State of Social and Internet 2017

A while back, my friend Jeremiah Owyang wrote his perception of the state of social to which I contributed. Decided I’ll add onto my blog as well.

Twitter: dumpster fire but central to US current events, news
Facebook: where The Olds who ‘don’t get’ other social networks congregate to get attention, Asia’s LinkedIn, and others have an account for the sole purpose of Messenger (messenger.com via web)
Messenger: communication utility (Skype / Hangouts replacement; the Westerner’s WeChat and Weibo — encrypted messaging and P2P payments? Yes please!)
LinkedIn: depot of shameless self promoters and what NOT to do cues for teens and millennials professionally networking. I.E., Stay away from descriptors such as, but not limited, to: ‘futurist’, ‘keynote speaker’, ‘innovator’, ‘change agent’, etc., etc.,
Snapchat: dancing Hot Dog and awesome filters to cross post onto IG
IG: branding tool for the non-olds (teens). Lifestyle diary for Millennials (food, beauty, fashion, etc.)
Google+: Huh? What’s that???
Telegram: status symbol to show you’re ‘in the know’ about cryptocurrencies.
Slack: quickly becoming the new email
WhatsApp: where European Android users are
LINE: only relevant to Thais and old Japanese people
Ding Talk: where Chinese who don’t trust Weibo or WeChat conduct business

Social networks aside, my phone is the place I do the most internetting and boy has my homescreen changed a lot. Take a look:

img_6567

The three apps on the bottom are apps most used: Twitter, brower, mail.
1. Apple’s mail app has been replaced by Outlook (yes, Microsoft Outlook) because Gmail loads the quickest plus the experience is much better. I can’t believe I’m saying this either but hey — it is what it is.
2. Safari has been replaced by Brave — which I wrote extensively about here.

Despite having 256gigs on my phone, I only have one page of apps. Mainly because I realized long ago I only use a handful on the daily. I also turn off the little red circles because they induce anxiety and helped me wean off my addiction. (Read about that journey here.)

Funny how things change!

Related: Snap Chat should be worried — check out this neat graph I found. 300M daily active users for Instagram stories! Amazing.

img_6562

Crypto News for The Rest of Us

Big week in cryptocurrencies, decided to do a round-up for non-technical people. Enjoy.

ICOs and Regulations

Just in 2017, ICOs have raised $2.7B and 18 have raised more than $100M, while 120 have raised up to $50M. In the past five months, ICOs have raised more than $350M each. To put that in context, ICOs raised 32% as much as Series A startups in the last quarter alone. link

ICOs are hot, hot, hot, but … what about regulations?

During Singapore’s FinTech Festival, the Singapore government revealed their new ICO regulations. Unlike China, Hong Kong, Vietnam and South Korea that outright banned ICOs, Singapore’s central bank: the Monetary Authority of Singapore (MAS) published a document to clarify SG’s ICO standards. 12

Meanwhile Japan, the US and EU are still in ‘discussion’ mode with the SEC issuing warnings, sending alarm bells to those looking to jump on the ICO train. 12 (There was even a discussion of ICO purchases being entitled to a refund by law? America is so adorable.)

Reading through the Monetary Authority of Singapore’s 13 page document, the terms are a bit fluffy and serves more as a guide than regulations of what specifically defines as an ICO. Lots of loopholes and workarounds are still possible but the report’s objective is to prevent scams and “combating money laundering and terrorism financing”. (Sure, good luck with that. But how about understanding the technology first, before layering rules?)

What you need to know about SG’s definitions of when ICOs are or aren’t securities:

  • ICO trading platforms require vetting and a license issued by MAS
  • some digital currency issued during ICO campaigns (or what are called ‘shit coins’ — alt coins aside from the well known ones like Bitcoin BTC, Bitcoin Cash BTH, Ethereum ETH — that are super minor) may possess characteristics of ‘normal’ currency and must publish a regulation-compliant investment prospectus and register it with the central bank.
  • there are exceptions to the rule including: if the ICO does not exceed S$5M within a 12 month period, offer is made to institutional investors only, and the offer is made to accredited investors under SG’s prescribed investor class.

These discussions of regulations by the big guys is an indicator of normalizing cryptocurrency, but I can’t help but think of how the promise of cryptocurrency are how 1. transactions happen collaboratively 2. secure because they are backed by technology and 3. without central points telling people what to do and how to do it (and without all the fees).

In other crypto news:

Notable Partnerships, Movements in Regulatory Systems, Alliances

  • AMEX announces partnership with Ripple, a crypto payment’s platform
  • MasterCard finally jumps on the blockchain payment bandwagon filing a patent in the U.S. for their platform link
  • KPMG joins the Wall Street Blockchain Alliance — a 501(c)(6) non-profit trade association. link
  • 20 global banks and financial institutions join Singapore and Hong Kong’s blockchain based network — no clear indicators of the implications yet link

Products and Services

  • VISA in partnership with the blockchain startup Chain, rolled out B2B blockchain payments. VISA is already partnered with U.S.-based Commerce Bank, South Korea’s Shinhan Bank, the Union Bank of Philippines and the United Overseas Bank, based in Singapore. link
  • Square’s Cash app is testing a feature to buy and sell bitcoin (only for U.S. users) link

Reports for PowerPoints

  • Deloitte scoured GitHub and published a report from the data so we don’t have to. The report is long and nerdy but there are some handy charts on there in case any of you MBAs need it for a PowerPoint 🤗 Find the report here.

