A tale of two smartphones
Until yesterday, I saw my phone, or rather, the smartness of it, as bling. When I’d leave it at home, I’d feel like a less trivial person, halfway to Walden Pond, more of an eyeball, if not yet transparent.
It is bling, but only for me, and those, like me, who were born into a hyper-connected society. For everyone else, it’s a vital conduit to entrepreneurial success.
When I was ten, my grandmother gave me the gift of giving someone else a cow. In the brochure it looked like a nice animal, ruddy and sturdy, standing patiently while a woman wound in bright woven fabrics squeezed milk into a clay jug. My grandmother explained that the milk produced from this cow would generate enough money for the milker to feed her whole family, and then some.
As I learned yesterday, a phone is like a cow, only more flexible in the avenues it offers.
There were a number of interrelated themes at QZ’s The Next Billion conference, so named after the next billion internet users, but the biggest was, in the words of Intel's Mike Bell, “mobile has become a real power for people to get their businesses done.” And how. A study by Deloitte found that, in low/middle income economies, a 10% increase in mobile penetration resulted in a 1.2% increase in GDP.
In emerging markets, where wifi may be scarce but cellular penetration is rapidly increasing, the phone is single point of operations: it’s the office, the payment center, the scheduler, the communications hub. Wes Chan, who works for Google Ventures, explained its role succinctly: “I don't need a car; I just need a smart phone.”
A corollary to this theme was the need to increase mobile access, thereby widening and increasing the distribution of power. People like Bell and Jay Sullivan, who works on WebOS at Mozilla, and Nathan Eagle, the CEO of Jana, talked about some of the ways this can be achieved: longer-lasting batteries, usage and cost transparency, phones that provide value (insight into data usage and which contacts in an address book are on which plans) over phones that are merely cheap. Small wonder, then, that "consumers in emerging markets spend 10% of their daily wages on mobile airtime."
And then there’s the payment aspect. Mobile commerce is burgeoning, but in areas that lack mobile payments systems, such as India, cash-on-delivery is prevalent, as noted by Venkatesh Bala, of The Cambridge Group. Meanwhile 20% of Kenya’s GDP flows through a mobile payment system called M-Pesa. In a panel on digital finance, moderator Kelly Evans raised again and again the question of why America’s mobile payment options lag considerably behind Kenya’s. The answer is pretty simple, really: one part leapfrogging (many emerging markets went straight from no electronic communication to mobile communication, whereas in much of America, landline access still prevails) and one part complacency -- after all, we have bank accounts, we have online banking, we have options to transfer money, though not in real-time.
The Next Billion was a technology conference, but it was refreshingly free of technoethnocentrism. A number of the panelists suggested that, for businesses dealing with emerging markets, locating oneself in Silicon Valley would be a detriment -- a prescription for thinking the bling is the point of the thing. But if the cash flows green…
Except it won’t, not for long. Christopher M. Schroeder, investor and author of Startup Rising, predicts America has another 10 years of preeminence, tops. Want financial proof? Right now Facebook, for example, gets $4.19/year per North American user, and $.74/year per Asian user. Eagle estimates that in 4 years, the majority of Facebook’s revenue will come from emerging markets. More proof: consumer goods company Unilever already earns a majority of its revenue from emerging markets.
So, then, three lessons: 1) American view != international view, 2) from Microsoft’s Susan Athey, the business models for the next billion will be ways to get these same people to participate in the global economy, and 3) from Schroeder, “stop thinking of mobile devices as fancy feature phones -- they are creative super computers that allow people to solve all sorts of problems.”
And one closing thought, from the photographer Platon, “Technology is there to empower, to make our lives better, to free us.”