Why does the start up industry beat corporates?


We seem to have, today, an unparalleled explosion in young, new companies, pioneering new products or ways of doing business, and thereby disrupting seemingly invincible pillars of our economy through explosive growth — commonly called startups. How is this possible?

Photo by Ian Schneider on Unsplash

Startups face a seemingly impossible challenge: they seek to build successful businesses from nothing. To do so, they need products that are so much better than alternatives that customers choose to use the new products, despite the lack of any brand recognition. These products need to be built on a shoe-string budget (at least initially), and quickly, by a team of founders that are working with limited resources, limited structures and few established commercial relationships. How can this ever work? Why don’t bigger companies, with access to all the same new technologies, lots of resources and skilled staff, a brand, and sales and marketing teams, win every time?

The answer often comes down to two things: startups have a completely crazy idea that actually works, and/or they are unreasonably good at something.

Continue reading “Why does the start up industry beat corporates?”

Thoughts: Lockdown

End of month one of lockdown: some thoughts as someone lucky enough to still be getting a salary.

Following the president’s example, I’ve donated a third of my April salary. Everyone’s choices of where to donate will differ, here were mine:

  • First priority was Silvertree staff (and ex-staff, in companies that have had to shut down). This month, between UIF and crowdfunding, everyone received a salary
  • I didn’t donate to Solidarity Fund this month, as (right now at least) we seem to have enough PPE, which seems to be their main focus
  • Next, I tried to donate or buy vouchers at restaurants+coffee shops I usually support. Not yet easy! Hopefully, initiatives like https://www.saveyourlocal.co.za/ will help
  • Lastly, I focused on NGOs that I know and that have established infrastructure to reach people that are hungry. This month, that included Thembisa Feeding Scheme, Streetlight Schools (https://www.streetlightschools.org/donate) and Gift of the Givers (https://giftofthegivers.org/make-a-difference/)
  • Economically, our problem is that the velocity of cash has dramatically slowed, as people can’t spend due to lockdown. This is causing a demand-side slump. So, your duty if you have cash: spend as you would have previously, and if you can’t, donate!

[Let me know your great ideas for causes to donate to!]

My predictions for the next 10, 20, 30 years

The latest in my once-every-two-years blog posts — oops. Over the New Year, I thought I’d make some predictions for the longer term. I’m looking forward to laughing at them in 2025, 2035 and 2045!


EDIT: some typos fixed

2025 (10 years time)

  • Physical signatures on paper will start becoming less common, replaced with electronic signatures and third-party document management systems. Over the next few years, security breaches or failures of some of these companies will lead to greater regulation of the industry. The result will eventually look similar to the credit rating agency or stock exchange industries of 2014 – several private companies running businesses in an industry heavily shapen by and working alongside regulatory agencies.
     
  • Hipster becomes accepted mainstream, as the desire for possession of mass-produced physical items is increasingly replaced with the quest for experience and “story” via artisanal and niche products. An increasing share of these products are virtual. Provision of these products and services will avoid massive unemployment, despite continuing decline in jobs in many of the careers that provided employment in 2014.
     
  • The global call-centre industry will finally peak (at a massive size), as new generations prefer to interact with computers and search for answers online. Content writing for helpdesks and forums will be the new outsourced growth industry, though it will not create as many jobs as the call centre industry.

2035 (20 years time)

  • As had happened to chess by 2014, computers will be unmistakably better than humans at “hard” AI problems from early 2000s, e.g., face recognition, speech recognition, “discovery” (reading and finding relevant content in huge troves of documents), medical diagnosis. However, AI will not be much closer to human-level consciousness, as we increasingly discover consciousness is not a single brain system, but rather an emergent property of many finely-balanced subsystems in our brains, built by our evolutionary past, that are very hard to abstract away from our brain structure. That is, computers won’t be “conscious” because we discover our “consciousness” is an increasingly slippery and less-generalisable concept than we had imagined.
     
  • More than 75% percent of seafood will be farmed rather than wild-caught. The exceptions will be either very high-end (and the target of growing environmentalist critiscism) or low-end. Farmed fish breeds will look and behave increasingly different to their wild ancestors.
     