PS: I’m playing around with a newsletter, not ready to announce yet but you can sign up here: https://tinyletter.com/highinnovationAny and all feedback, questions, and thoughts are welcome — simply reply to the newsletter or tweet me. Big shout-out to Jeff H., Jon Russell,Daryl S., and Dave McClure for invaluable insights and help.

ICO: Enough is Enough

Emergency. Emergency. We interrupt the crypto primer series for a special post on ICOs.

I decided to write intros to crypto, starting with “Why Bitcoin is Important” and “An Explanation of Blockchain for Non-Technical People” because I believe in the technology but more so, think when it’s normalized, it can change the world.

As I was drafting my next post on Smart Contracts and the Promise of Ethereum, I got ping’d for the thousandth time with a barrage of questions about Bitcoin and ICOs.

I am so sick and tired of repeating the cookie cutter response I have memorized, I decided to write it.

The explanation usually goes like this:

Hey. Remember the ICO Paris Hilton endorsed? Well it turns out, the company is run by a piece of shit who kicked the crap out of his girlfriend 117 times and was sentenced to a year in jail. He is also fighting four lawsuits and super radioactive in the tech community, no one wants anything to do with him. Paris Hilton found out what she was backing after she promoted him and distanced herself right away. Do you want to be known as a person who was duped like Paris Hilton?

Okay, okay, so Paris Hilton may be as smart as a box of rocks.

What about DJ Khaled’s endorsement? Remember that? Turns out, the founders of that ICO were accused of multiple charges of fraud, have outstanding bills, payments, and what have you. Just seriously not so… straight peeps and they recently resigned. You wanna end up like Khaled?

I’m sorry — well not really — but right now, you (you = my friend, acquaintance, etc.) are as knowledgable about ICOs as Paris Hilton and DJ Khaled.

So if you don’t know who and what you’re investing in, most ICOs are sketch level fucking bajillion and it goes without saying: You’re better off staying far, far, away until you understand what ICOs are.

Usually, the frankness wakes people up but I find myself getting more and more impatient when explaining ICOs. So I’m doing what every nerd does: Blog about it. (And to anyone I may have offended or angered, I’m sorry. It’s not you, it’s me. Really.)

Long legit explanation:

In short, an ICO (initial coin offering) is like a project on Kickstart built on the blockchain where a product or service is backed by the community versus investors. An ICO is not like an IPO, since ICOs are not regulated and due diligence best practices change rapidly since there isn’t an entity or regulatory party telling entrepreneurs what to do and how to do it.

Loose outline of how a company/startup typically launches an ICO

  1. publish a comprehensive white paper on what they are offering, how it will work, how they will make money, why people who back the project should invest, and the background of the founding team.
  2. find an ICO platform to launch the campaign
  3. tap into a network of high profile or influential figures, get them to back your project, and if you’re lucky, they will market when the general public can put money into backing the project
  4. market, market, market. Founders start Slack and Telegram groups to engage the community of potential backers. They publish posts on blogs and Medium. And of course, social media marketing on Facebook, Twitter, et al.

Now that we covered the basics of ICOs, some data points.

While looking through ICO stat sites like 1, 2, 3, I came across this post (in Japanese). This random guy in Japan plugged in all the numbers into an Excel so I didn’t have to, which I’m translating into English so you don’t have to. (You’re welcome.)

This guy took a sample of 48 ICOs with the following conditions:

  • ICO launched between 2014–2017 and listed on ICO stat sites
  • projects that didn’t use an ICO platform since data of products launched on platforms aren’t as easily trackable
  • projects that don’t require software or hardware development

Of the 48, he found projects to be bucketed in four categories:

  1. working product: at the time of the ICO there is a product and users
  2. beta: βversion of product is released; no users
  3. alpha: only a pro-type, not ready for beta release
  4. no product: just a white paper and a community, nothing to show (not even a prototype. Yikes.)

He lists several findings (YoY product delivery comparison, amounts raised, thoughts on why ICO products can not be delivered on time, etc.) but the one finding that raised the alarm bells was this one.

Of the 48 ICOs

Working product: 3 (6.25%)

Beta product: 7 (14.58%)

Alpha product: 11 (22.92%)

No product: 27 (56.25%)

Uhhhhhhhhhhh. 56.3% don’t have product on delivery? That’s insane. Where is the KickFailure equivalent site of ICOs? And I wonder if someone is keeping track of these people who fail to deliver. Just because ICOs aren’t regulated, it doesn’t mean individuals shouldn’t be held accountable.

Even more worrisome, is looking at the track record and seeing evidence such as this:

15 ICOs in a day and a half? What. The. Fuck.

Now I am a believer of blockchain. I champion Bitcoin, Ethereum, Litecoin, Monero, and a few others I’m closely monitoring. I am a fan of ICOs in theory and in time, cautiously optimistic that ICOs will help move crypto forward. But right now? Hedge your bets elsewhere; there are plenty of investment opportunities in cryptocurrency once you understand the basics.

A very rich man once said:

Risk comes from not knowing what you’re doing.”

