The Future of Startups
The Director of the Future Planet Research Centre, David Hunter Tow, predicts that the Startup culture will provide the key to a more productive, peaceful and sustainable planet by offering a new era of creative worTk and training with the potential to reduce poverty and conflict, while focussing on solutions to the looming crisis facing the planet from unstoppable climate change.
The Startup phenomenon can be likened to the first industrial revolution in the 18th and 19th centuries that radically transformed all aspects of world society by improving living standards and providing new ways to release the creative potential of new generations.
A whole new culture is emerging based on providing support for a new breed of Startup entrepreneur through business structures and processes that include-incubators, accelerators, mentoring and training and equity partners. Startup enterprises now number in the tens of thousands and embrace virtually every significant social, business and industrial process. This nascent culture is rapidly evolving into a global force - gaining structure by coalescing around a number of Hubs, Networks, Ecosystems and Industry and Application Sectors.
Major Hubs are currently based in most of the world's larger cities including- London, Berlin, Istanbul, Helsinki, Tel Aviv, Stockholm, Auckland, Singapore, Beijing, Bangalore, Sydney, Paris, Sao Paulo, Moscow , Reykjavik, Tallinn, Chicago, Manilla, Milan, New York and Barcelona, as well as the major iconic San Francisco/Silicon Valley nexus. At the same time a number of emergent hubs are gathering momentum in most urban regions of Africa, Middle East, Asia and South and Central America.
No process or application, no matter how entrenched or fiercely guarded by its traditional custodians will be exempt from the impact of the Startup’s disruptive agenda, with every activity embedded in the operation of modern civilisation likely to be transformed into a more streamlined and productive form- available primarily via inexpensive digital mobile platforms.
This re-engineering is occurring not just in the traditional online service sectors of retail, marketing, advertising, entertainment, travel and media, but increasingly in the professional service areas of knowledge management- education, healthcare, law, insurance, design and finance. Industrial sectors are also flexing up with smarter solutions, supporting engineering, mining, manufacturing, agriculture, construction, energy, transport, distribution, supply and communications, developing as well as developed countries.
Reading the Signals
But this shift to a smarter planet isn’t solely a big enterprise or big city initiative. In the near future every small town and regional community will also spawn its own Start up ecosystem. It will become a way of life offering a new form of work and play, with creativity the main currency.
It is gradually dawning on Government and the commercial and industrial establishment that this is going to be the future way to create a new generation of viable businesses and economy. In the process it will likely disrupt and displace the existing 20th century paradigm for building a civilisation, taking no prisoners. And if today's enterprises want to survive they will very quickly need to adapt.to this new world order.
But for the larger enterprises in particular this will be an almost impossible task. Social and technology commentators, big business and Governments until now have largely underestimated the significance of this revolution , seeing it as an add-on phenomenon, complementary but not essential to the functions of the traditional economy.
Misreading the significance of past economic disruptions such as the explosion of small desktop
computers and the Internet has led to the demise of many seemingly invulnerable organisations. Just ask IBM about its near-death experiences in these areas. The economy and our social fabric is undergoing the next wave in a series of rapid and radical global changes that will dwarf the original industrial and digital revolutions.
The Startup phenomenon is just the latest in a rolling wave of technology driven changes reshaping our relationship with the planet and triggering a whole new way of survival. And most significantly it is achieving this by releasing the full global potential of human creativity.
And the reason for this burgeoning hyper-growth cycle at the start of the 21st century is because it is meshing simultaneously with a number of other revolutions including those of the sciences, arts, knowledge and artificial intelligence, education and work, as well as advanced digital technology and social development.
The New Players
The primary mover and shaker- the heart and soul of all these revolutions is the Internet/Web, with its payload of exponentially increasing information, now available to all via commoditised mobile portals. This represents the next phase in the democratisation of the world’s storehouse of precious knowledge, driven by the imperative to fulfil the potential of the vast under-educated populations of Africa, Asia and the Middle East that have previously missed out on our planet’s bounty. It creates a level data playing field by allowing any citizen with a mobile phone or tablet regardless of location or income, to access a common knowledge universe.
Piggy backing on this pinnacle of this human intellectual achievement is the education sector which is now well on the way to providing the means of delivering this vast treasure trove in easy to absorb bite size chunks via virtually free MOOCs – Massive Online Open Courses, providing equal access to quality education and training at all levels within across the planet.
