In a fairly recent podcast I listened to, some tech thought leader (sorry, I can’t really remember his name at the moment) was rambling about the most powerful tech companies of today, and of course extolling the virtues of what makes them so great…yadda yadda. Then, he said one phrase which made an impression on me, as he described Google, Apple, Amazon, and Facebook as “the 4 horsemen of the apocalypse”.
Wow, what a powerful allusion. I’m not sure if he used the right allegory, but the point was well taken: these 4 tech companies are bringing about earth shattering changes to humanity. For a minute, I reveled a bit in the sentiment…4 companies I love and personally hold in the highest regard, all poised to change and dominate the world! But, after the short-lived minute, I realized what a mistakenly ethnocentric point of view this was. Sure, there’s no argument that these are all great companies having profound influence on billions of lives…but are they all really earth shattering? Are they the future even?…cause surely our assumptions on this list was pretty different only 5 years ago. Is it really coincidental that this top list consists of all American companies?
Soon after hearing the quote, I had the opportunity to visit Hangzhou, basically the Silicon Valley of China. This is the home to companies like Alibaba and Taobao. Being in that environment, seeing those companies first hand, diving a little deeper into their products, and seeing how people were engaged with them gave me some new perspective. Like most people, I tended to think China just made “copies” of the popular US tech ideas. Search gets big in the US…a giant China search service gets created (Baidu). Facebook gets big…someone reproduces a similar social network in China (renren). Twitter gets big…Chinese micro-blogging counter parts pop up (Tencent Weibo). I think it’s easy to think this way, as there are many examples of this phenomena on the surface. But with this mindset and posture, we might just be missing an opportunity to learn from the innovation occurring there.
Due to government regulations in China blocking many of the big US companies from entering the China tech space…the country couldn’t just adopt existing internet ideas and products. Chinese tech companies had to take a posture of innovation to service their unique locality and needs.
Take Taobao. Simply put, Taobao is an C2C ecommerce platform for individuals and small businesses to sell goods to consumers. I suppose on the surface, one can say it’s similar to a blend between Ebay & Amazon Marketplace, but truly we don’t have a counterpart here in the US. As the infrastructure to support ecommerce has grown in China over the years…speedy logistics & package delivery, online payments, and even online trust, the growth of Taobao has been staggering over the years. Even as a visitor, it was much easier for me to order something from Taobao than to shop around the city…and I was literally addicted instantly. From the brand perspective, Taobao’s B2C platform (TMALL) is just a simpler sales channel to reach a much wider audience than setting up costly retail locations. Behind the scenes, their platform hosts an entire marketplace of 3rd party tools and apps to help sellers conduct business on Taobao (think if Ebay had a Facebook apps API architecture)…pretty innovative. This past year, revenues topped 1 trillion yuan…10x growth in 4 years. They are already poised to overtake Walmart in revenues, and once they target rural areas in China and international market…can this be one of the Horsemen of the Apocalypse? They already foresee and want to tackle logistics as being one of the key factors of success…which I’ve always thought one of the four horsemen would be a logistics company.
If it’s one ecommerce company that’s poised to disrupt the world, I think it’s going to be Alibaba. Alibaba is ambitiously tackling M2C (manufacturer to consumer). In my opinion, a company that can take out as many middle men in the supply chain…wins. In a recent side project I’m doing…it took me couple days to source a manufacturer in China on Alibaba for a product I’m looking to develop in large quantities. As a consumer, I went to look for a similar product on AliExpress. I found a really nice product, much cheaper than if bought retail here in the US, and free shipping even. It took 14 days to arrive, but came as advertised. Both experiences were painless, highly useful, and there was no real alternative service for me to achieve what I needed. To me, AliExpress is a prime example of something to keep an eye on. With their sights set on B2C international, it does have the potential to disrupt on a global scale.
We can’t ignore the innovation happening in other parts of the world. In this recent trip to China and Hong Kong, it was quite clear that heavy mobile usage is much more prevalent in Asia than here in the US. Because of this, In China, new innovative apps are coming out daily…and breakout innovations like WeChat. There are 200 Android App stores in China…as opposed to the several prominent App Stores we have here in the US. With an commoditized environment like that, it’s no wonder China companies can have the boldness to create the next generation Linux based Mobile OS to disrupt on the low-end…while in the US, there’s arguably no room for a 3rd mobile player.
If we continue to ignore what’s happening overseas, the cost can be huge. Instead of leading innovation, the roles can be switched where we’re in a position to follow innovation. That’s just looking at China…what about other parts of the world? We can already see this phenomenon happening to some degree with Korea based Samsung, where their market dominance through innovation is sweeping the US. What if they disrupted the industry with their own mobile OS based on Tizen? From Japan, we see ecommerce giant Rakuten establish a beachhead here in the US with Buy.com, and with their enormous investments in Pinterest and acquisitions of other global internet properties around the world. Interestingly, Rakuten’s move is not one of attack…but of survival for the Japanese economy…to look outside of its nationalistic narrow views, into the global landscape of innovation.