Here Is The ‘’Other’’ Silicon Valley

It’s the Stanford Commencement Speech. It’s the Social Network Movie. It’s the moonshot projects. It’s the huge IPOs. It’s the Software Is Eating The World. It’s the Disruptive Innovation. It’s the technical skills meet liberal arts attitude. It’s the dropping out. It’s the moving fast, breaking things. You already know what it is. It’s the Silicon Valley narrative.

Like all the other powerful stories, the Silicon Valley narrative is changing the world. It has it’s twists and turns. It has it’s seasons and episodes. The Silicon Valley narrative is giving way to The ‘’Other’’ Silicon Valley, getting transformed by The ‘’Other’’ Middle Class, The ‘’Other’’ Urbanization, The ‘’Other’’ Internet Access, The ‘’Other’’ Mobility and The ‘’Other’’ Tech Giants.

THE ‘’OTHER’’ MIDDLE CLASS

Middle class will grow faster in Asia Pacific, Middle East and Africa in comparison to North America and Europe.

A middle class person is defined as having a daily per capita income between $10 and $100 in terms of purchasing power, according to Homi Kharas. [1] By 2009, North America and Europe combined had 54% of Global Middle Class citizens and 64% of Global Middle Class spending. By 2020, these numbers are projected to decrease to 32% and 46%, respectively. In the same period, Asia Pacific is projected to increase it’s share of Global Middle Class citizens from 28% to 54% and it’s share of spending from 23% to 42%. Although MENA’s shares are projected to stay flat, it must be noted that MENA will witness a 57% increase in it’s number of Global Middle Class citizens and 65% increase in it’s volume of Global Middle Class spending.

THE ‘’OTHER’’ URBANIZATION

For North America and Europe, Industry Age has been the time for massive urbanization. For Asia, Middle East and Africa, it is now.

Referring to the impactful and beautiful ‘’No Ordinary Disruption’’ [2] — It took Britain 154 years to double it’s economic output per person, with a starting population of 9M. US needed 53 years with a starting population of 10M. China and India have done it in 12 and 16 years respectively, each with about 100 times as many people. The share of global foreign investment going to emerging and transitioning economies rose from 34% in 2007 to 50% in 2010 to 60% in 2013. Between 2010 and 2025, 440 cities in developing nations will generate nearly 50% of global GDP growth.

THE ‘’OTHER’’ INTERNET ACCESS

To predict where from growth will come next, 2/3 of the developing world still remains offline.

By end of 2015, 3.2 billion people will be using the internet of which 2 billion are from developing countries. [3] Among the 10 countries with the highest number of internet users globally, US, Germany, UK and France make up 25% of the top 10, leaving the remaining 75% to China, India, Japan, Brazil, Russia and Nigeria.

THE ‘’OTHER’’ MOBILITY

Smartphones enable emerging markets to leapfrog in communications.

By end of 2015, 1.9 billion people will be using smartphones. [4] The 10 countries with the highest number of smartphone users make up 65% of global users, China alone 30% of them. 3 countries in the top 10, US, UK and Germany make up 24% of the top 10 and 14% of global users. I’m sure it’s not part of everyday conversation that United Arab Emirates and Saudi Arabia had a smartphone penetration of 73%, as of 2013, 17% higher than the US at the time.

THE ‘’OTHER’’ TECH GIANTS

Obama may be the first president to code [5] but he isn’t alone on attaching importance to tech: Narendra Modi dreams of a digital India [6] while Israel has gained the title ‘’Startup Nation’’. [7]

Chinese Alibaba is the greatest US-listed initial public offering, 56% ahead of Facebook’s. [8] Indian — Americans make up 1% of the US population, leading 13.4% of startups in Silicon Valley [9] and running behemots like Google, Microsoft, Pepsi, MasterCard, Deutsche Bank, Adobe System, Diaego and Reckitt Benckiser. [10] Out of 182 software business companies from North America, Europe and Asia reaching the billion dollar mark, 46% came from outside US, 66% from outside Silicon Valley. [11]

HERE IS THE ‘’OTHER’’ SILICON VALLEY

It’s the easy way to associate Asia with oppressive regimes, overpopulation and air polution, Middle East with political turmoil, Arab Spring or ISIS, Africa with ethnic conflict, poverty or Boko Haram. It’s the default, much like David Foster Wallace describes in his famous speech. [12] It doesn’t tell you much about what lies beneath layers.

