The Second Smartphone Revolution

Benedict Evans tweeted out this chart yesterday:

The first 2.5bn smartphones brought us Instagram, Snapchat, Uber, Whatsapp, Kik, Venmo, Duolingo, and most importantly, drove the big web apps to build world class mobile apps and move their userbases from web to mobile. But, if you stare at the top 200 non-game mobile apps in the US (and most of the western hemisphere) you will see that the list doesn’t look that different than the top 200 websites. The mobile revolution from 2007 to 2015 in the west was more about how we accessed the internet than what apps we used, with some notable and important exceptions.

But the next 2.5bn people to adopt smartphones may turn out to be a different story. They will mostly live outside the developed and wealthy parts of the world and they will look to their smartphones to deliver essential services that they have not been receiving at all – from the web or from the offline world. I am thinking about financial services, healthcare services, educational services, transportation services, and the like. Stuff that matters a bit more than seeing where you friends had a fun time last night or what it looks like when you faceswap with your sister.

Benedict is right. We aren’t done with the mobile revolution. But we are mostly done with it in the developed world. So where do we go to find the big mobile opportunities of this second revolution? Do we go to asia where they are having a very different looking mobile revolution? Do we go to latin america, the middle east, africa, eastern europe, and southeast asia? Or do we think that entrepreneurs in the US and other parts of the developed world will build and deliver these important new services to the developing world? I am not so clear on that. We are seeing a bit of all of this right now. I would like to believe that entrepreneurs all over the world now have the capabilities (both technical and financial) to build game changing and disruptive new services and launch them in their countries and regions of the world.

However, there are still many roadblocks for entrepreneurs in these emerging economies. It is not lost on me that Mpesa was launched by and is owned by the dominant local carrier in Kenya. It is not lost on me that Russian lawmakers are proposing a seven year jail sentence for bitcoin use. It is not lost on me that war and strife in the middle east will make building companies there harder.

But the thing that is particularly exciting about new services in the developing world is that they may come with fundamentally new business models. And, it turns out, new business models are even more disruptive than new technologies. Microsoft can copy Netscape. But copying the Linux business model is harder. Chase can copy Venmo’s app, but copying Venmo’s business model is harder.

So I am excited to watch this second mobile revolution unfold. It may be an opportunity for US-based VCs like me. But more likely it will be an opportunity for VCs and early stage investors who have had the courage and foresight to set up shop in these emerging locations. The investors who had the courage and foresight to set up shop in China in the late 90s and early 00s have been rewarded fabulously for that. If you ask me where the next big whitespace for VC is, I would point to the developing world. It doesn’t come without its risks and roadblocks, but it feels to me that it has enormous potential.

#entrepreneurship#VC & Technology

Comments (Archived):

  1. Mostafa Nageeb

    Well said, being from the middle east myself and having a failed startup there makes me relate to every word of this post. Phenomenal growth in internet usage and smartphone adoption. Uber opened cash in Egypt to not hurt their growth by the low credit card penetration. On the other side I totally agree on the challenges and roadblocks. There are many of them. I personally gave up for now and decided to move to the west. My question to you: Where do you see the next opportunity as a VC? I know it is not about a location but rather a company, which leads to my second question: how do you discover those opportunities as an investor? Given that you live in the west, you don’t speak the same language, and sometimes you lack the cultural awareness. How do you bridge such gap? And how would you start?

    1. fredwilson

      i don’t know if we can bridge that gap, which is why i said that i think these emerging opportunities may go to local VCs, not western VCs

      1. Mostafa Nageeb

        True. One big challenge will be bridging the knowledge gap between those local VCs/entrepreneurs, & what successful people like SV is doing. Because currently I see VCs in the region can provide the money, but very few of them have successfully built/invested in a tech company to success making them an added value to what they invest in. I think the first successes will come from hybrid entrepreneurs, people who are local but have been educated or worked in the west for a while. Once few of those break into success, they will start investing and the whole wheel will start rolling.

    2. BillMcNeely

      Would be cool to see a follow up to Chris Schroeder’s 2013 Startup Rising book (with Marc Andreessen forward)

    3. Kent Karlsen

      Interesting conversation. Being from Northern Europe we try to setup a business in Middle East (GCC). I have connected with a CFO that lives and do consulting in the region being from Northern Europe too. Together we teamed up with a local university to do market research etc. Great learning. Now we connect with local conglomerates in the region and request co-operation (funding) and we offer a vertical integrations based on their existing business. I learn that the culture is not really a problem, it’s an opportunity, and if you behave like a normal person you will have no problem in Middle East. Great culture and great food. We are lucky to find younger owners in the family conglomerate that have been studing and living abroad in Europe. We will create a trading platform as hybrid between classifieds and eCommerce. Challenge is to communicate technology and tell the difference and communicate financial numbers, and why it is better than the old business model. Maybe it is about fear to something new they are not in control of. We offer a negative control to local investor and we promise to reinvest most of potential profit back to the region. I have spent one year, 60 travel days and five trips so far 🙂 High risk, and great learning.

  2. awaldstein

    Personally–for my work–the next phase is mobile data beyond the phone.I don’t see myself working in the near future in these developing areas but I’m already starting to work within the enterprise and within the developed world on mobile data that is beyond simply the devices we carry around.Kinda a more future with of the IoT with a people component as one of the components not the one component.

  3. LIAD

    And of the next 2.5bn people to adopt smartphones… It’s all Android baby.Was reading about ‘reverse salients’ – the limiting factor in a system that holds back the entire system. Resources are thrown at the reverse salient as releasing it unleashes the entire system. Discovering and fixing it gives you maximum leverage as advancement for everyone is dependant on you.Seems to be a bunch of reverse salients holding back the next 2.5bn. Some of which, govt corruption, political, ideological that make them seem implacable. Making forging a path through them even more valuable.

    1. fredwilson

      I am going back to android when I get back to NYC in a few weeks. I can’t wait. I feel like the 6 months i am on iOS is like being in detention in high school (i spent a lot of time there)

      1. William Mougayar

        You got to try a Xiaomi 🙂 (and dual SIM included)Here it is on eBay. It can arrive by end of March…

        1. fredwilson

          i may just do that. i’m going to see what’s what. i want stock android for sure

          1. Reddy_s

            It is NOT stock Android .Operating System:4.3 optimized with MIUI version 5 Brand:Xiaomi / Mi 4iDo Xiaomi phones outside China have access to Google Play store or do apps need to be especially built for Xiaomi?…Xiaomi Mi4 review: China’s iPhone killer is unoriginal but amazingA big iPhone that runs Android ends up being the best of both worlds.…How to Install Google Play Store on Xiaomi Mi4 – Tutorial…

          2. kenberger

            The Robin Nextbit is also kind of neat, mostly because it was cobbled together on such a small budget.I’ve had a Nexus 6P since november. It ticks most of the boxes (except Image stabilization) and even now has Android *N* (so, even beyond M) on it. See my other comment re improved battery life, which is a big deal.But now that I’m carrying a new S7 Edge (which is awesome and also has M), I’m sort of over the 6P– it’s just a bit too bulky and I don’t care about Google Fi. I admit this with slight chagrin because I really wanted the Chinese “underdogs” to have won by now.

        2. creative group

          William Mougayar:Thanks we just ordered it. The unlocked aspect always is the first feature we seek. The 2GB we can overlook that.

          1. William Mougayar

            I was surprised of the price drop. I thought it was a $400-450 device. $250 is an excellent price point. I’m thinking about replacing my Mi3 now perhaps, which is 18 months old. Let me know what you think when you receive your Mi4i [email protected]

          2. creative group

            William Mougayar: expected delivery Monday 21 March 16. We will be out of town but will update you Wednesday. The Samsung S7 when on market for a year or two we will gravitate to those features. (Waterproof, etc.)