  • The car industry will be in trouble as individual car ownership becomes less common. In advanced economies, shared self-driving cars summoned by smartphone are the default for many people. The only healthy parts of the industry are high-end luxury cars, low-end cars for emerging markets (though massive congestion is pushing public opinion away from car ownership here too), and self-driving electric cars designed for sharing.
     
  • Road congestion in advanced economy cities will be much reduced compared to 2014 (as happened to air pollution in these cities in a previous era, e.g., London after 1800s and LA after 1960s). This will be due to reduced private car use, but more so to self-driving cars and much better traffic management (traffic lights, automatic car re-routing).

2045 (30 years time)

  • CO2 emissions will be steadily falling, with global temperatures on track for a 3.5 degree rise. Agriculture will be steady, thanks to most of the world’s famers using genetically modified crops. Widespread but localised wars and revolutions will have happened, all with political proximate causes but with incidence strongly correlated with areas of greatest climate disruption. Large movements of people will also have occurred, leading to dramatic pro- and anti-immigrant upheavals, but these migrants will be largely described as economic- rather than climate-driven.
     
  • The dominant socio-economic issue will no longer be poverty and financial inequality as measued by Gini coefficient and similar, as this will be superseded by inequality in duration and quality of life. Improved medical technology will leave the top 1% with an expected lifetime almost double that of the bottom 50%, and much better quality of life in the meantime. The advantages of expensive biotech will threaten the assumption that all are born equal, as the offspring of the wealthiest gain developmental advantages, and society faces the danger of a biologically entrenched upper class.
     
  • The tertiary or “services” sector will employ nearly all workers, with industry following agriculture to become virtually irrelevant in formal employment. Production of physical goods will have followed energy use, to be largely uncorrelated with GDP, as non-physical goods become the bulk of GDP by value. Economists will split services into subsectors, such as traded services (finance, media and content) and non-traded services (hospitality, experiences, personal services).
     
  • First steps will be taken to in some countries to ban human drivers on certain roads (e.g., long distance highways), for safety reasons. These will be very controversial, pitting clear evidence of massive reductions in death toll due to self-driving cars, versus people’s right to drive themselves, and the rights of those who don’t yet own self-driving cars.

Black swans (that could make the above invalid)

  • Global pandemic of an easy to catch, slow to incubate but deadly virus. Might be caused by rogue biotech labs
     
  • War between super-powers

What do you think?

Micrologistics and the need for transport in Africa

‘Micrologistics’ is my name for a new approach to transport of goods in small loads, using mobile phones to provide the trust and tracking required to create an effective transport network out of existing vehicles. Below some thoughts on why I think small-scale logistics is a real problem in Africa, what the underlying challenge is, and a possible solution. I think Africa is ready for a new model of small-scale, bottom-of-the-pyramid logistics – for a ‘micrologistics’ revolution.
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“Africa at work” report finally published

The report I’ve spent quite a few months working on has been published — Africa at work: Job creation and inclusive growth. We look at the state of employment in Africa, and what needs to be done to create more wage-paying jobs. It’s awesome to see it getting lots of media attention, but also just good to get it out — it was a lot of work!

In other news, Claire and I are back in Johannesburg after a great year in London and a month of travel in Europe. I’m on a leave of absence for another month or so, still enjoying a more relaxed life!

Contradictions in the countryside

This last weekend I attended the wedding of (as of the weekend) Rebecca and Danson Joseph, at the Cathedral Peak hotel in the Drakensberg. It was a beautiful wedding, and a good party — many of us camped near the hotel, in a big shared campsite. My congratulations and best wishes to Danson and Rebecca!

The last 40km or so of the trip to the hotel passes through a part of what was the “self governing homeland” of Kwazulu, under the Apartheid system. It’s been a long time since I was in this part of the country, and it’s just such a reminder of the bizarre results of Apartheid, and of the difficulty of overcoming its legacy.

Continue reading “Contradictions in the countryside”

BizSchool

I’m very excited about a project running at the moment, as summarised below. Full disclosure: It’s funded by my company, Thornhill, so I may be biased!

The idea is a modern alternative to initiation – a way in which school leavers could be introduced to the attitudes, ethic and life skills required to be an effective employee and citizen. The programme, for thirty school leavers, began this Friday with a weekend away in the Magaliesberg, and then runs for two weeks at GIBS (a business school).

