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Guns Germs and Steel for Startups

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A smoothie of Ecosystems, Innovation and Culture.
Talk given at IDEAS Show in July 2013 in Taipei.

Published in: Economy & Finance, Business

Guns Germs and Steel for Startups

  1. The FATES of DIGITAL SOCIETIES BENJAMIN JOFFE GUNS, GERMS, AND STEEL
  2. BENJAMIN JOFFE •  13y in CJK+SEA+SV" •  Digital Naturalist, +8*" •  Startup Guy, Cmune" •  Angel investor" •  Mentor, 500 Startups, Chinaccelerator, etc." •  Speaker, Columnist"
  3. HAVE YOU HEARD OF THIS BOOK?
  4. THE QUESTION IT ASKS IS WHY IS THE WEST DOMINANT? AND THE ANSWER IS UNUSUAL
  5. SUITABLE ANIMALS & CROPS
  6. SUITABLE LATITUDE & CLIMATE
  7. NOT “SMARTS”
  8. CONCLUSION #1 YOU’RE (POTENTIALLY) JUST AS SMART (AND MORE ATTRACTIVE)
  9. THERE ARE TWO WIDESPREAD BIASES
  10. BIAS #1 EVERYTHING FROM THE U.S. IS GREAT (AND GLOBAL)
  11. “A  billion  dollar   so-ware  company   is  founded  every   3  months  in  the  USA”   –  Ron  Conway  
  12. BIAS #2 EVERYTHING FROM ASIA IS WEIRD (AND LOCAL)
  13. YET…
  14. $1B COMPANIES OUTSIDE THE US •  Europe " "Skype, Spotify, Rovio, SuperCell, Unity! •  Japan " "Softbank, Rakuten, DeNA, GREE, CyberAgent, Kakaku," " " " "Gungho, LINE" •  Korea " "NHN, Nexon, KakaoTalk! •  China " "Tencent, Baidu, Alibaba, Qihoo, Sina, Sohu, VIPShop, YY," " " " "Shanda, Giant Interactive, 360Buy, Youku Tudou, Netease," " " " "NetDragon, KingSoft, Ctrip, Xiaomi, Lightinthebox…" ! ! ! !(Sogou, Qunar, Vancl, UCWeb, Cloudary, Dianping, Xunlei,)! •  Russia " "Yandex, Mail.ru" •  Brazil " "MercadoLivre, Peixe Urbano" •  India" " "MakeMyTrip, FlipKart! Note:  Not  all  are  strictly  $1B  or  public,  but  in  the  ballpark  
  15. CONCLUSION #2 INNOVATION IS EVERYWHERE!
  16. TABLE OF CONTENT " CONCLUSION: GUNS, GERMS AND STEEL FOR STARTUPS! " 1.  ON ECOSYSTEMS" 2.  BEING GLOBAL" 3.  FINDING USERS" 4.  RAISING MONEY" 5.  ON ACCELERATORS" 6.  THE CULTURAL OS"
  17. 1. ON ECOSYSTEMS
  18. DEFINING ECOSYSTEMS
  19. ECOSYSTEM MODEL Market" Infrastructures" " Capital" Talent" " Regulations" Entrepreneurial Culture"
  20. USA   CHINA  SINGAPORE  
  21. ANNA KARENINA PRINCIPLE •  “Happy families are all alike; every unhappy family is unhappy in its own way.”" Anna Karenina, Tolstoi" " Also true for Startups? •  Deficiency in any one of a number of factors dooms it to failure." –  Check your ecosystem!"
  22. CONCLUSION #3 DIFFERENT ECOSYSTEMS GIVE BIRTH TO DIFFERENT SPECIES
  23. CONCLUSION #4 SIMILAR ECOSYSTEMS CAN HAVE SIMILAR SUCCESSES
  24. EBAY IN CHINA? ! “eBay was trying to land advanced jets in muddy rice paddies.”! – Jack Ma, Alibaba" Yoda can help you out!
  25. (MORE DETAILS IN OTHER TALKS) ECOSYSTEMS 101 DIGITAL NATURALISM
  26. AND IN MY TC COLUMN hCp://techcrunch.com/2012/09/01/ecosystem-­‐101-­‐the-­‐six-­‐necessary-­‐categories-­‐to-­‐build-­‐the-­‐next-­‐silicon-­‐valley/    
  27. MYTH “INNOVATION” & “ENTREPRENEUR” ARE AMERICAN THINGS
  28. (LET’S REMIND EVERYONE THAT “ENTREPRENEUR” IS A FRENCH WORD)
  29. AND INNOVATION IS GENERALLY DISMISSED WHEN NOT (1) FIRST WORLD (2) TECHNICAL AND SIMPLY “INCREMENTAL” WHERE DO YOU DRAW THE LINE? WHO DECIDES?
  30. MYTH “TWO GUYS IN A GARAGE”
  31. THAT WORKS BETTER IF YOU’RE A STANFORD CS GRAD AND YOUR GARAGE IS IN PALO ALTO (LIKE THE HP GUYS ON THE PHOTO)
  32. CONCLUSION #5 ECOSYSTEM MATTERS…
  33. COROLLARY #1 …EVEN FOR HANDSOME TAIWANESE… Like Jerry Yang @ Yahoo
