WEBVTT 00:00:01.698 --> 00:00:06.152 In February 2013, my wife and I moved to Singapore. 00:00:06.651 --> 00:00:08.230 Exactly at the same time, 00:00:08.254 --> 00:00:11.512 Uber has announced it started operations in the country. 00:00:11.536 --> 00:00:15.432 Now, my wife and I agree on a lot of things, 00:00:15.456 --> 00:00:18.718 but using Uber was definitely not one of them. 00:00:19.797 --> 00:00:21.823 While I was excited about the technology 00:00:21.847 --> 00:00:25.093 and how maybe we don't need to own cars anymore, 00:00:25.117 --> 00:00:30.618 she felt that every Uber car is here to steal jobs from taxi drivers. 00:00:32.519 --> 00:00:34.585 And Sarah was not the only one. NOTE Paragraph 00:00:35.519 --> 00:00:38.891 As the Ubers, Airbnbs and Amazons of the world -- 00:00:38.915 --> 00:00:41.299 what we call "online marketplaces" -- 00:00:41.323 --> 00:00:44.720 as they started expanding their presence, 00:00:44.744 --> 00:00:48.029 we have heard, all of us, countless policymakers 00:00:48.053 --> 00:00:50.720 worried about how to deal with these new risks 00:00:50.744 --> 00:00:54.609 of job destruction, lower wages and tax leakage. 00:00:55.244 --> 00:00:57.527 We've also heard company leaders 00:00:57.551 --> 00:01:00.892 worried about aggressive competition from global platforms 00:01:00.916 --> 00:01:03.116 eating up their local businesses. 00:01:04.067 --> 00:01:07.146 And on the rational level, of course I understand. 00:01:07.750 --> 00:01:10.553 After all, this is basic supply and demand economics. 00:01:10.577 --> 00:01:13.458 If, in any market, you dramatically increase supply, 00:01:13.482 --> 00:01:16.961 you should expect prices, profitability and growth to go down 00:01:16.985 --> 00:01:18.385 for existing players. NOTE Paragraph 00:01:19.371 --> 00:01:21.466 But in my personal experience, 00:01:21.490 --> 00:01:24.591 I've also seen the other side of the story. 00:01:24.615 --> 00:01:26.148 Where online marketplaces, 00:01:26.172 --> 00:01:29.861 like Gojek in Indonesia or Jumia in Africa, 00:01:29.885 --> 00:01:33.860 have helped their business ecosystems and the communities around them. 00:01:34.170 --> 00:01:35.895 The positive side I have seen 00:01:35.919 --> 00:01:40.697 demonstrated itself in a woman, a taxi driver in Egypt, 00:01:40.721 --> 00:01:42.776 that now had the opportunity to work 00:01:42.800 --> 00:01:45.577 without the harassment she faced in the taxi business. 00:01:45.601 --> 00:01:50.662 It demonstrated itself through a village in Kenya 00:01:50.686 --> 00:01:52.347 that got an economic boost, 00:01:52.371 --> 00:01:55.649 because the nearby beautiful but completely unknown lake 00:01:55.673 --> 00:01:58.749 is now becoming a national ecotourism spot. NOTE Paragraph 00:02:00.276 --> 00:02:03.323 Online marketplaces will continue to grow. 00:02:03.347 --> 00:02:05.276 And they will transform the way we shop, 00:02:05.300 --> 00:02:06.482 the way we travel 00:02:06.506 --> 00:02:08.537 and the way we transact with each other. 00:02:08.561 --> 00:02:11.371 So we really need to understand 00:02:11.395 --> 00:02:14.347 where is the truth between those two stories. 00:02:14.736 --> 00:02:17.688 Should we expect more of the bright side 00:02:17.712 --> 00:02:19.978 or more of the dark and worrying side? 00:02:20.585 --> 00:02:24.235 And is there a way to get the first without getting the second? 00:02:24.839 --> 00:02:26.106 I believe there is. NOTE Paragraph 00:02:26.514 --> 00:02:30.045 As a strategy consultant, I study businesses for a living. 