Innovation Models in China



          * The 5C™ of Innovation +


 Benjamin Joffe, CEO | Plus Eight Star | Beijing, 2009...
Benjamin Joffe
 ベンジャミン
   벤자민
   本杰明
4 years

          1 year
                   4 years
www.plus8star.com
Innovation Arbitrage
  China | Japan | Korea
+8* and Me
– Worked in mobile SNS in Japan in 2003
   • With avatars, virtual goods and GPS!

– Advise leading companies w...
Here is the plan

1.   Exogenous innovation
2.   What is innovation?
3.   The 5C™ of Innovation
4.   Some things we think ...
1.
Exogenous Innovation
When was it invented?
Europe
Gutemberg | ~1450

     Korea
  Metal | ~1230

     China
 Wooden | ~1040
Who came first?
Where do you get inspiration from?
Innovations are bound to happen
2.
What is innovation?
Technology?
e.g. LAMP stack
(Linux / Apache / MySQL / PHP)
    + HTML / Flash / AJAX…
Largely commoditized…
Makes money?
Tons of users?
Most start with zero
(is innovation a popular vote?)
Speak English?
Some things
     going on here



And there            There too
Some things
     going on here



And there               There too




             And of course in a lot
              ...
“News is anything that happens to
or near publishers and their friends”
Alternative
Live in Silicon Valley
Internet              Mobile
1.3 billion           3.3 billion




       (Asia = US + Europe)
                           ...
English-speaking LAN
3.
“5Cs of Innovation”™
a. Copy
“Benchmarking”
               “Inspiration”
              “Best practice”

“If I have seen farther it is only by standing ...
Pragmatic Entrepreneurs & Investors



           Innovation ROI?

            “Blue oceans”
Entry barriers

     Technology?
       Capital?
        Talent?
Intellectual Property?
     Censorship?
The Underpants Gnomes
Business Plan
Copy can backfire!
Japan: Mayonnaise
China: Whipped Cream
Copycats often die


• Market not sustainable

• Business model does not work
b. China
Already in 2007               ...$1 billion do not
(We even published a report…)    appear overnight
Attention Threshold
           =
  1 billion dollars?
Scale / Geography / Demography
   make some services viable
Maybe the West is simply
     not looking?




       Happy life in a fish bowl
c. Combination
Will it blend?
Tencent (1998)
Registered users




200 mln   856 mln
Revenues 2008 (E)




                     1 BILLION DOLLAR
                   COMPANY YOU NEVER
                        H...
Profit margin



- X?     40%

         ~400 MILLION DOLLAR
              NET PROFIT
Market Capitalization
       (June 2009)




  3-15 bln?    21 bln

                 REAL MARKET CAP
Our estimates for 2009 (roughly)


     Revenue | $1.5 bln
    Net Profit | $600 mln
     (Let’s buy   MySpace this year?)
d. Competition
“Survival of the fittest”




  (Herbert Spencer)
What happens when you have
         4 Facebook
         20 YouTube
        10 MySpace
        5 Match.com
           3 Yah...
Hard spots
“Concepts”
   Sociology
  Psychology

“Execution”
  Marketing
Business models
   Payment
e. Constraints
“Necessity is the mother of invention”
                (Plato)
Low GDP/capita
Small transactions / making millions from cents
Limited advertising
Alternative business models / B2B to B2C
No credit cards
Alternative payment systems,
  mobile, virtual currencies
No legacy industry
  (is it a constraint?)
4.
Some things we think are cool
Lihua | Order food over IM
Alimama | Ad exchange + Micro-retail
Babytree | Vertical for young parents
Huica | Mobile coupons
PPLive | P2P Internet TV
iNezha | RSS-to-IM
Digu | Twitter + Pics + Celebs
5.
What if all this was irrelevant?
Many ways to work with China

     Develop in China
    Operate from China
      Build for China
Innovation does not have a nationality
From China to the World?