  34. COROLLARY #2 …BUT NATIONALITY DOES NOT. EVEN IN SILICON VALLEY, A VAST NUMBERS ARE FROM “OUTSIDE” IT’S A MINDSET
  35. CASE OF CMUNE AND UBERSTRIKE •  3D Multiplayer Shooter on Facebook" •  High tech, first in the world" CHECK IT OUT > WWW.FACEBOOK.COM/UBERSTRIKE
  36. WHAT IS THE NATIONALITY OF CMUNE? •  Team" " " "10 nationalities" •  Founders " "French + Australian" •  Investors " "Europe + US (and their LPs?)" •  Market " " "US is #1, but not " •  Company " "Based in Beijing and Berlin" DOES NATIONALITY MATTER HERE?
  37. CONCLUSION #6 NATIONALITY IS A BRAND WHO CARES ANGRY BIRDS ARE FROM FINLAND? USE IT IF YOU CAN.
  38. 2. BEING GLOBAL
  39. CAN YOU BE GLOBAL? •  USA = English only" •  China = Chinese only + Hyper-competitive" •  Russia? Japan? Other?" BEING GLOBAL IS NOT SO SIMPLE…
  40. Western! Latin American! African!Orthodox! Indian! Muslim! Japanese! Chinese! YOU CAN LOOK AT THE WORLD AS “CIVILIZATIONS” Buddhist! Source:  The  Clash  of  CivilizaRons,  Samuel  HunRngton  
  41. WHEN TO EXPAND? 1.  Platforms give reach (FB, Apple, Google)" 2.  Users already there (best case, build on it)" 3.  No choice (small home market)" OFTEN, EXPANDING EARLY IS NOT GOOD ROI ON MANAGEMENT BANDWIDTH (THE SCARCEST RESOURCE)
  42. CONCLUSION #7 “GLOBAL” & “ASIA” MEAN NOTHING PICK MARKETS & PLATFORMS
  43. “ASIAN” COMPANIES ABROAD Zheng He, Explorer
  44. THE WESTERN FRONT •  Recent" – Japan: DeNA, GREE, Rakuten" •  Casualties" – Japan: Index, For-Side" – Korea: Daum" •  Same mistakes as Western firms in Asia"
  45. TYPICAL MISTAKES •  “Landing jet fighters in rice paddies”" •  Assuming ecosytems are similar enough" – Payment, internet speed, devices, logisitics…" •  Ignorance of local competitors" •  Ignorance of must haves of local users" •  No autonomy to local team" ENTERING A LARGE MARKET IS OFTEN MORE LIKE CREATING A NEW STARTUP
  46. SOME ARE GOING “UNDERCOVER” •  Tencent + Riot Games (LoL)" – Most players probably don’t know the “new World of Warcraft” is now a Chinese property" •  AppAnnie! – HQ in Beijing, French CEO!" •  Dolphin Browser! – Entire team is Chinese"
  47. ALTERNATIVE: LICENSING OR LONG-TERM •  Especially suitable for Asian firms entering Non-Western markets" – Ecosystems closer to China’s (India, Brazil, Indonesia, Russia)" •  Gaming companies" – Nexon in China via licensing" – NHN in Japan took many years" – Chinese companies & emerging markets"
  48. CONCLUSION #8 ECOSYSTEM DIFFERENCES MAKE THINGS HARD
  49. CONCLUSION #9 THERE IS MORE THAN ONE STRATEGY TO EXPAND
  50. YOUR  AMAZING  APP  GOES  HERE   3. FINDING USERS
  51. MYTH GREAT PRODUCTS ALWAYS FIND THEIR AUDIENCE
  52. REALITY 1.  Most great products die in oblivion" 2.  Great = 10 bad then 1 good-to-great" 3.  Distribution, Monetization, Funding"
  53. WITH PLATFORMS •  Apple, Google, Facebook, Amazon" •  eBay, Taobao, WeChat, LINE, Kakao…" •  Ideally" – Have IP" – Use new features" – Have connections with platforms"
  54. BY YOURSELF? •  Figure out what is left of “Viral”" •  Retention = Do Proper Cohort Analysis" – Week-on-week growth" – 1d, 7d, 30d retention" – Lifetime value" – This is VERY OFTEN DONE WRONG"
  55. CONCLUSION #10 MAGIC BULLETS DON’T LAST LONG
  56. 4. RAISING MONEY
  57. GOOD   IDEAS   BAD   IDEAS   GOOD  IDEAS  THAT  LOOK  BAD   BAD  IDEAS  THAT  LOOK  GOOD   STARTUPS  ARE  HERE  
  58. DEFAULT ANSWER IS NO!
