The	
  Myths	
  of	
  Innova/on	
  
Benjamin	
  Joffe	
  |	
  CEO,	
  Plus	
  Eight	
  Star	
  
Ins/tute	
  of	
  Innova/on...
Introduc/on	
  
@benjaminjoffe	
  
4	
  years	
   1	
  year	
   5	
  years	
  
•  CEO,	
  Plus	
  Eight	
  Star	
  |	
  www.plus8star.com	
  
– Best	
  prac/ces	
  from	
  Asia’s	
  digital	
  space	
 ...
•  Speaker	
  
	
  100+	
  talks	
  in	
  16	
  countries	
  
•  Advisor	
  
•  Investor	
  in	
  Asia-­‐based	
  global	
...
My	
  Interests	
  
•  Technology,	
  Sociology	
  and	
  Anthropology	
  
•  Virtual	
  economies	
  
•  Digital	
  third...
The	
  Myths	
  
1.  Entrepreneurs	
  have	
  original	
  ideas	
  
2.  It’s	
  all	
  about	
  execuEon	
  
3.  The	
  vi...
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”	
  
•  ...
Thee	
  of	
  history!	
  
•  The	
  Western	
  reframing	
  
	
  even	
  convinced	
  Asia!	
  
Magnificent	
  Seven	
  
(1960)	
  
Seven	
  Samurai	
  
(1954)	
  
The	
  Matrix	
  
(1999)	
  
Ghost	
  in	
  the	
  Shell	
  
(1989/1995)	
  
Kimba	
  the	
  White	
  Lion	
  
(Japan,	
  1965)	
  
The	
  Lion	
  King	
  
(US,	
  1994)	
  
“Even	
  our	
  lawyers	
...
It’s	
  not	
  always	
  simple	
  copies…	
  
Ideas	
  go	
  back	
  and	
  forth!	
  
•  Nike	
  (USA)	
  and	
  Asics	
  (Japan)	
  
•  Feiyue	
  (China)	
  popular	
...
(now	
  served	
  in	
  Japan	
  too!)	
  
California	
  Rolls	
  
Durian	
  Strudel	
  
Beard	
  Papa’s	
  
•  “Fresh’n	
  natural	
  cream	
  puffs”	
  
•  250	
  stores	
  in	
  Japan,	
  300+	
  worldwide	
  ...
BreadTalk	
  
BreadTalk	
  
•  Bakery	
  founded	
  in	
  Singapore	
  in	
  July	
  2000	
  
•  24	
  retail	
  outlets	
  in	
  Singap...
Strip	
  –	
  Ministry	
  of	
  Waxing	
  
Strip	
  –	
  Ministry	
  of	
  Waxing	
  
•  Body	
  waxing	
  concept	
  store	
  founded	
  by	
  The	
  
Spa	
  Esprit...
Summary	
  
•  Ideas	
  are	
  everywhere!	
  
•  Asia	
  contributes	
  too	
  
•  Stereotypes	
  get	
  in	
  the	
  way...
If	
  you	
  missed	
  the	
  previous	
  episode…	
  
3	
  Stages	
  for	
  Innova/on	
  
Idea	
  
(e.g.	
  Durian	
  +	
  Strudel)	
  
Inventor	
  
(Prototype)	
  
Entrepreneu...
Digital	
  Evolu/on	
  or	
  “Techno-­‐Darwinism”	
  
a)  Replica/on	
  
b)  Muta/on	
  
c)  Natural	
  Selec/on	
  
Dodo
...
Ecosystem	
  Factors	
  for	
  Evolu/on:	
  5C’s	
  
1.  Copy	
  
2.  Compe//on	
  
3.  Combina/on	
  
4.  Constraints	
  ...
The	
  Race	
  to	
  Success	
  
Who’s	
  Success?	
  Iden/ty	
  Crisis	
  
15th	
  Century	
  Entrepreneur	
  
郑和 |	
  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	
  ...
Zheng	
  He’s	
  “Refurbished”	
  Ship	
  
Replace	
  old	
  boards,	
  mast,	
  sails…	
  	
  
Everything!	
  
