Feb. 22, 2007 SDF Global Emerging Markets

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On February 22, 2007 at Morgan Lewis in Palo Alto, SDForum and the Women’s Technology Cluster presented the Global Emerging Technologies Conference. Panels of experts discussed disruptive emerging technologies and markets. There are opportunities from synthetic biology to pattern technology and from Shanghai to Sao Paolo. The second part of the conference dealt with emerging markets.

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Joel Dreyfuss of Red Herring talked about his magazine’s new focus on global technology. He moderated the second panel on what was happening in China, India, Latin America, Israel and Europe. Dreyfuss said that Africa has a large mobile market but many places have strict controls on Internet access limiting opportunities for growth. As for Russia, he said if you liked Hamlet, you’ll love Russia.

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Dan Avida of Opus Capital spoke about Israel. Israel is a small country with a great deal of entrepreneurial activity. It has a population less than New York City but creates over 200 start-ups a year. It has the largest percentage of engineers per capita in the world. Companies like Intel invest heavily in development there. Israel’s venture capital market is about ten percent of the United States, with investors getting almost seven times what they put in as investment proceeds. Israeli companies tend to participate heavily in mergers and acquisitions. Experienced entrepreneurs go from successful projects to the next project. The government fosters but does not interfere in high tech development. The drawbacks to the Israeli market are its small size, hostile neighbors and distance from Europe, East Asia and the Americas. Success stories are many. A company called Given Imaging developed a small camera that can be swallowed like a pill. Scitex has developed a digital pre-press system that dominates the publishing industry. Warren Buffet invested four billion in Iscar, which makes very strong material in turbine blades and milling machines.

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Matt Perez of Nearsoft talked about Latin America. The latest development in outsourcing is called near-shoring. Sharing the same time zone with the U.S. helps. Other than possible higher costs for telecommunications, all the infrastructure for development is there. Latin America has small markets where technology is tested before wider deployment. Brazil is the largest market, but Mexico and Costa Rica are growing. In Mexico there is development in automating business processes as well as wireless transmitters for hospitals and hotels. In Costa Rica there is a successful company that created a transferter, a low-cost, easy-to-deploy intelligent device that converts electricity from AC to DC. Costa Rica also has multi-user gaming operations. Life sciences companies are processing CAT scans to give doctors better images to make diagnoses rather than use invasive techniques. Chile has growing investment in biotech. Business culture has its own traditions here. A high tech developer will tell you what he thinks. A high tech customer will talk about anything but business, the hard sell is considered rude. Long term he sees opportunities for onshoring.

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Dominique Piotet of BNP Paribas talked about high tech development in Europe. Only 44 percent of Americans have high-speed Internet access compared to sixty percent in France and seventy percent in Belgium. Internet access is always on, faster, cheaper and bundled with TV and phone service. Skype is an example of a successful company that grows out of broadband access. While usage is not a problem, innovation can be. Investing in innovation is a third that of the United States. The European Commission’s attempts to create a European Google or repository of books have had support in France, but not in England or Germany. People ask why have a European Google if the existing Google works just fine?

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Mohanjit Jolly of Garage Technology Ventures talked about India. Of the twenty companies in their portfolio sixteen are in software and four are in green tech. Sand Hill investors will demand a back-end 24/7 operation in India as part of their deals. India has over billion people but at most only 50 million are online. This leaves cell phones as a better potential mobile computing platform with the current 100 million units growing to over 300 million in three years. Half the average family income is a hundred dollars a month but their income and lifestyle is slowly improving. TV is everywhere and scooters are replacing bicycles. With this additional income, a cell phone for less than twenty dollars could be within reach for millions of people. The culture of risk for innovation is starting to change in India. Raising money is easier outside of family and friends. Companies outsourcing to India should not be surprised if Indian companies outsource again to Eastern Europe or the Philippines. Whole new communities are now innovating entirely new products like animation and biotech.

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Charles Wu of TianDi Growth Capital talked about China. China is so large it is hard to make a single generalization. People who have started from nothing are the ultimate risk takers, willing try new ideas. If one person has a good idea, twenty people will copy it. Open source is a fact of life. You see a lot of borrowed technology but not much emerging technology…yet. The great potential in China is for clean technology. It has government and popular support reflected in something as simple as solar hot water heaters. Great success is made by taking a small local business and making it national, like meat and dairy businesses. People start their high tech journey buying a cell phone before they buy anything else. They look to South Korea for emerging technology like online dating or buying virtual goods. It’s best to have local experts. It’s very easy to make money in China if you are Chinese. It is also very easy to lose money if you are not Chinese. Like anywhere, there are lots of bad engineers in China. He has seen great success with Chinese who have experience in Silicon Valley.
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I want to thank Penelope Dwyer of the Women’s Technology Cluster for her help at this event.

Copyright 2007 DJ Cline All rights reserved.