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Who will create the Netscape of the Blockchain era? May 27, 2014

Posted by Bernard Lunn in capital markets, Fintech, Globalization, India.
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This is one of a series called Explorations down the BItcoin rabbit hole.

The Blockchain is exciting because The Perfect Copy Machine has its flaws.

Let me unpick that, starting with an anecdote.

In 1992, somebody showed me the Internet (thanks Charles Rawls). I ignored him. Silly me! The reason I ignored it was that I am not a developer and could not see how to use it.

The next time I saw the Internet was in 1996. I was in India and needed to use email in an Internet cafe. A developer showed me Hotmail.

The rest, as they say, is History.

In between those two events, a student at University of Illinois at Urbana–Champaign co-wrote the first browser for the Internet (thanks Marc Andreessen).

The Blockchain does not need a browser, but it needs something like a browser that makes it accessible to ordinary people. Today we only know the Blockchain because of Bitcoin. Now I will play the Long/Short game that FT journalists use in interviews:

Blockchain: Long

Bitcoin: Short (it’s primary value is to teach us that Fiat currency is like Winston Churchill’s description of democracy “lousy but better than any of the alternatives that have been tried”).

My inner editor is saying, get to the lede  (thanks Owen Thomas). What is wrong with The Perfect Copy Machine of the Internet? Simple: I cannot value something because it can be copied for free. That has been a dream opportunity for developers to make fortunes by offering ways to navigate the oceans of freely-created digital data. It has been a nightmare challenge for creative people, who had over time learned how to control of the analog copy machine, but then lost control of the digital copy machine.

However that is not where the Blockchain is needed. Creative people will finally find ways to make a living using The Perfect Copy Machine (as musicians are finding with iTunes and Spotify and writers with Createspace).

That is a First World problem and it is being solved.

I think the Blockchain will find use in the Rest of the World. Then it will come back to the West.

This is a “First the Rest then the West” story. To think about this, travel to Kenya and see where a digital currency/mobile wallet accounts for 30% of GDP. No, it is NOT Bitcoin. It is M-Pesa, derided by techies as utterly simplistic but massively useful to the billions emerging into a global middle class (which is the biggest story of the 21st century). One reason that M-Pesa works is because individuals can prove who they are using the most basic mobile phone. Yes, that is right your mobile number is your identity!

Like the other 7 billion people on the planet, I am unique. That is scientifically true, check my DNA. But my identity can be copied and my work can be copied. Again that’s a Western World problem and I can live with it. What if the title to my house or the access to my bank account could be copied? That is not fanciful; anything that has access to the Internet is accessible to criminals who can steal any of my assets that are recorded digitally (stealing is another way of saying copy it without my permission).

What if there was a way to protect the uniqueness of assets (creative or land or financial or whatever) that was not controlled by anybody other than you? That would be a powerful enabler for the billions emerging out of poverty who will then buy the products and services that our children and grandchildren in the West will be creating in order to make a living.

The Blockchain could give me the same control over all my assets as WordPress gives me for over my scribbling. 

That is why I am excited about the Blockchain. Other people share this excitement, but it strikes me that it is like the excitement for the Internet around 1992 before the browser made it accessible. Making the Blockchain accessible to the 7 billion people who will soon have mobile phones (it is over 5 billion today) will create a seismic shift.

If you are building something like that, I would love to hear about it.

This is one of a series called Explorations down the BItcoin rabbit hole.


Global Expansion for Enterprise Software: don’t wait too long or ignore the subtle signals. October 11, 2013

Posted by Bernard Lunn in Uncategorized.
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Enterprise software knows no boundaries. The customers are obviously global, so vendors have to go global to match that. This article describes the “why, when, how” of going global.

Lets start with why and when.

Many enterprise software vendors originate from markets that are relatively small – think
of SAP from Germany, Autonomy from the UK, Business Objects from France, NICE Systems from

(I am using the word “relatively” in relation to America, the biggest market, from where
most enterprise software firms originate).

Companies from these relatively small home markets have to go global early in their life.
In some cases the first customer may even be outside their domestic market.

Even US ventures, which used to wait till late in the cycle, are going global earlier as
they recognize the realities of the global economic rebalancing. McKinsey Research
estimates that “the emerging economies’ share of Fortune Global 500 companies will probably
jump to more than 45 percent by 2025, up from just 5 percent in 2000.” This means that
“going global” no longer just means a quick trip to London, some serious air miles to
“exotic” locations are needed.

So, the answer to when to go global is “earlier than we used to”.

Getting to the how to go global, computers help but humans are still needed.