Re-­‐use	
...
Ques/on	
  
Replace	
  old	
  boards,	
  mast,	
  sails…	
  	
  
Everything!	
  
Re-­‐use	
  old	
  boards,	
  mast,	
  sa...
…Or	
  Zheng	
  He’s	
  New	
  Ship?	
  
Case	
  Studies	
  
Examples	
  from	
  Asia	
  
#1	
  SNS	
  in	
  Korea	
  
US$100M	
  in	
  2009	
  
#2	
  SNS	
  in	
  China	
  
Raised	
 ...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Yong	
  Hyoung	
  
Founder	
  
Cyworld	
 ...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Gave	
  most	
  
shares	
  to	
  
keep	
 ...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Wang	
  Xing	
  
Founder	
  
Xiaonei	
  
...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Wang	
  Xing	
  
Founder	
  
Xiaonei	
  
...
2005	
   2007	
   2008	
   2009	
  
Wang	
  Xing’s	
  Projects	
  
Ques/ons	
  
1.  What	
  did	
  he	
  do	
  in	
  2006?	
  (no	
  company	
  created!)	
  
2.  What	
  went	
  wrong?	
  
...
Today’s	
  Deal!	
  
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Batara	
  Eto	
  
CTO	
  
Mixi	
  
#1	
  ...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Started	
  Mixi	
  
as	
  an	
  intern!	
...
Changing	
  riders	
  
#2	
  SNS	
  in	
  China	
   #1	
  SNS	
  in	
  Japan	
  
Now	
  invests	
  
in	
  Indonesia	
  
Ba...
A	
  Caucus	
  Race?	
  
What	
  is	
  a	
  Caucus	
  Race?	
  
From	
  “Alice	
  in	
  Wonderland”	
  
•  Why,	
  said	
  the	
  Dodo,	
  the	
  b...
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	
  
Ads 	
  CPA 	
  Virtual	
  goods	
  Ini/al	
  business	
  model?	
  
#1	
  Mobile	
  SNS	
  in	
  Jap...
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	
 ...
S/cking	
  to	
  it	
  
IM	
  was	
  not	
  making	
  money	
  and	
  our	
  
compe/tors	
  moved	
  to	
  other	
  
ventu...
Alibaba	
  |	
  China’s	
  #1	
  e-­‐Commerce	
  Playorm	
  
•  1999 	
  Alibaba	
  by	
  Jack	
  Ma	
  +	
  17	
  others	...
Myths	
  of	
  Entrepreneurship	
  
The	
  Myths	
  of	
  Innova/on	
  
1.  How	
  many	
  talked	
  but	
  did	
  not	
  start?	
  
2.  How	
  many	
  starte...
Case	
  Study:	
  Farmville	
  
Quiz:	
  Who	
  Created	
  the	
  First	
  Farm	
  Game?	
  
•  Game 	
   	
  MAU	
   	
  Dev. 	
   	
  Country	
  
•  Far...
Answer:	
  “It’s	
  Complicated”	
  
1.  Five	
  Minutes	
  (China)	
  
2.  Slashkey	
  (US)	
  
3.  Zynga	
  (US)	
  
4. ...
The	
  Mother	
  of	
  all	
  Farming	
  Games?	
  
or	
  “where	
  is	
  the	
  innovaBon?”	
  
•  Harvest	
  Moon	
  (19...
The	
  Mother	
  of	
  all	
  Farming	
  Games?	
  
or	
  “where	
  is	
  the	
  innovaBon?”	
  
•  Harvest	
  Moon	
  (19...
The	
  Mother	
  of	
  all	
  Farming	
  Games?	
  
or	
  “where	
  is	
  the	
  innovaBon?”	
  
•  Harvest	
  Moon	
  (19...
Quotes	
  from	
  Elex	
  
•  High	
  producEvity	
  	
  
–  “Anyone	
  is	
  able	
  to	
  develop	
  social	
  games	
  ...
I’m	
  loving	
  it!	
  
Conclusion	
  
•  Aggressive	
  teams	
  can	
  do	
  it!	
  
