The birth of the smartphone and then the app store have provided companies with a revolutionary platform to reach consumers all over the world. But this also means that any business that has an app is essentially global from day 1. This presentation analyzes how this global mobile revolution has occurred and offers strategies for tackling international mobile markets, specifically China and Europe.

1. The Global Mobile Revolution
Delivering Apps to Global Markets
@GGVCapital
#globalmobile

2. • The Global Mobile Revolution
• The Chinese Market
• The European Market
• Key Takeaways
Contents

3. The Global Mobile Revolution

4. 4
More people on the planet
use a mobile phone than
use a toothbrush.
Source: 60SecondMarketer.com

5. Smartphone usage is growing worldwide
5
1.06B
1.40B
1.76B
2.04B
2.29B
2.52B
2.73B
26%
32%
38%
42%
45% 48% 50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.0B
0.5B
1.0B
1.5B
2.0B
2.5B
3.0B
2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8
W O R L D W I D E S M A R T P H O N E U S E R S
& P E N E T R A T I O N
Smartphone Users (Billions) % of Mobile Users
Source: eMarketer, June 2014.

6. 6
2007
iPhone Gen 1
Launch
2008
iTunes App Store
Launch
= The Mobile Revolution
Platform | Experience | Globalization
+

7. The Mobile Revolution #1: Distribution Platform
7
After App Store
• One free, centralized platform
• Millions of users + millions of
developers in one place
• Streamlined discovery and
distribution
• Unprecedented distribution
model
• Leads to non-linear growth
The app store completely changes how companies
distribute software and services to users.
Before App Store
• Software downloaded from
company websites or delivered
on disks
• One-by-one, mainly paid
acquisition
• Even the introduction of Google
only addressed the discovery
side of the equation

8. 8
A P P D O W N L O A D S
G L O B A L LY I N 2 0 1 3
…up from zero
5 years earlier.
100+
billion
Source: Gartner, 2013

9. The Mobile Revolution #2: User Experience
9
After Mobile Apps
• Totally new UX designs
• Simple, streamlined interfaces
• Highly curated content, highly specific
feature sets
• Revolutionizing many categories:
shopping, payments, video, messaging,
finance, games
• Complementary to the rise of social
• Mobile-first companies will be the next
wave of billion-dollar businesses
Mobile apps have created drastically different user
experiences than the web.
Before Mobile Apps
• Complex, feature heavy products
• Web- or cloud-based applications
often mimic the UX of the original
software
• Same old-UI, just in new
locations
• Everything but the kitchen sink
approach to product design

10. More people
worldwide access
the internet on
mobile than on
a PC.
Source: Gartner.com

11. The Mobile Revolution #3: Global
11
App Stores make mobile companies global from day 1
155
countries and
territories
190
countries and
territories

12. 12
US
163M
13% growth
over 2013
Middle East
& Africa
122M
31% growth
over 2013
Brazil
41M
36% growth
over 2013
Mexico
33M
22% growth
over 2013
Argentina
13M
22% growth
over 2013
Japan
77M
44% growth
over 2013
China
522M
25% growth
over 2013
India
270M
287% growth
over 2013
Russia
75MW Europe
197M
29% growth
over 2013
Total smartphone users in 2014
Sources: IDC, eMarketer, DazeInfo, Statista

13. Users are engaged across markets
13
16.8
29.6
25.9
32.2
28
38.8
16.9 17.8
23.5
36.4
23.1
20.2
28.5
32.8
A V E R A G E A P P S P E R S M A R T P H O N E
Source: think.withgoogle.com/mobileplanet

14. 14
All this has happened in the last 6 years.
And it’s just the tip of the iceberg.

15. 15
The Chinese Market
• Opportunity and Challenges
• Recommended Approaches
• Case Studies

16. 16
The Opportunity and Unique Challenges
in China

17. 17
Smart devices in use in
China - more than the
population of every country
except India
700
million
Source: Umeng Insight Report 2013, 03/12/2014.

