asian eye for the startup guy
DESCRIPTION
What can a startup do in Asia? How are the big Internet guys faring? And what is Asia anyway? Presentation given at Geeknrolla in London on March 2011.TRANSCRIPT
@benjaminjoffe | Geeknrolla | London, March 2011
Startup Guy
Asian Eye
for
the
1984
2010 1984
Karate Kid!
1984
• Los Angeles
• Japanese master
• Mysterious
2010
• Beijing (jobless in Detroit)
• Chinese master (karate?)
• Bilingual talented (Chinese) kids
HELLO! MY NAME IS
@benjaminjoffe
“Mister Asia” – Mike Butcher
CEO, Plus Eight Star www.plus8star.com
Best pracQces from Asia’s digital space
Research, Strategy & “InnovaQon Arbitrage”
Co-‐Founder, Mobile Monday Beijing (38 events, 130 speakers, 3,000 parQcipants)
• Speaker 100+ talks in 17 countries
• Advisor
• Investor in Asia-‐based global companies
Angel Investor, Advisor, Keynote Speaker
4 years 1 year 5 years
#HowAsianAreYou?
42%
33%
8%
8%
4% 2% 2%
Chinese
Japanese
Korean
French
American
German
Singaporean
Bacon
1. Our #1 Problem
2. What is Asia
3. Local Leaders
4. Foreign Players
5. Local InnovaMon
6. Where is the bacon for my startup?
Our #1 Problem?
PreconcepMons
The World According to the West!
Asia The West Orkut?
Revolutions Offline
West (sort of)
The Russians
Common AssumpQon #1
Everything from USA is great
Common AssumpQon #2
Everything from Asia is weird
Common AssumpQon #2
Everything from Asia is weird (and someQmes funny)
Biggest Issue with Asia:
Illiteracy
Foreigners can’t read a word!
Western Framing
Which Movie is This?
Kimba the White Lion (Japan, 1965)
The Lion King (USA, 1994)
“Even our lawyers are not that good” – a Disney animator (rumor)
Where is it from?
Origins
KraMng Daeng (“Red Water Buffalo”)
Thailand, ~1970
Lipovitan Japan, 1962
Red Bull Austria, 1987
Which Game is This?
FarmVille Copied from China
1. Five Minutes (China)
2. Slashkey (US)
3. Zynga (US)
4. Playfish (UK), etc.
Who Came First
• Harvest Moon (1996) – Super NES, by Victor InteracQve – Inspired Happy Farm
• Where is the innovaMon? – Not in the game concept, but in viral & social mechanics
2. What is Asia?
“Pick up your jacket!”
What is Asia?
• Obvious: Cultures & Languages
• Less obvious: Separate Ecosystems – Size, GDP/capita, infra, capital access, etc.
• Beyond: Parallel Universes – Past, present, future, different
Users
0
500
1,000
1,500
2,000
PopulaQon Internet Users Mobile Users 3G Users
USA Japan South Korea China
Sources: CIA World Fact Book, MIIT, Japan TCA, SKT, March 2011
+8* | www.plus8star.com Unit: million
Users
Country USA China Japan South Korea
PopulaMon 310 mln 1,330 mln 130 mln 50 mln
Internet Users 245 mln 460 mln 100 mln 40 mln
Mobile Users 295 mln 860 mln 120 mln 50 mln
3G Users 120 mln 50 mln 115 mln 30 mln
+8* | www.plus8star.com
Sources: CIA World Fact Book, MIIT, Japan TCA, SKT, March 2011. Numbers Rounded for easier comparisons