•  “Ramen	
  Profitability”	
  reach...
Shanzhai	
  Innova/on:	
  Mass	
  customiza/on	
  
Innova/on	
  Awareness	
  Test	
  
PHOTO:	
  MOBILE	
  PHONE,	
  BEIJING,	
  APRIL	
  2010	
  
©	
  Benjamin	
  Joffe	
  /	
  Plus	
  Eight	
  Star	
  Ltd.	
  
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	
   	
   	
   	
  	
  	
  	
 ...
The	
  straight	
  story	
  
•  FPS	
  make	
  billions	
  
•  Nobody	
  has	
  made	
  an	
  FPS	
  on	
  Facebook	
  
• ...
Startups	
  are	
  not	
  straight	
  stories	
  
•  Our	
  star/ng	
  point	
  in	
  2008	
  was…	
  
“Online	
  3D	
  co...
Go	
  that	
  way…	
  Really	
  Fast	
  
Cmune’s	
  Evolu/on	
  
1.  Powerpoint	
  stage	
  
2.  Technology	
  selec/on	
  
3.  From	
  ideas	
  to	
  prototypes	
...
Powerpoint	
  stage	
  
•  Showing	
  around	
  to	
  people	
  and	
  friends	
  
•  Get	
  feedback	
  
•  Get	
  starte...
Technology	
  Selec/on	
  
•  Our	
  CTO	
  wrote	
  the	
  reference	
  book	
  on	
  Virtools	
  
•  Evalua/on	
  of	
  ...
V1:	
  Mid-­‐2008	
  
Prototyping	
  
•  Social	
  network	
  visualizer	
  
•  Virtual	
  space	
  (TED	
  scene!)	
  
•  Web-­‐based	
  apartm...
Showing	
  around:	
  Business	
  
•  Adver/sing	
  agencies	
  
–  “We	
  could	
  use	
  that	
  cool	
  3D	
  thing.”	
...
Showing	
  around:	
  Users	
  
•  FPS	
  put	
  on	
  Apple.com	
  as	
  a	
  widget…	
  
•  #1	
  worldwide	
  in	
  1	
...
Pick	
  your	
  market!	
  
Service	
   Market	
  scale	
  (MUSD)	
   Business	
  model	
  
3D	
  Tools	
   1	
  x	
   B2B...
Pivot:	
  Clarified	
  purpose	
  
•  Mission:	
  “digital	
  third	
  place”	
  
– First	
  place:	
  your	
  home	
  
– S...
Which	
  game?	
  
•  3D	
  has	
  to	
  make	
  sense!	
  
•  FPS	
  
•  Racing	
  game	
  
•  Dance	
  /	
  Music	
  gam...
V2:	
  Late	
  2008	
  
Our	
  pick:	
  FPS	
  
•  Limited	
  assets:	
  2	
  guys	
  and	
  a	
  gun	
  ^_^	
  
•  Huge	
  market	
  
– Billions!...
How	
  to	
  build	
  an	
  FPS	
  
•  Benchmark!	
  
•  Free-­‐to-­‐play	
  FPS	
  from	
  Korea	
  successful	
  
•  Bes...
V3:	
  Mid-­‐2009	
  
Valida/ons	
  Summary	
  
•  Tons	
  of	
  users,	
  many	
  passionate	
  
•  No	
  compe//on	
  
•  Huge	
  FPS	
  marke...
V4:	
  September	
  2010	
  
Evalua/ng	
  markets	
  
•  GDP/capita	
  
•  Channels	
  
•  Usage	
  
•  IT	
  infra	
  
•  Payments	
  systems	
  
•  C...
Results	
  
•  Game	
  portals	
  >	
  Social	
  networks	
  
•  Korea,	
  Japan,	
  Russia	
  >	
  China	
  
•  Convincin...
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!	
  
More	
  about	
  “Innova/on	
  Arbitrage”	
  
Thanks!	
  
www.plus8star.com	
  
benjamin@plus8star.com	
  	
  
benjaminjoff...
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
The Myths of Innovation
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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.