18. Monetization is a challenge
18
Source: Distimo, “How the Most Successful Apps Monetize Globally,” February 2014;
Nielsen, “The Asian Mobile Consumer Decoded,” 09/17/2013.
Smartphone penetration
is high in China at 71%
(versus 60% in the US),
but revenue generation
remains challenging.
$5.32
$2.30
$2.29
$2.25
$1.30
$0.92
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00
Japan
Germany
USA
UK
Russia
China
A V E R A G E R E V E N U E P E R D O W N L O A D
Apple App Store (Jan 2012-2014)

19. Distribution is complicated
19
There are over 200 mobile app stores in China, and the majority of
Android app users come from outside of Google Play.
US CHINA

20. 20
Local competition is very
strong. Only 2 of the top 30
non-game apps in China
are foreign.
Source: Distimo, Jan 2014

21. 21
App sizes have to be kept small
79% 34%of mobile
subscriptions
are prepaid
of mobile
subscriptions
use 3G
Source: GSMA, as cited by We Are Social, April 2014.
Akamai, “State of the Internet,” Q1 2014.
67%slower average
internet speed
than in the US

22. 22
Recommended Approaches in China
Legal Structure Localization Local Team Hosting Distribution
App Stores Monetization Billing &
Payments
IP & Regulations

23. Legal Structures
23
L I G H T W E I G H T S U G G E S T E D S U G G E S T E D
App-Only Variable Interest Entity Invest in China Start-
up
• Submit your app to local
app stores (complying with
SDKs and certification
requests)
• No need to create a legal
entity in China if you do
not hire Chinese locals or
operate a website hosted
in China.
• Performance issues likely
due to hosting outside
China and can’t leverage
carrier billing, payment
integration, or integration
with domestic social
networks.
• Allows a foreign entity to
control / invest in China.
• The Chinese entity is
technically majority
Chinese-owned so it can
legally hold the ICP license
(needed to operate
websites in China).
• Has become popular
among US-based
businesses entering China
• Not officially endorsed by
the PRC, and may not be
enforceable if the Chinese
partner declines to uphold
the agreement
• Make an equity investment
in a China startup with
similar product or going
after similar market.
• Your product usually is not
distributed in China via the
partner.
• Involvement is limited to
investment and exchange
of knowledge.
• Good choice when local
preferences would make
localization of your product
difficult.
• Allows you to capitalize on
the growth of the market
via team of local experts.

24. Variable Interest Entity (VIE) Details
24
US Company
Chinese Individuals /
CEO / GM
Special Purpose Vehicle
(Offshore)
Usually a Cayman Islands or
Virgin Islands entity for tax
purposes
Wholly Foreign-
Owned Entity (WFOE)
100% owned by Special
Purpose Vehicle
Domestic
Licensed Co
(VIE)
Share 100% ownership of SPV
The VIE allows a non-Chinese company
to retain control over its Chinese
operations while still technically
complying with the requirement that the
Chinese entity is majority owned by
Chinese nationals.
The domestic Chinese company that
holds the requisite operating licenses has
agreements with the Wholly Foreign
Owned Entity (WFOE) that give the
WFOE control of the domestic company
and power to consolidate its own
financials with the economic performance
of the domestic entity.
Recommendation: Recruit trusted core
team member with PRC passport who
can hold ICP license.
O U T S I D E C H I N A
I N S I D E C H I N A
Contractual
Relationship
Chinese Individuals /
CEO / GM
Operators

25. Localization
25
Linguistic Cultural Operational
• Translate content into
Mandarin Chinese
• Change name to
memorable Chinese name
(60% of the top 25 free
apps have a Chinese
name)
• Hire in-house translation
team or retain 3rd party
translation service
• Can also partner with a
local app distribution
partner that will handle
localization as a service
• Adapt in-app content to
include local popular &
historical references
• Example: add characters
or symbols from Chinese
pop culture, history,
astrology or myths
• Adapt app mechanics
(esp. if gaming) and
operations to match
expectations of local
players
• Integrate with the most
popular social networks
(QQ, WeChat, etc.)
• Provide the most common
payment methods (carrier
billing, Alipay)
• Adapt in-app purchase
pricing to reflect average
pricing for that market
Source: InMobi, “What It Takes to Win in the Chinese App Market,” June 2013.

26. Local Team
26
Hire a GM in China
• Often ideal candidates will have both US and China experience
• Look for educated abroad at undergrad/Masters level and/or work
experience in both US and Chinese tech companies
• Give the local GM/CEO a fair amount of autonomy to hire his own
team and make decisions for the local market
• Plan to start with about 5 people
Hire out of domestic Chinese leaders
• They will understand the market and ecosystem
• Tencent for gaming, web applications, social networking, chat
• Alibaba for commerce, marketplaces, payments
• Youku-Tudou for video, content
• Baidu for search, social networking, mobile apps
• Other major leaders such as Netease, Sohu, Qihoo360, Sina,
Perfect World, Xiaomi