That rich man is Warren Buffett. Warren Buffett is worth $80B USD so I think he knows what he’s talking about so for God’s sake, before talking about investing in an ICO or buying Bitcoin: please, please, please educate yourselves.

Thank you for reading this very long rant. The End.

An Explanation of Blockchain For Non-Technical People

Note: If you are looking for ways to get rich quick on ICOs and Bitcoin, this post is not for you.

Now that that’s out of the way, this is the continuation of this post and why Bitcoin and misc. alt-coins, cryptocurrencies or digital assets, and blockchain are so important.

Here, I will cover blockchain and why prominent VCs such as Fred Wilson has been writing about it for six years, and why many other firms are co-investing in crypto ventures and how cryptocurrencies are no longer for terrorists, drug lords, human traffickers, and other not so kosher transactions we only see or hear about on the dark corners of the Internet.

I left off the last post with the question: If we can make free calls between Beijing and San Francisco, why do we need to pay to transfer currency between Beijing and San Francisco? I then took it a step further, to ask: In a world where middlemen can potentially take several paychecks worth of fees for an exchange of assets, why wouldn’t I find a way to cut out the middleman and directly transact?

Right now the public is focused on currency built on blockchain technology since it seems as though people are ‘getting rich quickly’ but blockchain is much more than currency (Bitcoin, Ethereum, and other alt-coins). What blockchain does, is it enables transfers of digital assets (in any form) in a safe, secure, transparent way with no middleman.

blockchain is much more than currency (Bitcoin, Ethereum, and other alt-coins)

Technologists are excited for the possibilities that instead of a middleman — in any industry from bankers, to real estate agents, suppliers and distributors — individuals and merchants who supply a product or service can directly deal with their customers looking to purchase the product or service offered. This is what is called a P2P (peer-to-peer) network. Decentralized is another term often used but it basically means micro-transactions are not regulated by those we have come to acknowledge as trusted parties to legitimize these exchanges of assets.

A world where everything is regulated is what we are ingrained to believe as ‘trust’. 

We trust banks to handle our money. We trust fund managers to invest our money. We trust real estate agents and brokers when we look to buy or sell property. We trust companies like Amazon and Google to store our personal information and communication. The list goes on and on but in our daily lives, we know that anything we do with these established institutions, our information, money, assets, or what have you, are safe.

But what if there is a way to safely and securely cut out the middlemen, have a new trusted method to transact and save on fees?

What if there is a way to safely and securely cut out the middlemen?

That is what blockchain can do. Bitcoin is just one of the solutions (currency) to the problem of cutting out the middleman (financial institutions). The reason why blockchain is safe and secure, is a bit complex, technical, and potentially boring but important to know in order to understand the value of blockchain technology and the things built on it — like Bitcoin or Ethereum.

The following is a chart I found from a report published here. All tech jargon aside, this is basically the flow of a transaction built on the blockchain:

What this illustrates, is the structure of the blockchain technology we currently cannot see with our two eyes like at a bank or real estate office.

I’m sticking with these two examples in order to keep things simple.

In order for a transaction on the blockchain to be valid, it goes through a process, exactly how a ‘normal’ transaction happens. In traditional validation processes, there are certain things that need to be checked off in order to legitimize any exchange of assets. But instead of one entity (the middleman — whether it’s a bank or real estate firm to follow the examples from above), there are many anonymous people solving complex equations to verify the validity of the asset transfer request. Currently, if we were to transfer money or buy or sell property, a person or people manually call different parties or look through records, forms and contracts are drawn with lawyers, and / or whatever else is required in the verification process for the transactor and transactee required by regulations.

On the blockchain, there is no manual checklist item to ensure a safe and secure exchange of assets, but instead, a process based on math is used for validity. Multiple parties are involved and validation is done in two parts.

How Blockchain works

(this is where it gets a bit nerdy — skip if you wish)

Simply put: There are people who run computers called miners, that receive a request to verify a transaction. These requests are called blocks. If the miner chooses to accept the block, they run the block against a complex computer program (kind of like descrambling government spy level cryptograms).

Once the block is validated, it is passed onto the middleman called a node, to add onto a giant, public ledger (blockchain database). In traditional real life ways, the middleman is usually a person or institution. In the case of blockchain, the middleman who pass the verified transaction data and the valid block data are anonymous and technologically driven within the blockchain process, so payments and fees are unnecessary.

When there are a certain number of blocks verified (multiple miners validating the blocks and nodes adding onto the chain), the transaction is deemed valid and only then, transactional exchanges happen.

Miners are rewarded with Bitcoin for their work. There is no central authority (government, regulatory entities, etc.) overseeing the process but blockchain uses a network of trusted people, with multiple layers of technologies to ensure a fairness in keeping the transaction and all the information stable, safe, and secure. There are also methods put in place to ensure one miner doesn’t have more authority over another, or technologies that makes sure all the miners validating blocks aren’t located in the same geographic area, and so on and so forth.

Do keep in mind, this is embarrassingly simplifying an extremely complex process, and a basic explanation for those looking for a primer on Bitcoin, blockchain, and crypto.

Why did I write this? Because as cryptocurrency and transferring of digital assets become more common place, hopefully these posts will help to understand why these technologies aren’t scary but more so, valuable, disruptive, innovative, and most of all: Exciting!

Next up: Smart contract governance and the promise of Ethereum.

