Decentralization of Silicon Valley! What’s next?
The world has been going flat and it will be fully flat sooner than one would expect. Global citizenship could be a real phenomenon at some point in the near future. Thanks to cloud computing, mobile penetration due to cheaper smartphones, cheaper data, social networks and Moore’s law is at its inflection point.
Twenty years ago, the U.S. accounted for 90% of global venture capital; that number has fallen to 53%, according to research firms PitchBook and PwC. Today, the U.S. market cap of publicly traded companies represents about 36% of total global market cap… down from 45% (as of 2003).On the other hand the investors are investing heavily in tech companies in Asia. Looking at this trends one can predict, Asia is where the next growth will come from in the coming two decades.
As Internet and mobile penetration have reached saturation in the U.S., the next big growth opportunities will inevitably come from the rest of the world, Asia will be a great opportunity hub and India will be a big player. The Asian region could account for 90% of the next one billion entrants into the global middle class and Asia “will account for a full 62% of total global growth this decade,” according to the report by KKR.
In today’s hyper-connected world, in order to build a billion-dollar business, founders need to have a go-global mindset from day one. Going global is important and the time for companies to go global has never been better before. The markets are unifying, the world has become interconnected.
It used to be that the US or Europe based companies would expand globally but now the things have changed. Asia-based tech companies have started to go global. Musical.ly is a great example. A lip-syncing app, Musically was acquired by the Chinese news giant Bytedance for $1 billion, is a China-based company which claims 60 million users, most of whom are based in the U.S. Most of the Musically’s users actually came from outside of China. We are also seeing India-based companies expanding outside of India — for example, Ola expanded to Australia, Oyo rooms in China and Zomato in Dubai and 22 other countries.
India is the last great untapped market — but it comes with challenges. You can learn about the challenges that investors and companies face when entering India in a blog post I wrote a few months back.
There are two ways companies can expand into the new market. Either by acquiring a local company or going in all alone. This blog post covers the latter approach.
The markets in India and Asia, in general, are different than it may look from outside. When entering the market all alone, it’s very important for companies to team up with a local partner, a partner that can help you with market expertise, product optimization and local hiring. This way the companies can avoid hitting the blind spots.
One should look for partners like Hypeasia and Times Bridge. Hypeasia is started by Henek lo, who helped launch Airbnb and WeWork in Asia. He and his team understand what it takes to launch an international company successfully in Asia, where the culture and needs are a lot different than those in the western world.
Times Bridge is another company that is doing some interesting work in India. The CEO, Rishi Jaitly lead Twitter in India and Asia, before joining Times Bridge. He and his team understand how to integrate foreign companies into India the right way. They invest in world’s best ideas and work with creative, mission-driven entrepreneurs who believe in the Indian market is a microcosm of the world. They have partnered-up with world’s best companies like Uber, Airbnb, Coursera, Vice and many more.
The next decade will be fascinating. I am hoping to see the decentralization of silicon valley. Talent is too expensive, hard to find and retain, and the startup ecosystem of Silicon Valley is living in a bubble. Moving forward more and more funds will be investing globally, more and more companies will be expanding globally, and the next generation of household companies will come from outside of Silicon Valley. Most importantly, the next generation of companies will be solving hard problems in hard industries. Industries like healthcare, education, water and sanitation, agriculture and financial services. Go-global mindset from day one will be the new norm for entrepreneurs.
