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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