Why Bitcoin is Important

Most have now heard of Bitcoin because there is so much coverage of people getting ‘rich’ from Bitcoin. But the more I research, the more I realize: Not that many people know exactly what it is, how it applies to them, and why ‘Bitcoin’ is so valuable.

I put Bitcoin in quotes because Bitcoin only represents a sliver of the possibilities behind the fundamental reason Bitcoin, or cryptocurrency, digital assets, alt coins, and blockchain are so important. That said, disclaimer: If you’re here to learn how to instantly make money from ICOs, this post isn’t for you.

Let me back up a bit.

The rapid growth of the middle-class is the reason I choose to live in SEA but it also should be worrisome to the world for one reason: by 2030, it is projected that 2/3 of the world’s middle class population will be living in Asia.

I use the term Asia broadly, but these countries include, but not limited to: Asia-Pacific (Southeast Asia ie: Indonesia, Malaysia, Thailand, Vietnam, Singapore, Philippines, Myanmar, Cambodia, Laos, Brunei), and of course, China, and India. (Sources: 1, 2, 3, 4)

What this implies is if 2/3 of the middle class population is based in Asia, the economic power will start shifting, new problems and solutions for these problems come alive. Or, as we commonly hear: disruption and innovation.

My interest in Bitcoin (or crypotcurrency and blockchain technology) simply started as a curious, technologically savvy person residing in this region, as crypoto is only one of the ‘disruptive’ or ‘innovative’ technologies deriving from quick change. Within the short 4.5 years I’ve moved from the States to ‘Asia’, I’ve seen with my own eyes, massive advances.

What does this mean?

I’ve been obsessed with messaging apps, anything mobile, and SEA — specifically how technology is changing economies in high-growth nations, driving innovation from need, reducing socio-economic inequalities, and the failures of first world nations to keep up. (This sounds like a bunch of jargon but whatever. Deal with it.)

Messaging apps that started as communication utilities are now full-blown ecosystems where billions of micro-transactions from communication (messaging), payments (cashless), to things that make daily life easier (food delivery, share economy, etc.) take place on a daily basis. And this is just the beginning.

In a region where things change on close to a daily basis, conversations about currency are naturally floating about because

  1. according to the World Bank’s Global Financial Inclusion Database, over 2.5B adults in developing economies do not own bank accounts
  2. and only 20% of those living in extreme poverty own bank accounts

Source

And by 2020, there will be 1 billion new smartphone subscribers only in SEA. (source)

With the mobile penetration changes, our daily lives are impacted, as daily necessities are physically met through mobile technology. If you live in a first world, it may be hard to imagine a world where getting from point A to point B can take an entire day, since city infrastructures in developing nations aren’t designed to handle traffic and congestion. Imagine taking a day off to run simple errands, such as shopping, banking, and paying bills. Now, imagine not having a bank account because you can’t afford to pay banking fees or you don’t have a valid I.D., or worse: the nearest bank to your home requires a day trip.

Enter Bitcoin.

In regions with pain points such as the above, the notion of currency that doesn’t require the middleman (banks) is the reason investors, bankers, and smart people in fin-tech find Bitcoin so alluring.

Put it this way: If we can make free calls between San Francisco and Beijing, why do we have to pay to transfer money from San Francisco to Beijing? If it takes all day to take out cash from my bank account, why won’t I leave it in a safe under my bed unless there’s a better option? In a world where middlemen can potentially take six paychecks worth of fees, why wouldn’t I find a way to cut out the middleman and directly transact?

These are only a few problems ‘Bitcoin’ or more accurately, cryptocurrency and blockchain technology can solve. 

Do note, these are examples in high-growth nations to simply illustrate the promise of cryptocurrency, but there are a ton of first-world scenarios where the blockchain can innovate and disrupt that I’m looking to share in the upcoming months.

In the meantime, hope this post clarified what the fuss about Bitcoin is about.

Stay tuned for Part II: An Explanation of Blockchain for Non-Tech People
Edit: published! You can read it here.

Why Are We Still Carrying Wallets in 2017?

img_5920

The food court inside one of the biggest malls in Bangkok — Paragon — has digital menu boards and is cashless. This food court in this ‘third world country’ Bangkok is more advanced than Japan or America. This digitization not just aesthetically pleasing, it actually works and here is why:

  • efficient — because cash is not exchanged, there is barely a line and even the most popular spots the transaction is really fast
  • effective for SMBs — zero cash transactions with profit reconciliation at end of day, the number of mistakes are limited to erroneous input vs erroneous input + too little/less change

In Bangkok, the public transportation system is called BTS. And each BTS station also have similar methods where all the tiny stalls take zero cash and only these pre-paid cards.

How does a developing nation figure it out before the rest of the first world???

Digital Expectations: from a leadership standpoint

Three years ago I addressed something that should be thought about more so now than ever: Digital communication expectations. In 2017 people rely on chat apps to conduct business: Slack, Facebook Messenger, WhatsApp, Ding Talk, LINE, and such. So now on top of email, we have communication coming at us from various directions.

Currently I manage a team of about 15 people and we are growing super fast. With several projects going on simultaneously, we are in constant communication via Slack, WhatsApp, and Ding Talk (Ding is another chat app for our China clients  — apparently Tencent (WeChat’s parent company) and Weibo cannot be trusted). I told our team there are times I might send messages at odd hours of the day and please do not feel obligated to respond. After a week or so, I noticed everyone would respond right away.

