guns germs and steel for startups
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The FATES of DIGITAL SOCIETIES
BENJAMIN JOFFE
GUNS, GERMS, AND
STEEL
BENJAMIN JOFFE
• 13y in CJK+SEA+SV"• Digital Naturalist, +8*"• Startup Guy, Cmune"• Angel investor"• Mentor, 500 Startups,
Chinaccelerator, etc."• Speaker, Columnist"
HAVE YOU HEARD OF THIS BOOK?
THE QUESTION IT ASKS IS
WHY IS THE WEST DOMINANT?
AND THE ANSWER IS UNUSUAL
SUITABLE ANIMALS & CROPS
SUITABLE LATITUDE & CLIMATE
NOT “SMARTS”
CONCLUSION #1
YOU’RE (POTENTIALLY) JUST AS SMART
(AND MORE ATTRACTIVE)
THERE ARE TWO WIDESPREAD BIASES
BIAS #1
EVERYTHING FROM THE U.S.
IS GREAT (AND GLOBAL)
“A billion dollar so-ware company is founded every 3 months in the USA”
– Ron Conway
BIAS #2
EVERYTHING FROM ASIA
IS WEIRD (AND LOCAL)
YET…
$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
CONCLUSION #2
INNOVATION IS EVERYWHERE!
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"
1. ON ECOSYSTEMS
DEFINING ECOSYSTEMS
ECOSYSTEM MODEL
Market"Infrastructures""Capital"Talent""Regulations"Entrepreneurial Culture"
USA
CHINA SINGAPORE
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!"
CONCLUSION #3
DIFFERENT ECOSYSTEMS GIVE BIRTH TO DIFFERENT SPECIES
CONCLUSION #4
SIMILAR ECOSYSTEMS CAN HAVE SIMILAR SUCCESSES
EBAY IN CHINA?
!“eBay was trying to land advanced jets in muddy rice paddies.”!
– Jack Ma, Alibaba"
Yoda can help you out!
(MORE DETAILS IN OTHER TALKS)
ECOSYSTEMS 101
DIGITAL NATURALISM
AND IN MY TC COLUMN
hCp://techcrunch.com/2012/09/01/ecosystem-‐101-‐the-‐six-‐necessary-‐categories-‐to-‐build-‐the-‐next-‐silicon-‐valley/
MYTH
“INNOVATION” & “ENTREPRENEUR” ARE AMERICAN THINGS
(LET’S REMIND EVERYONE THAT “ENTREPRENEUR” IS A FRENCH WORD)
AND INNOVATION IS GENERALLY DISMISSED WHEN NOT
(1) FIRST WORLD (2) TECHNICAL
AND SIMPLY “INCREMENTAL”
WHERE DO YOU DRAW THE LINE? WHO DECIDES?
MYTH
“TWO GUYS IN A GARAGE”
THAT WORKS BETTER IF YOU’RE A STANFORD CS GRAD AND YOUR
GARAGE IS IN PALO ALTO
(LIKE THE HP GUYS ON THE PHOTO)
CONCLUSION #5
ECOSYSTEM MATTERS…
COROLLARY #1
…EVEN FOR HANDSOME TAIWANESE…
Like Jerry Yang @ Yahoo
COROLLARY #2
…BUT NATIONALITY DOES NOT.
EVEN IN SILICON VALLEY, A VAST NUMBERS ARE FROM “OUTSIDE”
IT’S A MINDSET
CASE OF CMUNE AND UBERSTRIKE
• 3D Multiplayer Shooter on Facebook"• High tech, first in the world"
CHECK IT OUT > WWW.FACEBOOK.COM/UBERSTRIKE
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?
CONCLUSION #6
NATIONALITY IS A BRAND
WHO CARES ANGRY BIRDS ARE FROM FINLAND? USE IT IF YOU CAN.
2. BEING GLOBAL
CAN YOU BE GLOBAL?
• USA = English only"
• China = Chinese only + Hyper-competitive"
• Russia? Japan? Other?"
