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The Myths of Innovation

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Are entrepreneurs geniuses? Is innovation so new? Various examples and metaphors to highlight the many myths around those two. Talk given at Singapore Management University in November 2010.

Are entrepreneurs geniuses? Is innovation so new? Various examples and metaphors to highlight the many myths around those two. Talk given at Singapore Management University in November 2010.

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The Myths of Innovation The Myths of Innovation Presentation Transcript

  • The  Myths  of  Innova/on   Benjamin  Joffe  |  CEO,  Plus  Eight  Star   Ins/tute  of  Innova/on  &  Entrepreneurship,  Singapore  Management  University  |  2010.11  
  • Introduc/on  
  • @benjaminjoffe  
  • 4  years   1  year   5  years  
  • •  CEO,  Plus  Eight  Star  |  www.plus8star.com   –  Best  prac/ces  from  Asia’s  digital  space   –  Research,  Strategy  &  “Innova/on  Arbitrage”  
  • 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   •  Ar/ficial  ar/ficial  intelligence  (AAI)   •  Online  social  dynamics  
  • The  Myths   1.  Entrepreneurs  have  original  ideas   2.  It’s  all  about  execuEon   3.  The  vision  is  clear  from  day  1   4.  Entrepreneurs  make  millions   5.  Innova/on  always  wins   Bonus:  the  West  does  it  beaer  
  • Innova/on’s  Cultural  Bias  
  • Common  Assump/on  #1   Everything  from  USA  is  great
  • Common  Assump/on  #2   Everything  from  Asia  is  strange
  • Common  Assump/on  #2   Everything  from  Asia  is  strange (and  some/mes  funny)
  • Western  Framing   of  Innova/on  
  • Famous  Examples   •  Ceramics    (“Deleware?)   •  Prin/ng  Press      (Gutenberg?)  
  • Arts,  religion,  poli/cs…   •  “Innova/on”   •  “Democracy”   •  “Roman/c  love”   •  “Chris/anity”   •  “Freedom”   •  “Crea/vity”   •  etc.  
  • Thee  of  history!   •  The  Western  reframing    even  convinced  Asia!  
  • Magnificent  Seven   Seven  Samurai   (1960)   (1954)  
  • The  Matrix   Ghost  in  the  Shell   (1999)   (1989/1995)  
  • Kimba  the  White  Lion   The  Lion  King   (Japan,  1965)   (US,  1994)   “Even  our  lawyers  are  not  that  good”   –  a  Disney  animator  (rumor)  
  • It’s  not  always  simple  copies…  
  • Ideas  go  back  and  forth!   •  Nike  (USA)  and  Asics  (Japan)   •  Feiyue  (China)  popular  in  Europe!  
  • California  Rolls   (now  served  in  Japan  too!)  
  • Durian  Strudel  
  • Beard  Papa’s   •  “Fresh’n  natural  cream  puffs”   •  250  stores  in  Japan,  300+  worldwide   •  1999  |  First  store  in  Osaka,  by  Yuji  Hirota   •  Stores  in  Japan,  China,  Korea,  Taiwan,   Indonesia,  Australia,  Singapore,  Malaysia,   Canada,  UK,  US,  El  Salvador,  Guam  –  Italy  and   Saudi  Arabia  coming  soon!   •  “Wired”  –  ranking  by  “Wired”  in  June  2008  
  • BreadTalk  
  • BreadTalk   •  Bakery  founded  in  Singapore  in  July  2000   •  24  retail  outlets  in  Singapore   •  13  countries,  300  bakeries,  5,000  employees   •  Singapore  (24),  Indonesia  (14),  China,  Kuwait,   Oman,  Philippines,  Malaysia,  Hong  Kong,   India,  Thailand,  South  Korea,  Vietnam,  Bahrain   •  Maintains  80%  of  its  product  range  and  adapts   20%  to  the  local  palate  
  • Strip  –  Ministry  of  Waxing  
  • Strip  –  Ministry  of  Waxing   •  Body  waxing  concept  store  founded  by  The   Spa  Esprit  Group  with  HQ  in  Singapore   •  Founded  in  2002   •  27  stores  in  7  ci/es  (Singapore,  NYC,  Jakarta,   KL,  Bangkok,  Manila,  London,  Shanghai,  HK)   •  HSQ:  Hygiene,  Speed,  Quality   •  Thelma  &  Louise,  Batman  &  Robin  combos   •  2  million  bushes  and  coun/ng…  
  • Summary   •  Ideas  are  everywhere!   •  Asia  contributes  too   •  Stereotypes  get  in  the  way  
  • If  you  missed  the  previous  episode…  
  • 3  Stages  for  Innova/on   Entrepreneur   Inventor   (Business)   Idea   (Prototype)   (e.g.  Durian  +  Strudel)  
  • Digital  Evolu/on  or  “ Techno-­‐Darwinism”   a)  Replica/on   b)  Muta/on   c)  Natural  Selec/on   Dodo (extinct)
  • Ecosystem  Factors  for  Evolu/on:  5C’s   1.  Copy   2.  Compe//on   3.  Combina/on   4.  Constraints   5.  Context  
  • The  Race  to  Success  
  • Who’s  Success?  Iden/ty  Crisis  
  • 15th  Century  Entrepreneur  
  • |  Zheng  He   Chinese  (Muslim)  Entreprenaute  (1371-­‐1435)  
  • Zheng  He’s  Ship  
  • 1.      Zheng  He  Sells  His  Boat  
  • 2.      Much  later…   Replace  old  boards,  mast,  sails…     Everything!  
