If Black Paw Ventures had to be summarised into a phrase, it could possibly be “for developing countries, by developing countries”. By creating scalable mobile application startups, the company aims to team up with entrepreneurs based in developing countries to serve smartphone users in about 150 of the world’s developing countries.
We find out more with Divon Lan, the Managing Director of Black Paw Ventures, who recently left Google to begin this initiative.
This interview has been edited for flow, clarity, and length.
How did the idea for Black Paw Ventures come about?
Up until recently, and for nearly a decade, I had been working at Google, focused the whole time on users in developing countries throughout Africa and Asia. I spent most of my time on the ground in these countries, working with developers, startups, universities, governments, telcos, the media on one side and Google’s own engineering teams on the other, to help grow the Internet usage and local technology creativity in developing countries.
In the past decade we’ve seen an incredibly fast change in technology usage in developing countries. First, the simple mobile phones starting about 10 years ago, then smartphones gaining traction with the middle class in the past two to five years. However, since about a year or two ago, we have been in the middle of a tsunami, a huge wave of change that is dwarfing anything we’ve seen before, and this is the smartphone revolution. It is a perfect time for technologists who are experts in understanding the nuances of developing countries, to initiate projects that are really game-changing on a global scale.
What is this tsunami?
Let me explain: until let’s say, a year or two ago, the smartphone revolution was a middle class phenomenon in developing countries, including Cambodia. It applied especially to the younger, urban, educated people in the country. What has started to happen in the past year or two is that smartphones have gone beyond the middle class, and are now starting to be used by almost everyone. I call this segment of population that is beyond the middle class, the “everyone” segment.
The reason that this is important is that, for these “everyone” users, their smartphone is actually the first computing device they’ve ever used in their lives. In their minds – their expectations, their understanding of what the smartphone can do, and even the concept of an app or their grasp on what the Internet is, is vastly different than the people who started their journey on the computer and a web browser.
I think this is a huge opportunity for startups, because if you look at how Cambodians in this “everyone” segment use their smartphones today, they use them in very limited ways. The number of applications relevant to them, that they choose to use, is very small. I have interviewed hundreds of people across dozens of countries, and most of them basically use primarily Facebook, and the instant messaging platform of choice in their country – mostly Line in the case of Cambodia.
Basically the benefit they’re getting from this device is still small compared to the potential, and the reason is because the existing applications were developed with a developed-country lifestyle in mind.
Now, everybody in the technology industry, if you go to any event, if you listen to what big companies like Google, Facebook, Microsoft are saying, everybody’s talking about developing countries (or in corporate-speak – “emerging markets”) – the next billion users, the next three billion users. The reason they’re interested is because the growth in developed countries is slowing, as those markets are saturating, so if you want to grow and get a lot of new users, the remaining places to look at are developing countries.
However, while Silicon Valley companies are good at creating platforms that can be used everywhere (think Android or YouTube or Facebook or WhatsApp), they have not registered many major successes in specific applications for developing-countries so far. Despite huge amounts of money and time spent, this is primarily because the nuances of these markets are difficult to understand by people who do not live here.
How does Black Paw Ventures work?
We are a creative organisation that creates companies. Our creation, our art, is companies, startups.
We look to team up with brilliant developers, designers, entrepreneurs that have a creative idea, some direction not yet crystallised, and want to do things globally and build a Silicon Valley level company out of Cambodia or another developing country.
While we might fund the very early stage of a new company, we are fundamentally a creative, not a financial, organization. Our objective is not to invest, sit on the sidelines, and then get the return of investment. Our objective is to create companies, be hands on, be involved in creating the products, build the teams and business models, and so on. So that’s why we’re calling this a startup foundry, as we’re basically founding companies.
Black Paw Ventures just got started, and currently we have one project underway, still in stealth-mode, with a team based in Philippines. And we are actively evaluating more projects.
What type of startups does Black Paw Ventures try to create?
At Black Paw Ventures we are focused exclusively on mobile apps for the mass market only, and only in developing countries. In addition, we need to be convinced that each one of our projects (that are all for-profit), also has some inherently positive impact on society.
What we’re looking for is a product idea and operational model that, if a startup is successful, has the potential to get to hundreds of millions of people. These are mass-market consumer applications. For example, we’re not into industry specific B2B applications – if someone has an app to manage bakeries, that’s great but we’re not interested in that. The value we add to a team is our knowledge on how to build the app and the company from day one with the objective of scaling globally in developing countries.
There isn’t any example yet of an app built in Cambodia that has reached millions of users, or an app built in Cambodia that succeeded overseas. How does one approach these challenges?
For every case, you start in one country, as you have to start somewhere. It’s usually good to pick the country where the developers are based so they can be close to the users. Then very quickly, not after years, but after weeks and months, scale to a large number of other developing countries, leveraging our existing relationships and partners across the world. That’s a model. We’re basically hoping to build Silicon Valley quality companies that can have an impact on a large number of people.
What are your views on the Cambodian startup scene?
My background with Google in developing countries has made me lucky to be able to work on the ground in roughly 60 developing countries. I’ve worked all over Africa, Southeast Asia, South Asia, the Pacific region and also in ex-Soviet Central Asia. There are a lot of similarities between developing countries but every country also has its uniquenesses.
From the perspective of building a multinational technology company out of Cambodia – I think Cambodia’s big advantage is that it’s a very open country, and it’s very easy for foreigners to work here. Cambodian people are very open, connected to the world, and accepting of international environments and foreign people. In addition, there is a high level of English proficiency amongst professionally skilled people, the US Dollar is the de-facto currency, tax rates are reasonably low, it is very easy to get work permits for foreign expert staff, Internet connectivity in the city is exceptionally good, and finally, also very importantly, Phnom Penh is a fun and vibrant city to live and work in – all these things make Cambodia an attractive location to base a technology company.
The issue I’m seeing all the time, and by the way this is not unique to Cambodia, is that technology entrepreneurs’ state of mind or ambitions or aspirations tend to be very local. They’re building a company to do something in Cambodia, to have some app that does something that they hope will succeed in the country. I think that is missing the potential.
The problem is that Cambodia is a really tiny market; the GDP of the entire country is like the GDP of a small neighbourhood in New York, maybe even a street. Anything that you target that is only local, in a country like Cambodia, is going to be small in users, small in revenue, small in the size of the company, just small all around.
So what advice can you offer for Cambodian entrepreneurs?
My advice to entrepreneurs is this: building a company is a huge effort, it is all-consuming. You basically invest your entire self in your company. So for the same amount of effort, it’s better to do something big rather than something small. It’s not more difficult to do something big than to do something small; it just requires to switch your state of mind. It is okay to use Cambodia as your test site, but plan to then scale globally or to many more countries, fast.
What do you hope to achieve with Black Paw Ventures?
We’re just getting started but the vision here is very big. We’re addressing about half of the world’s population that is significantly underserved by the global technology industry. There are huge opportunities there and we hope to build some very big and very significant companies that focus on that segment.
Needless to say I think all of your readers agree that access to information and communication changes people’s lives, in every aspect, so we hope to contribute to that.
How can you be reached?
I am always interested in brainstorming about ideas and can be reached on firstname.lastname@example.org.
Written by Denise Tan. Edited by Rizqina Mahdzar.