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The Myths of Innovation

  1. 1. The  Myths  of  Innova/on   Benjamin  Joffe  |  CEO,  Plus  Eight  Star   Ins/tute  of  Innova/on  &  Entrepreneurship,  Singapore  Management  University  |  2010.11  
  2. 2. Introduc/on  
  3. 3. @benjaminjoffe  
  4. 4. 4  years   1  year   5  years  
  5. 5. •  CEO,  Plus  Eight  Star  |  www.plus8star.com   – Best  prac/ces  from  Asia’s  digital  space   – Research,  Strategy  &  “Innova/on  Arbitrage”  
  6. 6. •  Speaker    100+  talks  in  16  countries   •  Advisor   •  Investor  in  Asia-­‐based  global  companies   Angel  Investor,  Advisor,  Keynote  Speaker  
  7. 7. My  Interests   •  Technology,  Sociology  and  Anthropology   •  Virtual  economies   •  Digital  third  places   •  Ar/ficial  ar/ficial  intelligence  (AAI)   •  Online  social  dynamics  
  8. 8. 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  
  9. 9. Innova/on’s  Cultural  Bias  
  10. 10. Common  Assump/on  #1   Everything  from  USA  is  great
  11. 11. Common  Assump/on  #2   Everything  from  Asia  is  strange
  12. 12. Common  Assump/on  #2   Everything  from  Asia  is  strange (and  some/mes  funny)
  13. 13. Western  Framing   of  Innova/on  
  14. 14. Famous  Examples   •  Ceramics    (“Deleware?)   •  Prin/ng  Press      (Gutenberg?)  
  15. 15. Arts,  religion,  poli/cs…   •  “Innova/on”   •  “Democracy”   •  “Roman/c  love”   •  “Chris/anity”   •  “Freedom”   •  “Crea/vity”   •  etc.  
  16. 16. Thee  of  history!   •  The  Western  reframing    even  convinced  Asia!  
  17. 17. Magnificent  Seven   (1960)   Seven  Samurai   (1954)  
  18. 18. The  Matrix   (1999)   Ghost  in  the  Shell   (1989/1995)  
  19. 19. Kimba  the  White  Lion   (Japan,  1965)   The  Lion  King   (US,  1994)   “Even  our  lawyers  are  not  that  good”   –  a  Disney  animator  (rumor)  
  20. 20. It’s  not  always  simple  copies…  
  21. 21. Ideas  go  back  and  forth!   •  Nike  (USA)  and  Asics  (Japan)   •  Feiyue  (China)  popular  in  Europe!  
  22. 22. (now  served  in  Japan  too!)   California  Rolls  
  23. 23. Durian  Strudel  
  24. 24. 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  
  25. 25. BreadTalk  
  26. 26. 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  
  27. 27. Strip  –  Ministry  of  Waxing  
  28. 28. 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…  
  29. 29. Summary   •  Ideas  are  everywhere!   •  Asia  contributes  too   •  Stereotypes  get  in  the  way  
  30. 30. If  you  missed  the  previous  episode…  
  31. 31. 3  Stages  for  Innova/on   Idea   (e.g.  Durian  +  Strudel)   Inventor   (Prototype)   Entrepreneur   (Business)  
  32. 32. Digital  Evolu/on  or  “Techno-­‐Darwinism”   a)  Replica/on   b)  Muta/on   c)  Natural  Selec/on   Dodo (extinct)
  33. 33. Ecosystem  Factors  for  Evolu/on:  5C’s   1.  Copy   2.  Compe//on   3.  Combina/on   4.  Constraints   5.  Context  
  34. 34. The  Race  to  Success  
  35. 35. Who’s  Success?  Iden/ty  Crisis  
  36. 36. 15th  Century  Entrepreneur  
  37. 37. 郑和 |  Zheng  He   Chinese  (Muslim)  Entreprenaute  (1371-­‐1435)  
  38. 38. Zheng  He’s  Ship  
  39. 39. 1.      Zheng  He  Sells  His  Boat  
  40. 40. 2.      Much  later…   Replace  old  boards,  mast,  sails…     Everything!  
  41. 41. Zheng  He’s  “Renovated”  Ship   Replace  old  boards,  mast,  sails…     Everything!  
  42. 42. 3.      Later  again…   Replace  old  boards,  mast,  sails…     Everything!   Re-­‐use  old  boards,  mast,  sails…     Everything!  