Networks 3G
Users (%
)
China
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80%
3G: 60% (W-‐CDMA only) Web: 72% Avg. 14 Mbps
3G: 98% Web: 60% Avg. 8.5 Mbps
3G: 40% Web: 34% Avg. 5.0 Mbps
3G: 5% Web: 0.5% Avg. 1.0 Mbps
Sources: Akamai 4Q10, Japan TCA, SKT, ITU, IDA, Internet World Stats, March 2011
Internet ConnecMons Measured >5 Mbps (%)
+8* | www.plus8star.com
Japan & Korea have the Fastest Internet in the World
15
10
61
13
1
North America
Europe
Japan
South Korea
Hong Kong
16
13 Japan
South Korea
Top 100 Fastest Internet CiQes CiQes Measured >10 Mbps
Source: Akamai 4Q10
3. Local Leaders
Sites Ranking
Rank USA China Japan Korea UK
1 Google Baidu Yahoo JP Naver Google UK
2 Facebook QQ Google JP Daum Google
3 Yahoo Sina FC2 Nate Facebook
4 YouTube Taobao YouTube Cyworld YouTube
5 Amazon Google HK Google G Market* BBC
6 Wikipedia Netease Ameblo AucMon* Yahoo
7 Twiver Google Livedoor Chosun eBay UK
8 Blogger Sohu Rakuten 11th Street Windows Live
9 eBay SoSo Wikipedia Yahoo KR Wikipedia
10 Craigslist Youku Goo Joins MSN Twiver
Sources: Alexa.com, March 2011, Rankey.com (Korea)
+8* | www.plus8star.com
Social Networks
• China – QQ 650M – Q Zone 490M – QQ Microblog 110M – RenRen 95M – Sina Microblog 70M – Kaixin001 40M – 51.com 40M
• Japan – Mobage (mobile) 25M – GREE (mobile) 25M – Mixi (web+mobile) 25M
• Korea – Cyworld 20M
• SE Asia – Mig33 (mobile) 40M
Local Leaders
• China • Taobao (#1 E-‐commerce) • Tencent (#1 IM, Games, $3B sales) • 11 game companies market-‐listed • Sohu (#2 portal), Sina (#1 +“Twiver”) • Baidu (#1 search) • DangDang (“Amazon”), listed • Youku (listed), Tudou (“YouTubes”) • RenRen, Kaixin001 (“Facebooks”)
• Korea • Naver (#1 search + portal + Q&A) • Daum (#2 portal) • Nexon (Online games, $1B sales) • Hangame (Online games) • NC Sox (Online games) • Cyworld (#1 SNS) • Nate (#1 IM)
• Japan – Web guys
• Sojbank (Yahoo, Apple, Broadband) • Rakuten (#1 e-‐commerce) • Mixi (SNS) • CyberAgent (ad net, games, blogs..) • Nico-‐Nico Video (“YouTube”) • M3 (doctor SNS, $100M) • Cookpad (recipe portal)
– Mobile guys • DeNA (mobile SNS, $1.3B sales) • Gree (mobile SNS, $600M sales) • CA Mobile (mobile ads) • Zappallas (mobile zodiac, $100M) • Xavel (mobile shopping+fashion)
Free-‐to-‐Play Games
Free-‐to-‐Play Games
Mobile SNS & Commerce
Beware!
Global Shopping
– DeNA (Japan) buys ngmoco:) $400M
– Tencent (China) buys Riot Games $400M
– Rakuten buys PriceMinister & Buy.com $250M each
– Gree (Japan) has $250M in the bank
This is just the beginning!
4. Foreign Players
Foreign Companies in Asia Who got Tiger Blood?
Group A: The Valley Darlings
China Japan Korea
Google FAIL BI-‐WIN FAIL
Facebook FAIL (fail) (win)
Twiler FAIL BI-‐WIN (JV with Digital Garage)
WIN
Zynga (win) (M&A for dev.)
