Why Now? Inflection Point
We are at an inflection point. The changing global dynamics have created a unique opportunity to change business models. Walmart gave us less expensive ways to consume. Dell gave us direct access to customize our PCs. AWS allowed individuals to start businesses from their bedroom. Offshoring gave us cheaper goods. Preservatives gave us food for years. JOLT gave us energy drinks. TAB gave us the “diet” age. Social media sucked us in to the mixed worlds of real and illusion. AOL shattered the postal services. “As a service” allowed business to revamp their balance sheets and consumers to put everything on layaway….one month at a time. Japan’s focus on quality allowed Toyota to become the largest car manufacture in the world. Huawei leveraged their state and wayward western businesses to capture the 5G crown. Tesla leveraged new materials to shape the next wave of data lakes. Estonia leveraged threats to scale digital technologies which attracted FDI. Saudi Arabia joined the world stage with natural resources.
We could go on and on with examples of global inflection points which allowed businesses to change course and adapt. To some this represents opportunity. To others it threatens the lifeblood which fills the coffers and elevates the masses. Mindset matters. Timing matters. Awareness matters. Leadership matters. Some inflection points are self-induced. Others are driven by geo-politics. The ebb and flow of global and domestic events produce contagion effects for the business world. Too much of something and you become numb. Too little and you become isolated. Either one crushes the practical use of innovation.
Current events across the world have shifted. Technology has advanced. Businesses can follow the shift or get wiped out. Knowing, understanding and being aware of the global environment can help mitigate the waves of the future. The following inflection points and signs are things to think about as we navigate our future business models. They may not be remote viewing, but the signs are flashing for everyone to see.
The VC/Start-up Scene
It seems everywhere you turn; someone is starting a “venture fund.” The FOMO is thick. Many venture firms drink their own Kool-Aid. The pyramid of valuations keeps them coming back. The mirage of that one unicorn gives them hope. Masters of deal flow in their own mind. Champions of business building. The older firms have their clout, scars, and bank rolls. The newer ones believe they have the power of vision quest for next market.
The investors in the funds wear badges of honor. They too drink the Kool-Aid…. a different flavor, but sugar sweet it still is.
According to TechCrunch, 2022 saw ~2,900 US venture firms which is a ~225% from 2008. I’m sure there are 100s more since the start of 2023. The big ones get bigger, the new ones try to rope the outliers. Which brings me to my point. Are we chasing the wrong things? Are we really innovating with just different wrappers?
A couple of things lead me to this conclusion……
With the end of the year looming, many households have to reup their family health plans. I was struck by new options available. Starting in 2024 you can now add your family pet to your annual health plan! I’m all for man’s best friend, but I think it’s over the top and indicative of how far off track we have gone on solving practical problems. If only we had had pet health insurance, I could have saved my hamster from 6th grade!
In the world of smaller ventures, we seemingly are trying to solve problems with little or no practical impact to fixing core problems. Whether they are band aid solutions to larger structural problems or companies focused on non-essential areas like better painted fingernails or pet therapy. I’m all for making money and being creative, but the companies getting funded are sometimes repackaged into the latest buzz words. AI is everywhere! Time will tell if the market accepts, and the venture funding follows. Based on some indications the money flows are slowing……
Venture banking failures coupled with higher start-up failure rates, and you start to see the need to shift what we do, how we do it, and what we are trying to solve. The winners in the coming years will be the start-ups with new business models. Companies that can take advantage of the true problems unclouded by hubris and born from hands on experience. Maybe the technology just needs to be applied to the right problem in the right part of the world with the right people.
Timing is everything. Maybe Orville Black and Ryon Batson are on to something with Fairsplit. They have created a platform to provide risk assessments and insurance for start-ups, small businesses and ventures. VCs, private equity firms, family offices and corporate ventures may find value in better analytics and severance insurance. Maybe the timing is right to capture the downturn. They use the latest technology, they have the common sense, will the firms listen?
Technology Convergence
As mentioned in previous articles, the combination of technologies will be the accelerator for future leadership. Specifically, hardware with software embedded (AI), quantum compute + AI for optimization and simulation and edge compute, which allows faster processing with added privacy.
Quantum Compute + AI
Just like the classical computer transformed the business and global landscape over the last decades, quantum compute + AI will take us up and to the right with a faster impactful pace. The broader public is a little smarter now about compute and AI. The higher compute power will allow optimization of many things in the business, climate, energy and simulation world.