27. P R O V I D E R E X A M P L E C U S T O M E R S
Aliyun, Alibaba’s cloud group, is the largest
domestic infrastructure provider with nearly
1M indirect & direct customers
Joyent launched in 2009 and partnered with
ClusterTech to offer public cloud services
using Joyent tech
Azure launched in 2014 in partnership with
21Vianet and has over 9k customers with
data centers in Beijing & Shanghai
AWS launched in China in 2013 in
partnership with local providers
ChinaNetCenter and SINNET and has
thousands of customers
Cloud Valley is an infrastructure services firm
that has worked with Evernote & Linkedin on
their Chinese expansions; manages 3rd party
partners to provide hosting, big data services,
systems integration, operations and PR
Hosting
27
Host apps in China to improve speed and availability
*
*
*
*
*
* GGV Capital invested in Alibaba, 21ViaNet, Kingsoft, Reebonz

28. Distribution: Partners
28
P A R T N E R S H I P P A R T N E R S H I P V E N D O R
Top Internet Channels Distribution Services Mobile Ad Networks
Leading internet channel
partners are responsible for
most of China’s app
downloads
The most established,
premium option and may help
keep copycats out of their app
stores
Negotiate performance-based
ad fee or revenue share (30-
40%, not including billing fee)
for distribution in their app
stores
Localization and distribution
partners can help negotiate
agreements with top channels
and ad networks
Can also help redesign and
package your app for the
Chinese market
Additional fee or revenue
share on top of what is
negotiated with the major
channels, but simplifies the
launch process for a non-
Chinese developer
Major mobile ad networks
exist, but market is more
fragmented than in the US
Reach is inferior to Tencent,
Baidu, and Qihoo
Real-time bidding is still
nascent, so deals are
negotiated in-person (similar
to an agency model)
* GGV Capital invested in Chukong, Yodo1
*
*

29. Distribution: Social and Websites
29
Social
• Key discovery method for users
• Drives down acquisition costs in a very
competitive market
• 55% of the top 200 apps have social
sharing or login
• Sharing of app content grew 86X on
WeChat and 29X on QQ from Mar-Nov
2013
Websites
• Chinese smartphone users are more
likely than US users to discover mobile
apps from accessing websites on both
their phone and PCs.
Source: Umeng Insight Report 2013, 03/12/2014.
InMobi, “What It Takes to Win in the Chinese App Market,” June 2013.
T O P S O C I A L N E T W O R K S

30. App Stores
30
35.6%
25.4%
18.8%
14.2%
12.2%
9.3%
6.9%
5.4%
17.1%
Qihoo 360
Tencent
Wandoujia
Hiapk
91 Wireless
Baidu
Anzhi
AppChina
Other
T O P C H I N A T H I R D - P A R T Y
A N D R O I D A P P S T O R E B Y M A R K E T S H A R E
% of active app store users
Source: Distimo, “How the Most Successful Apps Monetize Globally,” February 2014.;
InMobi, “What It Takes to Win in the Chinese App Market,” June 2013.
Focus on the 10 most popular apps
stores, plus first-party carrier stores
from China Mobile, China Telecom,
China Unicom and Xiaomi
Prioritize getting featured in the app
stores - Chinese users are even more
influenced by app store ratings,
reviews and features than in the US

31. Monetization
31
D O M I N A N T P O P U L A R G R O W T H P O T E N T I A L
In-App Purchase Advertising M-Commerce
Free app download with in-
app purchases for content,
upgrades, items, or currency
Enable in-app advertising
via ad network or direct
publisher relationships
Sell physical goods through
an in-app store or via affiliate
links to 3rd parties
ECONOMICS: 30% commission to
carrier if using carrier billing; 25-50%
revenue share to app store partner;
plus additional revenue share to
other payment processing or
distribution partners
PRO: Most popular and successful
monetization method to date with
variety of established billing options
available (Alipay, carrier billing)
CON: ARPU is low at $0.92 in China,
even for top apps and revenue share
for billing options can be steep,
eroding margins
ECONOMICS: Highly variable based
on ad format, pricing type (CPA,
CPM, CPI) and target user; Global
mobile eCPM on Android varied from
$0.11 to $1.26 on AppFlood
PRO: Willingness to spend is high –
60% of global mobile ad spend in Q2
2014 came from China; banners are
being replaced by higher quality
interstitial, rich media, and video ads
CON: The ad network landscape is
extremely fragmented, with many
players over-promising results
ECONOMICS: If offering proprietary
products (in an in-app physical gift
shop), margin is flexible based on
pricing; negotiable affiliate revenue
% from brands and ecommerce
partners
PRO: Ideal for social networking,
gaming, inspiration or lifestyle apps
where offline goods (such as toys,
clothing, event tickets, food) are
relevant
CON: If holding physical inventory,
have added commerce logistics and
liabilities, and affiliate revenue only
becomes material at large
transaction volumes