00:02:30.069 --> 00:02:31.752 And as a mathematician at heart, 00:02:31.776 --> 00:02:34.982 I couldn't live with something and its opposite being equally true. 00:02:35.006 --> 00:02:39.315 So, I went back to fundamentals, and I asked the question: 00:02:39.339 --> 00:02:42.505 What do online marketplaces really do? 00:02:42.903 --> 00:02:44.053 What do they do? NOTE Paragraph 00:02:45.347 --> 00:02:47.164 Well, at their core, 00:02:47.188 --> 00:02:49.269 they're doing something very simple. 00:02:49.583 --> 00:02:51.583 They match sellers and buyers. 00:02:52.044 --> 00:02:53.194 That's it. 00:02:53.520 --> 00:02:55.996 For drivers and passengers, 00:02:56.020 --> 00:02:58.403 you get Uber, Grab in Southeast Asia 00:02:58.427 --> 00:02:59.955 or DiDi in China. 00:03:00.688 --> 00:03:02.874 For matching merchants and consumers, 00:03:02.898 --> 00:03:05.903 you get Amazon, Alibaba or Jumia in Africa. 00:03:05.927 --> 00:03:08.244 And for housing, you get Airbnb; 00:03:08.268 --> 00:03:10.410 for fundraising, you get Kickstarter -- 00:03:10.434 --> 00:03:11.584 the list goes on. 00:03:12.125 --> 00:03:14.887 What all these examples have in common 00:03:14.911 --> 00:03:17.450 is that they transition this basic functionality 00:03:17.474 --> 00:03:19.125 of matching sellers and buyers 00:03:19.149 --> 00:03:22.196 from the physical world to the digital world. 00:03:22.220 --> 00:03:24.133 And by doing so, 00:03:24.157 --> 00:03:25.968 they can find better matches, 00:03:25.992 --> 00:03:27.156 do it faster 00:03:27.180 --> 00:03:30.196 and ultimately, unlock more value for everyone. 00:03:31.847 --> 00:03:35.307 In fact, online marketplaces' core benefit 00:03:35.331 --> 00:03:39.013 is that they get us more from the same amount of effort. NOTE Paragraph 00:03:39.958 --> 00:03:41.537 For example, 00:03:41.561 --> 00:03:43.934 if you're a taxi driver in San Francisco 00:03:43.958 --> 00:03:46.568 and you decide to work 10 hours per day, 00:03:47.609 --> 00:03:50.664 then you're actually having a paying passenger in your car 00:03:50.688 --> 00:03:52.622 for four hours out of the 10. 00:03:53.168 --> 00:03:57.287 If you take the same car and put it on a platform like Uber, 00:03:57.311 --> 00:03:59.209 you can have paying passengers 00:03:59.233 --> 00:04:01.422 for an additional one and a half hours. 00:04:01.446 --> 00:04:05.752 This is the same car becoming 40 percent more productive. 00:04:06.466 --> 00:04:10.164 And the same has been proven true for other online marketplaces. 00:04:10.188 --> 00:04:14.156 By design, they create more value for the economy. NOTE Paragraph 00:04:16.339 --> 00:04:20.363 Now, we need to figure out who gets this additional value. 00:04:20.895 --> 00:04:22.808 You can give it to the drivers -- 00:04:22.832 --> 00:04:24.720 more passengers, more income. 00:04:24.744 --> 00:04:27.760 You can give it to consumers, if you reduce prices. 00:04:27.784 --> 00:04:30.799 Or you can decide that the platform gets to keep all of it. 00:04:31.689 --> 00:04:34.149 What usually happens is that all three of them 00:04:34.173 --> 00:04:35.706 would somehow split it. 00:04:36.776 --> 00:04:39.212 But what about the rest of us? NOTE Paragraph 00:04:40.149 --> 00:04:41.517 We can also be impacted 00:04:41.541 --> 00:04:43.736 without being on either sides of this business. 00:04:43.760 --> 00:04:47.101 If my neighbor decides to rent his apartment on Airbnb, 00:04:47.125 --> 00:04:50.317 and we have more people coming in and out of the building, 00:04:50.341 --> 00:04:52.023 more noise than usual, 00:04:52.047 --> 00:04:56.237 then I'm getting an unpleasant side effect of this productivity magic. 