Little Is the New Big
From Angry Birds to crowd-sourced science, the "micromultinational" corporation is here.
For centuries, huge multinational corporations have dominated the world of business. From the British East India Company to Sony, these industry giants span the globe, with manufacturing centers, production lines, and executive headquarters spread across continents. In most cases, it's taken years for these megacorporations to globalize. But now, due to technologies that have leveled the playing field, there's a new trend on the horizon: small businesses that are international from the get-go. With little more than a good Internet connection and a solid business model, these "micromultinationals" -- as Google's Chief Economist, Hal Varian, writes in Foreign Policy's Future Issue -- are proving that size doesn't always matter. These five start-ups aren't merely market flukes, but rather, the future of business.
For centuries, huge multinational corporations have dominated the world of business. From the British East India Company to Sony, these industry giants span the globe, with manufacturing centers, production lines, and executive headquarters spread across continents. In most cases, it’s taken years for these megacorporations to globalize. But now, due to technologies that have leveled the playing field, there’s a new trend on the horizon: small businesses that are international from the get-go. With little more than a good Internet connection and a solid business model, these “micromultinationals” — as Google’s Chief Economist, Hal Varian, writes in Foreign Policy‘s Future Issue — are proving that size doesn’t always matter. These five start-ups aren’t merely market flukes, but rather, the future of business.
In 2003, Swedish entrepreneur Niklas Zennstrom and his Danish counterpart, Janus Friis, who had recently sold the file-sharing website Kazaa, founded Skype. Within the first six weeks of its initial release, 1.5 million users had downloaded the software, which allows video and voice calls, instant messages and file transfers to be made over the Internet. Zennestrom claimed that charging for calls was so “last century” — Skype allowed people to place calls from one edge of the globe to the other for almost nothing.
Skype grew quickly, and now employs around 500 people in Estonia, Sweden, the United States, Japan, and China, among other places. Skype’s founders sold the company to eBay in 2005 for $2.6 billion, and in 2009, the technology investment group Silver Lake bought 40 percent of Skype’s stake. Just 18 months later, in May 2011, Microsoft took the company under its wing for $8.5 billion. Skype today boasts around 700 million users, but the company is hoping its new partnership with Facebook will bring in enough new users to hit the one billion mark.
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Angry Birds has become a global obsession. Rovio, the developer of the hugely popular mobile-phone game, in which birds armed with slingshots battle green egg-stealing pigs, was founded in 2003 by three Finnish students. A team of only a handful monitored and developed a series of games for the first several years, but in 2009, when Angry Birds made it to the iTunes store, their success spread like wildfire. The game hit No. 1 in 68 countries, and remains a personal favorite of Justin Bieber and David Cameron. In May, CEO Mikael Hed told Reuters he expected the Rovio’s revenue to be in the range of $72 million to $143 million this year.
But Angry Birds isn’t just an addictive diversion — it could be the beginning of an empire. In March, investors including Skype co-founder Niklas Zennstrom and Accel Partners, one of Facebook’s funders, backed Rovio with $42 million. Disney may be partnering with the company in the near future, along with Zynga, the creator of the wildly popular game Farmville, and Electronic Arts, the global video game behemoth. Rovio is currently considering taking additional funding from a yet-to-be-named entertainment company, valuing the company at a $1.2 billion. Clothing and stuffed animals depicting the animated birds may soon be sold in 200 Chinese stores, and an Angry Birds movie is even in the works. With only around 110 employees now based in Espoo, Finland, Rovio’s success is remarkable — especially considering the firm had only 17 people on staff until last year.
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Launched in 2004 from founder Brad Oberwager’s California basement, Sundia — a major U.S. fruit and vegetable provider — now deems itself to be the “fastest growing produce brand in North America.” Sundia’s growers are scattered throughout the United States, its manufacturing hubs in China, Mexico, Thailand, and Turkey, and its distribution centers in Vancouver, Los Angeles, and New York. Its phone systems are based in the Philippines, accounting in India, and quality assurance in Pakistan. While Sundia remains a staple source for U.S. grocers, the company’s backbone is nearly entirely international.
Sundia’s web-based system, which CNN praised in 2006, allows for “a Sundia employee in the Philippines [to] take an order from a Philadelphia grocery store for watermelon juice made from Mexican fruit. The juice gets squeezed in Washington state, and payment goes to Oberwager in California, who then notifies his CFO in India that the money has been received.”
The company’s global network has translated into success, with Sundia now manufacturing all Sunkist and Jamba Juice fruit cups; 35 percent of watermelons in the United States bear the Sundia logo. In 2009, Forbes ranked Sundia as the sixth-most promising young company. As of last year, the company only had 15 employees, with revenue of around $15 million.
PAUL J. RICHARDS/AFP/Getty Images
After finishing business school in Paris, American entrepreneur Robert Keane sought to start a printing company that would provide individuals and small businesses with the tools to market themselves cheaply and easily. In 1995, Keane did exactly that — and built his firm into one of the leading online printing companies. In 2007, the company partnered with OfficeMax to introduce stations using Vistaprint technology in all of its U.S. and Mexican stores; it announced a partnership with FedEx two years later.
Vistaprint’s competitive advantage is scale. In a matter of minutes, small companies around the world can create personalized logos and business cards using the company’s online design studio for a fraction of the cost of what traditional printing companies charge. But small can be hugely profitable: CNN ranked Vistaprint No. 52 on its 2010 list of the 100 fastest growing companies, and the company’s revenue for the 2011 fiscal year reached $817 million.
Vistaprint has three regional headquarters in the United States, Spain, and Australia, as well as facilities in France, Jamaica, Tunisia, and a handful of other countries. There are currently 24 versions of the Vistaprint website, and its products are shipped to over 130 countries. As Keane told CNN in 2006, “It’s often hard for startups to find their way out of their home nation. But you have to — it’s not that type of world anymore.”
Outsourcing may have become a dirty word, but Kaggle, which pools the expertise of more than 13,000 scientists worldwide, is unabashedly harnessing its power. The company describes itself as an “innovative solution for statistical/analytics outsourcing.” By launching online data analysis competitions, Kaggle consults thousands of experts from over 100 different countries and 200 universities for what they say is “cheaper, faster and more powerful analytics” — a 21st century approach to solving real-world problems. Kaggle’s use of crowd-sourcing has created a healthy competition of ideas and data.
The Australian company, founded in 2010, is supported by a small team including Anthony Goldbloom, a former economic modeler for the Australian Treasury, and Jeremy Howard, a veteran of the consulting firm McKinsey. NASA, Deloitte, and Ford have all partnered with Kaggle to create data competitions, where prize money is awarded to the winning model. Experts have recently participated in competitions involving predicting the progression of HIV, developing better ways to detect when a driver falls asleep at the wheel, and measuring the shapes of galaxies to map dark matter.
Sophia Jones is Global Editor at The Fuller Project. Twitter: @sophia_mjones
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