This document discusses digital innovation in Asia. It begins with an orientation on why foreign companies fail in Asia and Asian companies fail overseas. It then provides background on innovation, discussing misleading appearances of innovation, techno-Darwinism in Asian markets, and key innovation catalysts like infrastructure, market potential, talent and capital. The document outlines the 5Cs model of innovation: copy, competition, constraints, combination, and context. It provides examples of innovative Asian companies and discusses opportunities to leverage successful Asian innovations globally through "innovation arbitrage".

1. Digital Innovation in Asia
Benjamin Joffe | CEO, Plus Eight Star
Institute of Systems Science, National University of Singapore | 2010.10

2. Introduction

3. @benjaminjoffe

4. 4 years 1 year 5 years

5. • CEO, Plus Eight Star | www.plus8star.com
– Best practices from Asia’s digital space
– Research, Strategy & “Innovation Arbitrage”
• Clients

6. Angel Investor, Advisor, Keynote Speaker
• Speaker
100+ talks in 16 countries
• Advisor
• Investor in Asia-based global companies

7. My Interests
• Technology, Sociology and Anthropology
• Virtual economies
• Digital third places
• Artificial artificial intelligence (AAI)
• Online social dynamics

8. Plan
1. Introduction
2. Orientation
– Definition
– Why foreign companies fail in Asia
– Why Asian companies fail overseas
3. Background on Innovation
1. Misleading appearance
2. Techno-Darwinism
3. Innovation catalysts
4. 5Cs of Innovation
5. Innovations in web & mobile
4. Q&A

9. Orientation Test

10. Question #0
Define “Innovation”

11. Definitions
Entrepreneur
Inventor (Business)
Idea (Prototype)
(e.g. Chocolate + Hemp)

12. Question #1
Something innovative from Asia?

13. Question #2
Google is the world’s largest search engine.
Its market share is 1.5% in Korea. Explain.
(here)

14. Question #3
Why Did Japanese Handset Makers Fail Overseas?
(Where are Sharp, Panasonic, Fujitsu, NEC, Sanyo, Mitsubishi…?)

15. Background on Innovation

16. 1. Misleading Appearances
Aggressive?

17. Quiz: Top 10 websites?
USA China Japan Korea
#1
#2
#3
#4
#5
#6
#7
#8
#9
#10

18. 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

19. Are you on Facebook?

20. More than Facebook and USA
• Facebook
• LinkedIn
• QQ (Tencent)
• Qzone
• RenRen
• Kaixin001
• Xiaonei
• 51.com
• Mixi
And more…
• Mobile Game Town
• Gree
• Cyworld
• Friendster

21. Billion Dollar Brands
$B $B
• Facebook
• LinkedIn $B $B
• QQ (Tencent)
• Qzone $B $B
• RenRen
• Kaixin001
• Xiaonei
• 51.com
• Mixi $B
And more…
• Mobile Game Town
• Gree
• Cyworld
• Friendster

22. Market Caps (2010.10)
$780M
$3.3B
$4.2B
$43B

23. Simplification vs. Understanding

24. The Appearance
• Naver = “Google of Korea”?
• Rakuten = “Amazon of Japan”?
• Tencent = “Facebook of China”?

25. The Reality
• No real equivalent
• Powerful ideas get overlooked
• It’s all in the details!
• More concepts not yet ported

29. 2. Techno-Darwinism

30. Charles Darwin
“The Origin of Species”
(1859)

31. Voyage of “The Beagle”

33. “Diverging” from common ancestors

34. 150 years later…

35. 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)

36. “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

37. Internet Mobile
1.3 billion 3.3 billion
Source: Morgan Stanley, 2007

38. Digital Population
Country USA China Japan Korea
Population 300 mln 1,300 mln 130 mln 50 mln
Internet users 225 mln 400 mln 100 mln 35 mln
Mobile users 260 mln 700 mln 100 mln 45 mln
x5
Total x2
x3

39. Why did those countries diverge?

40. 3. Innovation Catalysts

41. What do you think?

42. Key Catalysts
• IT infrastructure
• Market potential
• Talent
• Capital

43. 4. The 5Cs of Innovation

44. 5Cs of Innovation
1. Copy
2. Competition
3. Constraints
4. Combination
5. Context

45. 1. Copy
Entry barriers
Technology?
Capital?
Talent?
Intellectual Property?
Censorship?

46. 2. Combination
Will it blend?
Tencent
(US$1bln)

47. 3. Competition
What happens with
4 Facebook
20 YouTube
10 MySpace
5 Match.com
3 Yahoo
4 Twitter
?

48. 4. Constraints
Low GDP/capita
Limited advertising
No credit cards
No legacy industry

49. 5. Context
Scale / Geography / Demography
make some services viable

50. 1. Some Asian species
are fit for global markets
2. Learn from them to evolve
successfully

51. Question #4
When was it invented?

52. Europe
Gutemberg | ~1450
Korea
Metal | ~1230
China
Wooden | ~1040

53. Who came first?

55. The Arbitrage Opportunity
1. Identify
2. Analyze
3. Leverage

56. 5. Some Examples

58. Looking more closely
Zhenai.com vs. Match.com
• “On the shoulders of giants”
– Started as Match.com
– Raised capital
– Business model issue
• “Each new user costs us
money!”
• Develop new model
– 350 people call center
– VIP service
– Metrics & analysis

59. Rest of Asia

60. Time-Shifted Markets
• Vietnam
– ~$150M from online games
– 86 million people
– 4-5 years behind china
• Indonesia
– #3 on Facebook!
– 238 million people!
– Behind Vietnam
• Other places: Thailand (66M),
Philippines (92M), etc. Virtual Goods Time Machine
• Biggest potential: online games
& mobile SNS

61. Mig33
“We have decided we want to be like QQ for
mobile in the rest of the emerging world.”
– Steven Goh, CEO
Source: VentureBeat, March 2010

62. Mig33
Made in China
“We have decided we want to be like QQ for
mobile in the rest of the emerging world.”
– Steven Goh, CEO
Not iPhone! Not rich
countries!
Source: VentureBeat, March 2010

63. About Mig33
• Nationality
• Founders from Australia
• Moved to Silicon Valley
• Relocated to Singapore
• Users
• India, Indonesia, Bangladesh, Vietnam, South Africa…

64. From Asia to the World
Durian Strudel (Singapore)

65. Paradise Paintball by Cmune
• World’s first FPS on social networks!
• Over 500,000 users in open beta
– “Paradise Paintball – you feel like you’re playing a
console game.” - Gareth Davis, Games Platform
Manager, Facebook
– “Abandoned my clan, crops have withered and my
cafe has gone bankrupt. Thank you for creating the
first real game on Facebook!” – Facebook user

66. Paradise Paintball | World’s First Social FPS!
www.facebook.com/paradisepaintball www.cmune.com

67. Conclusions
• Yes, you can!
• Asia is a tremendous growth market
• Inspiration from everywhere
• From Asia to the world!

68. Questions?

69. Thanks!
More about “Innovation Arbitrage”
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjaminjoffe +82 | Korea
+86 | China
http://twitter.com/benjaminjoffe
Telecom & Internet
www.linkedin.com/in/benjaminjoffe + Added Value
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