          3. William Mougayar

            Did u order the 4 or 4i?I saw the 4 at $150. I think it’s because the 5 out now.

          4. creative group


          5. William Mougayar

            note the Mi4 has 3GB, whereas the Mi4i has 2GB.

        3. Matt Zagaja

          The Samsung Galaxy seems pretty tempting these days, especially with the Gear VR add-on. My co-worker had one and it is incredible. Apple seems to be asleep at the wheel when it comes to VR, but at least my iPhone works with my Google Cardboard.

          1. William Mougayar

            How much is it, though, unlocked- $450-500?Tough to be beat $250 for a high-end 5 inch. Android.

          2. Matt Zagaja

            Expensive compared to other Android phones, but still significantly cheaper than buying the PC version of Oculus Rift.

          3. William Mougayar

            Well, ounce for ounce, $250 is a good mid-level price point (unlocked!!!) for a high-end phone.some plans make you pay $150-250 upfront for a locked iPhone which you don’t even own for 2-3 years! Screw that.

          4. Vasudev Ram

            Why can’t the US (and is it Canada too) – with all their activism – do something about locked phones / contracts being the rule rather than the exception? In India it is the opposite, surprising considering its a less developed country. Historical reasons, too much inertia, enough users don’t care, or something else?

          5. William Mougayar

            Dunno about the US, but in Canada the 3 big TelCos have enormous lobbying power. The most the CRTC could do is reduce their minimum contract terms to 2 years, from 3.

        4. JimHirshfield

          Is that stock android?

          1. William Mougayar

            Not sure. It says Android L. Was that a “nerdy” question? why should I care ?

          2. JimHirshfield

            I’m on Cyanogen and I don’t like it.

          3. William Mougayar

            With Xiaomi, you mostly see their MIUI interface which makes the devices almost look like an iPhone.

          4. JimHirshfield

            Is that a good thing, in your opinion?

          5. William Mougayar

            For me, yes. Ease of use, and I’m not a tinkerer of operating systems, nor interested in rooting versions. I can’t remember how many items I dropped it, including on its glass face and in water; and the damn thing keeps working.

          6. JimHirshfield

            Your points in the last sentence bode well for the hardware and construction. It’s usually the software that can irritate me more when it fails, preforms poorly, or is designed poorly.

          7. Vasudev Ram

            Interesting that it survives dropping and water …. will check it out.

          8. jason wright

            what don’t you like?

          9. JimHirshfield

            It’s unresponsive at times, so I need to restart.A few things about features that are ambiguous or extraneous.

          10. Vasudev Ram

            IIRC I read a while ago that Cyanogen has become a company and may have got investement. Let’s hope they use it to improve the products, if so. I’d to try it then, because rooting / flashing your phone means you can do a lot more with it [1], plus it may use less battery energy because you can remove all the crapware.[1] Including using it as a terminal (maybe w/attached keyboard) to login to your PC or server remotely, say while on holiday / moving around, and do any quick work, without taking out your laptop. At least for Linux machines, don’t know about Windows (for the PC or server).

          11. JimHirshfield

            It’s definitely a VC funded company, for sure. And it came standard on my OnePlus One phone.

          12. Vasudev Ram

            Cool, good to know, thanks.

          13. Vasudev Ram

            What’s not to like about it?I don’t mean it that way 🙂

          14. Vasudev Ram

            I meant it the way jason wright below did.

          15. JimHirshfield

            Unresponsive at times. Restart required.

          16. Vasudev Ram

            >why should I care ?Not an expert, but from what I’ve read (also, I use Android), I think the typical reasons people ask that question – whether stock Android or not – are 1) because the third-party manufacturers tend to add a lot of cruft (in the form of bloatware / unnecessaryware / crapware) to their phones, whereas stock Android does not, and 2) because the stock Android is supposed to get updates more frequently, including security ones and bumps up to the next major point release, whereas third-parties may not even support, e.g. 4.3 on a phone that came with 4.2 (experienced that, but at lower Android versions).People who know more can comment and correct …

          17. William Mougayar

            Got it. But most users probably don’t care for this. They can wait for packaged upgrades that work with their phones, no?

          18. Vasudev Ram

            Some users might care, I think (if they knew what was going on), even non-tech ones. because, depending on the phone model, it can be a real hassle to work around or live with the bugs – which more frequent updates would solve many of. And I’ve heard that many phone manufacturers don’t provide the facility to upgrade more than one point version or so, e.g. X.2 to X.3 is all they support. A likely reason is to force people to buy the next higher model from them, by advertising it as: “supports Android LATEST.VERSION!!!”. And non-tech customers – the majority – won’t know what is going on.Could be wrong though, haven’t studied this in detail, is more of a gut feel plus some anecdata.

          19. kenberger

            see my previous comment. Marshmallow is a reasonably big deal because it changes power management a LOT.

          20. kenberger

            the Android L thing sounds like a deal-killer to me. Makes it seem like it’s pre-Lollipop– and we are already on to Marshmallow and even N now.The Nexus 6P I’ve used for over a quarter now has N. The big deal with Marshmallow (and N) is MUCH smarter battery/power management.

          21. William Mougayar

            Well, for some users this matters. But I think for many that’s not a big deal.Do we change cars every year because the next model is more fuel efficient by 5%?

          22. kenberger

            I completely agree re most letter iterations of Android. But M brings a substantial battery difference– I find it much greater than a 5% type of thing. Battery is one thing that most everyone can appreciates and notices.

          23. William Mougayar

            How much better is the battery life?

          24. kenberger

            Marshmallow puts thing into deep sleep when you’re not using the phone for a while, such as at night. This is exactly the #1 simple feature I have wanted for years.It’s a big deal, anecdotally– and so far, anecdotally is probably the best you’ll cull from the write-ups so far since it’s tough to benchmark with precision as use case impacts it so much.

          25. kenberger

            Noooo!! That is the lame-o inefficient old skool way that never really worked right, and annoys on nights when you stay out late, for example.the new way is several generations WAY smarter 🙂 And I think will also improve quickly.

          26. Reddy_s

            It is NOT stock Android .Operating System:4.3 optimized with MIUI version 5 Brand:Xiaomi / Mi 4iDo Xiaomi phones outside China have access to Google Play store or do apps need to be especially built for Xiaomi?…Xiaomi Mi4 review: China’s iPhone killer is unoriginal but amazingA big iPhone that runs Android ends up being the best of both worlds.…How to Install Google Play Store on Xiaomi Mi4 – Tutorial…

          27. JimHirshfield

            Thanks. Good info

      2. LIAD

        Find it hard to believe you ever saw the inside of a school detention room. Maybe if you took a wrong turn on leaving the library ;-)Re 6th month iOS purgatory. Like voluntarily throttling network speed etc to get real life insight into how others experience tech. Next level dogfooding.

        1. Vasudev Ram

          >Find it hard to believe you ever saw the inside of a school detention roomI find it easy to believe. I think (based on what I’ve seen him write, nothing more) that Fred has a bit of a mischievous streak 🙂 I won’t give examples, will just say that there is a hint in the previous sentence – for the right people who’ve been around here long enough 🙂

      3. creative group

        Fred:Elated a power user of both platforms actually can express their views on the deficiencies of the mobile OS.

      4. Steven Roussey

        You had better be careful, the security implications of that could be bad. You are a high value target. Go with a nexus device so the business models of carriers and manufacturers doesn’t leave you with a hacked device sending requests for wire transfers to Russia.

        1. Steve_Dodd

          This is why I like my Blackberry Priv. All android and securely managing what’s going out the back. I know everyone will dump on me for this comment however I’ve found android to be terrific and with the BB software quite secure. What was most fascinating was knowing what the dam thing was trying to tell “the world” about me….and could stop it. There are also newly emerging 3rd party products that can do the same for all android and iOS platforms.