Yes, the world is getting flatter. We can connect across borders using all kinds of social
media, we are all available on our mobile phones and on Skype. However, while we can
maintain relationships using these tools, the initial job of building relationships
requires air miles and “breaking bread together”. Yes, the Anglo Saxon business culture
rules, but unless you know the local culture, you miss the subtle signals that tells you
whether a deal is on track or heading for a train wreck.

This is the constant push and pull that global brands face between standardization and localization. The American way of scaling through standardization is epitomized by McDonalds, yet even McDonalds have changed menus
in India and sell in Switzerland on buying local beef and potatoes. All good
software now has tools for localization, but there are subtler cultural, human and branding
issues that determine whether the locals see you as trustworthy. You need standardization
to scale, but you win one country at a time and one customer at a time; insensitive, brute
force standardization is no longer a winning formula as it was in the post war years when
American multinationals grew up.

The consumerization of enterprise software changes the rules and enables globalization with
less friction and less cost. The “foot in the door” is now usually a Freemium product
rather than a salesman dialing for dollars. This is a game-changer, the consumerization of
software does change everything. Well, not quite everything! The vision of a world where
all business development is done by software algorithms makes as much sense as all
stockmarket trading being done by High Frequency Trading (HFT).

Machines are very fast. High Frequency Trading (HFT) machines beat human day traders on
speed. Freemium conversions feeding automatically into Marketing Automation (MA) systems
beats lots of sales folks punching feedback into CRM systems. Yet machines can also be very
stupid, as HFT driven flash crashes teach us regularly. The same is true in sales driven
by Freemium and MA algorithms; a data point that is a reliable signal of customer intent in
America or even England, might totally miss what a customer is thinking in India, China,
Turkey, Germany, Switzerland, etc. Humans need to understand these cultures in order to
fine tune the Freemium and MA algorithms. Even in a consumerized enterprise software world,
there are three other inflection points where a human is needed:

1. Early, when even consumer startups “do things that don’t scale”. (The classic story
tells of AirBnB founders going door to door in New York to recruit the first apartment
owners). Network effects need to be seeded; build it and they will come is usually a mirage
that tech founders fall prey to (sometimes build it and they will come does work. there are
exceptions to prove this rule).

2. When your Freemium traction gets you a meeting with the CIO. Dell was the first company
to understand that you “schmooze in person and deliver online”. Get to that CIO too early
and you waste your time. Get to that CIO too late and you risk your early traction being
replaced by a competitor who knows how to balance digital marketing with human selling. You
need just-in-time CIO selling.

3. When you need to understand the whole product in order to move into adjacent spaces and
cross the chasm. That requires the old selling discipline of “two ears, one mouth”, lots of
active listening and open questions that unearth the real drivers of value in your

If Siri still has trouble with something as simple as voice recognition, imagine computers
parsing body language, the twinkle in the eye or the quality of a handshake. Phew, humans
do still have a role to play!

The question then is what type of human? The old way went through three iterations –
distributors to expats to local teams.

1. Distributors used to be the inexpensive way to get initial traction. This is less relevant in the SaaS/consumerization world; there is nothing to “distribute” and the foot in the door is done by Freemium. However something is lost here. There is nobody local saying “try this, yes it is foreign, but it works here, let me explain”.

2. Expats. In 1994 Misys moved me from running the  American region to running Asia. One mission was to replace distributors who had got the early sales in countries like Indonesia, Malaysia and Thailand with wholly owned branches. There were enough sales to make it worth paying an expat package to capture the additional margin.

3. Local teams eventually replace expats as they are cheaper and more likely to stay for a long term mission to dominate a local market.

The new SaaS/Freemium way goes something like this:

1. Ignore the local markets. If it catches on, great, if not ignore the market as there is too much to do in the priority market(s). This lets local vendors win.

2. Buy the local vendors. That works but the acquisitions can be expensive and hard to integrate. Customers, only a click away from an alternative, may migrate to competitors when you attempt to switch your “acquired” customers over to your globally standardized solution. The beauty of Freemium, low friction on entry, works in reverse as well, low friction on exit.

Understanding this, many founding teams are spending a lot more time circling the globe than they had planned. This comes at a cost of founding team management bandwidth.

What ventures going global need is a bridge between the globally standardised ideal and the localized reality. This bridge is built from people who can move easily between these two worlds, who know that a globally standardized solution is the end game but who can bring on the early customers and local teams that are needed to win on a country by country basis. They may also spot the local competitors early and “head them off at the pass” or buy them when they are still young and cheap.