Reverse Cultural Arbitrage

VCs talk about third generation technology leap-frogging second generation technology in developing markets wherein the second generation products haven’t taken a firm hold. The canonical example is mobile payments being the dominant form of non-cash payments in some parts of Africa. There is a kind of arrogance that is biased towards one direction of this arbitrage: developed to developing. But the reverse can happen frequently: look at smart door locks — super ubiquitous in Asia since the early 2000s — but not at all in western markets. Hence companies like Latch can take a foothold with a new, third generation twist with smartphone integration. Look at content publishing models in Asia — web comics, fan fiction, celebrity endorsements. This sort of reverse arbitrage is a powerful differentiator and competitive edge for foreign born entrepreneurs in the US.