I followed Sheryl Sandberg’s lead in communicating with her team, that just because she sends emails late at night she doesn’t expect an immediate response (via Bloomberg Studio). Laying out expectations encourages a fair, flexible work place. But when I put it to practice, I found this to be unrealistic: Most people will always feel the need to respond right away. Then, I imagined myself working at Facebook and if got an email from Sheryl Sandberg, I would feel obligated to respond right away.

As senior leadership and co-founder of our company, I realized it was now up to me to relieve the team of the burden and this sense of responsibility to prove they are of value. So now I jot things into notes (SimpleNote, Apple Notes, email draft, anything — to prevent from sending messages) and make sure to send during work hours. This method has worked well so far and I encourage other leaders and managers to do the same.

Just something to think about.

Mobile Money

Leaving the US has opened my eyes to a lot of things, especially how the world outside of America operates. Because the iPhone isn’t as adopted in other parts of the world, there are many solutions to make communication between iOS and Android possible — which is why I became so fascinated with chat apps.

Then, I fell into the chat app rabbit hole and became obsessed with learning, using and following the big players outside of the US: WeChat, LINE, Kakao and WhatsApp. Which lead to learning about the different use cases and the reason I keep piping on about how SnapChat, WhatsApp, FB Messenger are not like WeChat, Line and Kakao. I also argue WeChat is in a league of its own. (If you’re interested, my messaging app series is here). Living in Asia, it’s easier to appreciate various ways people and cultures use their mobiles as I am an actual user vs. reading about use cases.

When I visited various Southeast Asian countries with Dave McClure’s Geeks on a Plane tour, my mind was blown. In countries still considered emerging nations ex: Malaysia, Thailand, Philippines, Indonesia, the way phones are used are so different. Actually, everything is different. Most mobiles are pre-paid. Mobile internet connection is mostly 3G and the majority of the population still uses flip phones. I even saw old Nokia phones with the green, pixelated screens. Remember those? I was really good at Snake. Reading and researching about mobile, I was aware of the numbers but to actually see how low smartphone penetration actually was, is a moment I will never forget.

The biggest opportunity I see in emerging nations is how technology is solving dual objectives: social problems and monetization. And the biggest opportunity I see is in mobile payments. I’ve said it once and will probably keep repeating, that because WhatsApp has capabilities on flip phones and older phones, their biggest missed opportunity is moving from a communication utility into a full fledged platform.

I really wish I knew more about payments or was passionate about the topic enough to jump into creating a product. But I am, super excited to see who will be the first to solve across SE Asia.

qz really sums it up best:

At the end of April, nine mobile operators with 582 mobile connections across 48 countries in Africa and the Middle East committed to make their mobile money offerings work across their networks. With interoperability comes greater cohesion and opportunity for new services.

And the kicker:

If it’s done right, it could form the foundation of a whole new global financial-services industry. And the US and Europe will be far behind.

Read the entire post here

SEAsia Messaging App Share

BqieJL4CQAAmH-o

 

LOTS of opportunities in SEAsia.
To recap on LINE:

  • 60% of LINE’s revenue came from the mobile games
  • LINE was the world’s top app publisher by monthly revenue
  • LINE Posts $143 Million In Revenue, Up 123% Year-Over-Year
  • $1.5mm USD revenue for user generated sticker marketplace

Granted, we may not see the same sorts of revenues from SEAsian countries, as most are developing nations and notorious for not spending (ex Path is Indonesia’s largest market, yet they never boast revenues or lack thereof).

The next few years will be fun to watch as chat apps mature and become more dominant.
(Sources 1,2,3, image via here)

 

Charts: Global Internet usage

I had to blog this vs tweeting  — it’s just too good not to share.
Take a look:

share-of-population-that-has-never-used-the-internet-2013_chartbuilder

  • 20% of Europeans have never used the Internet.
  • 34% of Italians have never used the Internet — via qz

Granted, there are still 13% of American adults in 2014 don’t use the Internet [1] but these numbers still astound me.

Then there is Asia — and I loathe using ‘Asia’ so loosely because Asia is BIG — but they are the global leader in online growth: 42% APAC vs 27% Europe — Comscore Asia forecast (PDF)

This is also a good opportunity to revisit the scope of technological adoption and revenues coming out of Asia.
Parallel with online growth; the increase of mobile traffic, combined with mobile revenues makes this region, the most interesting when it comes to disruptive technologies + monetization.

ChartOfTheDay_1088_Percentage_of_global_page_views_from_mobile_devices_n

 

Asia includes the following four countries: China, India, Japan and South Korea. Those four countries account for 66% of Asia’s population, 60% of Asia’s mobile connections and over 70% of regional mobile income. Four markets, four countries with four very different ecosystems.

China = population of 1.4 billion people, GDP of 8.2 trillion USD
India = population of 1.2 billion people, GDP of 1.84 trillion USD
South Korea = population of 50M people, GDP of 1.13 trillion USD
Japan = population of 127.6M people, GDP of 5.96 trillion USD

Then, there are the smaller countries with high GDPs and/or high population like: Hong Kong, Singapore, Taiwan, Thailand, Indonesia, Malaysia, Philippines, etc., etc.

