Culture is Important in Global Services

Fred Wilson had a very important post last week, examining the non-US growth of a few web properties, and concluding:

There's a lot of money "rest of world" and I suspect that will only be
more and more true over time. So we should start building web
businesses with that in mind.

The topic is very relevant to my business thesis, so i have been thinking about it over the weekend.  At the heart of the discussion is the notion of global web businesses.  The thinking here is pretty linear.  In capitalism, most businesses enjoy economies of scale.  In the connected, digital economy, since most physical points of friction are eliminated, the economies of scale allow for significant economic advantages to the largest players.  Therefore, it's natural to see large, global, dominant players emerging.  Fred is saying that these players will eventually have their non-US markets larger than their US markets and should behave with that in mind.

It makes a lot of sense.  And, we're already seeing this in action with Google dominating search in most countries, and Facebook killing all sorts of local social networks that preceeded it at the local level.

Is there not a segment of internet business that is inherently local?  I think there is.  And the secret sause there is cultural.  eBay has een very acquisitive in its global expansion.  However, the eBay acquisitions always come with their unique local flavors. It's in the community if not the product but all auction-based local ecommerce businesses I have seen have a unique cultural component.  The same is true for dating services, classifieds, recruitment sites…

I think it's very difficult to build, from scratch, a truly global service, except in pure technology-driven ventures (such as search, as in Google, or VoIP, as in Skype).  Each company is built with its own cultural unique points and then, as they expand globally, adopt or acquire practices that fit into other cultures.

5 thoughts on “Culture is Important in Global Services

  1. What if eBay had gone to Turkey directly, not via taking shares of GG?
    Do these US players acquire shares because they are forced to (because operations like GG are already present) or because the value they derive from a GG-type local player is higher than entering alone?

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  2. very true… even for the highly technology driven ventures, I believe success of marketing strategies depends increasingly on how succesfully they deal with local market dynamics …to keep/make the competetive advantages repetitive..

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  3. Yes, I think you’re right too. But, of course, I would differ if we were dealing with a service that has not been replicated with a local flavor by some people in the native market.
    Spain (my country) has an interesting case with Tuenti (Spanish FB) which has been around for 4 years, still has not made break-even, is populated by 20-somethings and became big (8M RU) -for the most part- because at the time of it’s growth FB did not offer a Spanish interface.
    Now they just had to scape another 9M from PRISA as all other possible investors said “No”.
    However, their breaking even is a huge challenge and I just fail to see how “localization” is in any way going to help them vis-a-vis FB in the long run.

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  4. Please check Otto Group’s Limango and Strawberrynet.com.
    Limango.de (Limango for Germany) and limango.com.tr (Limango for Turkey) provide different products at the same campaign periods and with different web site designs-images etc. Limango considers local preference, local purchasing power and internet infrastructure differences when providing the same service to different markets.
    Strawberrynet.com,like FB, provides the same service all around world. As I notice, recently they added language option…

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