  59. SO MANY REASONS TO SAY NO 1.  No traction" 2.  Wrong sector" 3.  Not Delaware C Corp" 4.  Team can’t execute" 5.  Limited exit options" 6.  Can’t understand you" 7.  No money" 8.  Don’t like or trust you" 9.  Spouse against" 10. Not cool enough" And  one  is  enough!  
  60. EXAMPLE: ELYSIUM SPACE (SPACE BURIALS) •  Background" –  Space Burials" –  NASA founder" •  Fundraising" –  Pitched dozens of angels and early-stage VCs" –  VCs want TRACTION" •  Result of first round: Friends" MY NASA FRIEND IS RAISING A ROUND FOR HIS STARTUP. IT’S NEVER EASY.
  61. GETTING ATTENTION •  ONE clear phrase about the PROBLEM" •  Your BEST FOOD FORWARD" –  TRACTION TRUMPS EVERYTHING" –  Crazy high retention?" –  Figured out viral?" –  Interviewed 100 clients?" –  Ex-Google?" –  Sold a startup?" –  Users pay?"
  62. STATISTICALLY AMONG INVESTORS:
  63. CONCLUSION #11 FOCUS ON THOSE WHO “GET IT” DON’T WASTE YOUR TIME CONVINCING THOSE WHO DON’T CARE OR HATE IT
  64. CONCLUSION #12 PREPARE FOR SURVIVAL DOING THE WORK IS GOING TO TAKE A WHILE
  65. COROLLARY #3 BETTER PICK A MARKET & CUSTOMERS YOU LOVE YOU’RE GOING TO SERVE THEM FOR A LONG TIME. YOU NEED EMPATHY WITH THEM TO DO IT WELL.
  66. CONCLUSION #13 YOU WILL NEED ALL THE HELP! ALWAYS BE PITCHING (I PITCHED BOTH CMUNE & ELYSIUM SPACE IN THIS PRESENTATION ;-P)
  67. 5. ON ACCELERATORS
  68. ACCELERATORS ARE STARTUPS Source:  hCp://emergentbydesign.com/2013/02/28/62-­‐top-­‐startup-­‐accelerators-­‐us-­‐canada/  
  69. 3 TYPES OF STARTUPS? STARS WILL SUCCEED REGARDLESS ? MIGHT MAKE IT WITH HELP BOMB NO AMOUNT OF HELP WILL DO IF YOU’RE AN INVESTOR, HOW DO YOU SPEND YOUR TIME? FINDING MORE STARS!
  70. ADDED-VALUE OF ACCELERATORS •  (Money is generally small)" •  Connections " "Still your job to charm them" •  Environment " "Focus & Distraction" •  Demo Day " " "One opportunity on the road"
  71. ACCELERATORS ARE SPRINTS WITHIN MARATHONS •  Market access" •  Take a long-term view" •  Do the work"
  72. 6. THE CULTURAL OS
  73. CULTURAL OS Career/Money" " Family" Society" " Culture" Spirituality" Physical Appearance"
  74. FRANCE’S DEFAULT SETTINGS
  75. (MORE DETAILS IN OTHER TALK) YOUR HAT LOOKS FUNNY “THE SLIDESHARE SENSATION WITH OVER 20,000 VIEWS” RATE YOUR CULTURAL OS TOO!
  76. FOUNDERS NEED TO SEDUCE! CO-FOUNDERS, TEAM MEMBERS, INVESTORS, CUSTOMERS
  77. PICK-UP ARTIST VS. STARTUP FOUNDER •  Leader " " " "= Own Vision & Decisions" •  Assertive " " "= Speak Up" •  Adventurous" "= Risk-taking" •  Easygoing" " "= Empathy & humor" •  Sexual " " " "= Success-driven" Source:  Aura  DaRng  Blog  
  78. ARE “ASIAN VALUES” IN YOUR WAY? •  Leader " " " "Follow the Crowd" •  Assertive " " "Modesty, Respect, Hierarchy" •  Adventurous" "Risk-Averse, Responsible" •  Easygoing" " "Serious, Diligent" •  Sexual " " " "Repressed, Dependent"
  79. The FATES of DIGITAL SOCIETIES BENJAMIN JOFFE CONCLUSION GUNS, GERMS, AND STEEL
  80. GUNS? GERMS? STEEL? GOOGLE     FB   Y!   GOOGLE, FB, Y! ENABLE ECOSYSTEMS BUT SUCK LIFE OUT OF THEM TOO!
  81. GET YOUR OWN GUNS, GERMS AND STEEL! •  Increase your skills (it’s a long-term investment)! •  Understand distribution at scale (don’t let your product die alone)" •  Figure your ecosystem strengths (and weaknesses- and adapt to it or move)!
  82. PICK WISELY, THEN WORK “A good team in a strong market will beat
 an excellent team in a bad market”! – Song Li (ChinaHR, Zhenai.com)" •  So:" – Pick a good market" – Customers you love" – Learn fast" – Be patient"
  83. www.slideshare.net/plus8star BENJAMIN@PLUS8STAR.COM THANK YOU!

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