(win) (M&A)
-‐
Groupon (fail) (but hiring 150 staff)
(win) (fail)
+8* | www.plus8star.com
Grades: BI-‐FAIL | FAIL | (fail) | (win) | WIN | BI-‐WIN
Group B: The Old Guard
China Japan Korea
eBay BI-‐FAIL (buy leader then fail)
FAIL WIN (M&As)
Amazon FAIL WIN FAIL
YouTube FAIL (win) (win)
Yahoo! BI-‐WIN (Alibaba investment)
BI-‐WIN (JV with Soxbank)
FAIL
Blizzard (win) (license)
-‐ BI-‐WIN (cult)
+8* | www.plus8star.com
Group C: The Dark Horses
China Japan Korea
Skype FAIL FAIL FAIL
LinkedIn (fail) (fail) (fail)
Evernote -‐ BI-‐WIN (deals with PCs, Telcos)
-‐
Tumblr -‐ (win) -‐
MIH (Naspers) BI-‐WIN (Tencent investment)
-‐ -‐
+8* | www.plus8star.com
Group D: The Mobile Guys
China Japan Korea
Apple (win) (win) (win)
Android BI-‐WIN (supported by telco)
BI-‐WIN (supported by telco)
BI-‐WIN (supported by telco)
Nokia BI-‐FAIL (lead then dropped)
FAIL (never grew)
FAIL (never grew)
App Developers Not many foreign Varied Varied
+8* | www.plus8star.com
Signs of True GlobalizaQon
• NOT Charlie Sheen
• Tom Cruise on Sina Weibo (local Twiver)
• Rakuten’s CEO (Japan) tweets in English • Company official language in transiQon to English
• Who tweets in Chinese or Japanese in the West? • First step: MyGengo :-‐) ?
Summary
• China: No company won a direct confrontaQon
• Japan: More open, quality & persistence pay off
• Korea: Advanced models… acquisiQons?
5. Local InnovaMons
Mobile Social Gaming
Self-‐published + Open pla~orms
Some ads
SNS +
Free games +
Virtual goods Homepage
The QuesQon is…
NOT “who will be the Facebook of XXX”
But rather
“Who will be the Tencent of…”
Indonesia (#2 FB populaQon), India, Vietnam,
Philippines, Thailand, Russia, Brazil,…
Korea surfing Apple’s Success
Shanzhai InnovaQon: Mass customizaQon
InnovaQon 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.
Hardware InnovaMon: “Shanzhai” (山寨)
PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd.
QQ Farm
Design Your Own Mobile!
• Design teams < 10 people
• Factories take orders from 5,000 units
• Cost < 50 EUR
“Shanzhai” Spirit?
• Cheap • Fun • Flashy • Fast
5. Where is the bacon?
Three Main Paths
Learn Build Compete
Learn
• China: Entertainment, post-‐piracy models
• Korea: New service concepts
• Japan: Mobile + alternaQve models
Digital goods: $14B in Asia already! (USA=$2B?)
Build
• China: Compare, leverage (app bouQques…)
• Korea: Case-‐specific
• Japan: For local market
Compete
• China: Ultra-‐compeQQve
• Korea: Size limited
• Japan: Yeah!
• Great infra • Everyone has a smartphone • Broadband + NaQonwide free WiFi • MulQ-‐cultural, access to SE Asia, India, Middle-‐East, etc.
• Ecosystem growing fast • Barcamp, Founder InsQtute, Startup Weekend, etc. • Early stage funds, Angels, …
• Some cool companies • Mig33 Mobile SNS, 40M+ users in emerging markets • Viki Crowdsourced video subQtling community • Foound Group communicaQon service • Eduardo Co-‐Founder of FB (worth $3B+) lives there
Special Case: Singapore (“the red dot”)
Conclusion
1. “There is no Asia”
2. Learn from proven successes
3. Enter markets cauMously
4. InnovaMon is everywhere!
Made from China the Cmune Case
• Snapshot: – www.facebook.com/uberstrike – First FPS on Facebook – Made in Beijing
• Leverage – Best pracQces of Asia’s free-‐to-‐play – Best distribuQon (Facebook, App Stores, Web)
• Result – Organic growth – High spending / user – Largest 3D social game (>500,000 MAU)
The Sky is the Limit!
@benjaminjoffe | www.slideshare.net/plus8star
More about “InnovaQon Arbitrage”
Thanks!
www.plus8star.com
benjaminjoffe
hvp://twiver.com/benjaminjoffe
www.linkedin.com/in/benjaminjoffe
www.slideshare.net/plus8star
+81 | Japan
+82 | Korea
+86 | China
Telecom & Internet
+ Added Value
* High quality