00:04:57.389 --> 00:05:01.149 This is what economists would call a "negative externality." 00:05:01.173 --> 00:05:04.799 The negative externality of Uber cars becoming more productive 00:05:04.823 --> 00:05:07.849 is taxi drivers seeing the value of their licenses drop 00:05:07.873 --> 00:05:11.425 by as much as 30 percent in New York, for example. 00:05:11.981 --> 00:05:13.989 This is the dark side. 00:05:14.307 --> 00:05:17.442 And this is what sparks street demonstrations 00:05:17.466 --> 00:05:20.133 and sometimes, sometimes, even violence. NOTE Paragraph 00:05:21.323 --> 00:05:23.918 I profoundly believe this is avoidable. 00:05:23.942 --> 00:05:25.418 And it became clearer to me 00:05:25.442 --> 00:05:28.081 the more I have spent time in emerging markets. 00:05:28.569 --> 00:05:30.426 In fact, during my time in Singapore, 00:05:30.450 --> 00:05:33.568 I spent half of any given week traveling in the region, 00:05:33.592 --> 00:05:36.331 between Malaysia, Thailand, Indonesia, 00:05:36.355 --> 00:05:37.736 and I became a user -- 00:05:37.760 --> 00:05:39.315 actually, more of a fan -- 00:05:39.339 --> 00:05:43.165 of online marketplaces that were not that well-known back then. NOTE Paragraph 00:05:44.047 --> 00:05:47.507 But some of them made interesting strategic trade-offs 00:05:47.531 --> 00:05:50.024 that dramatically reduced their side effects, 00:05:50.048 --> 00:05:51.673 their externalities. 00:05:52.871 --> 00:05:54.958 Take Gojek, for example. 00:05:55.347 --> 00:05:57.966 They're basically Uber for motor bikes. 00:05:57.990 --> 00:06:02.008 They are one of the most liked online marketplaces in Indonesia, 00:06:03.383 --> 00:06:07.231 and this has a lot to do with the role they chose to play. 00:06:07.637 --> 00:06:08.891 Instead of picking a fight 00:06:08.915 --> 00:06:11.613 with every other transportation option out there, 00:06:11.637 --> 00:06:16.134 they choose to gradually integrate them within their own platform, 00:06:16.158 --> 00:06:18.920 so that without leaving the Gojek app, 00:06:18.944 --> 00:06:21.301 you can check the public transportation schedule 00:06:21.325 --> 00:06:23.658 and choose to take a bus for a long distance. 00:06:23.682 --> 00:06:27.133 Then, maybe, a motorbike or a traditional taxi 00:06:27.157 --> 00:06:31.720 that you can order and pay for from within the same app. 00:06:33.039 --> 00:06:34.523 If you look at Gojek today, 00:06:34.547 --> 00:06:37.555 nine out of 10 previous motor taxi drivers 00:06:37.579 --> 00:06:42.645 believe their quality of life has improved after joining the platform. 00:06:42.669 --> 00:06:44.979 And nine out of 10 consumers -- 00:06:45.003 --> 00:06:46.408 nine out of 10 -- 00:06:46.432 --> 00:06:51.685 believe that Gojek has a positive impact on society in general. NOTE Paragraph 00:06:52.403 --> 00:06:56.576 Now, this level of trust is what allowed Gojek to grow 00:06:56.600 --> 00:07:00.379 into what is today a super online marketplace for everything 00:07:00.403 --> 00:07:02.561 from food to grocery 00:07:02.585 --> 00:07:05.085 even massages and laundry pickups. 00:07:06.442 --> 00:07:09.918 It all came from a deliberate trade-off 00:07:09.942 --> 00:07:12.650 to be an orchestrator of a bigger ecosystem 00:07:12.674 --> 00:07:15.464 where others also have their role to play, 00:07:15.488 --> 00:07:17.797 instead of a single winner, a hero, 00:07:17.821 --> 00:07:21.852 that takes for himself what would, at the end, be a smaller pie. NOTE Paragraph 00:07:23.046 --> 00:07:25.482 Another interesting example is Jumia. 