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Things will never be the same again.
It’s a phrase often used but rarely in history has it meant as much as it does right now.
Yes, we are aware of the current health crisis and the economic one which will surely follow, but few have truly grasped just how seismic the drastic change in human behaviour, belief systems and the exposure of our obvious weaknesses will do to the world in which we live.
Sure, you may accuse us of grandstanding but what we say is not without historic precedent.
The Black Death in the 1300s brought about the end of the ingrained feudal system right across Europe, ushering in the concept of employment. The 100-year war in the 1600s created an innovation drive (by necessity) that changed the face of food production. Even the relatively small SARS outbreak changed the face of retail across Asia, creating monumental growth in ecommerce.
And, it could be argued, that none of these had quite the same level of global impact as Covid19 does right now.
One man that knows this better than most is celebrated investor and entrepreneur Marc Andreessen; the man behind the accurate future-looking essay called Why Software is Eating the World from 2011. He has been so moved by what the structural shift in the economies of the world that he issued a rallying call to the world, entitled, It’s Time to Build.
His thoughts resonate with my own earlier post right here on the Haatch blog, a forward-facing look at ‘what comes next’.
Start-ups have a duty
Today I want to drill into that subject further with some thoughts around why start-ups, the part of the ecosystem we are so passionately embedded within, are so integral to what will be, for all intents and purposes, a post-war style rebuild. Sure, it won’t be a bricks and mortar tangible rebuild, of the type we saw post-1945, but it will be a rebuild all the same.
So why are start-ups so important to the cause’ this time? The answer can be summed up in two simple words:
We have already seen how poor the current ecosystem is poor at both of these, subdued by a layer of red tape and bureaucracy that is preventing the public and private sectors from being able to respond effectively to even the simplest of requests.
But start-ups do not suffer the same fate. There is no need to ‘pivot’. No requirement to conform or protect the ‘cash cow’. Without such legacy challenges you can move at pace, ship MVPs and disrupt the old economy businesses still mopping up around them and counting the cost of the pandemic.
Such agility will be a superpower in the 2020s and, combined with a relentless focus on problem discovery and solutions, will create a band of unstoppable scale ups moving too fast to be stopped.
Those that truly invest in innovation and in solving the problems laid bare by the forthcoming economic revolution will be the employers of tomorrow. The tax contributors of the next Roaring 20s and Haatch is very excited about playing a major part in the game.
Demand in a time of the new normal
So which areas may be ripe for disruption and will see an increase in demand as we readjust to the new normal?
As we’ve already written we will undoubtedly see disruption across a number of key economic areas. It is a view shared by many. In a recent study by global thinktank and policy lobbying group the Atlantic Council technology experts responded overwhelming to the question around what impact Covid would have on innovation, with 90% agreeing it would accelerate significantly. The following five fields came out on top:
So, what may we see in these spaces in terms of start-up and innovation opportunity? Let’s look at each in turn:
The Future of Work
Remote working is here to stay. Period. It perhaps won’t be as prevalent as it is now but there is little doubt that the enforced ‘stay at home’ has opened employers’ eyes to the benefits that a more flexible approach can offer. Smaller office cost less and will need to be redesigned in a world where fewer will be in, for less time and that space would be better utilised for meetings and project working than our current designs.
And outside of the office the existing suite of software to ensure we stay connected will grow not just across comms and day-to-day organisation but also in aligning longer term objectives like annual KPIs and OKRs as well as remotely and transparently tracking company-wide financial and other strategic objectives. Think PDPs at distance and in real time.
And then we come to the wellness challenge. The likely shift will impact morale, productivity and mental health too. And raises a much greater question:
How can you keep employees focused on the task of building a business longer term? Solve this and you can rule the world!
Data, AI and Automation
The second area is so vast that it is almost impossible to capture all of the opportunity in a few paragraphs, but there is little doubt that the evolution of the big data revolution will move even further and faster.
