John Miner: Entrepreneur Thought Leader (10/13/2004)

John Miner, President of Intel Capital, addressed the MSE 472 class today. His focus was mostly on the global angle of their investments, pointing out that 70-75% of Intel business was outside the US. Of the 1,000 investments that Intel capital has made, about 40% are outside the US, in some 30 different countries. Indeed, Intel Capital has employees in 25 different countries. This reflects the growing importance of developing markets. Some 3B new consumers are now (or will soon be) viable prospects, with Eastern Europe, India, China, and Latin America all opening up and experiencing rapid GDP growth. While the US still has the edge in innovation due to its preferred access to capital ("Capital goes where it's treated well.") and higher education, it's not clear that the locus of a new venture should be the US. Miner encouraged people to think before assuming they should start in the local (US) market: it probably doesn't have the best growth, nor the least competition. Looking at key technologies such as mobile phones, cable TV subscribers, and telephone lines, China is already the #1 global leader in these categories. By 2006, it will add top honors in internet users, broadband and VoIP to this list.

India will be adding 1M software engineers over the next 4 years. Miner views this as an opportunity, saying that there's always been a shortage, and that many of the dysfunctional factors of the enterprise software industry (e.g., changing your company's processes to fit to an ERP package) are a result of a scarcity of programmers that could build a package that would truly implement the processes that your company follows. New technologies like digital TV and wi-fi will also drive the need for more software engineers. Radio and TV may be at 90% global penetration, but cell phones, internet, will grow by half a billion users in the next few years.

	China	India	Russia
Focus	Domestic Consumption	Export Services	Natural Resources
VC maturity	Established	Established	Emerging
Capital Availability	"Bubble"	Flat	Low
Best of Breed	Computing / Communication	BPO and IT	Computation and materials

"Arguing against globalization is like arguing against the laws of gravity." -Kofi Annon

Responses to Questions

How does Intel protect its IP in China?

It's a calculated risk, one that they're not willing to take with all of their IP.

What are the key areas of opportunity?

10 CIO's from the F50 just said "A global, secure-across-the-firewall, collaboration solution." John added: management, security, and application deployment tools for grid computing.

Hosted Apps?

A reasonable solution for companies for whom IT isn't a core competence / competitive leverage. Some companies are starting to undo outsourcing relations, but others (small companies) find solutions like Salesforce.com a good fit.

Russia?

Although it appears that there are steps backwards in the political and economic stability front, Intel is not changing policies yet, but keeping an eye open to see how things develop.

Southeast Asia?

Rapid growth in the consumer segment, but still lacking the governance and capital protection laws that would make it ripe for VC investment.