To put that into perspective, the US has a population of 314M people (double Japan) with a GDP of 15.68 trillion USD. Compared to the big four Asian countries (Japan, South Korea, India and China), the US has been ahead of the race as far as development, access and economic distribution. This development gap the US has, is significantly wider with India and China than the gap the US has with Japan and South Korea, but the US is still ahead of these four countries.

WSJ just reported China is projected to overtake the US in mobile revenue [2] but as I said here, Japan should be the market to pay attention to, as

  1. smartphone penetration is still low
  2. spend is high — and keeps growing

Looking at global run rates and stats, it’s all about Asia and realistically, which markets and ecosystems one can penetrate.

 

 

 

Popular Communication & Messaging Apps by Country

I spent the past week reading forecasts and reports from Goldman Sachs, McKinsey, Morgan Stanley, Deutsche, etc., etc.

It sounds a bit boring but really not. It was actually fun to read, consume, compare and contrast the different reports.

Quick takeaways:

Deutsche Engagement

Deutsche’s chart of messaging apps used in Brazil, Russia, China, South Korea, Japan and the US.

culture and distro

 

Cross referenced with AppAnnie’s spend by country chart tells us:

  • S. Korea consumes and spends on content. Kakao Talk’s success is likely due to that ecosystem.
  • Japan leads in gaming, explaining the success of gaming companies as Capcom, DeNA, Gree, et al., and the reason the Japanese spend the most in both Google Play and iOS stores. Also explains success of LINE
  • US has wide range of content spend but the US is a distinct market from the rest of the world with different economical factors.

This chart also from App Annie interests me more, as it shows spend vs device:

Device per spend

I agree with Goldman Sachs, stating BRICs (Brazil, Russia, India and China) are 3-5 years away from global scaling and spending.

South Korea, with the highest spend and technological advancements, is like China where the ecosystems are so tightly intertwined it’s a tough market to penetrate. Fun to watch, but just like China, certain models and strategies cannot be emulated because of the reliance on proprietary strong holds.

For people looking to enter markets, Japan, UK and US are the likely bets. Or at least if I were a VC, that’s where I’d be placing bets.

Still digesting but as my thoughts parse, I will be sharing.

WeChat 101- Quit Comparing WeChat and WhatsApp

WhatsApp, Viber, Telegram and Snapchat are not like WeChat, LINE and KakaoTalk.

I’ve written about LINE and KakaoTalk but now it’s time to intro the last player – WeChat. WeChat is not – I repeat NOT anything like WhatsApp or Viber.

Aside from multi-media communication capabilities: photos, video, walkie-talkie and broadcast features, in August of 2013, WeChat completely overhauled their product with v5.1 to add a bunch of new features and functions.

They keep differentiating themselves from the rest of the chat apps and this is why:

  • in-app payments
  • P2P (peer to peer) and O2O (offline-online) core strategy aside from games <– HUGE
  • multiple monetization streams

Payments

WeChat-2

WeChat Payments connects bank card to WeChat account so users can make payments in-app.
Users can make transactions happen through 1. payments to WeChat authorized partner retailers 2. P2P (peer to peer) or in plain English other WeChat users – example: users can send one person a specified amount, or send money to a group and divide the lump sum among a group of friends.  If I had a penny for every time I’ve had issues with group payments where one person pays too much, too little I’d have about four extra iPhones sitting around. Or think about that one person who never has cash, etc., etc. WeChat group payments is the perfect resolution for group events / activities.

O2O / P2P Commerce

WeChat also partnered with sites and services – whether through acquisitions or buying a stake in the company – doing flash sales or becoming the preferred payment partner. To date, DianPing – China’s answer to Yelp, with a Groupon type group buying feature DianPing also offers coupons and discounts and users can even order food for delivery – is one of the most notable.

The other is Didi Dache – China’s Uber – where users can order a taxi and make payments, all in-app. Since forming the partnership in Jan., WeChat reports

  • 21mm cab rides have been booked via WeChat
  • 700k daily bookings via WeChat
  • Didi Dache and WeChat also pay cab drivers bonuses when the drivers use their services vs a competitor

WeChat also aggressively positions themselves as the entry point for global brands who want to reach China’s youths. Most recently, Vivienne Tam and WeChat collaborated to bring NYFW (NY Fashion Week) to WeChat users.

They’ve also done campaigns with Mc Donald’s, Starbucks, Burberry, Pepsi and Maybelline – bottom line, they are making money becoming a payment solution and by advertising as well.

Another monetization channel through partnerships is content. WeChat and Chinese media outlets bring news and entertainment to users. However, instead of solely bringing content into the app like Flipboard or Facebook’s Paper, they have their media partners build proprietary micro-sites into WeChat with proprietary URLs ie: mp.weixin.qq/majorchinesenetwork and charge users subscription fees.

They’ve also ventured into streaming video, launching a standalone TV with CNTV (major Chinese tv network).

If you think that’s all, they are also China’s small business e/m-commerce solution (like Etsy or even Amazon).
Small business accounts are

  • free to create — fee is dependent on level of API customization and how much a business wants to integrate their products and services into WeChat
  • transactions are conducted inside WeChat — which leads to increased time spent inside app
  • bar-code scanner capabilities so people can scan a bar code in a store of something they see and shop for it online for example
  • built in loyalty cards and point card systems

Major brands and retailers to even a college student with a fruit stand can buy and sell on WeChat – that’s how simple it is.