And right on its heels, leveraging the benefits of this educational bounty is the revolution in work practice- now catalysed by the Startup industry.
The nature of work is now undergoing a dramatic transformation, flexing up to allow the transfer of skills from cheaper as well as high quality expat off shore sources of labour. But Startups have the potential to take this transfer to another level; to redress the global employment problem, eventually providing opportunities for skilled employment at the local community level.
A major Startup Hub- the Founder Institute , with chapters in 55 cities across 30 countries has just declared that over 1000 companies with a total portfolio value of $5billion have graduated from its program in the last four years. And the Institute and other countless incubators around the world are not just attracting the typical demographic of twenty to thirty year olds with computer science and software engineering backgrounds, but entrepreneurs of all age groups - middle aged executives, trade and factory workers and housewives- even retirees still chasing their lifetime dreams; all with the vision and wisdom of hindsight that only serious life experience can provide- ready to grasp the opportunities that a younger generation cannot yet conceive of.
Following a hobby or passion has always been an intrinsic part of human nature. It is no different in the digital age. The over fifties, sixties, seventies and even eighties now utilise the web as much or more than the under thirties and in a more active way than passively downloading music or videos. Surveys have shown they are also more astute at utilising social media for real benefit. The software skills required to transform that hobby or creative idea into a digital app is the simplest part of the equation- capable of being easily and inexpensively outsourced to an expert or automated app generator. After all, the technical skills required to design a blog or website used to be challenging for the average citizen. Not anymore. Now anyone can use a free template from Google and be up and running within ten minutes. The same is happening with app technology for example with the MIT app generator.
This is the new world where age is not a barrier but an advantage and where creative content and innovation is king.
The infrastructure required to support this new work/play revolution is also dirt cheap; an old warehouse with some discarded tables and chairs and cheap commodity smart phones and laptops or servers- sufficient even for graphics and game developers. For brain storming or practical sessions with an engineering or financial expert with forty years heavy duty industrial experience - a comfortable coffee bar or a friend’s garage is sufficient.
Cities or precincts that were once derelict and dying such as exist in Detroit, Denver, East Berlin or devastated New Orleans are finding a new lease of life by Startup communities; at the same time solving another endemic problem in society- unemployment and crime. Street kids, high school dropouts and jobless university graduates can be rapidly absorbed into this culture with some initial mentoring and training, offering creative opportunities and refuges no different from the arts and crafts sectors that have adopted similar supportive practices for decades. In fact there’s now a significant overlap and synergy between technology and arts communities, sharing creative spaces, ideas and marketing strategies.
Downsizing the Enterprise
No wonder established enterprises of all hues- from the technology giants such as Google, Microsoft, Apple, Sony, Cisco, Verizon, Samsung, Yahoo, Amazon and IBM as well as Government agencies and big business in manufacturing, energy and banking- from NASA to Goldman Sachs, GE, Cisco, Shell, Phillips, Siemens, Panasonic, Ford and Toyota are cashing in on this potential bonanza, supporting and mentoring Startup communities- not so much to make an immediate profit but just to gain a footing in this ultra-competitive new survival game.
Most have either spun off their own internal Startup divisions like IBM or like Google are having a bet each way, aggressively offering to support other promising hubs such as the recently expanded Sydney Incubator tapping into the network of Australian University students.
For those enterprises that don’t or can’t adapt to this new universe, the gig will be up. Just as the empires of ancient times - the Romans, Greeks, Persians and Chinese dynasties or later British, Portuguese, Dutch, French and Spanish colonisers- all thought they were masters of the universe with their new technologies of guns and ships; but eventually overreached and lost the plot, misreading the pro-nationalist signals and new awareness of a changing world.
Now the new technologies keep exploding relentlessly, with the Cloud, mobile technology, virtual reality, the Internet of intelligent objects, big data, artificial intelligence, robotics, massive bandwidth, software defined networks, more flexible database structures and open source software, setting the pace.
But just over the horizon lurks the next generation of technology powered by – the intelligent Web with human like intelligence, quantum computing and teleportation, direct thought transfer via sensory headbands, the Precog society where prediction is the norm, insect sized drones and giant social observatories such as the original billion dollar EU FuturICT blueprint. Also the emergence of the global human superorganism- the response to increasing globalisation in the face of intractable global problems requiring urgent solutions such as climate change and conflict.
