A certain idea about innovation and value creation has been generally accepted in the technology startup world: value from intensive innovation emerges from central technology hubs (i.e. likely the US, and within it quite likely Silicon Valley), while in the rest of the world we can only expect value from extensive innovation, i.e. the adaptation of the intensive innovations to the local markets; a.k.a. copycats. Based on this thesis, Venture Capital firms outside of the US generally invest only on “proven models” for local markets, with the only serious exception being Israel, which has managed to enter the elite of “technology hubs.” They say: “Sure, Instagram or Whatsapp could have been created anywhere in the world, but as it turns out, they were created in Silicon Valley. There is more to innovation than just good ideas and a connection to the web. Being there matters.” The reality is that there is an enormous amount of evidence that supports this point.
However, we saw two big examples in the last two months that can be sparks of an important change in this paradigm. Flappy Bird, a mobile game developed by an indie developer in Hanoi, Vietnam took the AppStore by storm, becoming the most downloaded app in January and February of 2014 globally, grossing a reported $50,000 a day. And a few weeks ago Popcorn Time, a “Netflix for torrents” developed by a group of independent developers in Buenos Aires, Argentina, became an overnight global success, with download numbers in the millions within a few days, and becoming a “nightmare for Hollywood” as reported by many top outlets.
Both stories have many things in common. Firstly, they were both started by young independent developers in a remote destination with no funding whatsoever. Secondly, they both achieved amazing organic traction in a very short period of time (the kind that many well-funded Silicon Valley startups would only dream of). They both represented disruptive forces to big strong industries and they both had legal issues (as almost every disruptive force generally has), and sadly, they both ended up suddenly shutting down under legal pressures. (Also they both had cute characters as icons :)
To me, these stories represent a sign of a new era. With billions of web and mobile users around the world and open distribution platforms such as app stores and social networks, it is possible to create innovative web/mobile products from anywhere in the world and get massive global distribution in an organic manner. My feeling is that they are not isolated examples and that we will see more and more cases like these emerging soon. As smartphones become cheaper and the tools for development become more widely available, I bet that we will witness what I would call “the rise of the remote disruptor.”
Now, these heroic remote disruptors face big challenges as well. In the US the developed ecosystem around entrepreneurs supports them greatly when it comes to scale. Capital, talent and knowledge quickly align behind early winners to help them overcome the infamous growth pains. The legal issue is a clear example. In the US, when a disruptive startup starts going mainstream and getting legal pressures by the disrupted incumbents, they fight back (see Airbnb, Uber, Tesla, Grooveshark). They do so by surrounding themselves with the best legal counsels, experienced advisors and even lobbyists, and of course the necessary capital to afford all this. The remote disruptors don’t have access to any of this. I don’t know the exact situations by which Flappy Bird and Popcorn Time decided to shut down, but I’m sure that had they been based in Silicon Valley the stories would have played out in a very different way.
So what might be the solution? I think that the successful story of Israel can be of guidance here. One of the reasons that Israeli tech startups manage to get to global scale is that as soon as a company starts taking off they somehow make “the jump” to the US, where they can get the resources to scale. They either move part of their team to NYC or Silicon Valley or hire someone there to build a base (examples include Waze, Wix and GetTaxi). After years of relationship between the tech ecosystems of Israel, Silicon Valley and New York, the links are strong and these transitions happen naturally. So perhaps this is the key for the remote disruptors in the rest of the world: be able to make “the jump” when things start taking off, so that the startups can surround themselves with all the resources they needs to fight the incumbents and scale up to become sustainable growing companies. Fortunately, some accelerators (such as 500 Startups, SocialAtom, NXTP) and programs (such as Startup Chile, Startup Weekend, Endeavor) are building these global networks that will facilitate “the jump” and are investing in and supporting the remote disruptors with global ambitions. The really good news is that democratizing forces of the Internet can’t be stopped. With billions of new brains joining the network, innovation will continue to sprout in every corner of the planet.