The first few days have gone very well, with the participants committed, excited and learning lots. I particularly enjoyed hearing about some excellent spontaneous poetry in response to the weekend away.

A huge congratulations to Sarah Tinsley, Lanier Covington and Jonathan Cook for the concept and for making it all happen. This is also unlikely to be the last time the project runs, so I’m excited about it having a very useful impact on the lives of many high school leavers. Obviously, there’ll be a need for more volunteers to scale it all up, so anyone interested please drop Sarah a line — see contact details below.

Some further information:
Continue reading “BizSchool”

MobileActive08: Project Diaspora

Project Diaspora
TMS Ruge

(A personal note: it’s been great meeting Teddy, who’s behind this project — five days of conferences makes for good friends quickly!)

We started with the reminder that the African diaspora is a highly educated and useful group of people!

As a starting point, looking at mobile banking. Many African banks may not accept the huge volumes that the Africa diaspora transfers. Solving the remittance problem is obviously a huge ICT issue. But regulator is even a bigger problem — 54 countries! Suggestion that some banks (mostly South African) are starting to gain footprint across the continent. Perhaps a better system is partnering with an existing provider — using volume to build incentive for providers to offer lower-cost providers. Finally, donating to NGOs rather than person-to-person reduce costs.

Big problem with NGOs: people don’t know what other people are doing — get lots of duplication of effort. This is a known but unsolved problem. Should Project Diaspora attempt to solve this problem? Shouldn’t duplicate effort towards preventing the duplication of effort. Suggestion: define a microformat, to allow aggregation of databases.

This led to discussion of whether diaspora should create new projects, or support existing projects. It’s hard to set up and manage something from another country! There are also already groups that manage relations between donors and NGOs, including accountability.

Challenges to diaspora using the existing organisations: too many projects to search through; and desire to be involved especially as being a diaspora member, rather than just another citizen of your host country. What about project information from government? Problem: a lot of people distrust the government.

Project Diaspora as a social network. www.mykenyanspace.net is an existing one for the Kenyan diaspora. A further comment on these — being part of an existing organisation is better for raising funds and being sustainability. One challenge is getting recent news from people actually IN the country concerned. nabble.com: provides opportunity for volunteers in projects, and has people on the ground — citizen media type activity. Focus HAS to be on providing value to the people in the social network — some ways are letting people from the same country get in touch where they are, and also provide sources of information from their original countries.

Difference with “normal” social networking is perhaps the need for “community co-ordinators” who extract key information and memory out of the forums, and organise the database and summary pages.

A very different suggestion: work on existing open source Java applications for chatting (eg. Praekelt foundation has one) / SMS replacement on phones, and make it available through Project Diaspora — this makes international SMS essentially free! Huge draw to the site too.

MobileActive08: Mobile technology and government communication

South African Government Communication and Information Service (GCIS)

Two representatives from the above government office are here, and looking for feedback on how best to use mobile technology for communication from the government. Great to see people working really hard on working out the best models.

Where have we been: GCIS descends loosely from propaganda wing of previous regime, but with different ideal: make government available to everyone. Very expensive currently (hundreds of millions of Rand), questions about whether it’s a useful service. Mobile devices is a new medium, but usage testing has NOT been very successful. Now looking for suggestions from us. Platform on trial was WAP-based.

Some initial criticisms and points: I discussed the difference between push and pull mobile technology, and how push is very disruptive, that needs to be immediately relevant. Someone else discussed that mobile should be a part of a larger spectrum of channels, and so needs to be considered as successful as part of the larger project.

Question of whether government should use details requisitioned from elsewhere, or build databases from more opt-in processes.

Some suggestions: tag messages onto “please call me”s, confirmation SMSs to social grant grantees with additional messages attached.

Discussion is really interesting! I’m so involved I’m not typing. Sorry.

Lots of suggestions around service delivery issues, but of course that’s a local government issue rather than central government, so that’s a problem. But excellent idea seems to be a lookup service by SMS, where one can at least find out who the appropriate people to contact with an issue are. Call to use open standards and open source systems, and open information — get the IT sector involved in spreading the information further.