00:07:25.506 --> 00:07:28.744 Jumia is the equivalent of Amazon in Africa. 00:07:28.768 --> 00:07:31.553 But they don't generate the same level of fear 00:07:31.577 --> 00:07:33.711 in the small-business community. 00:07:34.379 --> 00:07:36.141 And one of the reasons for that 00:07:36.165 --> 00:07:39.900 is because they have decided to actively invest 00:07:39.924 --> 00:07:41.614 in African entrepreneurs, 00:07:41.638 --> 00:07:43.728 to grow them into the digital age. 00:07:44.292 --> 00:07:45.482 Now keep in mind, 00:07:45.506 --> 00:07:49.617 Jumia is operating in countries with some of the lowest digital literacy 00:07:49.641 --> 00:07:52.172 and digital connectivity scores in the world. 00:07:52.886 --> 00:07:54.918 Now they could have dealt with that 00:07:54.942 --> 00:07:57.529 the usual way, through lobbying for reforms -- 00:07:57.553 --> 00:07:59.426 and they probably do that -- 00:07:59.450 --> 00:08:02.534 but they have also built Jumia University, 00:08:02.558 --> 00:08:03.783 an e-learning platform 00:08:03.807 --> 00:08:07.982 where merchants can come and learn basic digital and business skills. NOTE Paragraph 00:08:09.085 --> 00:08:12.799 We have studied online marketplaces in Africa last year. 00:08:13.141 --> 00:08:16.767 And during that study, we have met one of Jumia's merchants. 00:08:17.085 --> 00:08:18.474 His name is Jomo. 00:08:18.498 --> 00:08:21.926 He was fired from his job in 2014, 00:08:21.950 --> 00:08:25.466 and at that time, he decided he wanted to become his own boss. 00:08:25.490 --> 00:08:27.204 He wanted to be independent. 00:08:27.228 --> 00:08:30.046 He also wanted to never be fired again. 00:08:31.362 --> 00:08:32.682 So at that time, 00:08:32.706 --> 00:08:35.148 Jomo had no clue what a business is. 00:08:35.172 --> 00:08:37.632 So he needed to go through a series of trainings 00:08:37.656 --> 00:08:40.597 to learn how to select products, how to price them 00:08:40.621 --> 00:08:42.688 and how to promote them online. 00:08:43.522 --> 00:08:47.259 Today, Jomo has a 10-employee online business. 00:08:47.807 --> 00:08:49.783 And as of a few months ago, 00:08:49.807 --> 00:08:52.926 he just opened his very first brick-and-mortar shop 00:08:52.950 --> 00:08:54.684 in the suburbs of Nairobi. 00:08:55.252 --> 00:08:56.776 Now, through its university, 00:08:56.800 --> 00:09:00.704 Jumia has the potential of helping a huge number of Jomos. 00:09:01.373 --> 00:09:04.704 And we have estimated that together with other online marketplaces 00:09:04.728 --> 00:09:05.886 on the continent, 00:09:05.910 --> 00:09:10.663 they can generate three million additional jobs by 2025. 00:09:12.388 --> 00:09:14.475 And they would do that either directly, 00:09:14.499 --> 00:09:16.785 or through their impact on the wider community. NOTE Paragraph 00:09:16.809 --> 00:09:17.975 And sometimes, 00:09:17.999 --> 00:09:20.756 taking that wider impact into consideration 00:09:20.780 --> 00:09:22.252 or forgetting about it 00:09:22.276 --> 00:09:24.209 can make or break a platform. 00:09:24.911 --> 00:09:27.919 To illustrate that, let's go back to Singapore. 00:09:27.943 --> 00:09:32.641 So, when we decided with my wife to leave the country last year, 00:09:32.665 --> 00:09:34.531 Uber decided to do the same. 00:09:35.117 --> 00:09:36.538 At the same time, 00:09:36.562 --> 00:09:41.111 again, we started to see that pattern, 00:09:41.135 --> 00:09:43.460 but maybe it's a coincidence. 