WeChat states they have 300mm active users per month and YoY growth of 124% (note: these numbers are before the Red Envelope campaign that reportedly activated 20mm transactions within 9 days and announcement of all their partnerships).

WeChat is not fucking around.

I’m sure there are so many more features and functions, products and services I may be missing. This is information I gathered through English sources (FT, Economist, WSJ, Techcrunch, The Next Web, Tech in Asia and some random Chinese sites I ran through Google Translate) but even if I don’t know all the details, it’s pretty clear they are one step above the rest of the chat app herd.

One can argue their success is due to the uniqueness of the Chinese market and how the economy is intertwined by a select few and with the government, but strip away all that noise and look at WeChat as a product. They are still several steps ahead of the rest — even LINE, that I am a massive fan of.

2014 is going to be a year to closely watch Asia.

WhatsApp: Time to Grow-up and Start Making Money

There is a piece on All Things D about WhatsApp’s CEO calling out other messaging apps and their “bullshit metrics”.

“We want to steer the conversation to be about active users, not registered users,” said WhatsApp CEO Jan Koum. “We’re a bit fed up and frustrated about people talking about registered users. We think it’s important for us as a leader in the space to speak up and be ethical.”

…the CEO, Jan Koum says.

In a competitive space as messaging apps, it’s no longer just about mass adoption. WhatsApp is the most adopted in markets where users do not spend.

These charts basically speak for themselves. Their pay-per-dowload and one dollar annual fee is cute, compared to the business oriented players as Line, KakaoTalk and WeChat.

Messaging apps are not social networks. They are communication tools and now, moving on to becoming businesses, shifting from apps to e-commerce.

I can’t be the only one who thinks it’s peculiar how WeChat has the most MAUs (monthly active users), yet they are profiting the least.

Calling out other players in the messaging space is nice and all but “we have the most users! we are superior!” mind-set is no longer enough.

Time to grow-up and answer the question: Where is the monetization strategy? #1 in MUAs, last in revenues. Hi, Facebook.

*All Things D piece is here
chart sources 1, 2

When Japanese Efficiency Meets Creativity

Lovely example of when Japanese efficiency meets creativity.
From Peatix, the EventBrite from a Japanese startup.

…sadly, I don’t think a lot of venues will adopt, as lines creates the illusion of popularity, which leads to need then ultimately, conversions.

Would love to see US retailers adopt this to prevent Black Friday madness though (for example). And this, is why I still believe in Japan.

Why People Should Care About Viki

My Twitter and Facebook are filled with mostly Americans and Europeans. Americans, only talk about American news (maybe a few China this-and China-that when the FT headlines them). Europeans, are 90% US and a few domestic posts here and there too.

I kind of get the feeling no one really talks about Asia and well, that’s ok. I guess that’s why there is a need on the planet for people like me. I digress, where was I? Oh. Viki. Particularly,Viki and Baidu’s partnership.

This is a BIG DEAL and All Things D nails why:

“Viki, which has already done several partnership deals in China, will be Baidu’s first streaming partner from outside the country, which is important given that big players like Netflix and Google’s YouTube are not represented there.”

Just a reminder, Asia has the largest distribution of world wide Internet audience:

global market

So for Viki, to secure a partnership where YouTube, Netflix, et al., aren’t is certainly a big, big, BIG deal.

I’m just sorry more people, well, don’t really give a two shits.
*FT’s coverage is pretty legit too

Japanese Mobile Market — a Brief History

Japan is an odd land where things are so advanced yet it can be backwards. Several times, I’ve been asked to fax my e-mail address, which sums up how ass backwards this country can be.

Back when Americans thought the Nokia 8890 was a status symbol, Japanese users were flashing their fancy flip phones (feature phones, as we call them here) with stunning color screens, amazing motion graphics and incredible audio speakers. Aside from basic phone functions, people browsed the Internet. Listened to music. Played games. Even watched TV on flip phones. I remember each Tokyo visit in the late 90’s-early 2000’s, looking down at my pixelated turtle-colored Nokia screen and thinking: wow, Japan is the future.

Fast forward to 2013 and that’s no longer the case. At least with mobile phones.

If you think Google is evil and Apple is too Draconian, they have nothing on Japanese telecoms. Japan is dominated by three major mobile carriers: NTT Docomo the Japanese equivalent of Verizon. au/KDDI which is closest to AT&T and SoftBank that would be T-Mobile, since they are the newest player in Japanese telecom.

Docomo and KDDI dictated the mobile landscape for years. I say that lightly but in a country that is mobile-centric, controlling mobile is controlling most of Japanese tech. Telecoms maintained closed market places, ensured software was proprietary, steered hardware movement, had a grip on the content space eg: ringtones, wallpapers, video, music, and even managed email.

When the iPhone arrived to Japan in 2008, it basically turned the market upside down.

SoftBank — the youngest carrier of the three — took a gamble and was the only telecom in Japan to carry the iPhone. au/KDDI woke up three years later following SoftBank’s lead in 2011. Docomo, the most dominant carrier in Japan, refused to carry the iPhone until the 5s. Yes, the 5s in September of this year. They tried to sustain their old world order. They ignored the iPhone. They pretended a market shift wasn’t happening and refused to accept the change of consumer needs until the last possible minute.