A 2017 report by global consultants McKinsey predicted a third of workers in the US would be replaced by automation and robots by 2030. Expect this timeline to accelerate now as big tech accelerates its acquisitions of start-ups showing promise in all areas of artificial intelligence; whether that’s in finding ways to replace tutors, fitness trainers and financial advisors, to discovering ways in which we can make our utilities more efficient and effective or even how we develop drugs. It’s already being used to help doctors triage patients and screen for the virus at one NHS hospital in Bolton.
Automation falls into this category too and one of the key areas for acceleration. In a bid to remove the risk now associated with a biological workforce a plethora of companies will look to robotics and other options to remove the human element of what they do as much as possible.
Walmart, the world’s biggest grocer, is already using robots to clean its floors. Hospitals will follow. McDonalds are testing tech that will replace cooks and waiters, while Amazon is keen to remove people from its warehouses completely.
And that’s before we even start to think about how consumer behaviours will change around potential germ and virus contamination points. With awareness now very much switched on to health risk there will be a push towards the touch-free operation of things such as doors and lifts, for instance as well as a move away from physical interaction more generally. This will usher in an acceleration of the move towards non-psychical shopping experiences.
On one end of the spectrum that trend will see home delivery services, such as our own portfolio company BuyMie, explode alongside the elimination of human-to-human checkout experiences, while at the other that demand could be met by mixed reality services and virtual reality. Could the High Street be reinvented and reborn in the virtual world? Will physical changing rooms be replaced by virtual ones? It’s certainly more likely now than it’s ever been.
The possibilities are endless.
Trust and Supply Chain
Then there is one of the most impacted of all economic sectors – the supply chain. The disruption we have seen as a result of global lockdown will reverberate through history, making the moment at which globalisation, as we know it at least, came to an end. For any government, or individual business, there is a now a realisation that a reliance on a supply chain where goods are not a lorry ride away builds in tremendous risk to an entire organisation and that means everything will change.
Most likely that will mean we welcome in a new era of distributed, coordinated and trackable supply chains broken down into score of micro-suppliers, rather than any reliance of a single factory or partner. A system that is built in the right way should be able to maintain economies of scale whilst reducing risk and it is likely that blockchain will play a significant part in its foundations.
It will also lean heavily on other new technologies like 5g, robotics and the Internet of Things to create a mesh-like framework which knows where everything is, all of the time. Expect it to then also have an impact at the delivery end too – with drones and driverless cars built into the ‘network’ at the consumer end.
You may then be thinking ‘what has this got to do with space’? Outside of the need for better global internet coverage (thanks Elon Musk and Starlink) to disseminate information better what we should really focus on here is how our communal and built environment space is designed.
We have seen how technologically advanced cities such as those in Taiwan, Singapore etc have fared better than most thanks to smarter information sharing. The benefits of this will force a rethink of how we create our urban environments to ensure they can better manage the next outbreak.
Part of this will be building with more ‘space’ but a lot will be to do with understand who is moving around them and where they are. Expect conversations around personal freedoms to clash with governmental requirements for data and also to an exodus of people moving into the ‘countryside’, away from risk and partly fuelled by the increase in remote working.
Medical and Bioengineering
And we couldn’t end such an article without a view on an area which is outside of our usual hunting ground; ‘pharma’ and bioengineering. The clamour for a vaccine, and for wider testing has exposed many challenges that the sector faces and as well as a reconsideration of the vast amount of red tape in the space we can expect to see much more rapid development in the emerging medicine space. With it we will see a massive spike in demand for ‘cross over’ specialists such as AI engineers, deep learning experts and programmers as a new arms race begins and such experts start writing their own cheques.
Complex supercomputers will become a must have for all in the space and many of the successful applications of simulation, machine learning, and additive manufacturing will be highlighted over the coming months as the world addresses the pandemic.
The long-term advantage is to open the door to new approaches that will save development time and get safe and effective medical treatments to patients as quickly as possible, not only during global health emergencies, but also as a bioengineering approach for many problems going forward.
So, what are you waiting for…
Rarely then in the history of the modern world has there been more opportunity for start-ups with visions of disrupting whole industries and creating entirely new ones.
If you are an entrepreneur, or an investor in those start-ups for that matter, then your country needs you more than ever right now as we attempt to (re)build the future we’ve all been waiting for.
What do you think? We’d love to see your comments below….