1. “Global” idea

2. Multi-cultural team

3. Leverage resources globally
One example: Cmune
• What is it?
  – Next-generation social gaming platform
  – 3D MMO: Browser / SNS / Widgets / Download...
Early Results
• 1 million installations

• Microsoft BizSpark

• Facebook Fund

• Facebook gaming campaign
Being Global?
                           Partners
Founders



  Team
Learn from the proven models
         of yesterday
Tomorrow’s models
  are born today
Contact Us

www.plus8star.com

benjamin@plus8star.com
                                       +81 | Japan
benjamin0123     ...
About +8*
There are more ideas
outside your country
          than inside
                   Tom Kelley
                    CEO, IDE...
“Innovation Arbitrage”
• About us
   – +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in...
Selected References
•   Adidas | E-commerce strategy for China, Japan & Korea

•   Bouygues Telecom | Cases studies of lea...
Social Contribution
• Mobile Monday
   – Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
     members, 28...
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
Innovation Models In China
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Innovation Models In China

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Presentation for the "Geeks On a Plane" tour to Asia. The purpose of this presentation is to re-assess assumptions on innovation, cultural differences and arbitration opportunities. It also involves Underpants Gnomes, Mexican burritos and a gallery of deceased scientists.

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Innovation Models In China

  1. 1. Innovation Models in China * The 5C™ of Innovation + Benjamin Joffe, CEO | Plus Eight Star | Beijing, 2009.06
  2. 2. Benjamin Joffe ベンジャミン 벤자민 本杰明
  3. 3. 4 years 1 year 4 years
  4. 4. www.plus8star.com
  5. 5. Innovation Arbitrage China | Japan | Korea
  6. 6. +8* and Me – Worked in mobile SNS in Japan in 2003 • With avatars, virtual goods and GPS! – Advise leading companies worldwide • MIH (China/S.Africa | Largest shareholder of Tencent) • DeNA (Japan | Mobile Game Town) • IMVU (US | 3D chat / virtual world) – First commercial report on Tencent “Inside QQ” – Work with China-based 3D social gaming startup – Co-Founded Mobile Monday in Beijing
  7. 7. Here is the plan 1. Exogenous innovation 2. What is innovation? 3. The 5C™ of Innovation 4. Some things we think are cool 5. What if all this was irrelevant?
  8. 8. 1. Exogenous Innovation
  9. 9. When was it invented?
  10. 10. Europe Gutemberg | ~1450 Korea Metal | ~1230 China Wooden | ~1040
  11. 11. Who came first?
  12. 12. Where do you get inspiration from?
  13. 13. Innovations are bound to happen
  14. 14. 2. What is innovation?
  15. 15. Technology?
  16. 16. e.g. LAMP stack (Linux / Apache / MySQL / PHP) + HTML / Flash / AJAX…
  17. 17. Largely commoditized…
  18. 18. Makes money?
  19. 19. Tons of users?
  20. 20. Most start with zero (is innovation a popular vote?)
  21. 21. Speak English?
  22. 22. Some things going on here And there There too
  23. 23. Some things going on here And there There too And of course in a lot more places
  24. 24. “News is anything that happens to or near publishers and their friends”
  25. 25. Alternative Live in Silicon Valley
  26. 26. Internet Mobile 1.3 billion 3.3 billion (Asia = US + Europe) Source: Morgan Stanley, 2007
  27. 27. English-speaking LAN
  28. 28. 3. “5Cs of Innovation”™
  29. 29. a. Copy
  30. 30. “Benchmarking” “Inspiration” “Best practice” “If I have seen farther it is only by standing on the shoulders of Giants.” (Isaac Newton)
  31. 31. Pragmatic Entrepreneurs & Investors Innovation ROI? “Blue oceans”
  32. 32. Entry barriers Technology? Capital? Talent? Intellectual Property? Censorship?
  33. 33. The Underpants Gnomes
  34. 34. Business Plan
  35. 35. Copy can backfire!
  36. 36. Japan: Mayonnaise
  37. 37. China: Whipped Cream
  38. 38. Copycats often die • Market not sustainable • Business model does not work
  39. 39. b. China
  40. 40. Already in 2007 ...$1 billion do not (We even published a report…) appear overnight
  41. 41. Attention Threshold = 1 billion dollars?
  42. 42. Scale / Geography / Demography make some services viable
  43. 43. Maybe the West is simply not looking? Happy life in a fish bowl
  44. 44. c. Combination
  45. 45. Will it blend?
  46. 46. Tencent (1998)
  47. 47. Registered users 200 mln 856 mln
  48. 48. Revenues 2008 (E) 1 BILLION DOLLAR COMPANY YOU NEVER HEARD OF? 350 mln 1 bln!
  49. 49. Profit margin - X? 40% ~400 MILLION DOLLAR NET PROFIT
  50. 50. Market Capitalization (June 2009) 3-15 bln? 21 bln REAL MARKET CAP
