Jeff Bezos launched Amazon in 1998, which created the phenomena called e-commerce on the Internet. Its market capitalization is about $98 billion now and Bezos is an inspiration to many wannabe Internet entrepreneurs around the world. Ma Yun “Jack” launched Alibaba in 1999, which had features similar to that of Amazon, popularizing e-commerce in China. After listing and delisting (probably for relisting at higher valuation) it is estimated to be valued at $35-50 billion.
Yahoo was founded in 1995 by Jerry Yang and David Filo to organize search on the Web. (Yahoo is an acronym for “yet another hierarchical officious oracle”). Yahoo is today valued at $19 billion after dropping by at least 80% from an all-time high in 2000. Ma Huateng and Zhang Zhidong launched a portal called Ten Cent in November 1998. It provides net, mobile VAS and instant messaging services in China and is valued at above $54 billion. It is the third largest Internet company in the world after Google and Amazon.
Mark Elliot Zuckerberg launched Facebook in February 2004. It became a great success in no time and created social networking on the Internet. Notwithstanding a fall in price on listing post its initial public offer (IPO), Facebook is currently valued at $74 billion making Zuckerberg one of the youngest billionaires. Joseph Chen launched Renren in February 2005 targeted at the Chinese market for social networking. Today it has a market capitalization of $1.7 billion after falling about 76% from its high in May 2011. This fall has probably occurred on investor disappointment on the pre-IPO statement of 160 million registered users versus post-IPO statement of 31 million active monthly users.
Larry Page and Sergey Brin conceptualized an efficient search engine in 1996 while studying and launched Google in 1999. It became a default search engine for the whole world except China. It is currently valued at $189 billion making Page and Brin poster boys of Internet billionaires. Robin Li and Eric Xu launched Baidu (which looks very similar to Google) in January 2000 targeted at the Chinese market. Today it is dominant in China with a market capitalization of $38 billion. Founders Robin Li and Eric Xu have become role model for Chinese entrepreneurs.
Jack Dorsey and Evan Williams launched Twitter in March 2006. It pioneered the concept of micro-blogging. Its valuation estimate ranges from $3 billion to $8 billion. Charles Chao of Sina Corp. launched a micro-blogging site, Sina Weibo, in August 2009 targeted at the Chinese market. It comprises features of Facebook and Twitter. Today it is more popular than all the other micro-blogging sites in China and is valued at more than $3.1 billion.
William Deng created Net ease in June 1997 for multiplayer online gaming and is today valued at $7.5 billion. Youku established by Wingcheung Koo “Victor” has similar features to YouTube and is estimated to be worth about $2.4 billion. At the end of the first quarter of calendar year 2012, Internet user business in China is estimated at $513 million and in India at $121 million, according to Internetworldstats.com.
India has the third largest Internet using population in the world after China and the US. In a few years, India will overtake the US in terms of number of Internet users. Over the next few years, it is likely that India will become the fastest growing Internet market in the world. Despite the size of the Indian Internet market, there are no Jack Ma, Ma Huateng or Robin Li equivalent entrepreneurs in India. It is difficult to find Indian Ranran, Net Ease, Sina Weibo, Baidu, Alibaba or Ten Cent.
Why is it that China has created the Chinese version of Google, Yahoo, Facebook, YouTube, Amazon and Twitter? More importantly, these companies are primarily owned by Chinese entrepreneurs and investors. Wealth created from the Internet boom in China is largely contained in China for the benefits of the Chinese. The number of subscribers, size of the country, language barrier, ease of doing business, among other things, can’t differentiate the gap between China and India in creating copies of successful global Internet companies. If at all, India is a difficult market to do business than China in the perception of most investors.
Indian entrepreneurs have made their mark in the Internet space through examples such as InfoEdge, Flipkart and Makemytrip. However, the size and the scale of Chinese companies are missing here.
It is likely that China has not heard the phrase atithi devo bhava (a visitor is like a god). They have guarded their territory for local entrepreneurs through sam, dam, dund and bhed (influence, money, stick and divide and rule). Global Internet firms have been restricted from free access to the vast Chinese market with scant respect for intellectual property rights.
China has provided nurturing from their point of view and undue protection from the global point of view to Chinese entrepreneurs to reap the reward of Internet boom. It’s not, too, late for India even today to formulate a policy that nurtures and encourages local entrepreneurs to reach the size and scale suitable to the Indian market and create wealth for Indians through the Internet boom. Asset price inflation has raised the bar for first-generation entrepreneurs. Give them the encouragement, which they truly deserve, to conquer the virtual world.
Nilesh Shah is director, Axis Direct.
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