Docomo’s stubbornness didn’t seem too tragic in 2008, yet five years later, their dominance of Japanese marketshare isn’t as prominent as it once was. At a total of 62 million subscribers, they are still the leading carrier but SoftBank’s growth rate is incredible.

In only five years, they doubled their subscribers, a 78.69% subscriber difference. This number is insane.[source]

This is only the beginning for the Japanese mobile industry and boy, am I glad I am here.

KakaoTalk’s Challenges

While the US is still trying to figure out how to jump on the messaging app money train, the downfall of messaging apps has begun in Asia.

KakaoTalk is Korea’s most dominant messaging app and an interesting analysis was just released [source].
A few takeaways:

  • KakaoTalk has 130 million subscribers. 35 million of them are from Korea.
  • Korea has approximately 37 million smartphone users
  • Kakao Japan was set up in July 2011. They have a joint venture with Yahoo Japan
  • Kakao is also in Vietnam and Indonesia
  • 9 of their games have at least 100 million cumulative downloads
  • since July of 2013, they have not hit 100 million
  • new subscriber acquisition rate is slowing down
  • they are also losing ground in overseas markets

KakaoTalk’s monetization strategy is lacking and heavy reliance on mobile gaming is a bad idea. Just look at Gree, the Japanese mobile gaming company. Their net profit Q1 fell 74% from the previous year and it keeps declining [source]. Even if KakaoTalk boasts game revenues of $300 million in the first half of the year [source], KakaoTalk’s user acquisition rate is declining. Their games are no longer as popular. They will see a shortage in projected revenue unless they come up with a new plan.

Their localization strategy is a failure. A joint venture with Yahoo! Japan should have catapulted them to mass penetration quickly, for in Japan, Yahoo!  is still the most visited website source. But they are still very much behind LINE, that entered the Japanese market 15 months after KakaoTalk. I also wonder how KakaoTalk is approaching growth in Vietnam and Indonesia.

KakaoTalk will stay dominant in S. Korea, since they have the most users in their home base, but LINE is also owned by Naver. Naver is a S. Korean company and they also have home base advantage. Unless KakaoTalk figures out a way to scale the servers (they are experiencing server errors and outages. Five that I could find, to date. 1,2 ), users can quickly move to another service as fast as they onboarded. Especially, since messaging apps are the way we communicate in Asia. An outage on KakaoTalk or LINE  in the US, is like Gmail or iMessage going down.

The messaging app space is peaking and it’s so competitive right now. It’ll be interesting to keep a close watch on KakaoTalk to see how they will evolve their product and strategies to stay a major player.

Quantitative vs Qualitative

I once heard a story of how the head of Morgan Stanley’s Emerging Markets spends time on the ground, for months, before drawing conclusions and making moves.

I am not head of emerging markets anywhere nor am I an analyst. I am a technologist.

I started out as a product manager in a Fortune 100 B2B enterprise software corporation. My role was to mobilize their main product. I then continued to find places within the intersection of product, Internet, users and content that aligns with business objects, and fell into marketing and content strategy. I’ve lived through one of, if not, the best, times in technology — experiencing the shift of hardware to software, software to web based apps then to mobile apps. I saw the disruption of music, telecom, hardware and electronic industries. I lived it. Breathed it. Worked in it — and still do. There is nothing I am more in touch with, than technology (even myself).

So yes, my posts are mainly qualitative observations. I depend on multiple analyses and news pieces, blogs and tech blogs, and even Twitter, to stay on top of hot topics.

Right now, there is a lot of focus on Asia.

As someone on the ground in Asia and knows the US market, I hope to bring cultural truths which supports numbers from people who get paid to conduct quantitative analyses.

I love technology. I also have a lot to say; too much sometimes, as I am living in one of the most exciting markets in 2013: Asia.

This blog, is the outlet I dump my thoughts. I hope you enjoy reading these posts as much as I love writing them.

Scale of Mobile in Japan is Insane

The WSJ recently announced that Japan has now bypassed the US market in mobile app spending by 10%[1].

Japan has a population of 127 million people.
The US has a population of 314 million people.

Of the 127 million people in Japan, only 51,050,000 million people are smartphone users[2].
Of the 314 million people in the US, there are 143.3 million people who are smartphone users [3].

The American and Japanese markets are very different, so this isn’t a comparison. Just putting into perspective how the Japanese market is rapidly shifting, and how unbelievable the scale is.

 

Messaging Apps are Not Social Networks

There is a lot of emphasis on Facebook’s youth demographic decreasing and how messaging apps like Snapchat, LINE, WhatsApp and KakaoTalk are becoming the new Facebook and I can’t help but to think: wow, people don’t understand product and technical differences.

Facebook is a social networking platform. Messaging apps are tools for communication.

It’s not that people are leaving Facebook or Instagram for messaging apps, it’s that people are using messaging apps as tools to communicate differently.

There is room for both in the world. It’s just that people are choosing how to talk to those they want to talk to (messaging apps), rather than putting themselves out there for everyone and – literally – their mothers to see (Facebook).

So just like how most people don’t want to socialize with tens and hundreds of people every second of every day, many are choosing to socialize with people in different ways. And they are doing so with photos, videos, text and content.

Facebook and messaging apps are two different things.

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