  • Zheng  He’s  “Renovated”  Ship   Replace  old  boards,  mast,  sails…     Everything!  
  • 3.      Later  again…   Replace  old  boards,  mast,  sails…     Everything!   Re-­‐use  old  boards,  mast,  sails…     Everything!  
  • Zheng  He’s  “Refurbished”  Ship   Replace  old  boards,  mast,  sails…     Everything!   Re-­‐use  old  boards,  mast,  sails…     Everything!  
  • Ques/on   Which  is  Zheng  He’s  Ship?   Replace  old  boards,  mast,  sails…     Re-­‐use  old  boards,  mast,  sails…     Everything!   Everything!  
  • …Or  Zheng  He’s  New  Ship?  
  • Case  Studies  
  • Examples  from  Asia   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   US$100M  in  2009   Raised  US$500M   US$200M  in  2009  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Yong  Hyoung   Founder   Cyworld  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Yong  Hyoung   Founder   Cyworld   Gave  most   shares  to   keep  going  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Wang  Xing   Founder   Xiaonei  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Wang  Xing   Founder   Xiaonei   Sold  for  US $2mln   in  2006  
  • Wang  Xing’s  Projects   2005   2007   2008   2009  
  • Ques/ons   1.  What  did  he  do  in  2006?  (no  company  created!)   2.  What  went  wrong?   3.  How  did  he  select  his  models?   4.  What  kind  of  changes  did  he  make?   5.  Is  it  going  to  work  this  Eme?  
  • Today’s  Deal!  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Batara  Eto   CTO   Mixi  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Batara  Eto   CTO   Mixi   Started  Mixi   as  an  intern!  
  • Changing  riders   #1  SNS  in  Korea   #2  SNS  in  China   #1  SNS  in  Japan   Batara  Eto   CTO   Mixi   Now  invests   in  Indonesia  
  • A  Caucus  Race?  
  • What  is  a  Caucus  Race?   From  “Alice  in  Wonderland”   •  Why,  said  the  Dodo,  the  best  way  to  explain  it  is  to  do  it.   •  First  it  marked  out  a  race-­‐course,  in  a  sort  of  circle,  (the   exact  shape  doesn't  maWer,  it  said,)   •  and  then  all  the  party  were  placed  along  the  course,   here  and  there.   •  There  was  no  One,  two,  three,  and  away,   •  but  they  began  running  when  they  liked,  and  lee  off   when  they  liked,  so  that  it  was  not  easy  to  know  when   Dodo the  race  was  over.   (extinct) •  […]  At  last  the  Dodo  said,  EVERYBODY  has  won.    
  • Winner  Bias   They  talk  but  don’t  race  
  • Winner  Bias   We  don’t  keep  track  of  how  many  start  
  • DNA  Bias   “You  don’t  change  horses  mid-­‐race”   He  changed  his  ride!  
  • DNA  Bias   “You  don’t  change  horses  mid-­‐race”   (and  started  mid-­‐race!)  