Future Shock has arrived.
And each time the technology explodes it exposes more opportunities as well as existential risks to humanity. The current generation of dominant tech providers- Google, Microsoft, Apple, Amazon and Facebook are already looking vulnerable; with Google overreaching just like the ancient empires; and Facebook’s invasion of user privacy- likely to go the same way as Myspace; and Apple- passed its innovative peak, likely to become another producer of commodity devices such as Nokia. Even Microsoft is on the ropes unable to make the paradigm shift needed to survive thenew world order.
Big enterprises have a habit of believing their own rhetoric of infinite growth with a delusional mantra of taking over the world in their market niche. Unfortunately they never studied physics and the limits of computation, information and energy, as the power of entropy inevitably dissembles their structures.
So the traditional notion of an individual's job and work-related role is already outdated. Work value in the future will be measured in terms of contributions to personal and organisational goals, together with social utility, whether for a two person startup or two thousand employee company.
By 2025 most tasks in heavy industry such as mining, construction, manufacturing and transport will be largely automated and robot-assisted. But such projects will also be increasingly managed and resourced on a real-time basis within the Web's global knowledge network- driven by innovative algorithms generated by next-gen apps.
Work and Play
By 2030 organisational boundaries and work practices will be fluid and porous, with individuals moving freely between projects, career paths and virtual organisational structures; adding value and in turn continuously acquiring new skills, linked to ongoing vocational programs.
And Startups will play the leading role in generating this new innovative world of work and play as a hothouse for generating new ideas and skills. Opportunities for Startups will therefore abound. Why? Because every current major provider of products and services whether- big pharma, big banks, big media, big agriculture, big construction, big government or big cities will be desperately in need of a makeover with their clunky and inefficient 20th century legacy systems not cutting it in the 21st roller coaster super competitive world.
Likewise professional services in marketing, healthcare, travel, law, media and finance will be dominated by apps and algorithms generated by small agile second and third generation Startup companies.
A revolution in social development is also changing the way populations are coping with massively expanding populations and dwindling resource options, by returning to smaller self- sufficient and cooperative urban communities linked by high bandwidth communication and transport networks which will facilitate work, food and water security and learning opportunities in a Startup age.
Although big factories using automated robotic processes for producing industrial components - steel, concrete, glass, cars, turbines, trains and solar panels will still be essential using a mix of advanced technologies such as 3D printing, the streamlined and flexible information services needed to manage, market and optimise such products are more likely to be created by the host of future creative Startups- not the few software goliaths still lingering from of the 20th century.
This future downsizing of the enterprise aligned with local community structures augers well for the nascent Startup industry with its naturally flatter decentralised architecture, allowing a more flexible capacity to adapt to market signals rather than through rigid centralised control communications. Startups also have the capacity to upscale more flexibly using cloud-based frameworks and by forming cooperative networks rather than expanding centralised silos.
And Startups are not only leveraging new information technologies but also the new sciences of materials, biology, chemistry, physics and energy including- graphene- the next electronics
replacement for silicon; artificial photosynthesis- the future hope for solar energy; optical physics- for invisibility cloaking and super lasers, quantum computing and information teleportation ; synthetic biology- for growing organs and creating organisms to clean up pollution. Even gene sequencing machines, atomic microscopes and analytic laboratory processes are being downsized to desktop level, closing the comparative cost differential between rich and poor countries and large and small enterprises.
And governments are loving it- because Startups are offering a silver bullet to generate prosperity- a low cost simple way to foster new industries and jobs without the burden of expensive infrastructure, offering the next generation entry to a better life.
The fight against big enterprise corruption, bribery, price gouging and market cartels by big enterprise also benefits in a down sized decentralised app society. There have been numerous recent exposures of the underlying level of corruption, bribery, conflict of interest and contempt for customers within the finance and banking industries, as well as major sectors of the mining and construction industries. But if government regulators have failed to prevent the misuse of shareholder and public funds then agile Startup competitors offering cheaper, safer and more convenient services, may do the job for them.
An example is the payments sector. Many smaller agile groups from technology and infrastructure poor African countries such as Kenya have taken the lead in these services of convenience and already provide perfectly viable mobile phone money transfer and business transaction services via text and a pin number, bypassing expensive western banking services.