      5. jason wright

        High school brats normally come right in the end

      6. LE

        is like being in detention in high school (i spent a lot of time there)Acting out, probably as a result of having moved so many times (30??) and the lack of stability and certainty in your environment. [1][2]I love iphone, spent 0 time in detention, and had 100% certainty when growing up. I knew exactly what was expected and it never varied and there was near 100% predictability in my environment.[1] Dovetails with you mentioning how Gotham Gal keeps you “in line”.[2] Taking a further shot in the dark perhaps your parents didn’t level with you as far as when the next move would be.

      7. NS

        Fred, do you feel the same way about Macbooks too? i.e., detention? it just seems that mobile is more ecosystem driven than laptops.

      8. Kirsten Lambertsen

        I’ll bet it was for calling out b.s. when you saw it 😛

    2. Michael Elling

      The reverse salient in mobile in developed markets is the business models of the carriers as we transition to 5G. What precipitated 4G was the wifi offload Steve Jobs took advantage of in 2007 based on an obscure regulatory loophole from 1938 (aka part 15) which enabled numerous network effects across the app ecosystem. Few credit this fact to the subsequent mobile revolution of the past 8 years is it really was an unintended consequence. Nonetheless the resulting unexpected demand forced the carriers to upgrade to 4G 4-5 years ahead of what most expected back in 2007.The evolution of the part 15 technology system into 70% offload and more than 60% of internet access via “garbage spectrum” (the frequency at which water molecules resonate) is it’s own history of unintended consequences.Who/what will precipitate a rapid move to 5G? Left to their own devices it won’t come from the carriers based on 30 years of analyzing them. The incremental economic return/benefit from the next 2.5bn to 3/4G will not be as great as people expect. So the transition to 5G is what everyone in the app and control planes should be interested in. And the transition will be precipitated by some unexpected source.

      1. Vasudev Ram

        >And the transition will be precipitated by some unexpected source.Do you think that sometimes, big changes happen due to unexpected reasons? I’ve sometimes wondered if it is so.

        1. Michael Elling

          That’s easy. Yes. Almost always, if not all the time.Mostly because of network effect when barriers drop or friction of interconnection eases. The change comes from an unexpected player or industry that can change and scale more rapidly than the incumbents.a) This was the case with aforementioned part 15 where no one every imagined, even as recently as the late 1990s that 50mhz of shared spectrum could account for 60-70% of all access. (as opposed to 500 mhz of licensed spectrum)b) Same holds for ethernet, 802.11 in layer 2. and TCP/IP in layers 3-4. Both benefited from explosion in fiber (layer 1) due to voice competition (wired and wireless). Of course video started taking over by mid-late 2000s (which is precisely when Netflix could go online and make real its moniker). Good article on history of fiber advances & Kleck’s law here: And same can be said for the web as a whole. The latter scaled commercially due to 3 issues in the competitive voice world: dial-1 equal access, computers 2/3 which protected nascent ISPs from BellCos, and flat-rate dialup. The first 2 were policy mandates, but the latter was a monopoly reaction to competitive WAN forces (ultra-low cost metering and distributed switching) that was an unintended consequence within a larger unintended consequence (“data” subsuming voice).Trust me when I say 99% of people never saw these things coming, nor was any of it pre-ordained. But few view history quite this way after the fact. They want to believe it happened for a reason. Makes predicting a lot easier!

    3. jason wright


    4. Chimpwithcans

      As an African – this comment is ringing bells in my head because it is true. While the growth of mobile in Africa is inevitable, the engagement of business and investment communities beyond the current ‘pay as you go’ social and data model is always in doubt because of vested interests and corruption. Like Fred says – MPesa only took off because the most powerful political family in Kenya had a piece of the pie. All other factors are for zilch until you navigate the political and cultural landscape. This means local solutions for local problems. Particularly hard to foresee and invest in from afar compared to analysis of a regulated, strong and transparent market like US/EU.

  4. Richard wakeel

    I feel we’ve barely scratched the surface of mobile data interface utility, even here in the West. The biggest issue from what I’ve seen is the pack mentality of chasing the next hot thing, even if it has minimal everyday utility value. Uber and airbnb, unlike (Snapchat, Instagram, WhatsApp…etc.) disrupted massive, old world industries and delivered indisputable value. My feeling is that the next disruption will affect the disrupter behemoths of the first generation internet. Computers were never personal or convenient the way mobile is and that’s where the next revolution will come from. Being outside of the main tech hubs in the US, and willing to actually build something that requires hard work has demonstrated to us that mainstream America is still hugely underrepresented when it comes to mobile, utility tech. Since launching our platform in Tampa two months ago, our adoption rate has gone through the roof with no advertising. Our clients are small, under-reped businesses trying to figure out how to not miss out on mobile like they did on desktop.

  5. William Mougayar

    Wait a second. “But we are mostly done with it in the developed world.” If you’re looking at Social only, maybe yes it’s saturated. But I’d hope the developed world is moving beyond that.The thing is that our mobile devices have gotten so good at running Web Apps that it’s short-sighted to define smartphones & mobile together. It’s the Web the Web the Web, and it takes many access forms.And soon, it will be the Blockchain. Wait til you can start to trade anything peer to peer from your smartphone, without the old “trusted” intermediaries.

    1. fredwilson

      Blockchain is not a mobile phenomenon. There may be some new mobile innovation that comes of it though

      1. William Mougayar

        At the user level, yes I hope there will be mobile innovations around the blockchain.

  6. Alexander Ainslie (@AAinslie)

    Stories like this one illustrate how the #2ndSmartphoneRevolution is core to the next 2.5bn…The Impact of Shutting Down Mobile Money in Uganda

  7. dan_malven

    This makes me think that if I were an LP I’d be backing 500 Startups strategy…and clearly it seems a lot of them are, based on their fund raising successes.Or as a VC I’d be staying close to the 500 Startups network looking to co invest with their local funds. Fred, any thoughts on that?

  8. creative group

    Fred:Your blog post subject is certified Platinum. Reflecting on the subject of emerging markets developing the next disruptive and innovative mobile app has more challenges if initial investors are not connected with those governments which are unstable and volatile. (Putin just taking a company and jailing the founders if he wants) Should actually alarm everyone but doesn’t. Business as usual.

  9. JimHirshfield

    Seems to me like the adoption of the device is local, but the innovations on the device are global. That is, there are geo-specific things holding back adoption of smart phones in certain parts of the world. But once they have them, what they’re used for is universal (search, email, messaging…)

  10. creative group

    Blog contributors:March Madness! List your team and who you think will win it all.Will we have a bracket for the blog?All this technical talent in one space.

      1. creative group

        JLM:Anyone of the top seeds can win it all. Even second seed MSU. (Spartans)

  11. James Lucas

    I totally agree with this. coming from Kenya i know how mpesa has revolutionized the way business is done. I can send my grandmother money in the most remote part of the country without leaving my house.Several entrepreneurs are now setting up shop in the part of the world and it makes perfect sense to do so.

  12. BillMcNeely

    I can’t wait to see something that was a hit first in Africa (Fintech related?) cross over to the Western World. I think that’s the power of the Second Revolution.

  13. Tom Labus

    Markets morph in unusual and unexpected ways. Anything can come out of anywhere at this point and that seems to be the normPolitical stability and the rule of law still are important factors in where you want to be located and work from. The Apple /FBI fight resolution too. If Apple loses it may unleash all sorts of innovation here.

