Rethinking Innovation


   Benjamin Joffe | CEO, Plus Eight Star
Haas School of Business, Berkeley | 2009.11
Plan
1. Introduction

2. Orientation
   – Definition
   – Why foreign companies fail in Asia
   – Why Asian companies fail...
Introduction
Benjamin Joffe
   本杰明
 ベンジャミン
   벤자민
4 years

          1 year
                   4 years
Consulting | Startups | Community
| Plus Eight Star
• “Innovation Arbitrage”
     • Internet & Mobile Digital strategy
     • Best practices from China, Jap...
References

EUROPE                  USA




                 ASIA
Work With Startups: Newt Games

• Mobile SNS in 2003 in Japan
  – 3G
  – GPS
  – Avatars
  – Virtual goods and AI!


• Too...
Work With Startups: Cmune

• Making the 3D Web happen

  –   fbFund winner
  –   First 3D FPS game on Facebook
  –   #1 Wi...
Most Advanced 3D Game on Facebook
         Paradise Paintball by Cmune
      http://apps.facebook.com/paradisepaintball/

...
Mobile Monday Beijing


   31 events
  111 speakers
3,500 members
1,500 companies
Orientation Test
Question #1
Define “Innovation”
Definitions




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




                ...
Question #3
    Why Did Japanese Handset Makers Fail Overseas?




(Where are Sharp, Panasonic, Fujitsu, NEC, Sanyo, Mitsu...
Background on Innovation
1. Misleading Appearance




         Aggressive?
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

• Virtual goods since 10 years ago

• Market 7 times US...
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%

       ...
Alexa Ranking
        USA            China         Japan        Korea
 #1    Google          Baidu     Yahoo JP / SB     N...
“Japan’s cellphones are like the
endemic species that Darwin
encountered on the Galápagos
Islands — fantastically evolved
...
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 ml...
Why did those countries diverge?
3. Innovation Catalysts
What do you think?
Key Catalysts

• IT infrastructure

• Market potential

• Talent

• Capital
On a smaller scale?
4. The 5Cs of Innovation
5Cs of Innovation

1.   Copy
2.   Competition
3.   Constraints
4.   Combination
5.   China
1. Copy

            Entry barriers

               Technology?
                 Capital?
                  Talent?
      ...
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. China




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
   – Raise...
Questions?
Thanks!
   More about “Innovation Arbitrage”

www.plus8star.com

benjamin@plus8star.com
                                  ...
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
Rethinking Innovation
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Rethinking Innovation

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Talk given at the University of California Berkeley, Haas School of Business. Its purpose was to challenge some preconceptions around innovation with examples from the Asian tech scene. This talk was given twice the same day thanks to the invitation from a Professor after the first session. It includes 4 questions as an "orientation test".

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Transcript of "Rethinking Innovation"

  1. 1. Rethinking Innovation Benjamin Joffe | CEO, Plus Eight Star Haas School of Business, Berkeley | 2009.11
  2. 2. 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
  3. 3. Introduction
  4. 4. Benjamin Joffe 本杰明 ベンジャミン 벤자민
  5. 5. 4 years 1 year 4 years
  6. 6. Consulting | Startups | Community
  7. 7. | Plus Eight Star • “Innovation Arbitrage” • Internet & Mobile Digital strategy • Best practices from China, Japan & Korea • Published reports • Inside Cyworld (2007) • Inside Tencent (2009) • Inside Alibaba (upcoming) • Contact • www.plus8star.com
  8. 8. References EUROPE USA ASIA
  9. 9. Work With Startups: Newt Games • Mobile SNS in 2003 in Japan – 3G – GPS – Avatars – Virtual goods and AI! • Too early!
  10. 10. Work With Startups: Cmune • Making the 3D Web happen – fbFund winner – First 3D FPS game on Facebook – #1 Widget on Apple.com – Virtual Goods • Check it out! – www.cmune.com
  11. 11. Most Advanced 3D Game on Facebook Paradise Paintball by Cmune http://apps.facebook.com/paradisepaintball/ Disclosure: I am an investor & partner of Cmune
  12. 12. Mobile Monday Beijing 31 events 111 speakers 3,500 members 1,500 companies
  13. 13. Orientation Test
  14. 14. Question #1 Define “Innovation”
  15. 15. Definitions Entrepreneur Inventor (Business) Idea (Prototype) (e.g. Chocolate + Hemp)
  16. 16. Question #2 Google is the world’s largest search engine. Its market share is 1.5% in Korea. Explain. (here)
  17. 17. Question #3 Why Did Japanese Handset Makers Fail Overseas? (Where are Sharp, Panasonic, Fujitsu, NEC, Sanyo, Mitsubishi…?)
  18. 18. Background on Innovation
  19. 19. 1. Misleading Appearance Aggressive?
  20. 20. Simplification vs. Understanding
  21. 21. The Appearance • Naver = “Google of Korea”? • Rakuten = “Amazon of Japan”? • Tencent = “Facebook of China”?
  22. 22. The Reality • No real equivalent • Powerful ideas get overlooked • Virtual goods since 10 years ago • Market 7 times USA • More concepts not yet ported
  23. 23. 2. Techno-Darwinism
  24. 24. Charles Darwin “The Origin of Species” (1859)
  25. 25. Voyage of “The Beagle”
  26. 26. “Diverging” from common ancestors
  27. 27. 150 years later…
  28. 28. 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)
  29. 29. 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
  30. 30. “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
  31. 31. Internet Mobile 1.3 billion 3.3 billion Source: Morgan Stanley, 2007
  32. 32. Digital Population Country USA China Japan Korea Population 300 mln 1,300 mln 130 mln 50 mln Internet users 225 mln 340 mln 100 mln 35 mln Mobile users 260 mln 650 mln 100 mln 45 mln x5 Total x2 x3
  33. 33. Why did those countries diverge?
  34. 34. 3. Innovation Catalysts
  35. 35. What do you think?
  36. 36. Key Catalysts • IT infrastructure • Market potential • Talent • Capital
  37. 37. On a smaller scale?
  38. 38. 4. The 5Cs of Innovation
  39. 39. 5Cs of Innovation 1. Copy 2. Competition 3. Constraints 4. Combination 5. China
  40. 40. 1. Copy Entry barriers Technology? Capital? Talent? Intellectual Property? Censorship?
  41. 41. 2. Combination Will it blend? Tencent (US$1bln)
  42. 42. 3. Competition What happens with 4 Facebook 20 YouTube 10 MySpace 5 Match.com 3 Yahoo 4 Twitter ?
  43. 43. 4. Constraints Low GDP/capita Limited advertising No credit cards No legacy industry
  44. 44. 5. China Scale / Geography / Demography make some services viable
  45. 45. 1. Some Asian species are fit for global markets 2. Learn from them to evolve successfully
  46. 46. Question #4 When was it invented?
  47. 47. Europe Gutemberg | ~1450 Korea Metal | ~1230 China Wooden | ~1040
  48. 48. Who came first?
  49. 49. The Arbitrage Opportunity 1. Identify 2. Analyze 3. Leverage
  50. 50. 5. Some Examples
  51. 51. 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
  52. 52. Questions?
  53. 53. Thanks! More about “Innovation Arbitrage” www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea +86 | China http://twitter.com/plus8star Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value * High quality www.slideshare.net/plus8star

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