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The Internet Is Flat, Now What?

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Editor’s note: Alec Oxenford is founder and Americas CEO of OLX, a global online classifieds platform. 

The Internet is getting very flat, very quickly, and traditional roles in its economy have already been thrown into flux. As Internet use in developing countries has grown, so has Internet entrepreneurship, with India, China, South America and Africa already hatching their own behemoth startups. Alibaba – though particularly massive – is hardly the only example.

But the attention the developed world pays to these companies and the emerging markets where they operate hasn’t kept pace (several months of Alibaba’s IPO press avalanche notwithstanding). For many entrepreneurs, this is great news. For others – in the developed world – it should be a wakeup call.

What amazed me most about the Alibaba IPO was not its predictable success, but that so few in the United States (and elsewhere) were familiar with Alibaba before 2014. As we all now know, this is a titanic company – one that did more than $9 billion in sales in a single day last year and has been in business for 15 years.

How could Alibaba – or anyone else for that matter – move from relative obscurity in the U.S. to the largest IPO in history in less than a year? And what does it say about the global tech sector that it did?

Underlying these questions – and making them all the more critical – is the fact that America’s Internet presence continues to shrink relative to the rest of the world as mobile Internet keeps bringing billions online and efforts like Facebook’s Internet.org initiative accelerate global Internet adoption.

According to the International Telecommunication Union, the United Nations special agency for information and communication technologies, 55 percent of all mobile-broadband subscriptions now come from the developing world, up from just 20 percent in 2008. Meanwhile, the number of mobile-cellular subscriptions worldwide is approaching the same number of people on Earth, according to the same report (and not just because many of us carry multiple phones).

Why should Americans care? Because a major reason that Alibaba, Tencent, Flipkart, Snapdeal, Baidu, Justdial, Mercadolibre and others have been able to launch and grow successfully outside the U.S. is that they’ve capitalized on opportunities that bigger American companies have left on the table.

Nigeria is perhaps Africa’s biggest technology center, with a population approaching 200 million. Yet, bafflingly, some estimate that the country’s burgeoning tech sector has only drawn investments to date from 10 companies at most. Meanwhile, Uber has raised funds from about three-dozen investors. Something is way off.

Why haven’t emerging markets-focused companies aggressively pursued the U.S. market? A better question is why others haven’t invested time and resources to launch in high-growth markets like Nigeria, India or Brazil, which offer substantial growth opportunities and often higher margins and less competition than developed markets like the U.S. and Western Europe.

It’s completely natural and logical, of course, to believe that you know your local market better than, say, Bangalore. But I spend an inordinate amount of time traveling and watching how consumers in developing economies around the world behave, and while it may sound trite, you’d be amazed how similarly we all act as consumers. We are motivated by the same fundamental factors. You may have different priorities in Boston than I do in Buenos Aires (soccer, for one thing), but doubtless we share the same aspirations to improve our quality of life. And that’s what drives Internet behavior, particularly in e-commerce.

What does this all mean for the global tech sector’s future and continued melding of global economies? Phase one of the Internet saw web 1.0 giants like AOL and Yahoo conquer the U.S. market as the Internet grew into adolescence, while phase two gave us Facebook, Google, YouTube and Apple (as we know them today), which grew so large and so quickly that they became the first truly global web companies we’d seen.

Now imagine a third phase in the not-too-distant future where foreign, multinational power players like Alibaba begin competing with American firms for American consumers. For the most part, this hasn’t happened yet, and it may sound absurd given the footholds that companies like Google and Amazon have in the U.S. But could the next wave of major Internet platforms in the U.S. originate in emerging markets? Absolutely.

The Internet is flatter than you think.

Featured Image: S_Photo/Shutterstock