  14. Tehsin Bhayani

    In terms of mobile opportunities in the developed world, I think we are very far from mostly done, we are at day 1. Three key areas:1. As users get into the habit of being dependent on apps to help in their day to day lives, there is room for significant innovation in how we sync or make these apps connect to their physical world.2. The hardware innovations that come to mobile will let us create apps and models unimaginable to us right now. Or when it *merges* with VR(?)3. Platforms that can inter-connect the developing world and what they bring to the table. Partly, making the global workforce more efficient/available/accessible, and partly coming up with new models (still on mobile) that currently remain unimagined in our heads.

  15. Jaikant Kumaran

    I am from India and if you love to solve real problems, you will find lots of them here (In a good stimulating sense). As an example a doctor relative of mine is tasked with ensuring all children in the municipality are vaccinated. This is a city municipality and attracts poor workers from all over the country for construction/related jobs. They set up a temporary home and are on the move every few months. This makes it difficult to identify/track/ensure that their kids are immunised and the continuity of their kids education. There are many more real problems, if solved can improve peoples lives for the real. Solving these problems may/may-not make a lot of money, but can give a lot of satisfaction. The good karma we can leave for the next birth.

    1. sigmaalgebra

      I wish you well. I really do. I wish all of India well. But I can’t understand India: I tried, and I just can’t do it.

      1. LE

        Cast system. At the core of everything in India.

        1. Jaikant Kumaran

          Racism has many forms. Caste, religion, color, nationality and more

        2. Jaikant Kumaran

          Where there is good there is also bad. Yin and yang.

          1. LE

            Can you give some examples of what would be good with the caste system? I can think of a few but they relate to what is good for anyone that is not in the lowest caste.

          2. Jaikant Kumaran

            There is nothing good in the caste system. I think the caste system is bad. The original intent of this system was to get people work to their strengths, overtime it became something a person was born into. By good I meant, other aspects of the culture and society. I could tell you about it, it will be about the family structures, beliefs, customs, traditions etc. It will be too much to put it all here. If you visit India, I would love to meet and talk about it and also show you around.

          3. LE

            Original intent? [1] It’s to keep people in their place (so they can serve their purpose to the upper class) – to that point prevent intermarriage. In that sense it prevents a mixing of the gene pool that makes it very hard for those in the lowest caste to escape that caste.The original intent of this system was to get people work to their strengthsSure. As in keeping people who are good at manual labor doing that, instead of ending up by marriage with enough brains and ambition to want to do things that require thinking and therefore revolt against doing manual labor. Which is why in India I believe they are literally referred to as “slaves” in many cases I believe.[1] I have not studied history and don’t know anything about this other than conclusions that I have reached based on what I observe and know.

          4. Jaikant Kumaran

            Keeping people in the places they are born is the distortion, not the original intent. As you don’t know, you can take it from me.The caste system is dead in the cities, it is still prevalent in rural India. There are rare incident of discrimination, which causes as much outrage as racism does in America. It is no different.Btw, I don’t take Wikipedia too seriously.

          5. LE

            not the original intentWell it’s not like people with intent are always honest about that intent and instead don’t use some other (what is commonly known as) “cover story” or reason for their actions.For example, in the US a father may want his son to go into the family business with him because he states it’s good for the son to have that stable known job. But it also serves the interest of the father allowing him to have a trusted person in the business which he can depend on to watch over. [1] And further makes it easier to control the son because the father controls the money. What the son gets paid and what he can achieve. Of course the father would never acknowledge that that was part of the reason for this, he would simply say it was for altruistic reasons.[1] And allow him to take increasing time off in Florida or playing golf.

          6. sigmaalgebra

            Standard approach to a poor, laboring, lower class of essentially slaves — have them identifiable, e.g., via language, skin color, schooling, social graces, etc.

          7. Satya Seri

            Caste system is mighty good if used in the right way. I always wondered why it is not practiced here in the US.Basically, this is about segregation of people into different classes that are unique in many aspects. By way of this, you were able to create a template for each class of people and get to know a person just by knowing the last name . Marriages are performed within the same caste thus confirming the alignment of the person’s sensibilities and expectations . I attribute the divorce rate of more than 60% in the US to be primarily because of no-caste system. You would never know what kind of a guy/girl is or their health factors gets affected after a certain age. In case of a caste system, you kind of know the history of atleast 5 generations above you before engaging into a wedlock. Quite like the 23 and me in action . And several of these advantages of an efficient caste system which is what you see in India.

          8. Jaikant Kumaran

            Indians love to play it safe, when it comes to marriages – arranged marriage using the caste system. Personal growth doesn’t come by playing it safe. There could be much to learn about oneself from a failed marriage.Btw, I would not read much into the divorce statistics, as there are many factors which affect these numbers. The Indian society looks down on divorce. It could take years to get a divorce in India – the legal system sucks. Gender equality is still a big issue.Technology and the internet has been a great leveller. It doesn’t discriminate based on sex, religion, caste, color or anything else you are born with.

      2. Jaikant Kumaran

        That’s good news. When you think you know something really well, that’s when things can go really wrong.

    2. gregorylent

      the home run ipo mentality as practiced in silicon valley is a value system destructive to humanity, long term …. solving local problems such as you mention is a positive good for humanity .. keep going, don’t be swayed by the west, or even by the emergent startup fever sweeping india .. it is generally as misguided as the west’s

      1. Vasudev Ram

        I’ll have to agree to some extent – a lot of it that I have seen / read about here is as misguided as some of the west’s. But maybe not all. I have been hearing about and reading about some startups that seem to be doing more meaningful stuff, or working on “stuff that matters”.

      2. Vasudev Ram

        >solving local problemand>as misguided as the west’sThat reminds me of E. F. Schumacher and his book Small is Beautiful, which I first read as a teenager, and I mentioned both him and his book some time ago on this blog). Pages about both of them are probably on Wikipedia.Yes, here you go – first two hits for a search for his name:…Here’s an excerpt from the top of the page about him:[Ernst Friedrich “Fritz” Schumacher (19 August 1911 – 4 September 1977) was an internationally influential economic thinker, statistician and economist in Britain, serving as Chief Economic Advisor to the UK National Coal Board for two decades.[1] His ideas became popularised in much of the English-speaking world during the 1970s. He is best known for his critique of Western economies and his proposals for human-scale, decentralised and appropriate technologies.According to The Times Literary Supplement in 1995, his 1973 book Small Is Beautiful: a study of economics as if people mattered was among the 100 most influential books published since World War II.[2] It was soon translated into many languages, bringing him international fame.]Ironicaily he was western, a German economist who settled in the UK and worked for the government – the Coal Board, IIRC.And Gandhi, who tried to bring about the small is beautiful culture in India (e.g. khadi (local spinning and weaving to make cloth for daily use – think millions of Etsy makers and sellers [1], decades before Etsy existed), self-reliance, etc.) may have influenced Schumacher – see Wikipedia article on S.[1] None or not many getting rich, but many or most making a decent living.Interestingly, from what I see, to a small extent at least, the tide seems to be turning in the other direction – towards smaller, local, organic, healthier, low environmental impact, etc.Everything that goes around comes around again …

    3. Vasudev Ram

      Some points there. I’m busy now so I will just put some (what I think are) relevant/related links here, and try to comment a bit later. maybe tomorrow.C. K. Prahlad and the fortune at the bottom of the pyramid:…I got to know about Prahlad and his work some years ago, then got to know about his book mentioned in the link above, and bought and read it. Good stuff. Not fluffy reading – full of real life industrial case studies, data and examples.More importantly, I’ve seen, over many years before reading his book, the entrepreneurship and innovation displayed by many small and medium Indian entrepreneurs, and by “entrepreneurs” I mean even people like roadside auto mechanics, other tradesmen and such.Anyway, more later, hopefully, with an anecdote or two.

