International Idea Arbitrage

Nov. 05

An international idea arbitrage is a concept I coined in the mid-1990s (apologies in advance to whomever might have said it before me). It’s the concept of taking an idea from one country and duplicating it and adapting it to another country.

As I mentioned in my 9 business selection criteria posting, I currently lack the creativity to come up with brilliant new ideas that change the world. However, the selection criteria can also be applied to evaluate existing businesses. When copying ideas, you must either dramatically improve on them or take them to places where they have not been done before.

It’s this latter strategy that has worked for me. If I had a nickel for every time someone told me that an idea from country A would never work in country B, I would be a billionaire!

When I created Aucland, I was told:

  • The Internet will not work in France, we have the Minitel!
  • Even if the Internet takes off, it’s only those crazy Americans who will trade beanie babies on eBay, we Frenchmen are much more sophisticated.
  • Americans have much more of a garage sale culture than the French
  • Even if by some miracle the Internet did take off and people wanted to trade used goods online, we would never put our credit cards online.

I heard similar stories across Europe. Yet today eBay generates around 20% of its revenues from Europe!

When a friend of mine created Meetic, now the largest dating site in France consumers were telling him the idea would never work:

  • It’s only those crazy Americans that are willing to put their profiles online, we French people are much more romantic and hate the concept of productizing love!
  • Girls would say that the site only had geeks and losers and would never be caught dead on the site.
  • Guys said that being on the site was admitting they could not find girls any other way and would never be on it – especially as no interesting girl could possibly be on it.

Four years later the site has millions of subscribers, over 10 million unique visitors per month and is now public with a $500 million market capitalization!

When I created Zingy in 2001, consumers, carriers and media companies all told me it was only those crazy Japanese, Koreans and Europeans that bought ringtones and mobile content. It would never work in the U.S. where consumers were more rational and price sensitive. In 2005, U.S. mobile content revenues reached $1.5 billion!

Conclusion:
I have come to realize that people around the world are much more alike than they like to admit. We all share similar goals and aspirations. We have a fundamental need to express our identity, to entertain ourselves, to communicate and to trade. As such many ideas are transposable across cultures, languages and countries.

It’s also interesting to note that consumers are not good at predicting their future behavior limiting the role of focus groups in evaluating new products and services.

The above is not to say that all ideas are transposable across countries, but there are certain indicators that can help identify those concepts that are. One of the best measures of the potential success in transposing an idea is its existing success in many countries and cultures. What gave me hope with Zingy was that mobile content was already popular not just in Japan and Korea – but also in the Philippines, China, France, Italy, Spain, Germany, the UK and many other countries around the world.

I guess I need to start booking a trip around the world 🙂

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