The 8 Things I Learned In Asia
Benjamin Joffe | CEO, Plus Eight Star
Stanford University| 2009.11

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, Japan & Korea
• Published reports
• Inside Cyworld (2007)
• Inside Tencent (2009)
• Inside Alibaba (upcoming)
• Contact
• www.plus8star.com

References
EUROPE USA
ASIA

Work With Startups: Newt Games
• Mobile SNS in 2003 in Japan
– 3G
– GPS
– Avatars
– Virtual goods and AI!
• Too early!

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

Most Advanced 3D Game on FB
Paradise Paintball by Cmune
http://apps.facebook.com/paradisepaintball/
Disclosure: I am an investor & partner of Cmune

Mobile Monday Beijing
31 events
111 speakers
3,500 members
1,500 companies

8 Things I Learned in Asia
A. Foreigner in Asia
1. Surprises
2. Bringing my own baggage
B. Innovation in Asia
3. Two-Way Bias
4. Simplification vs. Understanding
5. Techno-Darwinism
6. The Arbitrage Opportunity
C. Human Discoveries
7. Common Drives
8. Evolution Path

Foreigner
in Asia

1
Surprises: Japan
• Social drinking
• Social contract
• Quality = “It’s perfect”
• Risk averse

1
Surprises: Korea
• More social drinking!
• Education
• Quality = “It’s new”
• Latin?!

1
Surprises: China
• Person-to-person
• Pragmatic
• Creative chaos
• Quality = “It gives me status”?
• Art of War

2
My Own Cultural Baggage
• My definitions
– Company
– Family
– Friends
– Marriage
– Career
• Questions: What, Where, Who?

Innovation
in Asia
한글

3
Two-Way Bias

General assumption #1
Everything from USA is great

General assumption #2
Everything from Asia is weird
(and sometimes funny)

Japanese like texting on mobile
2000
Because they have small fingers

Asians like avatars
2003 Because they watch animations

Chinese like ring-back tones
2006
Because they go to karaoke a lot

4
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 USA
• More concepts not yet ported

5
Techno-Darwinism
or “How is that possible?”
1. Ecosystems at work
2. 5Cs of Innovation
3. Departing from models

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 340 mln 100 mln 35 mln
Mobile users 260 mln 650 mln 100 mln 45 mln
x5
Total x2
x3

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)

Comparison Hack for US Market?
1. Adjust with GDP/Capita
• Japan = x1.2 | Korea = x2.4 | China ~ x10
• (Avg. income of web user in China $400/month)

Comparison Hack for US Market?
1. Adjust with GDP/Capita
• Japan = x1.2 | Korea = x2.4 | China ~ x10
• (Avg. income of web user in China $400/month)
2. Adjust with Internet (or Mobile) Population
• Japan = x2.5 | China = x2/3 | Korea = x5

Formulas
$100M in Japan  $300M in US
$100M in China  $700M in US
$100M in Korea  $1.2B in US

Quick Calculation
• China
• Online gaming $3 to $4 bln market (mostly VG)
• 10 Chinese online game companies on NASDAQ
• Tencent = $1 bln in revenue (2008)
• Japan
• 3 Social networks market-listed in Japan for over $1 bln
• 2 are 100% mobile with >50% revenue from VG
• Korea
• Popularized the free-to-play model
• $1 bln online gaming market, mostly VG

Sharks with Laser Beams vs. Irritated Sea Bass
Asia’s Virtual Goods Market Estimate for 2009
Asia: 7 Billion Dollars!
USA: $1 bln (Source: Inside Virtual Goods, Oct 2009)

Sharks with Laser Beams vs. Irritated Sea Bass
Asia’s Virtual Goods Market Estimate for 2009
Asia: 7 Billion Dollars!
USA: $1 bln (Source: Inside Virtual Goods, Oct 2009)
US market potential
3~35 Billion Dollars?

Charles Darwin
“The Origin of Species”
(1859)

Voyage of “The Beagle”

France (10,000km)
4 years
1 year
4 years

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

“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

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

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. China
Scale / Geography / Demography
make some services viable

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

When was it invented?

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

Who came first?

6
The Arbitrage Opportunity
1. Identify
2. Analyze
3. Leverage

The Human Discoveries
Peking Man

7
Common Drives
Same Aspirations, Different Balance
Culture
Fulfilling
Family
Work
How do
you
balance?
Financial Spiritual
Success Dev.
Friends
Social
Life

8
Evolution Path
• Glimpse Into Local Futures
– Korea: Wired society
– Japan: Mobile society
– China: Communist Gov., Capitalist Population

Thanks!
More about “Innovation Arbitrage”
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjamin0123 +82 | Korea
+86 | China
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