      1. Jaikant Kumaran

        I haven’t read your links, would do so, pretty late in the night already. Monetisation is possible and I have come across a few innovative ways. Like Fred mentioned transformation will be in the business model.

      2. Vasudev Ram

        I’ll just add one line for now, from Wikipedia article about Prahlad:In 2009, he was named the world’s most influential business thinker on the list.[14]

      3. Vasudev Ram

        >Anyway, more later, hopefully, with an anecdote or two.Okay, here is the anecdote, to do with small-time entrepreneurship:I had linked to Prahlad’s his book, The Fortune at the Bottom of the Pyramid, in my comment above.Some years ago, I wanted to buy it. So went to a brick and mortar bookshop – a famous one, in my town, had existed for decades.Asked the salesman if they had it. He had no clue what the book was about (business / technical / other) curtly said no, and was not in the least interested in helping me to find it, e.g. by looking it up the publisher’s catalog, calling their distributor, none of that. Indifferent. The boss/owner was not around, or he may have behaved differently.I walked out, walked a few feet further down that block of shops, and there was a pavement (curbside for Americans) book and newspaper stand there. Asked if he had the book. He knew about the book, knew it was selling well, told me he didn’t have it in stock right now, but could get it for me fast, in a day or two, and asked me to come back. I did so, later, and bought the book from him.See the difference. The second guy (the street vendor) is a case of jugad [1], enterprise. You see a lot of that with these kind of small-time, often unofficially operating, vendors, tradesmen and other small business types in India.[1]…(The other, not so good side of the jugaad phenomenon, is when people twist the law for their benefit.)

  16. lawrence abeyta

    I agree that the obvious stuff has been done in developed countries, but just like the developing world, the harder things in mobile are just beginning. You don’t have to look far to see water issues in Flint, housing in NYC, and many other problems around our country that government infustructure is in need of a technology revolution worldwide. With 30% of the world population expected to move to urban areas, new systems are required to support that migration. It takes the foresight of companies and VCs to rise to this challenge.

    1. SubstrateUndertow

      First we invent network-effect technologies then network-effect technologies organically reinvent the organizational “US”Historically all technologies are by nature platforms for building new business/social models.But “network-effect technologies” are orders of magnitude more disruptive than all previous technologies. They enable an incremental, mutually-adaptive, self-organizing dynamic previously only accessible at the biological organizing layer to be consciously applied to human organizational social-evolution.New technologies always start by automating the old work flows then morph into platforms for building out completely new work flows.The universal strange-attractor”, the universal evolutionary gravitational tractor beam is a constantly selective gradient towards an ever increasing mutually adaptive awareness/consciousness, towards an evermore synchronizing morphogenic network-effect/singularity dynamic. I am aware of you, as you are aware of me, as we are all aware of each other, as everything is aware of everything.( Teleology – deity not a required feature just optional)Grasping that network-effect organizing narrative/metaphor/language/meme is our gateway to discovering truly disruptive distributively-adaptive new App platforms !New social/economic interdependency/network-effect-algorithm synchronization solutions my be hard to visualize at this juncture but here comes that universal evolutionary gravitational tractor beam that evolutionary “strange-attractor” thingy right at us.The real social/economic energy barrier to collectively accessing this “network-effect organizing narrative/metaphor/language/meme” App-potential is our present set of 19th century ownership/control values which are still hopelessly framed/organized around a vestigially obsolete/irrelevant left/right polemic. The network-effect is presently caught in a serious 19th century, values based, leg hold trap.New social/economic-interdependency optimized organizational structures/institutions (i.e. fundamentally disruptive new social/ecomonic Apps) will ultimately emerge by facilitating the collectively-adaptive-opportunism that can only be co-odinated/synchronize/accessed via an imaginative application of the network-effect’s organic-mojo self-organizing-dynamic, Apps eco-systems as an adaptive social/economic neural-net nervous system.We are being welcomed/tractor-beamed into the age of “Social Organism” whether we like it or not. Apps as adaptive “Functional Organs” within the larger “Social Organism” this is where the truly disruptive Apps will be playing !

    2. hairyasian

      where’s the money in this though? i don’t see a lot of capital flowing into necessary causes like these…

      1. lawrence abeyta

        The money is in PaaS/SaaS platforms to cities and government; the market is trillions now and expecting $3-5 trillion increase in the next decade. There are VCs who have started new funds in the last 2 years just for this space. It’s just the beginning.

        1. hairyasian

          this is outside of mobile you think mobile (ie handsets, wearables) will be relevant in the next decade? i know this is conjecture, but i think mobile tech will be leapfrogged relatively soon…

          1. lawrence abeyta

            Yes, extremely relevant. . First, there are billions more people who don’t have them in the developing world, that will take 1-2 decades to develop. Second, the technology may change, but the demand for greater integration with more technology will be higher and will require more Co’s to solve it, thus a bigger market.

    3. Twain Twain

      At Launch, Hyperloop team proposed something better than mass migration to already saturated urban areas: more efficient CARGO TRANSPORTATION TO RURAL SATELLITE TOWNS.So people don’t have to move to those urban areas.*…I <3 Hyperloop idea and hope they will make it happen.

      1. JamesHRH

        Just announced TOR to MTL up here…..

        1. Twain Twain

          Yes, connecting SF <=> CA, TR <=> MTL, NYC <=> WASH. is one strategy they announced.The other is the whole freight efficiency thing. That’s potentially competition for / cooperation with Fedex & Amazon.

      2. Matt Kruza

        So I think is very flawed from a basic economics standpoint. Who gives a shit about cargo being sent from california to ohio in 3 hours? It is fair to assume self-driving cars // trucks by the time of assuming hyperloop, so instead a truck can make it from california to ohio in say 24 hours straight at lets say 1/3 or less of the cost (since using existing roads and likely less fuel / energy). The basic economics is their is no “time / availability” premium for the vast amount of goods. I think hyperloop will not happen, but can say allmost surely hyperloop for cargo is doomed, just like bitcoin. Technology in search of a PROFITABLE economic opportunity. But it won’t happen.

