The Next Boom: In The Fast-Emerging Digital Economy, Company Size Is Irrelevant
This is the latest installment of my ongoing series of discussions with entrepreneurs, venture capitalists and corporate leaders on what to expect as the world recovers in the post-Covid era in terms of technology and innovation.
Over the past few months, small businesses have been taking a beating, while larger cash-rich and technology-laden organizations were able to weather the storm. However, as the storm clouds emerge and the new business day begins, we may see things tilt dramatically in favor of smaller enterprises.
Technology is making this so. Previously, only those with resources or the right connections could get started during tough times. Think about the cheap, or even free, and abundant online resources now available to entrepreneurs and innovators, compared to the financial crisis of 2008-2009. “A big difference between 2008 and now is that it’s much easier to start a company because of major technology advancements compared to 10 or 15 years ago,” says Yancey Spruill, CEO of DigitalOcean. “Between six to eight million businesses are started each year, and a majority of them are building their businesses on the cloud. The widespread availability of tech infrastructure like cloud computing has lowered barriers of entry for entrepreneurs, regardless of their background or expertise. Technologies supporting remote work also make it easier for these founders to acquire talent outside their immediate geographic areas.”
In the post-Covid, re-emerging economy that we’ll see in the coming years, we’ll see a much more level playing field, thanks, to an accelerated pace of digitization. “A new era of inclusion, collaboration and innovation is about to begin, and online platforms will help lead the charge,” says David Carmell, attorney, entrepreneur, and CEO of DealRockit. “Superior digital experience will become the new normal, which then opens access and opportunity to more people and businesses than ever before. Small business will drive this new age of customer experience and financial inclusion, enabling individuals, businesses, and enterprises alike to interact and transact in unprecedented ways.”
In addition, entrepreneur or innovator location no longer matters “because everyone is working remotely,” says Mark Gorenberg, founder and managing director at Zetta Venture Partners. “Companies can be built anywhere and the worker base can be distributed. This is leveling the playing field for entrepreneurs beyond the main tech centers.”
For example, Gorenberg continues, “our most recent investment was for a company headquartered in Madison, Wisconsin, Ensodata, a leading company in waveform AI to improve sleep disorders. We are seeing tremendous opportunities in Europe and other locations beyond the normal tech centers of Northern California, Boston and New York City. So, while the trend to distributed teams with online collaboration tools was already happening, this recession has further accelerated that trend. Location almost doesn’t matter.”
Don’t feel as if you have to be a high-tech software company, either — the opportunities to advance in the digital economy extends to all types of business. “We tend to think that the businesses that are going to fare the best are those squarely in the tech, software-enabled, space,” says Ajei Gopal, CEO of Ansys. “But manufacturing companies are just as nimble, and we see a huge opportunity for the post-Covid era to accelerate their adoption of digitization technology. Take product development, for example. Digitization has modernized and accelerated the product development process. Few products are sketched by hand on a drafting table today. Instead, the development cycle – from ideation to design and analysis to manufacturing to operations – occurs virtually. In fact, in the early phases of the modern development lifecycle, the product itself is entirely digital.”
Many entrepreneurs and professionals — laid off, or starting side projects — are likely to start new businesses at this time. Or, larger companies recognizing they need to recast their business models are being spurred to explore and experiment with new opportunities. “The pandemic has exposed areas of opportunity in education, streaming, gaming and work from home applications, and accelerated enterprise digital transformation by years,” says Spruill.
“Often, the most high-quality people are available as established companies put new product development on hold and open up more future white space for entrepreneurs to fill,” says Gorenberg
Entrepreneurs — as well as internal corporate innovation movers — “should pay close attention to digital platforms,’ Carmell prescribes. “They are the key to the future. In the race to deliver the best customer experiences, companies will increasingly turn to platforms to accelerate interactions and transactions, giving super-participation powers to users. Platforms create deeper partnerships and collaborations, allowing businesses to offer free products and services with far-reaching capabilities and benefits to clients, prospects, and business/referral partners.”
That leads to a “fast track to growth, a better map for navigating change, improved customer experiences, and broader financial inclusion,’ Carmell says.
“Start with the ecosystem in front of you,” Carmell advises. “This means your teams, prospects, clients, referral partners and others that make up your company’s constituency. It is imperative to create a virtuous cycle where everyone wins, demonstrating how much more your business can and will do.”