When it comes to the Internet, Emerging Markets are very, very different

When I speak to other investors who invest in some of the types of companies we invest in, we often use shorthand to describe an emerging market Internet business that resembles a successful US one. The shorthand usually describes the business in question as the “this of that”. For example, the “Amazon of India” or the “Netflix of Russia”.

We use this shorthand to quickly describe the gist of what a company does. Does it deliver video over the Internet? Then it must be kind of like Netflix. Does it sell multiple categories of goods and have its own warehouses? Then it must be kind of like Amazon.

But an important part of using analogies like this involves recognizing that they have limitations. Sometimes, huge limitations. Emerging market companies are often so different from their US parallels that using analogies can really get you in trouble in terms of understanding what the company actually does.

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