Mindsets on innovation – the west VS the rest.

This article was initially published in Viktor Kyosev’s (COO of Greenhouse) weekly newsletter, where he shares his views on the topic of startups, growth and fast-growth markets: viktor.substack.com

This week, I want to discuss the differences between running a startup in developed VS emerging market.

My interest in the topic dates from back in 2016 when I embarked on a trip to Hong Kong to write my master thesis on the topic of entrepreneurship in developed vs emerging markets. Four years later I have been part of the largest accelerator in the region, ran two startups, met many investors and attended countless startup events.

Typically, entrepreneurs in emerging markets approach building a company like chef cooks learn to cook, namely by following iconic recipes until they become great. Meaning, a lot of entrepreneurs based in developing markets tend to replicate proven business models. Even the language we use follows this thinking: e.g., Alibaba as the “eBay of China”, Flipkart as “the Amazon of India”, Grab as “the Uber of Southeast Asia”, etc.

And that approach seems to be working fine as each startup mentioned above has reached an incredible success and scale.

Source: Greenhouse’s LinkedIn page

But that’s not where it all ends, my experience in Southeast Asia taught me that startup ecosystems mature in the following way:

  1. Local entrepreneurs replicate successful models but focus on local markets
  2. As the eco-system evolves, founders start applying existing technologies to solve local problems in unique ways. Go-Jek is hardly a copycat of Uber, it may have been in the beginning but now it’s a “super-app” that allows you to buy food, medicine, cinema tickets, pay your bills, send items, travel, and even order massage from your living room.

There is definitely an element of innovation that many people do not see at first glimpse. Entrepreneurs who face the constrains of resources ever-present in emerging markets invest a ton of grit and creative thinking which leads to innovations in product, the path to market, or monetization. Not to mention that the scale in fast-growth economies is completely different because the total available market is often much bigger due to the large population.

What remains to be seen is whether breakthrough innovations will ever take place in emerging markets. Do we expect to see innovations as impactful as the personal computer or the internet emerging from regions like Southeast Asia? Or perhaps, we will continue to experience unique solutions, built on existing technologies that have high scalability in developing markets but would struggle to become global successes?

“The something of somewhere is mostly just the nothing of nowhere.” Peter Thiel