  17. sigmaalgebra

    Caution: I suspect that the opportunity in China in 1990s to the present was due at least heavily to, and the candidates are, …, and may I have the envelope please [drum roll, please], and the winner is, traditional neocon US foreign policy that long wanted to run the world with carrots and sticks, economic carrots in front of the mules and military sticks at the back. So, the US wanted China in the WTO, good China, nice China, peaceful China, obedient, obsequious, submissive, subordinate, subservient, grateful, happy, well behaved China — or so thought the neocons. So generous were the neocons, giving away US businesses and jobs and importing China’s unemployment. Same for the Asian Tigers.It was so, so, so nice and generous for the US neocons to take the US textile industry of the US Carolinas and give it to Pakistan. Now there are lots of Web sites in Pakistan selling nice, fluffy terrycloth towels. Nice Pukistan, oops, Pakistan.Sure the neocons assumed, easy for them not being in the Carolinas or the US Midwest Rust Belt, that all the unemployed US workers would soon get much better jobs at Microsoft writing software to sell to the countries the necons gave us businesses to. Ah, neocon version of mercantilism.Wonder how many Carolina textile workers, BBQ restaurant workers, auto repair workers, framing carpenters, etc. put out of work by the oh so perceptive and generous neocons actually got jobs at Microsoft? I could guess — ballpark zip, zilch, and zero.So, with the neocons, the US imported too many products, exported too many jobs, and imported too many workers and too much unemployment of other countries, all for the neocon version of US national security that they found in the same place as the triple secret intelligence that Saddam had nukes.The neocons had another big secret — just where the heck they found that really strong funny stuff they’d been smoking.So, here, before counting those third world, mobile app, plump chickens before they hatch, note that that neocon, US giveaway stuff is about to end.Indeed, yesterday fromhttp://www.realclearpolitic…I downloaded the basic data on the Republican primaries, made some reasonable, simplifying assumptions, wrote a little software, and got some answers and some surprises:(1) Basic Fact.There are a lot of states with delegate rule winner take all. So, with ballpark Trump’s national poll numbers among likely Republican primary voters of 35-45% with three competitors, Cruz, Rubio, and Kasich splitting the rest, Trump stands to do very well in the winner take all states.(2) Surprisingly Robust Bottom Line.If Trump, with just his plurality, does really well in just the winner take all states, then, for a wide range of assumptions about how many delegates he gets in the states with delegate rule proportional, the result is always essentially the same:Surprising ResultLacking some radical change in the political situation, on the last day of the primaries, June, 7th, Trump wins the nomination, that is, gets 1,237 delegates or more, by ballpark 100-300 delegates to spare. There is nearly no chance he will lose. And there is nearly no chance he will get the 1,237 delegates much before June, 7th.Surprisingly Simple DriversWhat really drives the situation are (A) the winner take all states, especially California on June, 7th with 172 delegates, (B) the broad fact that Trump has a plurality in the polls, and (C) that a plurality wins all the delegates in a winner take all state.E.g., the fact that Cruz just did well in Wyoming is, for who wins the nomination, essentially irrelevant — that is, it is nearly certain that Trump wins on June, 7th and not before no matter what happens in states such as Wyoming. Just simple arithmetic, guys.Then, for the general election against the Democrat, guess as you will. My guess is that Trump will win again due to (1) broad appeal to Republicans, independents, and centrists Democrats, (2) the chances that Clinton will be the Democrat nominee and her vulnerabilities, (3) Trump’s clearly effective, simply stated message, repeated over and over, day by day, and (4) Trump’s basic sales capabilities and determination.Apparently his Boeing 757 is a great help, too — give a speech, get into the plane, maybe parked just in front of an airplane hanger used for the speech, take off, get a meal and a nap, arrive at another location, give another speech, maybe call into a TV interview program, make some more headlines to get more free publicity, repeat until done.Then, with President Trump, no more neocon giveaways of US businesses to developing countries. Then, f’get about the rise of novel information technologies in such countries. More likely than significant, new mobile software will be blood in the streets from hungry citizens.Also more likely: Getting the real US unemployment rate down from ballpark 25% to where it belongs, a real 4% or so.Then US safety net expenditures go down, US tax revenues go up, US government deficits go down, US exports go up, US imports go down, the US balance of trade goes up, US divorce rates go down, US birth rates go up, US banks are willing to loan again, the US Main Street economies go up, US immigration laws get enforced, and the US gets healthy again.Net, bet on the US, inside the US, and f’get about finding gold in the third world sewers, from mobile or anything else.

    1. LE

      Generally agree with what you are saying above. (Use of “generally” only because it’s long and I don’t have the time to fully read each point btw.)One thing I would add though is you have to factor in “ridgid not going to move our lard ass” union workers into this discussion. Like I was told growing up “there is a guy that digs the hole, a guy that moves the dirt, a guy that drives the truck” and so on. And the inability to fire workers (NYC teacher “rubber rooms”) or anything that amounts to common sense employment practices. (Similar in a way to rejection of common sense gun laws actually). Also caused jobs to flee to southern states. Not to mention that people in the US got a bit fat and lazy with their work ethics as well. May factors came together.

      1. sigmaalgebra

        The unions are bad but not the cause but a consequence. The union workers should expect to like Trump, a LOT.Why? Union workers like the unions and the work rules since otherwise they stand to lose their house, car, wife, and marriage. Where a lot of people get fired, the results are standard: Rates of alcoholism, drug abuse, domestic violence, miscarriages, divorce, crime including violent crime, and suicide go through the roof.Sure, in a farm economy, in bad times, just be self-sufficient: Have a garden. Can vegetables. Heat with firewood. Build with wood. For ice, harvest it from the pond in winter and store it for summer by stacking it in a basement with a lot of sawdust for insulation — can last well all summer. Raise livestock for eggs, milk, meat, fiber, leather, and muscle power. Also, feather pillows anyone? Economy? Sure, do a little barter, e.g., swap a ham for a horse harness, maybe for a cast iron pot. Sure, 150 years ago, could do that. If the economy was booming, then junior could get a job working on the railroad. Else, junior could stay on the farm and help clear, plow, sow, cultivate, and harvest.But now ballpark 99% of the population is in cities with a money economy and not at all self-sufficient. When the money economy works, great, much better than the old farm economy. When the money economy gets sick, disaster — people die. The US is still starting to learn this crucial lesson.For the wasteful union work rules, the solution is easy — look at the cause, not the consequence. So, the solution is, and the candidates are …, may I have the envelope please [drum roll], and the winner is, have at least one job for each worker, hopefully two. To do that, have a healthy money economy. Then, the union worker will eagerly give up both the union and its work rules. Without a good money economy, no union work rules means dead workers and, then, blood in the streets.

  18. gregorylent

    do you think surveillance issues ill affect mobile adoption?

  19. gibson86

    6 Years ago,We did try to put Wechat alike app in Africa before Tencent debut Wechat in China..but the sudden death of our Africa-based investor totally stop our mission..There is no doubt Africa and other developing part of this world will provide tons of opportunities for business-savvy start-ups..It seems Germany based Rocket internet have done terrific job in those market already..Really smart people,smart copy,fast execution,well done!!

  20. Bruce Krulwich

    Fascinating thought. I agree with the first point, but think you lose the track when you say “we are mostly done with [the mobile revolution] in the developed world.” This sentence, and what follows, contradicts the main point you made a paragraph earlier.Many technologies follow a simple pattern – first they copy what came before, then they evolve it a bit, and only then is there transformation, which is the truest innovation.Cars started out replacing horses or trains, but eventually transformed society into suburbs, highways, and the like. Phones started out copying telegraphs or mail, but ended up changing how we plan lives. Mobile phones started out the same as landlines, but then transformed how we live and communicate on the go.I really agree with the stat you brought, that most mobile apps are simply mobile versions of web sites. But some aren’t. Some have already transformed driving (waze), parking (pango), public transportation (gettaxi and uber etc), payments (more in Europe and Asia than the States), and more. These are the truly transformational apps, and they’re only starting. But they’re starting in the developed world too, and more is emerging in the developed world every day.

    1. Satya Seri

      Transformation is what causes roadblocks. Not all things transformational have seen the light of the day if you look at the history . So it is better to resort to first two steps rather than failing at the third point.

  21. Amy Millman

    Fred: would love to read you thoughts on these business models and why they are unique

  22. Itay Rotem

    It might requires new investment models

  23. Guy Daniels

    Just a point about MPESA. You say “Mpesa was launched by and is owned by the dominant local carrier in Kenya.” It was actually conceived in the UK, following analysis of the emerging micropayment models of east Africa. The U.K. Government’s international development arm stumped up the cash and handed it to Vodafone to develop. The dominant local carrier in Kenya was Safaricom, 40% owned by UK-based Vodafone, so an ideal partner to launch with. My memory fails me, but I think IBM had a hand in the project too. Regardless, MPESA is a brilliant example of working with local innovators on a local need, and then being able to port that model across to other countries. But it originated outside of Africa. I’ve done a lot of reporting on the impact of mobile in emerging nations, but I’m still waiting to see a mass-movement that supports local / regional app and service innovation. It’s starting, but it’s early days. Plenty of help from global telcos such as Orange, who obviously are looking to secure a slice of the action for themselves. But as you rightly say, plenty of obstacles.

