Digital Tonto: The biggest digital media company you’ve never heard of

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June 11, 2012, 4:23 p.m. | Op-ed — by Greg Satell

Greg Satell

America is famous for its media giants. Facebook, even after the disastrous IPO, is still worth $60 billion. Google already trades at $200 billion. So called “old media” companies are massive too. Disney is worth $80 Billion; Time Warner about $35 Billion.

And why not? The US is the world’s biggest media market by far, accounting for about 35% of the world’s ad market. Make it here and you are a massive player globally.

Not surprisingly, we don’t pay much attention to the rest of the world, but we should. That’s where 95% of people live. 7 billion people with ideas and energy, who are unlocking value where we never thought to look. Probably the best example is Naspers, a $22 billion South African company that already owns chunks of Facebook and Zynga.

Who The Hell is Naspers?

I first wrote about Naspers two years ago in a post about 4 unlikely digital heroes (Full disclosure: When I was Co-CEO of KP media, we had a an e-commerce joint venture with a Naspers subsidiary).

They aren’t a start-up, but a century old company that was originally a publisher of newspapers and magazines and still derive about a third of their revenues from print. They got into digital in 1997 with the launch of an ISP in their native South Africa and made a smart early investment in China’s Tencent in 2001.

Since then, they have been on a roll snapping up a large stake in in 2007 and Polish auction giant Allegro in 2008, among others, piecing together a true international media empire.

As you can see from the organization chart above, Naspers has developed a significant footprint on every continent except for North America. Not all of the investments have been winners but, on balance, they’ve gotten in early and done pretty well.

A Simple Strategy

So what’s the secret sauce? How did this obscure South Africa publisher become a global giant? On their website, they describe their strategy like this:

If you would take a random sample of media company strategies and combined them, they would probably average out to something very similar. In other words, there’s no secret sauce, except that they have had the courage to look where no one else has bothered – emerging technologies in emerging markets.

And these guys don’t just swoop in with big egos and fat checkbooks. They have spent years going to regional conferences, getting to know people and establishing credibility as a value-added investor. When Naspers invest in you, you are not just getting bought by a big faceless corporation, but joining a community of successful entrepreneurs.

In short, Naspers has been successful not through amazing brilliance, but rather with good sense, shoe leather and a lot of patience (essential in emerging markets).

A Wide Gaping Hole

So here’s the big question. Where are the American media companies? Besides the occasional juggernaut like Google or Facebook that achieves significant audience overseas and then opens offices to service and monetize it, US firms are almost non-existent overseas.

I noticed this during my 15 years abroad, but it’s really become apparent in the short time I’ve been home. US executives not only lack knowledge of the rest of the world, they barely know it exists. Usually, they assume that it’s pretty much like it is at home, albeit with strange languages, weird food and a bunch of people who are trying to catch up to us.

That’s quite a big oversight. The rest of the world offers three quarters of the world’s GDP, a lot of really smart, hardworking people with great ideas and an amazing opportunity to learn about and experiment with new business models.

Oh, and about the catching up part, when eBay went into Poland, Naspers’ Allegro unit put them out of business in record time. Ignorance can cost you.

Take a Look Around

America has no monopoly on skills or innovative spirit. Asia and Eastern Europe boast some of the world’s best programming talent. Mobile payments are already old hat in South Korea. China has a burgeoning mobile digital culture. Poland’s Gemius has consistently beat out GfK and Nielsen in online audience research.

Make no mistake, reverse innovation is becoming a powerful force. Multinationals like General Electric and Procter and Gamble have already learned that successful innovations in low-cost countries can be used to disrupt markets back home. As I’ve written before, variation is a key element of innovation and geographic diversity is an important part of that.

So, what I guess I’m saying is, take a look around. There’s a big world out there with a lot in it. US media companies do themselves a disservice by ignoring all that the planet has to offer in talent, perspective and, possibly, the next great business model.

Greg Satell is a U.S.-based independent media analyst.You can read his blog entries at
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