  43. 43. Zheng  He’s  “Refurbished”  Ship   Replace  old  boards,  mast,  sails…     Everything!   Re-­‐use  old  boards,  mast,  sails…     Everything!  
  44. 44. Ques/on   Replace  old  boards,  mast,  sails…     Everything!   Re-­‐use  old  boards,  mast,  sails…     Everything!   Which  is  Zheng  He’s  Ship?  
  45. 45. …Or  Zheng  He’s  New  Ship?  
  46. 46. Case  Studies  
  47. 47. Examples  from  Asia   #1  SNS  in  Korea   US$100M  in  2009   #2  SNS  in  China   Raised  US$500M   #1  SNS  in  Japan   US$200M  in  2009  
  48. 48. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Yong  Hyoung   Founder   Cyworld   #1  SNS  in  Korea  
  49. 49. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Gave  most   shares  to   keep  going   Yong  Hyoung   Founder   Cyworld   #1  SNS  in  Korea  
  50. 50. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Wang  Xing   Founder   Xiaonei   #1  SNS  in  Korea  
  51. 51. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Wang  Xing   Founder   Xiaonei   #1  SNS  in  Korea   Sold  for  US $2mln   in  2006  
  52. 52. 2005   2007   2008   2009   Wang  Xing’s  Projects  
  53. 53. 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?  
  54. 54. Today’s  Deal!  
  55. 55. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Batara  Eto   CTO   Mixi   #1  SNS  in  Korea  
  56. 56. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Started  Mixi   as  an  intern!   Batara  Eto   CTO   Mixi   #1  SNS  in  Korea  
  57. 57. Changing  riders   #2  SNS  in  China   #1  SNS  in  Japan   Now  invests   in  Indonesia   Batara  Eto   CTO   Mixi   #1  SNS  in  Korea  
  58. 58. A  Caucus  Race?  
  59. 59. 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   the  race  was  over.   •  […]  At  last  the  Dodo  said,  EVERYBODY  has  won.     Dodo (extinct)
  60. 60. Winner  Bias   They  talk  but  don’t  race  
  61. 61. Winner  Bias   We  don’t  keep  track  of  how  many  start  
  62. 62. DNA  Bias   “You  don’t  change  horses  mid-­‐race”   He  changed  his  ride!  
  63. 63. DNA  Bias   “You  don’t  change  horses  mid-­‐race”   (and  started  mid-­‐race!)  
  64. 64. DNA  Bias   “You  don’t  change  horses  mid-­‐race”   (This  one  has  no  rider)  
  65. 65. DNA  Bias   “You  don’t  change  horses  mid-­‐race”   Nobody  knows  the  track’s  shape  
  66. 66. Case  Studies  
  67. 67. Changing  diet   Ads  CPA  Virtual  goods  Ini/al  business  model?   #1  Mobile  SNS  in  Japan   US$1  billion   in  2010!  
  68. 68. Changing  playorm  +  business  model!   #2  Mobile  SNS  in  Japan   US$400M  in  2009  
  69. 69. 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)  
  70. 70. S/cking  to  it   IM  was  not  making  money  and  our   compe/tors  moved  to  other   ventures.  I  did  not  have  other  ideas   so  I  stuck  to  it.   Pony  Ma   Founder  &  CEO   Tencent  (QQ)   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)  
  71. 71. 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  
  72. 72. Myths  of  Entrepreneurship  
  73. 73. 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!  
  74. 74. Case  Study:  Farmville  
  75. 75. 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  
  76. 76. Answer:  “It’s  Complicated”   1.  Five  Minutes  (China)   2.  Slashkey  (US)   3.  Zynga  (US)   4.  Playfish  (UK),  Elex  (China),  etc.  
  77. 77. 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  
  78. 78. 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  
  79. 79. 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  
  80. 80. 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”  
