The continued wave of innovation
A decade has now passed since the first iPhone and Amazon Web Services were launched, effectively marking the advent of the mobile and cloud computing revolution. Innovation has always come in waves. Before mobile and cloud, it was the internet and before that, the PC.
The cycle of innovation will keep repeating as new, disruptive ideas come along and create new industries. But, there is also an opportunity to reshape existing ones. Nowadays, businesses recognize that their ability to respond to changes in their competitive environment is directly correlated to their future success. Companies like Blockbuster and Borders that did not adapt have failed to survive, while those that envisioned where industries were heading have thrived (e.g., Netflix and Amazon).
Since the arrival of the internet in the early 2000s, growth was easy to come by as the global population came online, spurred by rapid population growth in emerging markets. Today, the rate of that growth has slowed, leading some to wonder if we are nearing the end of the current innovation cycle.
While these growth rates may be slower, the application of technologies across industries is accelerating. Businesses that deliver efficiencies see rapid uptake from customers. Just when we thought the internet had reached its potential, a new wave of innovation unleashed by broadband penetration came through, enabling software to be delivered over the internet. This has been a game changer for smaller technology companies, who now can compete head-to-head with the behemoth technology incumbents to reach customers on a global scale without assembling a massive salesforce.
As the internet has matured, there are certain industries where category leaders have been crowned. Google and Facebook are two of the great internet success stories that have created massive economic windfalls for their investors. While those two companies created new industries, there are other industry verticals, such as finance and banking, education, and healthcare that have been slower to be disrupted, either because they are fragmented or highly regulated. These are areas where new category leaders will be crowned.
In fintech, which is the realm of financial technology, there are a plethora of opportunities to deliver efficiencies and improve, if not disrupt, the operations of legacy banks and financial institutions. Payments are one such area where many start-ups are developing solutions to improve the way transactions happen across the internet.
Banks, insurance companies and other service providers are utilizing new technologies to assess credit and risk. Meanwhile, online stock brokers and wealth advisors are being challenged by upstart “robo-advisors” that are using automated, algorithm-based tools to deliver portfolio management advice. This only scratches the surface of the areas of opportunity, but provides a glimpse into where the future of fintech may be heading.
When it comes to education, global access to the internet makes distributed learning a powerful opportunity. Startups can deliver educational content not only geared for full-time students, but also for professionals requiring training to keep pace or learn new skills. Digitizing textbooks and learning tools are other areas where technology is sure to be embraced.
Finally, in healthcare, there are many technological advances that are poised to improve public health and wellness. For starters, the cost of gene sequencing continues to fall at an astonishing pace. As recently as 2008, it cost nearly $10 million to sequence a genome compared to less than $1000 today (Source: National Human Genome Research Institute).
As the costs continue to fall, it will revolutionize medicine by enabling doctors to focus on predicting rather than reacting to disease. Harnessing the power of one’s own immune system to fight cancer, immunoncology, is another area that holds great promise. It is truly the dawn of a new era in drug development and discovery. And of course, there is also the application of technology to improve wellness. One such company attracting a lot of attention is Peloton, a stationary bike company that offers streaming content and is often billed as “Netflix for fitness.”
Looking forward, there are many other areas where technology will be utilized to challenge the status quo and either deliver improved efficiencies or outright disruption. Right now, some of the pioneering areas entrepreneurs and venture capitalists are investigating include artificial intelligence, machine learning, virtual and augmented reality, blockchain, security, the Internet of Things (IoT) autonomous transportation and robotics.
While many of the aforementioned ideas seem futuristic, it is important to remember that a decade ago no one would have ever fathomed that consumers would be walking around with devices as powerful as supercomputers in their pockets today. What’s more, as the earning power of “net native” millennials increases in the coming years, it could be expected that the consumer uptake of new technologies will only accelerate.
All of that said, it is hard to say for certain what the future will hold. There was the first generation of the internet in the late 1990s, and then the second wave where real businesses were built on top of the maturing platform. While innovative ideas are scaling more quickly than ever before, we are still in the first generation of mobile.
Perhaps the next major platform will be centered around machine learning, the process of utilizing technology to teach computers to sift through data to find patterns. That remains to be seen. What we do know is that innovation never stops, and that it is the role of venture capitalists to peer around corners to recognize and capture that innovation.
This article was originally published April 27, 2017 on vcjnews.com.