  24. Peter Van Dijck

    Living in South America.Facebook is BY FAR winning the war for the next billion right now, in a double punch of brilliance.First their acquisition of WhatsApp, which is what everyone was/is using because of their smart SMS-but-pretty-much-free model, and second by the much less publicized free-internet landgrab. The next billion doesn’t have unlimited data plans, they often are out of minutes. But what they do get for free is free unlimited Facebook+Whatsapp data access with an affordable plan.Which effectively gives most people most of what they need, for free. No other company comes even close.

  25. howardlindzon

    Thank god for the Trump wall…keep that VC integrity locked in the USA!

  26. Staska

    My biggest problem with this post (apart from lumping in half of Europe into a developing world via flippant Q “Do we go to latin america, the middle east, africa, eastern europe, and southeast asia?”… ) is about transferability of business models created in a world lacking strong institutions to the world having them. And, to some extent, even to different parts of the world lacking institutions in a different way.Which not you, but some reading and sharing this post imply.

I think your suggestion of big VCs setting up regional shops to enable the local startups and reap rewards from is a great one. There is definitely lack of financing in many parts of the world. Some successes in China and maybe in India is a (limited) proof this approach can be very lucrative and beneficial to all.

But we should be aware about (very often) insurmountable difficulties of what it takes to transfer a business model, working around or despite the lack of some institutions, from one very different part of the world to another.

I am still on the fence, and skeptical watching how Uber will do here, in Lithuania. We had smh like Uber for about a 20yrs or more ago during wild west days here, when any guy with a car and a radio could do a taxi. We got some more regulations since then, but it was about 0.30$/km when we started getting them and is about $0.50-60 right now. And, except for novelty, and opportunity for unlicensed drivers, Uber brings very little new here. Have not seen any serious long term price or quality adjustments yet. And it is in a part of EU.Imagine what it will take to bring banking, medicine, education, heck, even retail business models in places with at least somewhat working institutions? And minimal wage, and at least some worker organization. Not even starting about certification to be a doctor or teacher.

Ugh. Already went too long. My main point is – the opportunity, looking at the first 2.5B on smartphones may look huge. But when you get into the details, it may turn out orders of magnitude less than it appeared based just on demographics alone. One factoid to share – in my website (in English) owning days (about 2-3 years ago) , my English language visitor from US was about 10X more valuable, in cash he brought in, than from anywhere else in the world.

  27. Ologn

    People in third world countries will probably get low-end Android phones. Something that would be transformative would be an app that allowed people to write Android apps on their own phones. It’s an ability I had 30 years ago on my primitive Commodore 64 – the ability to program my own computer on my computer – and it would be nice if kids in third world countries had the same ability.This programming app would be something akin to the already existing, commercial-developer-geared AIDE app, but with a broader target. This new app would be open source, multi-language, and beginner friendly.Some of the technology and code is already there – Termux, Terminal IDE etc. I hope to get some time in the coming years to work on this, since these kids should be able to program their own computer in the manner that I was able to program my first computer.

  28. Steve_Dodd

    Hi Fred, IMO the world is full of opportunities in the developed and under-developed worlds. It all comes down to vision and commitment as you’ve clearly proven. The mobile evolution is far from over, in fact, like social media, it’s only just begun. Not only will the platforms continue to expand but because of the increasing power of these devices, so will the applications. Applications that add value we cannot yet imagine. And, as mobile, social, IoT and other strategies continue to merge, the resulting opportunities for progressive thinkers continue to expand.

  29. Underwun

    Looking forward to every minute

  30. Saurabh Shah

    you might want to look us up – India’s first subscription based organic waste treatment service launched in Pune, India. You must also know that India provides the maximum number of de-centralized municipal solid waste management solutions compared to any country in the world!

  31. Steven Goh

    People really need to get the MPESA story right (rather than a westernized skewed view of a unique circumstance in one country as told by PR back to a first world audience) . Or how prepaid was founded in South Africa. Or the India experience and Nokia and the Chinese handsets . Or the Grameen examples to banking as they far eclipse the fantasy of Bitcoin. Or notably absent in the list of companies, is Wechat, Meitu, and others (the list in the blog itself says how wrong the view is .. ). ….

  32. David del Ser

    It is exciting to imagine tech entrepreneurs and investors applying their tools and capital to tackle the toughest problems around. Getting billions of people online and properly served would be truly world changing and very profitable too!Social entrepreneurs have started the job and showed the way forward but it’ll take serious scale to complete the task. So it’s fantastic to see funds like USV thinking seriously about emerging markets.One initiative to provide a sneak preview into this second revolution is the Catalyst Fund (, which combines insights from investors on the ground and global expertise to boost local capabilities. With funding from Gates foundation and JPMorgan Chas, we support inclusive fintech startups building new value propositions and business models using smartphones. Check it out, we recently got started and will be publishing our findings as we learn!

  33. Greg De Souza

    I think the marketplace model defensibility can be disrupted with a strategy to ‘Design for Culture’. The copy cat model of building ‘This (startup) for That (region)’. China has been the only thinking systematically along these lines and executing to beat competition.

  34. Justin Hall

    Appreciate the thoughtful post on the second mobile revolution. Emerging markets are often ignored by investors in developed economies, but some of the innovation on the mobile-side is truly, truly inspiring (Carousell in Singapore; Coda in Indonesia; Grab in Malaysia; etc. etc.)

  35. Steven van Hasselt

    I’m afraid the “Second Smartphone Revolution” (I’d argue there wasn’t a first one in the first place, in my eyes it’s been all just companies pushing their product) will be completely in the hands of either oppressive governments (like China and their Citizen score:… ) and profit driven mega-corporations.If you care about things like freedom, control and innovation, then the idea of a world where most people access the internet and information via smartphones or wearable devices is very troubling! Smartphones are tightly controlled and very tethered appliances. You think you own your iPhone, but in fact an invisible chain links it all the way to HQ in California, N̲o̲t̲h̲i̲n̲g̲ goes on on that device that has not been approved by Apple.And that’s just an example, if you sport an Android device, your access to internet is still controlled by a company (your mobile internet provider) who is free not only to charge prohibitively for access, (in fact becoming a gatekeeper to (social) media, education and information) but also free to decide what you can and can’t access.Might not seem a big deal right? That’s just capitalism at work. But what it really means is that with each new smartphone subscription we take another micro-step towards a networked world dominated by the powerful corporations that not only “regulate” the system in their own interests, but also control the speed of tech. innovation at a pace that is convenient for them rather than determined by the creativity of hackers and engineersI can’t help to look at this video: and be disappointed that in the past 8 years, we still seem to be stuck in this idea of what a smartphone is, but really in those 8 years, nothing much has changed. A revolution (from the Latin revolutio, “a turn around”) is a fundamental change in political power or organizational structures that takes place in a relatively short period of time when the population rises up in revolt against the current authorities. (the Arab spring for example.) Interesting enough due to the role played by social media during this, the UAE and Saudi Arabia both banned individuals and small businesses from using the most secure BlackBerry settings. This ban was dropped probably because RIM agreed to provide the U.A.E. with an encryption key that could be used in “extreme circumstances” to have “limited” access to BlackBerry data transferred across BIS or BES systems.Two articles I found particularly interesting:…Some stuff I copied, but I can’t find the source anymore

  36. Ariel Beery

    Agreed completely – and that’s what we’re seeing with MobileODT as we sell and install our Enhanced Visual Assessment (EVA) Systems across Africa and Latin America, for cervical cancer screening and provider support. Mobile phones have the unprecedented potential to connect the 5 Billion people in remote and rural areas and low-resource settings to expert medical diagnostics. It’s great to see @fredwilson:disqus bring this up, because it is not only an enormous humanitarian opportunity, but an enormous financial opportunity: the billions around the world who have access to phones but not physicians generally pay out of pocket for what is now low-quality diagnostics, which is why they are dying unnecessarily. They will pay more (and are paying us more) for better tests, and the quantity of examinations is orders of magnitude larger than what is in the US and Europe.

