Where are the world’s next internet entrepreneurs and innovators going to come from? This question was posed by Koos Bekker of Naspers, a global emerging markets giant that has invested heavily in internet properties around the world, at the Highway Africa conference held in Cape Town this weekend.
Among the 129 companies it has invested in world-wide, Naspers owns a stake in one of the biggest Instant Messaging/Social Networking properties in the world, Chinese TenCent.
The company indirectly landed up with a chunk of Facebook, via a 28.7% stake in Digital Sky Technologies (DST) (a Russian internet company that has invested in Facebook), social network game creator Zynga and owns the mature instant messaging service, ICQ.
Ironically the company has its roots in newspapers, but has managed to re-invent itself in the last ten years as a credible online player.
No internet innovation in Europe or Africa
Speaking at a Highway Africa on Saturday, Bekker said that “almost nothing” of any significance has come out of places like Europe and Africa when it comes to internet innovation on a large scale.
The innovation is coming out of places like “the West Coast in the US, Korea, Japan, China, and maybe Russia… because Russia’s maths teaching is very good”.
He says that for true innovation in the internet space to take place, people need the “freedom to fail”, and that the internet is causing an “immense creative, destructive process”.
The reason why Europe is failing is because it does not understand this process. According to Bekker, Europe likes to plan and “does not understand destruction”. He also commented that Africa is not producing entrepreneurs because it does not have good universities.
Bekker’s characteristics of internet entrepreneurs
Controversially Bekker notes that the world’s internet entrepreneurs tend to be “young, men, who are geeks and engineers”.
“No-one old ever invented anything on the internet,” he says.
Bekker also bemoans what he sees as a lack of internet innovation from women.
“It’s regrettable. The thing about the internet is that its made by engineeers, not social scientists. Maybe we should integrate engineering into the social sciences and journalism schools? Women all over the world tend to shy away from engineering,” he commented.
Bekker goes on to list the particular characteristics of entrepreneurs: “They are typically weird people. They’re deranged. Social misfits. This uniqueness and isolation leads to innovation. They’re not tall, dark handsome people.”
Bekker, who hails from South Africa has harsh words for his own country, which, although the largest economy on the continent, ranks but fourth in Africa for internet connections: “South Africa creates almost nothing on the internet”.
Bekker notes that for the next African or European Facebook founder to exist, the right conditions need to be in place for innovation. An entrepreneur needs the “freedom to try and fail, be good at maths, attend good universities, have hungry ambition and have computers and bandwidth aplenty.”
Bekker reminds us that 90% of all technology companies that are set up in Silicon Valley fail within 18 months. He points to a quote to illustrate this fact from Thomas Edison, whom he calls the greatest inventor of all time: “I have not failed, I’ve just found 10 000 ways that won’t work”.
For Bekker, it all boils down to the influence of our mothers. Getting philosophical, Bekker noted that mothers “instill ambition” — a key entrepreneurial trait. In China, he says, you come across the “tiger mum”, a personality that encourages ambition in her entrepreneur son. He says this type of mother does not exist in Africa and Europe.
Bekker says that innovation is not planned, but is chaotic and happens in small steps and with continuous improvement.
“People think of invention as a grand thing, a person sitting there trying to solve the world’s problems… the reality is that it happens in little steps.”
Bekker says that when the best companies fail at innovation, they “fail fast”. Innovation is also not necessarily about invention, but can also be about copying.
“Bill Gates has never invented anything as far as I am aware. Gates is a very good copier. He takes someone else’s idea copies it, embraces it… and then extends it.”
What works against innovation
Bekker says one of the biggest obstacles to innovation is, ironically, money. He points to great internet innovations like Facebook and Twitter and says none of them started off with a great deal of money.
He says strategic planning “is totally useless” for innovating on the net and reserves harsh words for governments — which he says stifle innovation.
“Innovation tends to be chaotic and illogical. When governments get involved they want to regulate and approach problems methodically and logically, this stifles innovation… innovation likes openness and freedom,” says Bekker.
He says there is a place for government regulation, but this is often enforced too early in the life cycle of developing a business — it should come later.
The problem with Groupon… and News24
Bekker notes that if people can copy your business too quickly, “you’re dead”. He uses Groupon as a recent craze, noting that there are now 4 000 Groupon clones in China and over a thousand in Brazil.
In contrast he says, there is a barrier to entry on Facebook. He says online businesses like Facebook can’t be attacked because of their scale: “Facebook’s defence is the network effect of its massive base”.
Bekker looks at portal and media businesses online and has reservations. He points to News24, the largest online media portal in the country, and says that its not a “good business in the long term” because there is a low barrier to entry and can be easily copied.
“You have to admit there is absolutely no barrier to entry. If you give any kid 15 employees he can probably set up a site that matches News24 in a punch, and that’s not a good business in the long term.”
Internet in South Africa ‘a tragedy developing over ten years’
For Bekker the most exciting country in Africa as far as the internet goes is Kenya: “Kenya got connected to the world powerfully, [and] sold a million 3G dongles in the last year.”
He reserves strong words for his home country which he calls “a tragedy developing over ten years” and is, in internet terms, “becoming the basket case of the continent”. SA was the leading country some time back, but worldwide, it has now slumped to the 40s in terms of internet connectivity and is only fourth in Africa behind Nigeria, Egypt and Algeria.
“We are far behind a country like China. We still have dial up connections. In Asia the term doesn’t exist any more.”
On the future of print
Bekker, an outspoken critic on the future of print softened his stance somewhat. He says newspapers as an institution will always survive, but just not on physical paper — they will exist on tablets.