  51. 51. Our estimates for 2009 (roughly) Revenue | $1.5 bln Net Profit | $600 mln (Let’s buy MySpace this year?)
  52. 52. d. Competition
  53. 53. “Survival of the fittest” (Herbert Spencer)
  54. 54. What happens when you have 4 Facebook 20 YouTube 10 MySpace 5 Match.com 3 Yahoo 4 Twitter ?
  55. 55. Hard spots “Concepts” Sociology Psychology “Execution” Marketing Business models Payment
  56. 56. e. Constraints
  57. 57. “Necessity is the mother of invention” (Plato)
  58. 58. Low GDP/capita Small transactions / making millions from cents
  59. 59. Limited advertising Alternative business models / B2B to B2C
  60. 60. No credit cards Alternative payment systems, mobile, virtual currencies
  61. 61. No legacy industry (is it a constraint?)
  62. 62. 4. Some things we think are cool
  63. 63. Lihua | Order food over IM
  64. 64. Alimama | Ad exchange + Micro-retail
  65. 65. Babytree | Vertical for young parents
  66. 66. Huica | Mobile coupons
  67. 67. PPLive | P2P Internet TV
  68. 68. iNezha | RSS-to-IM
  69. 69. Digu | Twitter + Pics + Celebs
  70. 70. 5. What if all this was irrelevant?
  71. 71. Many ways to work with China Develop in China Operate from China Build for China
  72. 72. Innovation does not have a nationality
  73. 73. From China to the World? 1. “Global” idea 2. Multi-cultural team 3. Leverage resources globally
  74. 74. One example: Cmune • What is it? – Next-generation social gaming platform – 3D MMO: Browser / SNS / Widgets / Download – Virtual goods • Team – Based in Beijing – 7 nationalities – Most speak 2+ languages & lived in several countries
  75. 75. Early Results • 1 million installations • Microsoft BizSpark • Facebook Fund • Facebook gaming campaign
  76. 76. Being Global? Partners Founders Team
  77. 77. Learn from the proven models of yesterday
  78. 78. Tomorrow’s models are born today
  79. 79. Contact Us www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea http://twitter.com/plus8star +86 | China Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value www.slideshare.net/plus8star * High quality
  80. 80. About +8*
  81. 81. There are more ideas outside your country than inside Tom Kelley CEO, IDEO The 10 faces of Innovation
  82. 82. “Innovation Arbitrage” • About us – +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia. – We provide local expertise & global perspective on mobile and Internet innovation from China, Japan and South Korea to add value to and accelerate the development of our clients’ businesses. • Our services – Analysis of proven best practices and business models from Asia – Other services: executive study trips, market entry strategy, M&A advisory, partners identification, negotiation support. • Founder & CEO: Benjamin Joffe – 9 years experience with mobile & Internet in Asia – Selected among “China’s Top 100 mobile industry influencers” in 2007 and 2008 – Regularly quoted in international press and keynote speaker at numerous telecom and Internet events – Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and Spanish
  83. 83. Selected References • Adidas | E-commerce strategy for China, Japan & Korea • Bouygues Telecom | Cases studies of leading Asian Web 2.0 services and virtual worlds • Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet convergence strategies • Hemisphere | Analysis of mobile marketing best practices in Japan and South Korea (Hemisphere is a leading digital advertising agency), analysis of leading social platforms (SNS, virtual worlds, online games). • Microsoft | Analysis of Japan’s key players and market catalysts for mobile commerce market positioning in China • DeNA | Case studies of the best practices of leading social networks in China and South Korea (DeNA operates Mobile Game Town, Japan’s leading mobile SNS service) • China Mobile | Benchmark of Korean leading online communities • Sands Capital Management | Evaluation of China’s investment opportunities in social networks in China
  84. 84. Social Contribution • Mobile Monday – Founder of the Mobile Monday forum in Beijing since 2006 (3,000+ members, 28 events, over 100 presentations). • Media – Monthly column on Asian innovation for Asian Business Leaders (one of the leading Chinese business magazines), numerous interviews in international media such as The Economist, CNN.com, etc. • Events – Regular keynote speaker and moderator at Internet, Telecom, Media and Investment events e.g. eComm, ITU Asia, Asia Venture Capital Forum, China Mobility International Summit, O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media 08 Conference, Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile Monday Global Summit, etc.)

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