Both banks and private equity funds are now scrambling to join the Startup race. But the banks are slow to shed their conservative no-risk attitude to lending and the large venture capital funds are being outflanked because of their elitist attitude, refusing to get involved until they are sure the Startup is well on its way to stardom. But in a future high risk roller coaster world there is no such thing as certainty and the professional funds are now at risk of being outflanked by the more nimble networks of crowdfunders and syndicates of wealthy Angel investors, happy to take a gamble, offering both seed capital for visionary ideas and serious followup investment for likely winners; gaining the advantage of an inside rails run to grab the major payoff prize.
Saving the Planet
But the Startup has a much more important role to play in today’s world.
The latest climate report predicts our climate will be irrevocably changed within thirty years if we don’t change direction – despite all the current advances in renewable energy technology and efficiency savings.
By focussing on innovations in sustainable energy and poverty reduction- rather than trying to emulate another superficial social media or marketing billionaire, today’s Startups can play an essential role in saving the planet and its human cargo, including themselves.
This is an indicator of the potential power of the maturing Startup industry, as a global phenomenon which also might just save the planet through the unleashing of an explosion of innovation and idealism; designing more resilient and sustainable systems, reducing the pressure on the planet’s ecosystems and supporting more cohesive communities; at the same time generating new pathways to peace through cooperative globalisation- offering hope for future generations in a time of existential crisis.
Today's Startup is therefore not only a powerful force for change but also for survival.
A Level Playing Field
They are also beginning to gain the upper hand in the marketplace of ideas. A tipping point is already emerging. There is now more investment capital available than viable projects. No more the demeaning cap in hand pleas by desperate entrepreneurs for funding - prostrating themselves in ridiculous speed
pitching marathons- often losing control over their IP in the process of a desperate race for assistance.
Now there are many more alternative funding options to tap such as crowdfunding and Angel syndicates- more financial supply than startup demand; Universities, such as Stanford, MIT and Sydney as well as tech companies and government agencies are also competing with established VC firms, with many lower-tier VC firms caught in the squeeze, at risk of going to the wall.
So now it’s the VC firms turn to do the pitching and make concessions for a limited supply of viable Startups. Just look at the massive investment flows that are inundating the Startup industry.
How things change.
For the entrepreneurs and founders it means more control, more funding choices, and shorter lead times.
The centre of gravity of the talented app developers and entrepreneurs is also shifting away from the US back to their country of origin. Until recently at all levels of science and technology the US has been living on borrowed overseas intellectual capacity. For the last fifty years it succeeded beyond its wildest expectations in seducing the most talented of the world's minds to assist achieve its scientific and technological dominance, with offers of scholarships, state of the art research facilities, career paths, permanent residency and financial packages an order higher than their own countries could offer. And during the last fifty years hardly a research paper of any significance was published without input from a researcher of European or Asian origin. And the American economy prospered beyond all expectations.
But now the game is over, with governments across the world able to offer their talented graduates and entrepreneurs the necessary home grown incentives and facilities to pursue their careers in their own countries; at the same time contributing to their own national development.
So the Startups of tomorrow will be much more evenly distributed with a more level playing field and the world can look forward to an explosion in creative and innovative potential across all nation states. In tomorrow’s world there will be no alpha nation. Each Startup ecosystem will develop its own expertise in its own way, which it will then share with the world.
Preparing for the Future
By the mid-forties the earth’s climate will have irredeemably changed to something much more violent and unpredictable if we stay on our current trajectory, even accounting for the growing use of renewable energy sources and greater efficiencies The best we can now hope for is to slow Armageddon down, but we may not be able to reverse it.
Climate change triggered by global warming will dominate every business and social decision within the next decade. Every country, community and company has to make it front and centre in their planning processes- what to produce, how to produce it, where to produce, in order to minimise energy consumption and slow the release of carbon.
The Startup culture will play a pivotal role in this process- the key to the planet’s redemption. But only if its focus shifts to developing sustainable, educational and humanitarian processes and products rather than infantile notions of becoming the next billion dollar enterprise.
Let’s hope that the current and future generation of founders, investors and new enterprises don’t lose sight of the real prioriies facing planet Earth and have the wisdom to avoid being dazzled by ephemeral dollar signs.
Otherwise they too will be swept away by its apocalyptic endgame.