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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 Innova/on
Benjamin Joffe | CEO, Plus Eight Star Ins/tute of Innova/on & Entrepreneurship, Singapore Management University | 2010.11
Introduc/on
@benjaminjoffe
4 years 1 year 5 years
• CEO, Plus Eight Star | www.plus8star.com – Best prac/ces from Asia’s digital space – Research, Strategy & “Innova/on Arbitrage”
• Speaker 100+ talks in 16 countries
• Advisor
• Investor in Asia-‐based global companies
Angel Investor, Advisor, Keynote Speaker
My Interests
• Technology, Sociology and Anthropology • Virtual economies
• Digital third places • Ar/ficial ar/ficial intelligence (AAI) • Online social dynamics
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
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” • “Freedom”
• “Crea/vity” • etc.
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 are not that good” – a Disney animator (rumor)
It’s not always simple copies…
Ideas go back and forth!
• Nike (USA) and Asics (Japan)
• Feiyue (China) popular in Europe!
(now served in Japan too!)
California Rolls
Durian Strudel
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
BreadTalk
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
Strip – Ministry of Waxing
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…
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)
Entrepreneur (Business)
Digital Evolu/on or “Techno-‐Darwinism”
a) Replica/on b) Muta/on
c) Natural Selec/on
Dodo (extinct)
Ecosystem Factors for Evolu/on: 5C’s
1. Copy 2. Compe//on
3. Combina/on
4. Constraints 5. Context
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 boards, mast, sails…
Everything!
Zheng He’s “Refurbished” Ship Replace old boards, mast, sails…
Everything!
Re-‐use old boards, mast, sails…
Everything!
Ques/on
Replace old boards, mast, sails…
Everything!
Re-‐use old boards, mast, sails…
Everything!
Which is Zheng He’s Ship?
…Or Zheng He’s New Ship?
Case Studies
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
Changing riders
#2 SNS in China #1 SNS in Japan
Yong Hyoung Founder Cyworld
#1 SNS in Korea
Changing riders
#2 SNS in China #1 SNS in Japan
Gave most shares to keep going
Yong Hyoung Founder Cyworld
#1 SNS in Korea
Changing riders
#2 SNS in China #1 SNS in Japan
Wang Xing Founder Xiaonei
#1 SNS in Korea
Changing riders
#2 SNS in China #1 SNS in Japan
Wang Xing Founder Xiaonei
#1 SNS in Korea
Sold for US$2mln in 2006
2005 2007 2008 2009
Wang Xing’s Projects
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?
Today’s Deal!
Changing riders
#2 SNS in China #1 SNS in Japan
Batara Eto CTO Mixi
#1 SNS in Korea
Changing riders
#2 SNS in China #1 SNS in Japan
Started Mixi as an intern!
Batara Eto CTO Mixi
#1 SNS in Korea
Changing riders
#2 SNS in China #1 SNS in Japan
Now invests in Indonesia
Batara Eto CTO Mixi
#1 SNS in Korea
A Caucus Race?
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)
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 Japan
US$1 billion in 2010!
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 Goods
(40% Net Margin) Market cap US$43 bln (more than eBay)
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)
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
Myths of Entrepreneurship
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!
Case Study: Farmville
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
Answer: “It’s Complicated”
1. Five Minutes (China)
2. Slashkey (US)
3. Zynga (US)
4. Playfish (UK), Elex (China), etc.
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
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
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
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”
I’m loving it!
Conclusion
• Aggressive teams can do it!
• “Ramen Profitability” reachable
• “Fast followers” can trump innovators
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.
Hardware InnovaEon: “Shanzhai” (山寨)
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 www.cmune.com
The straight story
• FPS make billions
• Nobody has made an FPS on Facebook
• “Let’s make one and make billions!”
Startups are not straight stories
• Our star/ng point in 2008 was…
“Online 3D collaboraEon made simple”
Go that way… Really Fast
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
Powerpoint stage
• Showing around to people and friends
• Get feedback
• Get started!
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
V1: Mid-‐2008
Prototyping
• Social network visualizer
• Virtual space (TED scene!)
• Web-‐based apartment
• And… a small FPS game
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
Showing around: Users
• FPS put on Apple.com as a widget…
• #1 worldwide in 1 week!
• Do we have a winner?
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
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
Which game?
• 3D has to make sense!
• FPS
• Racing game
• Dance / Music game
V2: Late 2008
Our pick: FPS
• Limited assets: 2 guys and a gun ^_^
• Huge market – Billions!
• But… most difficult technically – Lag – Fun
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
V3: Mid-‐2009
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
V4: September 2010
Evalua/ng markets
• GDP/capita
• Channels
• Usage
• IT infra
• Payments systems
• Cultural peculiari/es (FPS in Japan?)
Results
• Game portals > Social networks
• Korea, Japan, Russia > China
• Convincing social gamers << Aarac/ng gamers
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
benjaminjoffe
hap://twiaer.com/benjaminjoffe
www.linkedin.com/in/benjaminjoffe
www.slideshare.net/plus8star
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