32. Direct to
Carrier Billing
15-30% revenue share
Most popular method of payment for
in-app purchases in China,
comprising up to 75% of total app
revenue
Online
Payment
Processing
2.5-3% revenue share
Alibaba’s affiliate Alipay is the
dominant player
Mobile
Monetization
& Distribution
Partners
Negotiable rates
Some distribution partners offer
integrations for carrier billing and
payment processing
Payments and Billing
32 * GGV Capital invested in UCWeb, Yodo1
*
*

33. IP and Regulations
33
IP Protection
App Store
Documentation
Special
Regulations
Retain an IP lawyer to certify
ownership of code and UI
Legal counsel may be advisable
for handling IP documentation,
UI patent registration, app store-
specific copyright certification
and possibly additional
governmental approval
processes.
Two suggested documents to
obtain:
1. Copyright Registration for
software
2. Patent Registration for
Graphical User Interface
Each app store requires different
documentation, but two common
ones may be:
1. PRC Software Copyright
Certificate or other
documentation that proves
the developer’s ID
2. Documentation proving the
developer is the IP owner or
is authorized by the owner
Partnerships with major channels
(Baidu, Tencent, Qihoo) may be
helpful in keeping copycats out of
their app stores.
Documentation is particularly
important when the developer
has no proprietary relationship
with a platform.
Different industries may have
special regulatory requirements;
be sure to research and comply
For example, mobile game
developers must get a special
PRC Ministry of Culture approval

34. 34
Case Studies in China

35. Case Study: Evernote
35
Evernote is one of the few US-based
companies to successfully launch a
consumer internet & mobile product in China
STRUCTURE: Separate service from Evernote US, with local Chinese
General Manager, joint venture investment partner and cloud service
LOCALIZATION: Translated Chinese name includes a character for
“elephant,” making the logo and function easier to recall
PRODUCT ADAPTATIONS: include an API for Chinese developers,
integration with Chinese social networks and payment systems, and
local Chinese language support
TEAM: Hired Amy Gu as General Manager, a Stanford MBA who
previously worked at mobile internet companies in China; now runs
separate China team
PARTNERS: Took $70M investment from and set up JV with China
Broadband Capital (founder of infrastructure partner Cloud Valley);
partnered with a local cloud infrastructure provider, Cloud Valley, to
have greater control over speed & security
MAY 2012
Launch localized service
Yinxiang Biji (印象笔记)
JULY 2012 1.1M users
MAY 2013
4M users, including 5K
companies
NOV 2013 8M users

36. Case Study: LinkedIn
36
LinkedIn formally launched a Chinese service
in 2014, to capitalize on strong existing
demand
USER BASE: Existing Chinese users mostly from top four cities,
indicating an urban, white collar demographic.
STRUCTURE / PARTNERS: Joint venture with two VC groups
(Sequoia and China Broadband Capital) to form team with ~15
employees
LOCALIZATION: Translated Chinese characters mean “leading” and
“elite,” suggesting a premium service
PRODUCT ADAPTATIONS: Integration with popular services including
Sina Weibo and Tencent WeChat
TEAM: For President of LinkedIn China, hired Derek Shen, a Masters
in CS grad from UCLA and Chinese native who previously founded
Nuomi (acquired by Baidu), led partnerships for Renren and led BD for
Google China
NOV 2013
3M+ registered users from
China on LinkedIn (non-
localized app)
FEB 2014
Launches official site in
China as Ling Ying (领英)
MAY 2014
5M+ registered users in
China

37. Case Study: HalfBrick / Fruit Ninja
37
Halfbrick Games (developer of Fruit Ninja)
worked with localization partner iDreamSky
to release a Chinese version of the app that
saw over 400M downloads in China
PAYMENTS: Uses carrier billing and Alipay like most local apps
PRODUCT ADAPTATIONS: App incorporates integration with
prominent local social networks, a Chinese character, and other visual
adaptations to appeal to local gamers
Local Chinese name +
WeChat and QQ integration
Chinese zodiac design replaces
original background
Sword-like stroke design inspired by
user feedback/request

