Technology traditionally has been created in two main spaces: traditional established companies, or public and private research centres (universities, technological centres, etc.). In recent years, there has appeared a third actor – startups!
The long-range economic potential and societal impact of new technology are one of the few certainties in the decades ahead. Technology companies continue to become a bigger percentage of the world economy. ‘They have overtaken oil and gas companies to become the largest public companies in the world, the private market is bursting with billion dollar unicorn valuations unseen ever before in history, and many non-technological industries are either dying at technology’s hands or becoming one with it.’
The first five information technology waves of defense, Integrated Circuits, the Personal Computer, the Internet, and Social Media have dramatically transformed society. But the waves that are coming in the next 20 years will make what’s come to pass look like a child’s play. Self-driving cars, Artificial Intelligence, robotics, and Virtual Reality are just a few of the fast approaching societally transformative technologies coming in the next wave. All of these technologies portend a future with great increases in productivity and prosperity. Where will all this technology be created and commercialized? A majority of this future technology will likely be brought into the world by entrepreneurs creating startups.
The global Information Technology (IT) industry market, encompassing hardware, software, services, and telecommunications, is expected to reach more than $3.8 trillion in 2019, up from a little over $3.7 trillion the previous year. Other calculations exclude sectors that are not deflationary such as services, and come up with $1.6 trillion/year, or 2 percent of global GDP. This figure was just 1 percent of global GDP in 2004 and only about 0.5 percent of global GDP in 1992. So technology’s percentage of the world economy is growing exponentially. At this rate, it will be 4 percent of world GDP by 2026 and 8 percent by 2038. If technology keeps on its exponential pace, hitting the 8 percent figure, then deflationary technology sectors will be doing $12 trillion in revenue in 2038.
Today, the adoption line of certain new technologies is practically vertical. Innovations and technologies are rapidly introduced into the market and accepted by society. The time it takes for a new technology to reach mainstream adoption is accelerating exponentially, to the point in the future where a new technology can have greater than 50 percent market penetration in just a few years, whereas earlier it would take decades. This is a very large amount of future growth for technology that portends a very bright future for technology businesses, and in particular, technology startups and startup ecosystems. Apart from that, the emergence of new technologies is increasing over time. A significant portion of the technology products that will make up the $12 trillion in global annual GDP 20 years in the future likely doesn’t exist yet. By definition, a startup means risk and velocity. Startups are thus the prime drivers of risk and the speed.
Some of this technological future will also come from large companies, but by and large, these large companies still haven’t figured out how to reliably create disruptive innovation.
A strong indication that we are in the middle of the passing of the baton between the industrial era and the information era is the recent milestone reached in July 2016, where the world’s five largest public companies by market capitalization were all technology companies – Apple, Google (Alphabet), Microsoft, Amazon, and Facebook. Large tech companies have developed a more symbiotic relationship with startups. Companies such as Amazon, Apple, and Microsoft have displayed strong competency over the last 5–10 years in developing complementary relationships with startups by providing platforms and infrastructure for them to build on. New startups are created each year and they receive money from investors to grow.In fact, repetition and diversification are key elements in startup ecosystems.
Purva DYNAMIC VISHVA