Why Asia still has at least 10 years before it leads the tech world

Why Asia still has at least 10 years before it leads the tech world

November 27, 2013

by Anh-Minh Do

It is undeniable that Asia is one of the most important centers of technology growth for the next decade. It’s the key for Facebook’s continued growth. It’s where the majority of web data is being produced. And it’s home to China, where some of the biggest multi-billion dollar tech companies the world has ever seen reside. But Asia is not alone in watching Silicon Valley, the Mecca of the tech world. The Valley dominates and leads everyone forward into the next century of technological innovation. We all have Valley-envy.And despite the fact that Asia is coming into its own with possibly its own organic startup philosophy and ad-hoc infrastructure, leapfrogging, and bootstrapping, it still has a ways to go before it takes the lead in the tech world. I’d say it’ll take another decade.

Payment, logistics, infrastructure, and internet penetration

At the very core of Asia’s barrier to Valley-like dreams are payments, logistics, infrastructure, and internet penetration. At first glance, why would these things have any impact on Asia’s attempt to lead the world in innovation? They’re just potentials to tackle in the ecosystem, right? But they are also the bottlenecks for money to flow. Investors in the region are mainly interested in the clear and present problems across the region. Startups are also mainly interested in low hanging fruit. In other words, entire Asian ecosystems are aimed at systemic problems. Until these things are solved, dreams of leading the world in tech are far from everyone’s minds on a very practical level.

Why one tech trend leads to the next

One of Silicon Valley’s biggest competitive advantages is that all the new technologies are built and launched there. That means startups in the heart of the tech Mecca are privy to the newest trends and can build on what’s next. For example, Uber and Airbnb both built on a budding shared economy trend, a trend kickstarted by Craigslist years before. Kickstarter and Indiegogo, in a different vein, built on several other trends including the ease of online payment and the growing interest in unique projects. It was natural for crowdfunding to arrive, people were ready for it. The business models were waiting to happen and users were primed. This is a result of decades and generations of tech innovation all happening in one place.

Add on top of this, the keen interest from huge companies in smaller companies throughout the Valley. Although IPO’s are romantic and exciting, the fact of the matter is the most common exits are mergers and acquisitions. In other words, bigger companies are acquiring companies that fit into their agenda. This only happens when one company is riding the coattails of another.

Now some people who read this are going to say, “hey, look at e-commerce and its fast and compelling growth across Asia.” Granted, e-commerce is one of Asia’s fastest growing and most competitive markets. Huge competitors like Alibaba, Rakuten, and a host of other large Asian competitors compete heavily in Asia for their own domestic markets and neighboring markets. E-commerce is also a leapfrog industry perfectly suited for a world where retail and supermarkets have still not reached the scale of Walmart, Costco, and Target. But leapfrogging is not leading. Leapfrogging is catching up.

Leading the world means building massive user-friendly and developer-friendly platforms

At the end of the day, what Asia really needs is a multi-billion dollar startup that builds a platform that people across the world want to build on top of. That is exactly what Google, Facebook, Salesforce, and Apple do. They build massive platforms with tons of users that developers and entrepreneurs can use as a foundation. Can Asia do that? Not anytime soon. Not while leapfrogging is the prime directive.