00:09:44.053 --> 00:09:48.679 In reality, Uber lost the ride-hailing battle 00:09:48.703 --> 00:09:51.727 to a Malaysian-born start-up called Grab. NOTE Paragraph 00:09:52.616 --> 00:09:54.378 Now, interestingly, 00:09:54.402 --> 00:09:57.931 my wife didn't have the same level of concerns with Grab, 00:09:57.955 --> 00:10:00.598 because when Grab started, it had a different name. 00:10:00.622 --> 00:10:03.074 It was called MyTeksi, 00:10:03.098 --> 00:10:08.537 and as the name suggests, it started as a platform for taxis. 00:10:09.521 --> 00:10:13.943 So when Grab started expanding the driver pool beyond taxis, 00:10:13.967 --> 00:10:16.500 it was seen as gradual and reasonable. 00:10:16.815 --> 00:10:19.748 They were also very careful while doing so. 00:10:20.188 --> 00:10:22.979 They thought of what kind of social safety net 00:10:23.003 --> 00:10:25.125 they should bring to all drivers. 00:10:25.149 --> 00:10:28.188 So they put in place special insurance packages 00:10:28.212 --> 00:10:30.513 and even financial education programs. NOTE Paragraph 00:10:31.295 --> 00:10:36.056 Now, compare that with what happened in London, 00:10:36.080 --> 00:10:38.025 in New York, in Paris, 00:10:38.049 --> 00:10:41.946 where taxi drivers didn't feel that the platforms understood 00:10:41.970 --> 00:10:45.307 they had to pay 200,000 euros for their license -- 00:10:45.331 --> 00:10:46.665 and mostly in loans. 00:10:47.482 --> 00:10:51.449 When you don't take that kind of social environmental information 00:10:51.473 --> 00:10:52.640 into account, 00:10:52.664 --> 00:10:54.330 you get strong reactions. NOTE Paragraph 00:10:57.140 --> 00:11:00.578 I'm not trying to argue that the trade-offs 00:11:00.602 --> 00:11:04.465 by either Grab or Jumia or Gojek are risk-free. 00:11:04.903 --> 00:11:08.036 Did they slow down growth at some point, temporarily? 00:11:08.060 --> 00:11:09.219 Maybe. 00:11:09.243 --> 00:11:10.506 But look at them today. 00:11:10.530 --> 00:11:13.428 Gojek is worth 10 billion dollars. 00:11:14.569 --> 00:11:18.918 Jumia is one of only three unicorns in the whole of Africa. 00:11:19.752 --> 00:11:22.953 And Grab, well, they pushed out Uber 00:11:22.977 --> 00:11:25.777 out of the whole region of Southeast Asia. 00:11:26.712 --> 00:11:31.165 And I also think these trade-offs have nothing specific to emerging markets. 00:11:31.650 --> 00:11:34.846 Amazon or Uber or others can learn from them 00:11:34.870 --> 00:11:37.880 and adapt them to their own realities. NOTE Paragraph 00:11:38.443 --> 00:11:39.594 In the long run, 00:11:39.618 --> 00:11:42.335 this doesn't need to be a zero-sum game. 00:11:42.639 --> 00:11:43.790 In the long run -- 00:11:43.814 --> 00:11:46.846 and this is maybe the Asian side of me speaking -- 00:11:46.870 --> 00:11:48.623 it pays to be patient. 00:11:48.941 --> 00:11:52.522 It pays to reconsider your goal and your priorities 00:11:52.546 --> 00:11:54.918 in the light of a much bigger equation 00:11:54.942 --> 00:11:58.307 that includes you and your users, of course, 00:11:58.331 --> 00:12:01.311 but also it includes regulators, 00:12:01.335 --> 00:12:03.573 policymakers, your communities. 00:12:03.597 --> 00:12:05.906 And I would argue, above all, 00:12:05.930 --> 00:12:09.216 it includes the very businesses you are meant to disrupt. NOTE Paragraph 00:12:09.684 --> 00:12:10.834 Thank you. NOTE Paragraph 00:12:10.858 --> 00:12:14.595 (Applause)