Internet Entrepreneurs Are Fundamentally Re-Wiring the Global Economy

4 November 2009. Too Big To Fail. Government Bailout. Protectionism. 2009 was the Year of Big.

4 November 2009. Too Big To Fail. Government Bailout. Protectionism. 2009 was the Year of Big.

4 November 2009. Too Big To Fail. Government Bailout. Protectionism. 2009 was the Year of Big.

4 November 2009. Too Big To Fail. Government Bailout. Protectionism. 2009 was the Year of Big.

Think about it. It has been all about big government, big banks, big auto/ airline/ pharma/ media. Even in the online world, 2009 has been about the growing empire of ‘Do Some Evil’ Google, Microsoft sucking the guts out of Yahoo to compete with them, and Facebook joining the ranks of the internet-giants-that-are-as-big-as-continents, having recently surpassed 300 million users.[br]

With the possible exception of Twitter, we seem to have forgotten about innovation coming out of garages and dorm rooms. Have we grown up? Now that we have government guarantees, shiny new iPhones and search engines, do we pretty much know how things are going to be? Are we settling down?

Not according to Jack Ma, Founder, CEO and Chairman of the Alibaba Group, writing in the New York Times. Ironically of course Jack Ma is no longer a small businessman, running not only Alibaba but also Yahoo’s Chinese operations. But it seems his heart is still with the little guy.

Jack says

[quote]The headlines of the past year about storied global corporations all but collapsing in the wake of the global economic downturn were not signs of the times, but rather a foreshadowing that a long-awaited business revolution is actually beginning. Many of these large enterprises are relics of the last century and the financial crisis was the last straw in exposing their inherent weaknesses.[/quote][br]

His hypothesis is that the change in the relationship between consumers and businesses that the internet has enabled is only just starting – and in no way ‘there already’ as it sometimes feels. He goes on to say that it is entrepreneurs starting new online businesses – or ‘netrepreneurs’ – who will capitalize on this trend, outsmarting the lumbering giants with business models as up to date as bowler hats and snuff.

Jack quotes a fascinating statistic. He says that his site, Alibaba.com, which connects manufacturers and suppliers in China with customers all over the world, has created 1.1 million direct jobs in the last three years in his home market. He believes there will be exponential growth in online business, and that within 10 years, 1 billion people (one seventh of the world) will rely on the internet to buy products and services daily.

However he says that the ‘Too Big to Fail’ mentality is impeding this wonderful new world of lower costs and global markets.

[quote]But there is a missing ingredient that can help realize this vision. While it’s common for people to focus on big brand names, it’s important to note that more than 70 percent of the world’s innovations have come from once small and medium-sized companies. That’s why it’s critical that policymakers and leaders devote more time toward encouraging the development of this sector of the economy. It needs greater support through financing, training programs, tax policy and technology advancement.[/quote]

As an internet entrepeneur earning a livelihood by running EconomyWatch.com, I have a very personal interest in this story. I agree with Jack’s point of view in all but one crucial way.

We hear horrifying stories about the end of journalism as traditional media outlets get shut down or minisized, but I can assure you that journalism has never been healthier. There will indeed be millions of new voices being heard online. There will be Iraqis and Somalis, Azerjis and Argentinians, sharing things from their own perspectives and using the growing plethora of revenue-generating services to earn a living out of their efforts.

Like virtually all our colleagues in the online space, we have seen a massive growth in our business this year. The user numbers of EconomyWatch.com have more than doubled, growing from 300,901 in January to 708,071 in October 2009.

Revenues have increased 534% in that time, thanks to growing traffic but also the ever-improving advertising networks and revenue sharing partnerships from the 800 pound Gorilla in our neighbourhood, Google, but also from enterprising startups like Asterpix, InfoLinks and Chitika. All these services are free, get set up in minutes, and can be used from anywhere in the world. Combined with freely available (and often open source) content management systems, ad servers, eCommerce platforms, payment services and the like, there is infrastructure there to grow businesses from zero to millions of customers in an amazingly short timeframe.

According to a study carried out by PriceWaterhouseCooper, the internet has just become the largest advertising media in the UK, overtaking TV for the first time. Online advertising in the first half of 2009 grew by 4.6 percent year-on-year, while the overall ad industry shrank 16.6 percent.

The ease, speed and increasingly quality of online services means it is a no-brainer source of entertainment, information and commerce – once you get connected. Within 10 years, most of the world will be connected, and the internet will be in most countries be both the largest advertising medium and the primary channel to order products and services.

I do believe, however, that Jack may have been disingenious with his call for help from big government.

No internet entrepreneur that I know has ever looked for leadership or even help from the regulators. Instead they have sought to understand the enabling capabilities of technology, and the changing mindsets of customers as they embrace that technology. They use that knowledge to make things better/ cheaper/ faster, in a way that a large corporation is not nimble enough to do.

It is those large corporations, rather, that require regulator help. Let us not forget that Jack basically runs Yahoo China and is maybe their last chance of greatness.

The purple Yodel lost its way years ago. Google quietly took over Yahoo’s mantle of the world’s most visited site earlier this year. It was quiet because it was already obvious that it would happen for years, with all the mis-steps of Semel, Yang and now Bartz at the helm. Incidentally, on current trends Facebook could soon usurp Google as most visited site, as it already has in other metrics – pageviews and time spent – although not now and probably not ever in the lets-face-it-the-most-important-metric-of-all: revenues.

My question to Jack is this: are you really looking for help for entrepreneurs – or for Yahoo and your companions, the other ailing internet giants (think AOL, eBay, MySpace etc) who are struggling to compete?

Have they also become ‘relics of the last century’ requiring bailouts?

To be fair to Jack, he has always spoke out for small business. At the Alibaba shareholders meeting in May, attended also by Hong Kong students, he urged everyone present to innovate and start their own businesses, rather than waiting for government or business to help them. Which just makes his apparent change of heart all the more questionable.

I honestly don’t know if I am over-thinking this. I just know that like all netpreneurs I need to innovate, work hard, learn and serve my customers every day, hoping to make Jack’s fabled new economy a reality one day.

Keith Timimi

EconomyWatch.com