Back in early 2003, a Dane named Janus Friis and a Swede named Niklas Zennström had an idea for a software application, and founded a business with the help of three Estonian software developers. A new multinational, albeit a small one that nobody had heard of, was thus born. They set about registering an internet domain name, preparing for the release of a Beta version of their app later that year.
Fast forward to 2011 and the business had been bought by Microsoft for a whopping $8.5 billion. The app, Skype, had become a household name.
This was one of the earliest iterations of the ‘micro-multinational’: small, self-starting companies that are either ‘born global’ or else leverage online business platforms and the openness of the global economy to enter global markets.
What’s made the rise of the micro-multinational possible is the reality that, in the 21st century, you don’t have to be big to go global. Today, all you need is a mobile device, a shipping platform and a big idea. Even the smallest business has access to communications and computing innovations that were beyond the reach of even large companies 15 years ago, at little or no cost.
By combining virtual networks (high-speed internet, mobile communication, etc) with physical networks (transportation systems and logistics platforms), micro-multinationals have the potential to disrupt industries virtually overnight.
So what’s the big deal about micro-multinationals? To start with, micro-multinationals are small- to-medium-sized enterprises (SMEs) by definition – a critically important part of the global economy that makes up about 90% of all businesses, more than 99% of all employer firms, and more than 50 percent of employment worldwide.
But micro-multinationals enjoy advantages that are unavailable to SMEs operating in a single market, such as the ability to exploit global variations in knowledge, skills, and labour costs. They can operate their businesses around the world and around the clock across multiple time-zones. Essentially, micro-multinationals have all the traditional benefits of being small and nimble, plus additional ones that come from being able to operate and market their products and services in multiple global markets.
India provides a case in point. On eBay alone, 15,000 Indian entrepreneurs export products through 39 eBay worldwide sites to 128 million active users from 201 countries. There are micro-multinationals which have taken on interesting niches; selling leather jackets from Dharavi, horse saddles from Kanpur, paintings from Kochi and even vanilla beans and essence from Mumbai. Yet the average retail export entrepreneur on eBay employs only 5.3 full time staff.
Of course, most micro-multinationals won’t be the ‘next Skype’. They might look more like Vast.com, a big data solutions provider for home-buyers. It has 25 employees across five time zones, four nations and two continents. Its executives sit in San Francisco, its CTO is based in the Dominican Republic, and its development team is in Belgrade. According to its CEO, “We are building a company in a way that wouldn’t have been possible even two years ago.”
Or consider Local Motors, an Arizona-based car company. It has no design team and does little in-house R&D.
Instead, it has an online network of 12,000 freelance designers from 121 countries that collaborate on futuristic car designs. Unlike most carmakers, there are no massive manufacturing facilities or shiny global headquarters: the company produces cars using a network of micro-factories. To date, it has designed and manufactured 50 off-
road vehicles and plans to produce 1,500 more. Low overheads make this a highly successful business model: the company only employs around 15 full-time staff.
At FedEx, we believe that micro-multinationals will change the face of global business across industrial sectors and geographical boundaries. The logistics industry has a key role to play in their success, and we’re gearing up to support them, not only with rapid and reliable logistics, but also by providing deep expertise in trade regulations and supply chain management.
By Raj Subramaniam
The author is executive VP, global marketing and communications, FedEx Services