The only silver lining in a bleak global economic outlook today has been the technology industry.
Within it, the many triumphs – such as Apple, Workday and Amazon – have been peppered with sporadic financial letdowns. Whispers of a second ‘dot com bubble’ – referring back to the sharp decline in the performance of technology companies in the late 90s, following a number of consistently lucrative quarters – have been rampant due to many entrepreneurial ventures that simply fizzled out.
Whatever the case maybe, the picture is indicative of a larger, more alarming scenario; the failure of conventional business models, establishment, and governments.
The larger businesses (establishments) have failed to innovate and keep pace with what entrepreneurs are churning out today. Blockbuster Video underestimated the threat posed by Netflix. Borders and CircuitCity both lost out to Amazon and its aggressive expansion plan.
Most governments have failed to facilitate the growth of the tech sector. Instead of simplifying taxation on profits, laws on immigration, copyright and sales tax, they have focussed on skewing the existing laws to remain relevant even with the industry and the market outpacing them.
By using the conventional economic Key Performance Indicators (KPIs), it becomes easier to see that most of the world is currently undergoing some form of economic turmoil: from inflation in Zimbabwe to unprecedented high levels of unemployment in Spain, from the nationalisation of certain industries in the United States – in the form of bailouts – to Greek austerity measures.
While no one can pinpoint one singular reason, few will argue that the ‘old ways’ are still working. For most individuals, disposable income has depleted, increasing the level of uncertainty about the future and placing more emphasis on job security.
Despite these trying circumstances, people’s appetite for technology seemingly remains unaffected. The entire industry works in a cycle, with successes bringing in more customers, and more customers bringing in more innovative businesses and so on.
Following are a few of the many reasons why the technology industry seems to be gaining momentum as opposed to losing it; and how you can position yourself to reap some of the benefits.
A point that doesn’t get highlighted enough; customers carry smartphones with them around the clock. Research firm Strategy Analytics has stated that the one-billion smartphone milestone was passed this October. That equates to 1-in-7 people on the planet as potential customers, 24/7. Whether you’re selling clothes, apps or services, having an app gives you access to customers – with proven purchasing power – round the clock.
Six weeks after launching its app Draw Something, OMGPOP was bought for 180 million US dollars by Zynga. Instagram was sold for one billion US dollars despite never having generated any revenue.
A growing market
A gold rush brings with it gold seekers. In this case, they are spirited entrepreneurs with an abundance of ideas and an endless pool of talent. Drawn to their product offerings are eager customers looking for the next cool thing. America Online (AOL) took nine years to hit the million user mark. Facebook took nine months. Draw Something took nine days.
Access to markets
Before Apple’s App Store changed the world less than five years ago, gaining access to markets was an extremely high barrier to cross. Irrespective of what was being sold, there was bureaucratic red tape, middle men, costly time delays and other cumbersome deterrents.
Yes, you could sell online much earlier, but the volume of transactions was minuscule in comparison to what it is today – all that has changed irreversibly.
Take the example of AirBnB, an accommodation booking service started by two friends in San Francisco, which has a two billion dollar value and serves as a platform for 35,000+ properties in 165+ countries. As of September 2012, 26 per cent of its traffic comes from mobile devices. The numbers are staggering.
Access to information
Years ago, it was almost impossible to acquire knowledge at a fast pace, especially at an affordable price. You can now learn virtually anything online at your own pace. Hundreds of colleges including Harvard and Stanford provide free courses via iTunesU.
Websites like Lynda, The Khan Academy and Team Treehouse provide an abundance of material on varying subjects.
Access to technology
Software as a Service (SaaS) has removed the costs associated with hardware and software. Whether you need accounting, customer relationship management, or design suites, expensive servers with processing performance and expensive software are no longer required.
It’s not just software and conventional enterprise computing hardware. For individuals, professionals, and small and large businesses alike, apps like Square have revolutionised the mobile payments industry.
Square, a tech startup by Jack Dorsey of Twitter fame, enables anyone with a smartphone or tablet to accept a credit card payment anywhere using a small, free, square attachment. Square is now valued at 3.25 billion US dollars.
Rapid development used to be a term restricted to application development. Now, using services like Red Foundry, LightCMS, Venda and others, it’s possible to have a website, online store and mobile app, up and running in hours, instead of months.
Access to resources
Whether you need a copywriter, developer, illustrator, designer, or an attorney’s advice, you can get someone to work on your terms using services like E-lance, Dribbble and Justanswer.
You no longer need an office. Shared work spaces not only make it easy and affordable to establish or relocate an operation, but remove the administrative overheads associated with basic management tasks. If you need only an address and a receptionist, these services are readily provided worldwide by establishments like the Regus group among many, many others.
You no longer need to be geographically present. Remote incorporation services like BizFilings in the US can assist you in setting up a corporate entity within days. A 2-person design firm in Lebanon can have an American branch office with a Madison Avenue address within a week for a couple of hundred dollars a month.
Access to customers
Sell on Ebay, Amazon, Google and Etsy, through your own website, from anywhere in the world, within minutes. You can sell to a billion people round the clock.
Access to money
Crowd-funding has fuelled the development of everything from underground parks to videogame consoles, with Kickstarter being the most famous platform. Not having access to money is no longer an excuse.
Venture Capitalists (VCs) have probably made more millionaires in the past three years than all top 20 US colleges combined. There are other forms of funding, but most VCs are seasoned entrepreneurs themselves. Their ability to identify the potential in people, and subsequently their ideas, fuels growth within that particular operation, while expanding the scope of the entire industry.
Acting not only as investors but also as mentors, VCs today are an integral part of the startup industry’s continual success. Joe Kraus, formerly of Excite and Jotspot, is an investment partner with Google Ventures and acts as a catalyst for dozens of entrepreneurs.
It’s not just about America any more. A recent study by the Kauffman Foundation found that immigrant-founded startups declined from 52.4 per cent to 43.9 per cent in Silicon Valley.
Part of the reason is the US government’s inability to address immigration reform, specifically for highly-skilled workers. Their loss is displacing talent which is gravitating towards other epicentres conducive to productivity. Berlin saw 500 startups launch just last year, including Gidsy, backed by tech-savvy celebrity investor Ashton Kutcher. East London is now home to 3,000 tech firms, some of which are making substantial strides including Shutl, the same-day web courier service which is now expanding to San Francisco and prompting the United States Postal Service (USPS) to start offering similar services.
Deezer of France, a music streaming service, has raised 130 million US dollars in funding and caters to 160 countries worldwide, which does not include the United States.
There are many reasons to dabble in the tech startup industry. This is perhaps the first time in history that it is okay to start a company not knowing how it will make money, and walking away with hundreds of millions of dollars a few weeks, months or years.
Not all startups are successes and not all failures are made public. Some founders cash out early as is the case with Sparrow, the wildly popular e-mail client acquired/hired by Google for about 25 million US dollars recently. Some founders refuse to succumb to the temptation or the pressure and strike gold; Mark Zuckerberg reportedly walked away from a billion dollar cash offer from Yahoo! Arash and Drew of Dropbox rejected a ‘nine-figure’ acquisition offer from Steve Jobs of Apple.
While others most certainly regret not doing so: Groupon rejected a 5.75 billion dollar offer from Google in the fall of 2010.
While your idea may not gain that kind of traction, right now is the best time to try setting foot in the technology industry. It is easier, quicker, faster and cheaper than ever before.
If Maddie Bradshaw of M3 designs can become a millionaire at the age of 13 selling jewellery made of used bottle caps, most of us have no excuse to not even try.