BEING GLOBAL IS NOT SO SIMPLE…
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
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)
CONCLUSION #7
“GLOBAL” & “ASIA” MEAN NOTHING
PICK MARKETS & PLATFORMS
“ASIAN” COMPANIES ABROAD
Zheng He, Explorer
THE WESTERN FRONT
• Recent"– Japan: DeNA, GREE, Rakuten"
• Casualties"– Japan: Index, For-Side"– Korea: Daum"
• Same mistakes as Western firms in Asia"
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
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"
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"
CONCLUSION #8
ECOSYSTEM DIFFERENCES MAKE THINGS HARD
CONCLUSION #9
THERE IS MORE THAN ONE STRATEGY TO EXPAND
YOUR AMAZING APP GOES HERE
3. FINDING USERS
MYTH
GREAT PRODUCTS ALWAYS FIND THEIR AUDIENCE
REALITY
1. Most great products die in oblivion"
2. Great = 10 bad then 1 good-to-great"
3. Distribution, Monetization, Funding"
WITH PLATFORMS
• Apple, Google, Facebook, Amazon"• eBay, Taobao, WeChat, LINE, Kakao…"
• Ideally"– Have IP"– Use new features"– Have connections with platforms"
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"
CONCLUSION #10
MAGIC BULLETS DON’T LAST LONG
4. RAISING MONEY
GOOD IDEAS
BAD IDEAS
GOOD IDEAS THAT LOOK BAD BAD IDEAS THAT LOOK GOOD
STARTUPS ARE HERE
DEFAULT ANSWER IS NO!
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!
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.
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?"
STATISTICALLY AMONG INVESTORS:
CONCLUSION #11
FOCUS ON THOSE WHO “GET IT”
DON’T WASTE YOUR TIME CONVINCING THOSE WHO DON’T CARE OR HATE IT
CONCLUSION #12
PREPARE FOR SURVIVAL DOING THE WORK IS GOING TO
TAKE A WHILE
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.
CONCLUSION #13
YOU WILL NEED ALL THE HELP! ALWAYS BE PITCHING
(I PITCHED BOTH CMUNE & ELYSIUM SPACE
IN THIS PRESENTATION ;-P)
5. ON ACCELERATORS
ACCELERATORS ARE STARTUPS
Source: hCp://emergentbydesign.com/2013/02/28/62-‐top-‐startup-‐accelerators-‐us-‐canada/
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!
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"
ACCELERATORS ARE SPRINTS WITHIN MARATHONS
• Market access"• Take a long-term view"• Do the work"
6. THE CULTURAL OS
CULTURAL OS
Career/Money""Family"Society""Culture"Spirituality"Physical Appearance"
FRANCE’S DEFAULT SETTINGS
(MORE DETAILS IN OTHER TALK)
YOUR HAT LOOKS FUNNY
“THE SLIDESHARE SENSATION
WITH OVER 20,000 VIEWS”
RATE YOUR CULTURAL OS TOO!
FOUNDERS NEED TO SEDUCE!
CO-FOUNDERS, TEAM MEMBERS, INVESTORS, CUSTOMERS
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
ARE “ASIAN VALUES” IN YOUR WAY?
• Leader " " " "Follow the Crowd"
• Assertive " " "Modesty, Respect, Hierarchy"
• Adventurous" "Risk-Averse, Responsible"
• Easygoing" " "Serious, Diligent"
• Sexual " " " "Repressed, Dependent"
The FATES of DIGITAL SOCIETIES
BENJAMIN JOFFE
CONCLUSION GUNS,
GERMS, AND STEEL
GUNS? GERMS? STEEL?
FB Y!
GOOGLE, FB, Y! ENABLE ECOSYSTEMS BUT SUCK LIFE OUT OF THEM TOO!
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)!
PICK WISELY, THEN WORK
“A good team in a strong market will beatan excellent team in a bad market”!– Song Li (ChinaHR, Zhenai.com)"
• So:"– Pick a good market"– Customers you love"– Learn fast"– Be patient"
www.slideshare.net/plus8star
BENJAMIN@PLUS8STAR.COM
THANK YOU!
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