •  INTRODUCED not naturally •  INVASIVE widespread

Quick Look at Ecosystems USA •  Large popula9on •  High GDP/capita •  Experienced entrepreneurs •  High development costs •  Vast investments resources •  Clear regula9ons RICH ECOSYSTEM

Quick Look at Ecosystems CHINA •  Very large popula9on •  Low GDP/capita •  Inexperienced entrepreneurs •  Low development costs •  Popular investment spot •  “In-‐progress” regula9ons TOUGH ECOSYSTEM

Copy is the “natural” way

Muta9on for Survival

5C’s of Innova9on™ 1.  Copy 2.  Constraints 3.  Combina9on 4.  Compe99on 5.  Context

Compe99on? Service No. Local Services Tencent (QZone, Pengyou) Facebook 5 Renren (IPO), Kaixin001, 51.com 1G: (dead) TwiZer 3 2G: Sina (IPO), QQ, Sohu (IPO) 1G: Wealink, Tianji LinkedIn 4 2G: Ushi, Hengzhi YouTube 3 Youku (IPO), Tudou (IPO), QQ Yahoo 3 Sina, Sohu, QQ Groupon 1,000+ Lashou, Taobao, etc.

Endemic TENCENT (Galapagos Penguin)

Tencent & QQ •  1998: Chinese “ICQ” •  Survival: Virtual goods in Avatars, Games (Korea) •  Today: social networks, microblog, e-‐commerce, search, interna9onal…

Tencent Usage •  IM ac9ve accounts 702 mln •  Qzone SNS 530 mln •  Pengyou SNS 130 mln •  Microblog 233 mln

Tencent Results (1H2011) •  Revenue 2 bln USD –  More than Facebook! –  Games 55% –  Ads 8% •  Net proﬁt 42% •  Paying users 11% Photo: Tencent’s new Headquarters in Shenzhen

Endemic JIAYUAN (ﬂightless cormorant)

Jiayuan | #1 Matchmaking site •  40 mln members •  Revenue 18 MEUR (loss) •  5 mln ac9ve •  IPO in May 2011 (“DATE”)

Jiayuan | #1 Matchmaking site •  Starving with ads •  100’s of events •  Sells “stamps” (0.2 EUR) –  Either sender or recipient must buy it

Endemic ZHENAI (Lonesome George)

Zhenai | #2 Matchmaking site

Zhenai | #2 Matchmaking site •  28M members •  VIP service •  “Dates manager” •  Feedback channel •  300 EUR/6 months

Endemic VANCL (swallow-‐tailed gull)

Vancl | #1 Online Apparel Store •  Original brand “Vancl” •  “Online-‐to-‐Oﬄine” (O2O) •  Started as online shirts •  200 MUSD in 2010 •  Expanded to apparel •  $5 bln Valua9on

Vancl | #1 Online Apparel Store •  “Vancl Stars” show their styling ideas •  10% commission on sales from personal page

Invasive & Indigenous ONLINE GAMES (marine iguana)

>10 Online Game Giants! •  No game soaware market •  Inspira9on from Korea •  All online! •  Online games = $5bln vs. $2bln in USA

Market Cap $53.5B 8 Unit: billion US$ 7 6.2 6 5 5 4.5 4 3 2.4 2 1.7 1.7 1.1 1 0.764 0.29 0.1 0.165 0 Tencent Shanda Shanda Netease Perfect Changyou Giant Kingsoa NetDragon CDC The9 Renren Game World Interac9ve Source: Companies, 2011.04 except Renren, 2011.05

Who’s ahead?

Invasive & Indigenous SHANZHAI (“Bandit”) (Lava Cactus)

Apple Store in Kumming

Apple Store in Kumming •  Real products! •  Customer service •  (Some) staﬀ think it’s an oﬃcial store!

Awareness Test

This is a “FarmVille” bu3on There is a link to check your QQ Farm PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joﬀe / Plus Eight Star Ltd.

QQ Farm

By the way…

“Shanzhai” Phones: Mass Customiza9on •  4F’s of Shanzhai™ –  Fun –  Flashy –  Fast –  (almost) Free!

“Invasive” Commodi9za9on? World’s Fastest Android CPU (1.5G) by Xiaomi Tech (220 EUR)

“Invasive” Commodi9za9on? HaiPad Android 2.2, Dual camera by Haier (100 EUR)

“Invasive” Commodi9za9on? World’s First Android 3.2 Tablet by Huawei

Introduced Species (dogs or goats?)

ALL successful ones mutated •  Yahoo! Invested in Alibaba (40%) •  Google Failed •  Android Free! •  Angry Birds

Groupon War •  Hundreds of players •  Single digit margins •  No clear leader •  $110m funding for Lashou •  Hard 9me for Groupon US

One more thing! Cmune (new hybrid)

Made From China Uberstrike by Cmune: Top 3D Game on Facebook

The Future of Digital Species •  Study Ecosystems •  Discover new species •  Mutate •  Survive •  Thrive! Gymnadenia Runei (Indigenous Swedish ﬂower)

Tack sså mycket! Tack å m ycket! @benjaminjoﬀe benjamin@plus8star.com www.slideshare.net/plus8star

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Digital Naturalism

by Benjamin Joffe

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