38. 38
The European Market
• Opportunity and Challenges
• Recommended Approaches

39. 39
The Opportunity and Unique Challenges
in Europe

40. A growing market
40
8.7x
3.5x 3.5x
3.2x 3.2x 3.0x
2.7x
2.2x
1.8x
1.5x
India United
States
Germany United
Kingdom
Brazil France Russia Canada Japan South
Korea
M O B I L E A P P R E V E N U E G R O W T H
M U L T I P L E S
Projected for 2013-2017
Source: App Annie & IDC, “Mobile App Advertising and Monetization Trends 2012-2017,”
March 2014.OFCOM using data supplied by Tellgen, as cited by GSMA, 2013.
With low costs for
mobile internet access,
key markets in Europe
are forecasted to have
the significant mobile
revenue growth in the
coming years

41. Source: SAP, “The Mobile Consumer: Insights on Europe, Middle East and Africa
Trends Impacting Mobile Momentum and Customer Engagement,” 2013.
European mobile
users are most
likely to make
mobile payments
for entertainment,
bills, books, music,
and apparel.

42. But significantly fragmented
42 Source: International Telecoms Union, as cited by We Are Social, 2014.
75M
45M
34M 33M 32M
25M
19M
10M 9M
6M 5M 5M 5M 5M 4M
Top 15 European Countries By # Of Mobile Broadband Subscriptions
Europe is comprised of 50 countries with a
broad range of national languages and
cultures - but most of these markets are so
small that localization is not economical.
High English literacy across the region does
make expansion easier.

43. The business climate
43
Labor laws make it difficult to
compensate employees in options,
keep execution speed at rate of
US/China, and turnover the team
as quickly as US/China if needed
Economic growth and
smartphone penetration
growth are fairly slow,
reducing the chances of
rapid growth for a new
market entrant
Local startups have less access
to capital compared to the US,
making it possible to execute
faster than local competition
Possible antitrust, taxation, and
in-app purchase regulations
may hinder US-based
companies that are not
prepared to fight policy battles

44. 44
Recommended Approaches in Europe
Platform Distribution Monetization Billing & Payments

45. Platform
45
Europe’s dominant
mobile platform is
Android, making the
Google Play app store
one of the primary
distribution channels.
Source: Kantar World Panel, Jul 2014
0%
20%
40%
60%
80%
100%
F r a n c e G e r m a n y S p a i n U K I t a l y
M O B I L E O S M A R K E T S H A R E
Android iOS Windows Other

46. Distribution: Social
46
Source: Vincent Cosenza, “World Map of Social Networks” as cited on Vincos Blog.
Note: Reflects top social networks based on Alexa rank.
T O P S O C I A L P L A T F O R M S W O R L D W I D E
Facebook is the top social
network in Europe (except in
Russia), so social media-
based user acquisition in
Europe can be Facebook-
centric, as it is in the US.

47. Monetization
47
Source: Source: App Annie & IDC, “Mobile App Advertising and Monetization Trends 2012-2017,” March 2014.
GigaOM Research (sponsored by European Commission), February 2014.
60
70%
of app revenue in top
European markets
(UK, Germany, France,
Russia) will come from
mobile advertising
by 2017
€
Revenue from paid
apps in the EU in 2014
- currently the top
source of app revenue
projected revenue from
in-app purchases in
2016, at which point it
will overtake paid app
revenue in the EU
P A I D A P P I N - A P P A D V E R T I S I N G

48. Billing and Payments
48
Carrier billing for digital
goods in Europe is
forecasted to grow from
5% of purchases to 18%
by 2017.
Source: Dimoco & Juniper Research, "Is Mobile Operator Payment
the Ideal Payment Method to Bill Digital Content?” 2013.
€5.2Bwill be spent in 2017
through carrier billing, up
from €790M in 2012

49. 49
Key Takeaways

50. Global + Mobile: How-to Guide
50
Find your targets Know the user How local to go
• Regions in which you are
already getting traction
with your app
• Countries with high
smartphone penetration
and broadband use
• Regions that are similar to
places you are already
successful
• Areas with high English
literacy that will require
less localization
• Lack of incumbents– no
dominant existing player to
unseat
• How to monetize: What
are the most successful
models in the region:
in-app purchases, paid
apps, advertising, or
m-commerce?
• How to pay: Are credit
cards the dominant
payment choice or are
users more likely to use
carrier billing or third-party
payment solutions?
• How to distribute: How do
your users discover new
apps: social, app stores,
web, ads?
• Local product: Translation,
localization of app name,
changing visuals, graphics,
characters and more to
appeal to local consumers
• Local hosting: to deliver
quality app experience
• Local team: who knows
the market
• Local partners: to help with
operations and distribution

51. Thank you