  • DNA  Bias   “You  don’t  change  horses  mid-­‐race”   (This  one  has  no  rider)  
  • DNA  Bias   “You  don’t  change  horses  mid-­‐race”   Nobody  knows  the  track’s  shape  
  • Case  Studies  
  • Changing  diet   #1  Mobile  SNS  in  Japan   US$1  billion   in  2010!   Ini/al  business  model?   Ads  CPA  Virtual  goods  
  • Changing  playorm  +  business  model!   #2  Mobile  SNS  in  Japan   US$400M  in  2009  
  • S/cking  to  it   Tencent   #1  SNS  in  China   US$1.8  bln  in  2009   90%  From  Virtual  Goods   (40%  Net  Margin)   Market  cap   US$43  bln   (more  than  eBay)  
  • S/cking  to  it   Tencent   #1  SNS  in  China   US$1.8  bln  in  2009   90%  From  Virtual  Goods   (40%  Net  Margin)   Market  cap   US$43  bln   (more  than  eBay)   IM  was  not  making  money  and  our   compe/tors  moved  to  other   ventures.  I  did  not  have  other  ideas   Pony  Ma   so  I  stuck  to  it.   Founder  &  CEO   Tencent  (QQ)  
  • Alibaba  |  China’s  #1  e-­‐Commerce  Playorm   •  1999  Alibaba  by  Jack  Ma  +  17  others   –  Mission:  “ To  make  doing  business  easy”   •  2001  Savio  Kwan  hired  as  COO   –  17  years  GE  Medical  Systems   –  Target:  “Sustainable  long-­‐term  cash  flow”   •  2010  More  GE  than  GE?   –  “The  GE  spirit  is  alive  and  well  at  Alibaba”        David  Wei,  CEO  of  Alibaba.com  
  • Myths  of  Entrepreneurship  
  • The  Myths  of  Innova/on   1.  How  many  talked  but  did  not  start?   2.  How  many  started?   3.  Change  in  product/service   4.  Change  in  business  model   5.  Change  in  market  condi/ons   6.  Change  in  ownership!  
  • Case  Study:  Farmville  
  • Quiz:  Who  Created  the  First  Farm  Game?   •  Game    MAU    Dev.    Country   •  FarmVille  61.6M  Zynga  USA   •  Farm  Town  18.6M  Slashkey  USA   •  Country  Story      8.1M  Playfish  UK   •  Barn  Buddy      6.8M  TheBroth  USA   •  Happy  Farm        2.5M  5  Minutes  China   •  Happy  Harvest        .6M  Elex    China   Source:  Appdata  and  Facebook,  2009.10.26  
  • Answer:  “It’s  Complicated”   1.  Five  Minutes  (China)   2.  Slashkey  (US)   3.  Zynga  (US)   4.  Playfish  (UK),  Elex  (China),  etc.  
  • The  Mother  of  all  Farming  Games?   or  “where  is  the  innovaBon?”   •  Harvest  Moon  (1996)   –  On  Super  NES,  by  Victor  Interac/ve   –  Inspired  Happy  Farm   •  Sim  Farm  (1993)   –  On  PC,  by  Maxis   •  Where  is  the  innova/on?   •  Not  in  the  game  concept,  but  in  viral   &  social  mechanics  
  • The  Mother  of  all  Farming  Games?   or  “where  is  the  innovaBon?”   •  Harvest  Moon  (1996)   –  On  Super  NES,  by  Victor  Interac/ve   –  Inspired  Happy  Farm   •  Sim  Farm  (1993)   –  On  PC,  by  Maxis   •  Where  is  the  innova/on?   •  Not  in  the  game  concept,  but  in  viral   &  social  mechanics  
  • The  Mother  of  all  Farming  Games?   or  “where  is  the  innovaBon?”   •  Harvest  Moon  (1996)   –  On  Super  NES,  by  Victor  Interac/ve   –  Inspired  Happy  Farm   •  Sim  Farm  (1993)   –  On  PC,  by  Maxis   •  Where  is  the  innova/on?   –  Not  in  the  game  concept,  but  in   viral  &  social  mechanics  
  • Quotes  from  Elex   •  High  producEvity     –  “Anyone  is  able  to  develop  social  games  at  Playfish   level”   •  12  languages  versions   –  “We  can  localize  our  game  in  different  language   versions  in  1  day”  
  • Conclusion   •  Aggressive  teams  can  do  it!   •  “Ramen  Profitability”  reachable   •  “Fast  followers”  can  trump  innovators   I’m  loving  it!  
  • Shanzhai  Innova/on:  Mass  customiza/on  
  • Innova/on  Awareness  Test  
  • PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  • Hardware  InnovaEon:  “Shanzhai”  ( )   PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  • PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  • QQ  Farm  
  • Hardware  commodi/za/on   •  Change  your  iPod  into  a  phone!  