The Rebirth of Tech hardware
We will see new opportunities in the compute arena. Groq is a great example of new hardware compute for large language models. They have coined the term LPU (Language Processor Unit). They manufacture chips, graphics cards, nodes and rack clusters. These low latency products are built for future language processing requirements. They are all manufactured in the USA for supply chain resiliency and national security.
Edge Compute
Edge computing brings computation and data storage closer to the location where it is needed. This improves response times and saves bandwidth. It pushes computing tasks and services away from centralized data centers to the "edge" of the network, closer to users, devices, and sensors.
Use Cases:
IoT Devices: Many Internet of Things (IoT) devices generate a large amount of data. Transmitting all this data to a central server for processing can be inefficient. Instead, processing data on the device itself (or close to it) can be more effective.
Autonomous Vehicles: Cars that operate autonomously need to make split-second decisions. Relying on a distant server to process data and send back a decision can introduce unacceptable delays. Local, on-board processing is essential.
Content Caching: In content delivery networks, popular content can be cached at the edge of the network, closer to users, ensuring faster content delivery.
Dell Technologies is resurfacing as a leader in the edge space. Back to the distributed compute environment where it came from! Full circle we are!
International Partnerships
Alliances and cross border partnerships which expand use cases, pool resources and allow for the import/export of critical technologies will be the future of global world order. As supply chains, trade routes, and energy shifts, so does the partnerships and alliances. Energy security has heightened importance. Access and refinement of critical minerals play significant roles for future technologies as well as economic viability. Development of new energy sources play strategic importance from nuclear to hydrogen to oil. Access to food. Access to water. All important. Supply chain resilience is more important than ever. In the past, it only depended on the most cost-efficient places for manufacturing. Today, one blocked source can halt supply chains which have ripple effects across the nation.
Intelligence Alliances
These are formal agreements between countries to share intelligence information, typically related to security, defense, counterterrorism, and other strategic concerns. The goal of these alliances is to enhance mutual security through the sharing of information that might be unavailable or difficult for individual nations to obtain on their own. Working together allows stronger visibility, viability and security.
Five Eyes (FVEY)
Member Countries: United States, United Kingdom, Canada, Australia, and New Zealand.
Nine Eyes
Member Countries: The original Five Eyes countries plus Denmark, France, the Netherlands, and Norway.
Fourteen Eyes
Member Countries: The Nine Eyes countries plus Belgium, Germany, Italy, Spain, and Sweden.
Defense Agreements and Alliances
These alliances operate on the principle that shared information can enhance the security of all member nations. These agreements include the development and use of joint technologies.
NATO (North Atlantic Treaty Organization): Military and Intel Alliance
Member Countries: 30 member countries primarily from North America and Europe.
Quad (Quadrilateral Security Dialogue):
Member Countries: United States, India, Japan, and Australia.
Further enhancement, collaboration and engagement are needed to strengthen the partnerships and provide economic security.
Technology Partnerships
Estonia is a leader in all things cyber and was one of the first countries in the world to fully automate and digitize the government, its operations and the touch points with the people it serves. This allows the government to focus on providing excellence and speed with business formation, foreign direct investments and technology partnerships. US cities and states could learn from Estonia.
Mexico and Canada play critical roles in North American supply chains. Mexico is now the US’s largest trading partner. As manufacturing rebalances across the world, Mexico will play a large role. Similarly, Canada has extensive natural resources and tech talent programs which can be leveraged and enhanced with local level connections. Like Mexico, Canada also plays a significant role in near shoring manufacturing. We could expand the technological partnerships across AI and Quantum.
France has leadership in quantum science and nuclear energy. Specifically, joint quantum research and university collaboration would help scale as well as offer speed to market for new use in quantum field. Joint development of small nuclear modular reactors could speed our route to market and play a significant role in energy security. Sharing resources pools and talent are a good thing when directed and measured.
Israel has world leading cyber security technologies. Continued sharing, collaboration and development of tech bridge programs will play large roles in the development of new use cases as well as national security. Continued sharing of innovation resources, research and development are good for both countries.
Are you ready for a new model?
So where does this bring us? The opportunity lies at the crossing of global shifting and technological advancements. New and extended partnerships will be needed. How will you take advantage of the new environment? How is your business model? Does it need to change? Opportunity awaits!
TJ