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A Business Version of a Fairy tale

This article is written by Mohammad Eslim, a Contributor Author at Startup Istanbul.

Teruhide Sato was a founding member of the Japanese arm of CyberCash, a U.S. online payment company (now known as Venus), and a joint venture with SoftBank Corporation. During this time, in 1997, Teru was studying at the Faculty of Policy Management, Keio University. In 1999, he was co-founder of BEENOS (formerly known as netprice.com), a global internet and e-commerce business incubator.

Aurore Belfrage is a tech entrepreneur, investor, and a partner at EQT Ventures with a specific focus on Artificial Intelligence and GovTech. She is a syndicated columnist with leading Swedish daily Svenska Dagbladet (SVD) and a contributor to POLITICO. She writes on issues at the intersection of geopolitics, ethics, governance, labor and future of work.

Aurore Belfrage and Teruhide Sato were special guests at Startup Istanbul 2015, where they had a fireside chat on business.

Sometimes when you think deeply in the business everything looks either black and white, but it’s completely different once it comes to the risky decisions a businessman, an investor or a venture capitalist might take. They make the wrong choice of decisions and it’s a hard fall, or they make the correct one according to many factors and conditions and they will rule the market. They simply become kings! 

Now, now…it probably seems childish and, for truth’s sake, a wide shot into Disney’s world to call these tycoons kings, but the analogy is really amazing. You see, in an arena of competitive parties who are in a race to have a steady foot in the royal palace emerges a strong, clever leader who takes his post as a king; and so is the market where a variety of businesses led by companies, corporates and enterprises are in a competition to invade the global market.  

For example, in regards to the electronic commerce (e-commerce) business there is Amazon, which is a multinational technology company focusing in e-commerce, cloud computing, and artificial intelligence in Seattle, Washington, is a king and so is Alibaba the Chinese multinational conglomerate specializing in e-commerce, retail, Internet and technology. In the business of technology we have Apple, Samsung, Amazon again and Foxconn.  So a king is a marketplace and have the largest gravity in the market and regardless of what the market is, each market has a local king. 

And a happy king needs his queen, in our case this queen is the payment. How is that? Take PayPal as an instance, PayPal is a queen for eBay right now. Also we can say that Alipay, which is a virtual payment platform launched in 2004 by the Chinese private firm Alibaba Group, is a queen to Alibaba. Therefore, if we use the market’s correct terms we know the company comes out first, then comes the payment system forming an empire and after that comes the affiliate networks that facilitate the empire’s activities or also vertical marketplace where both the companies along with their system score a real estate marketplace not only it’s about it being classified but also about becoming more transactional. After the payment system is facilitated in that market, the princesses can evolve.  

Of course a happy emerging gets us princesses, or even princes-I won’t discriminate. In India, we have about five to six huge companies taking over the market there, and along with their systems there is an estimation for India to be a great for investments in this environment of growing businesses. 

This lingo is so amazing it can simply explain the huge movement in investment in turkey and Indonesia where there are significant chances for such empires to grow and scale. But the real question is how do investors come to the deduction of where are the next powerful emerging markets?

Teruhide Sato has a thesis that he had shared about how he sense the pulse of these marketplaces before he invests in them; he took this analogy and put it like that: the first thesis is the company, and in this stage he talks with founders to know whether he/she want to build a company to sell or to scale and according to the answer he decides if there is an investment decision or not.

Then comes the second thesis where there has to be a system deployed for said companies to keep on the top of the market. Finally depending on some components or a state of readiness the ‘princesses’ are evolved. This is how investment in e-commerce is finalized with its happy ever after. 

 

05 May 2019

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