  • “Shanzhai”  Spirit?   •  Cheap   •  Fun   •  Flashy   •  Fast  
  • Cmune’s  Story  
  • UberStrike  |  World’s  First  Social  FPS!   www.facebook.com/paradisepaintball                                www.cmune.com  
  • The  straight  story   •  FPS  make  billions   •  Nobody  has  made  an  FPS  on  Facebook   •  “Let’s  make  one  and  make  billions!”  
  • Startups  are  not  straight  stories   •  Our  star/ng  point  in  2008  was…   “Online  3D  collaboraEon  made  simple”  
  • Go  that  way…  Really  Fast  
  • Cmune’s  Evolu/on   1.  Powerpoint  stage   2.  Technology  selec/on   3.  From  ideas  to  prototypes   4.  Valida/ng  concepts   5.  Finding  the  business   6.  Building  the  service   7.  Evalua/ng  markets  
  • Powerpoint  stage   •  Showing  around  to  people  and  friends   •  Get  feedback   •  Get  started!  
  • Technology  Selec/on   •  Our  CTO  wrote  the  reference  book  on  Virtools   •  Evalua/on  of  tech  features  &  licensing   –  Browser-­‐based?   –  Per-­‐desk?   –  B2B  or  B2C  focused?   –  Cool  team?   •  Eventually  pick  of  the  young  “Unity3D”  tech  
  • V1:  Mid-­‐2008  
  • Prototyping   •  Social  network  visualizer   •  Virtual  space  (TED  scene!)   •  Web-­‐based  apartment   •  And…  a  small  FPS  game  
  • Showing  around:  Business   •  Adver/sing  agencies   –  “We  could  use  that  cool  3D  thing.”   –  Upside:  people  are  interested,  but  it’s  a  gimmick   –  Downside:  reference  price  =  Flash   •  Virtual  world  companies   –  “Let’s  use  your  tech  to  build  a  prototype.”   –  Upside:  validates  tech,  finances  team   –  Downside:  slows  down  and  distracts   •  Investors  &  Experts   –  “I  don’t  see  your  business.”  “And  the  tech,  is  it  Flash?”   –  Upside:  show  the  need  explain  beaer  &  find  market.  Puts  on  radar.   –  Downside:  no  money,  /me  consuming  if  too  oeen  
  • Showing  around:  Users   •  FPS  put  on  Apple.com  as  a  widget…   •  #1  worldwide  in  1  week!   •  Do  we  have  a  winner?  
  • Pick  your  market!   Service   Market  scale  (MUSD)   Business  model   3D  Tools   1  x   B2B   Virtual  worlds  &  Spaces   10  x   B2B,  B2C   Social  networks  &  games   100  x   B2C   Online  games   1,000  x   B2C  
  • Pivot:  Clarified  purpose   •  Mission:  “digital  third  place”   –  First  place:  your  home   –  Second  place:  your  workplace   –  Third  places:  crea/ve  &  social  places   •  Is  the  market  ready?   –  Only  gaming  is   –  Path  of  least  resistance  
  • Which  game?   •  3D  has  to  make  sense!   •  FPS   •  Racing  game   •  Dance  /  Music  game  
  • V2:  Late  2008  
  • Our  pick:  FPS   •  Limited  assets:  2  guys  and  a  gun  ^_^   •  Huge  market   –  Billions!   •  But…  most  difficult  technically   –  Lag   –  Fun  
  • How  to  build  an  FPS   •  Benchmark!   •  Free-­‐to-­‐play  FPS  from  Korea  successful   •  Best  prac/ces  in  dual  currency  &  pricing   •  Business  model  &  virtual  economy  were   (almost)  no  brainers  
  • V3:  Mid-­‐2009  
  • Valida/ons  Summary   •  Tons  of  users,  many  passionate   •  No  compe//on   •  Huge  FPS  market,  untapped  in  the  browser   •  Tech  partners  impressed   •  Presenta/ons  at  events  
  • V4:  September  2010  
  • Evalua/ng  markets   •  GDP/capita   •  Channels   •  Usage   •  IT  infra   •  Payments  systems   •  Cultural  peculiari/es  (FPS  in  Japan?)  
  • Results   •  Game  portals  >  Social  networks   •  Korea,  Japan,  Russia  >  China   •  Convincing  social  gamers  <<  Aarac/ng  gamers  
  • Conclusions  
  • 1.   Inspira/on  is  everywhere  
  • 2.   Innova/on  is  acceleraEng  
  • 3.   Global  success  can  be  built  in  Asia!  
  • How  could  you…?  
  • 1.   …  leverage  proven  models?  
  • 2.   …  make  use  of  the  “Shanzhai”  spirit?  
  • 3.   …  and  create  your  own  success!  
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