The Eight Things I Learned in Asia

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Talk given at Stanford University for a student entrepreneur group with a focus on Asia. I picked 8 things I learned working in the web/mobile space in Asia.

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The Eight Things I Learned in Asia

  1. 1. The 8 Things I Learned In Asia Benjamin Joffe | CEO, Plus Eight Star Stanford University| 2009.11
  2. 2. Benjamin Joffe 本杰明 ベンジャミン 벤자민
  3. 3. 4 years 1 year 4 years
  4. 4. Consulting | Startups | Community
  5. 5. | 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
  6. 6. References EUROPE USA ASIA
  7. 7. Work With Startups: Newt Games • Mobile SNS in 2003 in Japan – 3G – GPS – Avatars – Virtual goods and AI! • Too early!
  8. 8. 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
  9. 9. Most Advanced 3D Game on FB Paradise Paintball by Cmune http://apps.facebook.com/paradisepaintball/ Disclosure: I am an investor & partner of Cmune
  10. 10. Mobile Monday Beijing 31 events 111 speakers 3,500 members 1,500 companies
  11. 11. 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
  12. 12. Foreigner in Asia
  13. 13. 1 Surprises: Japan • Social drinking • Social contract • Quality = “It’s perfect” • Risk averse
  14. 14. 1 Surprises: Korea • More social drinking! • Education • Quality = “It’s new” • Latin?!
  15. 15. 1 Surprises: China • Person-to-person • Pragmatic • Creative chaos • Quality = “It gives me status”? • Art of War
  16. 16. 2 My Own Cultural Baggage • My definitions – Company – Family – Friends – Marriage – Career • Questions: What, Where, Who?
  17. 17. Innovation in Asia 한글
  18. 18. 3 Two-Way Bias
  19. 19. General assumption #1 Everything from USA is great
  20. 20. General assumption #2 Everything from Asia is weird (and sometimes funny)
  21. 21. Japanese like texting on mobile 2000 Because they have small fingers
  22. 22. Asians like avatars 2003 Because they watch animations
  23. 23. Chinese like ring-back tones 2006 Because they go to karaoke a lot
  24. 24. 4 Simplification Vs. Understanding
  25. 25. The Appearance • Naver = “Google of Korea”? • Rakuten = “Amazon of Japan”? • Tencent = “Facebook of China”?
  26. 26. The Reality • No real equivalent • Powerful ideas get overlooked • Virtual goods since 10 years ago • Market 7 times USA • More concepts not yet ported
  27. 27. 5 Techno-Darwinism or “How is that possible?” 1. Ecosystems at work 2. 5Cs of Innovation 3. Departing from models
  28. 28. Internet Mobile 1.3 billion 3.3 billion Source: Morgan Stanley, 2007
  29. 29. 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
  30. 30. 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)
  31. 31. 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)
  32. 32. 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
  33. 33. Formulas $100M in Japan  $300M in US $100M in China  $700M in US $100M in Korea  $1.2B in US
  34. 34. 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
  35. 35. 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)
  36. 36. 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?
  37. 37. Charles Darwin “The Origin of Species” (1859)
  38. 38. Voyage of “The Beagle”
  39. 39. France (10,000km) 4 years 1 year 4 years
  40. 40. 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
  41. 41. “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
  42. 42. 5Cs of Innovation 1. Copy 2. Competition 3. Constraints 4. Combination 5. China
  43. 43. 1. Copy Entry barriers Technology? Capital? Talent? Intellectual Property? Censorship?
  44. 44. 2. Combination Will it blend? Tencent (US$1bln)
  45. 45. 3. Competition What happens with 4 Facebook 20 YouTube 10 MySpace 5 Match.com 3 Yahoo 4 Twitter ?
  46. 46. 4. Constraints Low GDP/capita Limited advertising No credit cards No legacy industry
  47. 47. 5. China Scale / Geography / Demography make some services viable
  48. 48. 1. Some Asian species are fit for global markets 2. Learn from them to evolve successfully
  49. 49. When was it invented?
  50. 50. Europe Gutemberg | ~1450 Korea Metal | ~1230 China Wooden | ~1040
  51. 51. Who came first?
  52. 52. 6 The Arbitrage Opportunity 1. Identify 2. Analyze 3. Leverage
  53. 53. The Human Discoveries Peking Man
  54. 54. 7 Common Drives Same Aspirations, Different Balance Culture Fulfilling Family Work How do you balance? Financial Spiritual Success Dev. Friends Social Life
  55. 55. 8 Evolution Path • Glimpse Into Local Futures – Korea: Wired society – Japan: Mobile society – China: Communist Gov., Capitalist Population
  56. 56. 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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