1.
Innovation Models in China
[ The 5C™ of Innovation ]
Benjamin Joffe, CEO | Plus Eight Star | Beijing, 2009.06

2.
Benjamin Joffe

3.
4 years
1 year
4 years

4.
www.plus8star.com

5.
Innovation Arbitrage
China | Japan | Korea

6.
+8* and Me
– Worked in mobile SNS in Japan in 2003
• With avatars, virtual goods and GPS!
– Advise leading companies worldwide
• MIH (China/S.Africa | Largest shareholder of Tencent)
• DeNA (Japan | Mobile Game Town)
• IMVU (US | 3D chat / virtual world)
– First commercial report on Tencent “Inside QQ”
– Work with China-based 3D social gaming
startup
– Co-Founded Mobile Monday in Beijing

7.
Here is the plan
1. Exogenous innovation
2. What is innovation?
3. The 5C™ of Innovation
4. Some things we think are
cool
5. What if all this was
irrelevant?

8.
1.
Exogenous Innovation

9.
When was it invented?

10.
Europe
Gutemberg | ~1450
Korea
Metal | ~1230
China
Wooden | ~1040

11.
Who came first?

12.
Where do you get inspiration
from?

13.
Innovations are bound to
happen

14.
2.
What is innovation?

15.
Technology?

16.
e.g. LAMP stack
(Linux / Apache / MySQL / PHP)
+ HTML / Flash / AJAX…

17.
Largely commoditized…

18.
Makes money?

19.
Tons of users?

20.
Most start with zero
(is innovation a popular vote?)

21.
Speak English?

22.
Some things
going on
here
And There
there too

23.
Some things
going on
here
And There
there too
And of course in a lot
more places

24.
“News is anything that happens to
or near publishers and their
friends”

25.
Alternative
Live in Silicon Valley

26.
Internet Mobile
1.3 billion 3.3 billion
(Asia = US + Europe)
Source: Morgan Stanley, 2007

27.
English-speaking LAN

28.
3.
“5Cs of Innovation”
™

29.
a. Copy

30.
“Benchmarking”
“Inspiration”
“Best practice”
“If I have seen farther it is only by standing
on the shoulders of Giants.”
(Isaac Newton)

31.
Pragmatic Entrepreneurs &
Investors
Innovation ROI?
“Blue oceans”

32.
Entry barriers
Technology?
Capital?
Talent?
Intellectual Property?
Censorship?

33.
The Underpants Gnomes

34.
Business Plan

35.
Copy can backfire!

36.
Japan: Mayonnaise

37.
China: Whipped Cream

38.
Copycats often die
• Market not sustainable
• Business model does not work

39.
b. China

40.
Already in 2007 ...$1 billion do not
(We even published a report…) appear overnight

41.
Attention Threshold
=
1 billion dollars?

42.
Scale / Geography / Demography
make some services viable

43.
Maybe the West is simply
not looking?
Happy life in a fish
bowl

44.
c. Combination

45.
Will it blend?

46.
Tencent (1998)

47.
Registered users
200 mln 856 mln

48.
Revenues 2008 (E)
1 BILLION DOLLAR
COMPANY YOU
NEVER HEARD OF?
350 mln 1 bln!

49.
Profit margin
- X? 40%
~400 MILLION
DOLLAR
NET PROFIT

50.
Market Capitalization
(June 2009)
3-15 bln? 21 bln
REAL MARKET
CAP

51.
Our estimates for 2009 (roughly)
Revenue | $1.5 bln
Net Profit | $600 mln
(Let’s buy MySpace this year?)

52.
d. Competition

53.
“Survival of the fittest”
(Herbert Spencer)

54.
What happens when you have
4 Facebook
20 YouTube
10 MySpace
5 Match.com
3 Yahoo
4 Twitter
?

55.
Hard spots
“Concepts”
Sociology
Psychology
“Execution”
Marketing
Business models
Payment

56.
e. Constraints

57.
“Necessity is the mother of invention”
(Plato)

58.
Low GDP/capita
Small transactions / making millions from
cents

59.
Limited advertising
Alternative business models / B2B to B2C

60.
No credit cards
Alternative payment systems,
mobile, virtual currencies

61.
No legacy industry
(is it a constraint?)

62.
4.
Some things we think are cool

63.
Lihua | Order food over IM

64.
Alimama | Ad exchange + Micro-
retail

65.
Babytree | Vertical for young
parents

66.
Huica | Mobile coupons

67.
PPLive | P2P Internet TV

68.
iNezha | RSS-to-IM

69.
Digu | Twitter + Pics + Celebs

70.
5.
What if all this was irrelevant?

71.
Many ways to work with China
Develop in China
Operate from China
Build for China

72.
Innovation does not have a
nationality

73.
From China to the World?
1.“Global” idea
2.Multi-cultural team
3.Leverage resources globally

74.
One example: Cmune
• What is it?
– Next-generation social gaming platform
– 3D MMO: Browser / SNS / Widgets / Download
– Virtual goods
• Team
– Based in Beijing
– 7 nationalities
– Most speak 2+ languages & lived in several
countries

75.
Early Results
• 1 million installations
• Microsoft BizSpark
• Facebook Fund
• Facebook gaming campaign

76.
Being Global?
Partners
Founders
Team

77.
Learn from the proven models
of yesterday

78.
Tomorrow’s models
are born today

79.
Contact Us
www.plus8star.com
benjamin@plus8star.com
ers! +81 | Japan
benjamin0123 Che
+82 | Korea
http://twitter.com/plus8star +86 | China
Telecom & Internet
www.linkedin.com/in/benjaminjoffe
+ Added Value
www.slideshare.net/plus8star * High quality

80.
About +8*

81.
There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

82.
“Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural
consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet
innovation from China, Japan and South Korea to add value to and accelerate
the development of our clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory,
partners identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007 and 2008
– Regularly quoted in international press and keynote speaker at numerous
telecom and Internet events
– Fluent in English, Japanese, French with working knowledge of Mandarin,
Korean and Spanish

83.
Selected References
• Adidas | E-commerce strategy for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0
services and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile &
Internet convergence strategies
• Hemisphere | Analysis of mobile marketing best practices in
Japan and South Korea (Hemisphere is a leading digital
advertising agency), analysis of leading social platforms (SNS,
virtual worlds, online games).
• Microsoft | Analysis of Japan’s key players and market catalysts
for mobile commerce market positioning in China
• DeNA | Case studies of the best practices of leading social
networks in China and South Korea (DeNA operates Mobile
Game Town, Japan’s leading mobile SNS service)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of China’s investment
opportunities in social networks in China

84.
Social Contribution
• Mobile Monday
– Founder of the Mobile Monday forum in Beijing since 2006
(3,000+ members, 28 events, over 100 presentations).
• Media
– Monthly column on Asian innovation for Asian Business Leaders
(one of the leading Chinese business magazines), numerous
interviews in international media such as The Economist,
CNN.com, etc.
• Events
– Regular keynote speaker and moderator at Internet, Telecom,
Media and Investment events
e.g. eComm, ITU Asia, Asia Venture Capital Forum, China Mobility
International Summit, O’Reilly’s Graphing Social Patterns, Red Herring Asia,
Media 08 Conference, Wireless Developer Forum, Open Web Asia,
XMediaLab, Mobile Monday Global Summit, etc.)