  37. Dileepan Siva

    Great post, Fred – and I hope the next big whitespace for VC is indeed in emerging markets. Aside from Connie Chan’s detailed post last August on WeChat, I’ve seen very few in-depth discussions of emerging market tech business models. The hard part about translating WeChat to other markets is the Chinese market (and political) context which is pretty different to that say in India or for that matter Nigeria. I’d argue that the latter two are more similar to each other than India is to China on several aspects – infrastructure and income come to mind as the most glaring. In a market where there isn’t ready access to services like banks, retail or others, consumers may be willing to engage with businesses in completely different ways. I’m reminded of ZipDial’s model in India for example. Users ‘missed call’ a central number and receive inbound deals, surveys, etc. by SMS from brands. Is there a relevant play using this model in developed markets? Do recent trends among certain demos away from the newsfeed to messaging make chat or text-based models more interesting?

  38. Kevin Murdock

    Fred – I am working with a group that has developed a superior model for seed stage VC based in Rio. They are innovating business models at both the investor and company level in one of the geographies you mentioned (Latam). They have over 70 people in their eco-system working together in a shared space working across 15 start ups. They turn code developed for any company into pre-built code (APIs, Saas) that can get re-used across others and they have depth of talent so they can get the right specialized expertise on the team from the inception of a start up — meaning they can build an MVP in half the time at half the cost (up to 75% savings). They have become the go to place for start ups in Brazil — creating great deal flow — and have taken four start ups from beginning to successful exit in just a couple of years and they have a meta-search company that is breaking out. If you would have an interest in participating in some manner and getting a seat at the “Brazil table”, I am confident that they would welcome you. I can think of a number of mutually beneficial ways you could work with them.

  39. Elizabeth Gould

    “do we think that entrepreneurs in the US and other parts of the developed world will build and deliver these important new services to the developing world? I am not so clear on that.”The reality is Western entrepreneurs often have very little understanding of the mechanics and economics of emerging economies, especially at the individual consumer level. Could a 21 year old CS major at Stanford know that a major issue disadvantaged parents face in urban slums is that there are too many children at the day care center for the uneducated staff to keep the dosages and times of the kids’ medicines straight, and come up with an app to remind them of those and food allergies so that already impoverished kids don’t get any sicker? Could they think of an app to anonymously report reckless mini-bus taxi drivers by calculating speeds using the timer and accelerometer of a passenger’s basic Android phone? How would they ever know that just getting to work in town every day can be a life or death journey?That’s why it’s so vital to train young digitally-savvy talent in emerging economies (who already have the smartphones, though they may not be able to afford the data, but that’s another post) with the coding and product development skills to build the solutions to the problems in their lives. That’s what we do at @project_codex — train the next generation of digital thinkers in Africa. Get in touch if you want to know more.

  40. Kenny Fraser

    This is a good article but I would add one point. In a feature phone world companies in Asia and Africa are already innovating so we must also learn from local innovation. M-Pesa may well be run by local incumbent (not strictly owned by Safaricom) but is has also made a huge difference to millions of people and seeded a whole ecosystem of fintech innovation. The ideas in Kenya and other countries are more radical than any fintech idea I have seen in New York or London.

  41. Jack Leeney

    Fred, we could not agree more with you. At Telefonica Ventures, via our Wayra accelerator and Amerigo fund of funds we have funded over 850 startups with the vast majority of that number in Latin America. The region is starved for VC yet has proved multiple $1bn+ exits.Navigating complex geographies and understanding the local nuance is crucial. The next 2.5bn smartphone users absolutely have different needs and opportunities… but they do love all the silly consumer apps we do just the same!

  42. jdennybr

    @fredwilson:disqus Given the topic, would love to hear any views you have about Rocket Internet….

  43. lostapiv

    What do you think about startups like Coppertino, that is from developing world (Ukraine), but create products (VOX music player, LOOP, Locker.FM) for the developed world?is there any place for this group?

  44. Rick Bullotta

    Precisely why I’m still very bullish on AAPL…

  45. Mike Hydes

    Have you setup shop in the BVI? That’s where the parent companies/corporations will most likely be registered/incorporated.

  46. ggruber66

    @fredwilson:disqus, when you talk about the services that the the next 2.5 billion people will be receiving, how exactly do you see that happening? The cost of data as a % of per capita income is ginormous in comparison to the West. Let alone their ability to pay to receive the services. I’m not sure the next 2.5B is where we will see the innovation.And because I can’t avoid a little <more> snarkiness, will the Second Mobile Revolution be Android First?

  47. pesa_africa

    completely agree! I largely find (from my interwebs) that East africa’s market is largely ignored by much of english speaking web. The potential is huge, saying this is a native African with massive exposure to the West (bit of Asia too).I feel models here will resemble China Or China is a great lesson at ‘thinking outside the box’ in considering framing models. From my fieldwork in low income border towns, I have seen 20 year olds on whatsapp and facebook on low cost Tecno (Asian) phones. Its creeping up silently.Trouble is, none of us expected this, so something like phone design aren’t built with this emerging market in mind. Like the 2) year old above, I met at Uganda/Kenya busia bordered. Neither hime nore his friends could figure out how to fix their phone for internet connectivity. Too many menus and terms. They asked me to help and Even I was unable to fix it. I have a degree in electrical and communications engineering fyiWhen thinking about East Africa, try think of it as a blank piece of paper. Leave any previous notions at the door.For readings on this, try emerging african consumer category

  48. Vasudev Ram

    >Both of these could explode next month or five years from now or never.Got to agree some.> I’m always suspicious of any tech for which the only unbounded excitement comes from the vendors.Right, and also of any tech (or job ads or other stuff) where they have a huge ratio of exclamation marks per sentence or paragraph. As though putting that makes the topic exciting by itself. Let it stand on its own merit.

  49. William Mougayar

    Wow, you are so wrong. Wait for my book to come out soon. It is anything but hot air. It’s early days, for sure. Think Internet circa 94-96. It did come with 3 years of skepticism.

  50. lawrence abeyta

    I agree that people have to care and that technology can’t solve every problem. What it can do is make information more accessible, which makes things more transparent, which means more people who do care are aware sooner. It doesn’t leave it to a few at the top, or those who stand to benefit or are punished for bringing attention to it. So it doesn’t solve the ‘care’, it helps the awareness.

  51. JamesHRH

    There are likely billions of instances of this equation:bad result = lots of info – caring

  52. jason wright

    But but but… wealthy philanthropists will step in and fix things.

  53. Twain Twain

    Thanks for your comment, especially this:Signal = products, codeNoise = reports, books, articlesI keep track of Blockchain because, sure, as former banker whose team incubated and invested in banking tech alongside commercial consumer tech, I can see use cases and have product+coding skills to add my 2 cents to it.However, despite people who know my background asking, “Why aren’t you doing a FinTech / Blockchain startup?” I don’t do it.Like you, I focus on SIGNAL — albeit, in my case, tuning code so the machines can better understand our Natural Language.I decided that area of AI is something I can contribute to and make a difference in.

  54. JamesHRH

    Very concise stomping on of William’s belief / dream.I agree with you and wish we were both wrong (William is great guy).

  55. Informerly

    2 questions:1) When is the book coming out? Eagerly awaiting.2) Not to be snarky, but regarding this line – does Venmo actually have a business model? “Chase can copy Venmo’s app, but copying Venmo’s business model is harder.”

  56. William Mougayar

    1/ Early May. Title is: “The Business Blockchain”.2/ Venmo’s business model means they can deliver the service at a lower cost than a bank for example. And they have an active user base powered by a friendly UI. Venmo is doing $1B+ per quarter in p2p transfers.