  81. 81. I’m  loving  it!   Conclusion   •  Aggressive  teams  can  do  it!   •  “Ramen  Profitability”  reachable   •  “Fast  followers”  can  trump  innovators  
  82. 82. Shanzhai  Innova/on:  Mass  customiza/on  
  83. 83. Innova/on  Awareness  Test  
  84. 84. PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  85. 85. PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.   Hardware  InnovaEon:  “Shanzhai”  (山寨)  
  86. 86. PHOTO:  MOBILE  PHONE,  BEIJING,  APRIL  2010   ©  Benjamin  Joffe  /  Plus  Eight  Star  Ltd.  
  87. 87. QQ  Farm  
  88. 88. Hardware  commodi/za/on   •  Change  your  iPod  into  a  phone!  
  89. 89. “Shanzhai”  Spirit?   •  Cheap   •  Fun   •  Flashy   •  Fast  
  90. 90. Cmune’s  Story  
  91. 91. UberStrike  |  World’s  First  Social  FPS!   www.facebook.com/paradisepaintball                                www.cmune.com  
  92. 92. The  straight  story   •  FPS  make  billions   •  Nobody  has  made  an  FPS  on  Facebook   •  “Let’s  make  one  and  make  billions!”  
  93. 93. Startups  are  not  straight  stories   •  Our  star/ng  point  in  2008  was…   “Online  3D  collaboraEon  made  simple”  
  94. 94. Go  that  way…  Really  Fast  
  95. 95. 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  
  96. 96. Powerpoint  stage   •  Showing  around  to  people  and  friends   •  Get  feedback   •  Get  started!  
  97. 97. 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  
  98. 98. V1:  Mid-­‐2008  
  99. 99. Prototyping   •  Social  network  visualizer   •  Virtual  space  (TED  scene!)   •  Web-­‐based  apartment   •  And…  a  small  FPS  game  
  100. 100. 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  
  101. 101. Showing  around:  Users   •  FPS  put  on  Apple.com  as  a  widget…   •  #1  worldwide  in  1  week!   •  Do  we  have  a  winner?  
  102. 102. 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  
  103. 103. 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  
  104. 104. Which  game?   •  3D  has  to  make  sense!   •  FPS   •  Racing  game   •  Dance  /  Music  game  
  105. 105. V2:  Late  2008  
  106. 106. Our  pick:  FPS   •  Limited  assets:  2  guys  and  a  gun  ^_^   •  Huge  market   – Billions!   •  But…  most  difficult  technically   – Lag   – Fun  
  107. 107. 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  
  108. 108. V3:  Mid-­‐2009  
  109. 109. 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  
  110. 110. V4:  September  2010  
  111. 111. Evalua/ng  markets   •  GDP/capita   •  Channels   •  Usage   •  IT  infra   •  Payments  systems   •  Cultural  peculiari/es  (FPS  in  Japan?)  
  112. 112. Results   •  Game  portals  >  Social  networks   •  Korea,  Japan,  Russia  >  China   •  Convincing  social  gamers  <<  Aarac/ng  gamers  
  113. 113. Conclusions  
  114. 114. 1.   Inspira/on  is  everywhere  
  115. 115. 2.   Innova/on  is  acceleraEng  
  116. 116. 3.   Global  success  can  be  built  in  Asia!  
  117. 117. How  could  you…?  
  118. 118. 1.   …  leverage  proven  models?  
  119. 119. 2.   …  make  use  of  the  “Shanzhai”  spirit?  
  120. 120. 3.   …  and  create  your  own  success!  
  121. 121. More  about  “Innova/on  Arbitrage”   Thanks!   www.plus8star.com   benjamin@plus8star.com     benjaminjoffe   hap://twiaer.com/benjaminjoffe     www.linkedin.com/in/benjaminjoffe     www.slideshare.net/plus8star     +81  |  Japan   +82  |  Korea   +86  |  China   Telecom  &  Internet   +  Added  Value   *  High  quality  
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