Rapidly urbanizing, globally integrated, educated, connected and more mobile middle class populations in Asia, Middle East and Africa experience a unique time period of decaying power, famously narrated by Moises Naim. [13] They have access to the same content as anywhere in the world, they face the same problems when building software business and they use the same scaling tactics when growing. They do so in developing countries facing oppressive regimes, political turmoil or ethnic conflict.

The ‘’Other’’ Silicon Valley narrative is developing with unignorable examples. China can’t be ignored due to it’s scale, Nigera due to it’s growth, Iran and Turkey due to their unique insights.

Chinese government launched a $6.5B Venture Fund to support startups this January. [14] They must be agreeing that Jack Ma of Alibaba proved to be an icon of tech entrepreneurship outside US, making the greatest US-listed initial public offering of $25B by challenging Amazon, eBay and Paypal. [15]

Nigeria became the greatest economy of Africa by an overnight growth rate of 89% in 2013. [16] Explanation for this frenzy includes magnificient details. Nigeria’s GDP for 2013 was calculated as $270B and then corrected to $510B — statisticans used 1990 as the base year and as they changed the base year to 2010, taking faster growing sectors into account, they observed number of mobile subscribers growing from a few thousand in 1990 to 120 million in 2013, increasing telco’s share in GDP from 1% in 1990 to 9% in 2013. 67Mpeople having internet access in Nigeria, a penetration of 38% and growing with two digits in nine years of the last decade, lay the foundation for a crazy consumer internet market. E-commerce is booming and this July, TechCrunch organized an event for Nigerian entrepreneurs to pitch. [17]

After the latest deal, the whole world is excited about Iran, commercially. 70% of Iran’s population is under 35. 20 million Iranians have internet access and smartphone penetration is around 50%. Although numbers look good, you wouldn’t think that you can talk about tech entrepreneurship in Iran, would you? Almost 50% of 500 most visited websites globally including Facebook, Twitter and YouTube are banned, after all. What would you think of an Iranian e-commerce startup valued above $300M, shipping thousands of orders a day and having 700 employees, with the expected analogy, Amazon of Iran? Or of an event in Berlin where Iranian startups are already pitching for investments? Iran is ready for a crazy growth and Christopher Schroeder’s piece already captures wonderful details about the other Iran. [18]

You may have heard Gezi Park protests in Istanbul. It’s more than 2 years old now. It began as a peaceful and environmentally conscious demonstration and transformed into one of the biggest scenes in Turkey’s history. There have been much debate going on about it, some calling it a spin-off of Arab Spring in the region, some label it under rapid expansion of middle class expectations. Debates are still alive but one thing is clear: the crowd participating in Gezi Park protest was different from the average Turkey: in terms of literacy rate (99% vs 94%), graduation of highschool and above (60% vs 12%), getting informed about the protests via internet (77% vs 22%). [19] This educated and connected part of the Turkish young middle class has also fueled the internet market. Turkey has a half-unicorn, Yemeksepeti, largest global food ordering acquisition of $589M. [20] Adding to the picture that eBay, Naspers, the Abraaj Group, Monitise, Wirecard, Opera have investments in Turkey as well.

THE TIMES THEY ARE A CHANGIN’

Understanding of the motivation behind Facebook’s Whatsapp acquisition has been one of the most significant examples proving what potential the ‘’others’’ possess. [21]

Headlines are clear. Trendlines are clear. This won’t slow down.

The Silicon Valley and The Other Silicon Valley are going to create products, services and experiences for a much wider and developing audience.

It is no surprise that one of the leading figures of the Silicon Valley narrative loved the song.

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