TechCrunch pundit on mobile and the importance of local in Asia’s digital landscape

Singapore tech and start-up blog e27 pulled off a major coup with its recent meeting with TechCrunch writer Sarah Lacy. Lacy, a high profile US tech writer, has spent the last two years exploring the tech scene in the world’s emerging markets and is currently visiting Asia in a trip which has seen her write a number of interesting pieces for TechCrunch and hang out at attendee key events, one of whiih was e27’s most recent Foundation Drinks meet-up.

e27’s most recent post, taken from the meet-up, is this must-read interview with Lacy who discusses a number of topics including the significance of Southeast Asia, attitudes to the region in the US, the region’s big three – China, India and Indonesia – and mobile in the region, an excerpt of which is below:

In Indonesia, the mobile opportunity seem to be centered across Blackberry and smartphones, whereas mobile opportunity in India seems centered across feature phones and I see them taking off in completely different directions. When it comes to Indonesia, from what I’ve heard from people building apps for Blackberry that it’s really hard to get paid from carriers.

I think in India, there is amazingly innovative opportunities around feature phones, so many entrepreneurs who are doing fascinating things around language learning, mobile banking and entertainment services, group messaging and news delivery — Justdial, redBus is an interesting company. I think there is something incredibly beautiful about building something in constraints, which is why during recessions some of the best companies in Silicon Valley comes about, because it forces you to be creative.

It is is clear from the interview, and reading Lacy’s work, that she is genuinely impressed at the technology scene and landscape in Indonesia more than most perhaps. China and India may be greater in population and influence globally, but Lacy has gone to great lengths discussing Indonesia’s potential which may challenge and change some opinions within TechCrunch’s regular readership.

Her latest piece for TechCrunch – discussing the lack of presence of major social networks and web 2.0 players in Indonesia – is an excellent outline of Indonesia and Southeast Asia’s potential, and explains why Facebook and Google are amongst the firms to have opened regional offices in Southeast Asia:

Wake up, guys. Emerging markets aren’t just about offense anymore, they’re about defense. This isn’t the age of eBay, Yahoo, and Amazon when you could expand in the US first, and worry about the rest later, nor is this an age of Friendster where a big Southeast Asian Web presence is worth little more than a sandwich. As Fred Wilson (you know, a Twitter, Foursquare and Zynga investor…) recently said to GigaOm, “If you look at Facebook, Twitter, Google– 75% to 80% of their users are outside the US, so globalization of Web services at scale is something I’m really interested in…So globalization is probably the number one thing I’ve been thinking about.” Understanding your users isn’t a nice-to-have luxury; it’s a must-have or someone will beat you.

Let me give you a primer on the Indonesian user: Half of Indonesia’s 240 million person population is under the age of 29. They are Web obsessed, and unlike the rest of Southeast Asia they have a huge domestic market. They are hungry, they are scrappy, they are smart and they are building their own Web companies. They love using  Facebook, Twitter and Foursquare– for now. But, frankly, the attitude is starting to piss many of the most Web savvy ones off. And every entrepreneur knows what pissed off Web users do: They start competitive companies. At the conference yesterday several people challenged the usual bragging that Indonesia is Facebook’s second largest market, saying “Why do we need to use Facebook? Why can’t everyone else use an Indonesian site?” Sure it’s just the Web elite saying it now, but the drumbeat is starting.

I know Indonesia isn’t a priority when you’re growing at the speed of Facebook, Twitter and Foursquare. Indeed, it’s a brutally hard market to monetize with a nascent advertising market and little ecommerce to speak of. Only about 3% of the population even has credit cards. And it’s not always a comfortable market to be in: The traffic is horrible, I went through four SIM cards before finding one that worked, and I’ve had little luck getting a consistent Web connection this week.  And I doubt many of you speak Bahasa. But you’re not going to understand this customer any better sitting in the Valley.  (I don’t speak Bahasa either, for the record, but after 40 weeks in emerging markets I could beat you all at charades.)

You can’t have it both ways, Web 2.0 elite. You can’t brag in local presentations about how global your reach is and not visit one of your largest markets. You can’t trumpet that it’s a brave new Web world with two billion global users and only cater to the first billion.

The issue of localisation of services is a big one in Asia, although typically more so in eastern markets like Japan and Korea where language and script issues demand a degree of dedicated-customisation.

In a recent report on the development of social media in Asia, analyst firm Gartner claimed there are four distinct reasons that Asia’s more ‘westernised markets’ – of which a number of southeast Asian markets were included – have adopted western social networks so rapidly:

1. The prevalence of English or roman character sets in the local language

2. Their recent twentieth century colonial history and familiarity with European and American mindsets

3. A large international disapora or migrant workforce using social networking to keep in contact with friends and family at home

4. Individualistic rather than the more collective societies of Japan, China and Korea, with the more culturally diverse communities opting for the global brands

Certainly, Lacy’s point adds a ‘but’ to the argument…markets will gravitate to relevant content, if a social network can focus on domestic, local issues whilst satisfying all other demands then it can rival an established network like Facebook.

Talk of a local Facebook spin-off in Indonesia is a good example, but is it really feasible that Indonesia internet users would reject the world’s largest social network just like that?

At this stage, it seems unclear. It is possible that the rise of global networks might prompt a locally-focused backlash but, given social networks as user generated, in theory the most important content comes from within so as long as a user’s network of friends use Facebook, the content is there and there is no reason to leave.

With its recent relaunch Friendster believed it could provide focused third party content to differentiate itself from Facebook without necessarily leaving its users choosing one or the other. Co-existence is the alternative view but at this stage it is too early to say whether it can work either.

Lacy’s points are interesting, though it will be some time until the potential for a ‘local backlash’ is clear. In the meantime, it seems likely social networks will seek greater local representation, as is beginning to happen with offices opening in Singapore and India initially.