Density is Destiny

This post was delivered as a speech at the Founders Forum in London England on June 16th 2016

I need to make a confession. I’m seriously worried. I’m a VC in Boston and I’ve made a living investing at the frontier of technology. Now I understand mobile. I tweet. I even, sort of, get AI. But I have no idea, no worldly conception of what it’s like to be born into a city of 20 million people, like Shanghai. In Asia there are now 400 million people living in 15 mega-cities. They don’t have much space, but almost all of them have mobile phones. Just look at these amazing photos by Michael Wolf and even the most jaded New Yorker or Londoner has to admit they’re mindblowing..

In the tech world we too often think of platforms like frontiers. A new platform is a new land to be conquered. VC’s assume mobile, search, social and ecommerce are solved problems & we’re fascinated by new innovations like AI & VR. The truth is that in tech, frontiers are constantly being redefined by people.

In the early 1970s the US auto industry led the world. Apologies to the Mini and Lotus fans in the house, but GM, Ford, and Chrysler were unrivaled. Everyone in the auto industry assumed Toyota & Honda would be content building looms and motorbikes. But they weren’t satisfied. They pioneered new ways to make old products and transformed the industry.

I believe we’re looking at a future where Apple, Amazon, and Google will face global competition similar to what Ford, GM, and Chrysler faced a generation ago.

Photo Credit: Founders Forum

This won’t be because Asian engineers develop a more efficient search algorithm. It will be when people use their unique circumstances — density chiefly — and build products around that. Today, we refer to eg a social network in Asia as “The the Facebook of China.” We too often assume that our ideas will simply migrate to the developing world, untouched except for language. Not so fast.

I met Bom Kim while he was dropping out of HBS. He was about to try build Groupon in Korea. We backed him and he had limited success to start but then realized that the density of Seoul created an unbelievable opportunity to rethink ecommerce from the ground up.

Then he didn’t just knock off Amazon’s model. His company built warehouses, bought trucks, and trained a staff that gave them logistical flexibility that American ecommerce companies can only dream about. For instance, this company delivers diapers to 90% of Korean parents within two hours. Amazon’s just getting started here.

Nearly the entire adult population of Korea has this company’s app on their phone. There are five tech startups that have ever raised a billion dollars or more and this is one of them. Density has provided them with a massive opportunity. Think of Delhi, Mumbai, Lagos

Developing nations aren’t purely new markets for Western wares. These places are enabling entrepreneurs to approach problems with an entirely different set of constraints and make us all richer.

So why am I telling you this?

There is a mania among parents and educators to teach kids how to code. This is very good. But equally important is learning to maintain a peripheral awareness of cultures across the globe. Prepare your kids to get into a good college, but set aside some money to help them spend a year in Guangzhou.