Investing in the next revolution

I was with Umair Haque last night and he urged me to read and respond to his Manifesto for the Next Industrial Revolution – something I was keen to do for a couple of reasons.

  1. He is urging us (and by us I mean investors, entrepreneurs and pretty well society at large) to get focused on the big problems – e.g. sustainability of the planet and organising the world’s hunger and thirst – who wouldn’t want to create/be part of the Google equivalent that solved those problems?
  2. The web has reached a level of maturity now where new ventures are somehow less exciting. There has been extensive discussion of this by Fred Wilson and others – but I guess the key point for me is that the canvas is no longer blank. We will keep investing here because there are a ton of problems still to be solved – search is still only 5% of the way there, Facebook and Myspace have shown the appetite for social applications, but their recent declines in traffic show that we all still need to figure out how to sate that appetite, etc. etc. – but going after those opportunities is maybe becoming less adventurous and more mechanical

So starting to think about these new areas is definitely fun for me.

So what is my response Umair’s manifesto?

As is often the case with Umair’s ideas I find myself in agreement with the thrust of what he is saying, but suspect itwill be hard to action as I go about my job of investing in startups and then helping them grow and exit over say 3-5 years.

To explain. As I read it there are three main thrusts to the manifesto:

  1. Good corporate DNA will be the driver of success in a the next generation of startups
  2. For the sake of global peace and prosperity those startups need to solve our big problems
  3. Those startups will have networks, markets and communities at their core

So far so good. I am in total agreement with all these points.

The challenge for me as a VC locked into the logic of 7 year funds is that things need to happen reasonably quickly. This question and answer from Umair captures both the opportunity and the timing challenge:

Where is the next industrial revolution crying out for revolutionaries? Simple: in industries dominated by clear, durable, structural barriers to efficiency and productivity.

The opportunity lies in the productivity and efficiency to be unleashed. The challenge comes from the durable, structural barriers.

I think this leaves us with two options – either the structure of VC funds changes to allow longer investment horizons, or smart entrepreneurs find ways to make change happen quickly in these staid industries. I know for sure that neither of these things will be easy. Then again, if it was easy, everyone would be doing it….

I’m going to finish by indulging the social scientist within me. The widespread dis-satisfaction that touches much of society today stems from alienation in the classic Marxist sense. There is too little meaning in life. One of the appealing things about Umair’s vision of the future is that I can see the combination of pervasive good corporate DNA and the rising importance of networks and communities could help, or even solve, this problem.

  • Crickey, that’s quite some post to follow ‘Northern StartUp 2.0 Business 8’. I don’t see how a material revolution can address what’s clearly a mental problem. The problem’s in the wad of cells between ours ears.

  • Crickey, that’s quite some post to follow ‘Northern StartUp 2.0 Business 8’. I don’t see how a material revolution can address what’s clearly a mental problem. The problem’s in the wad of cells between ours ears.

  • Nic, I can see the challenge in that. But look at this post from Fergus Burns, at Web2Ireland today http://www.web2ireland.org/2008/07/04/irish-government-data-sharing-apis-and-mashups/

    Think of the $100m spent on an integration hub for government services so that people could get access to government information by “life stage”. This is a societal block screaming out for redesign.

    I’ve been fascinated by how real estate has been not so much disintermediated, but re-mediated, and “exposed” by the internet. If Boris in London wants to expose crime data by area, so that citizens can perhaps make grounded suggestions as to how their areas might be better policed etc, then that is genuine redesign. If companies like Qik can let citizens record in real time, then car accidents, bad driving, evidence of social misconduct are immediate, mappable, findable, and “valuable”.

    I love the question “are you solving a real problem”, but here’s another question for you “is this a problem really worth solving”?

  • Nic, I can see the challenge in that. But look at this post from Fergus Burns, at Web2Ireland today http://www.web2ireland.org/2008/07/04/irish-government-data-sharing-apis-and-mashups/

    Think of the $100m spent on an integration hub for government services so that people could get access to government information by “life stage”. This is a societal block screaming out for redesign.

    I’ve been fascinated by how real estate has been not so much disintermediated, but re-mediated, and “exposed” by the internet. If Boris in London wants to expose crime data by area, so that citizens can perhaps make grounded suggestions as to how their areas might be better policed etc, then that is genuine redesign. If companies like Qik can let citizens record in real time, then car accidents, bad driving, evidence of social misconduct are immediate, mappable, findable, and “valuable”.

    I love the question “are you solving a real problem”, but here’s another question for you “is this a problem really worth solving”?

  • Martin Owen

    Nick, Umair’s piece is valuable if VCs are reading it. I have just spent a week in Africa – where I was invited to talk about how mobile technology might transform learning. Africa has 340 million mobile phones. Instead of talking, I soon learned it was much more valuable to listen.

    Communication is the key to so many of the issues raised by Umair – I remember working with fair trade coffee producers in the 80’s. Typically there are times when there is was no electricity. There were times when there was no telephone. Some time there would be both. Asynchronous communication (with 1200 Baud modems) via a bulletin board was the only option. Now central America has a viable fair trade industry.

    The mobile phone offers so much more. We explored the simplest of tools – how to learn in 160 characters. ZygoHubs txt groupware provides a great mechanism for small group mutual support and learning. frontlineSMS is designed specifically for NGOs and provides means of broadcasting information without interference by other channels through txt..

    Although many of the young African researchers and change agents I spoke with last week were keen to discover what solutions I had to offer – it became obvious that the solutions to Africa’s problems (apart from the G8 obvious!) had to have an African dimension and that ICT systems need to start from or evolve into an African context. What works in San Jose does not work for Addis. Returns on investment in Africa may not seem great at the moment – but there is real potential there.

    I suspect some of the real revolutionaries of the next wave must come from Africa.

    However one important perspective they did share on current ICT: the advantage they see in Web 2 is that “free” is a very good price for them.

  • Martin Owen

    Nick, Umair’s piece is valuable if VCs are reading it. I have just spent a week in Africa – where I was invited to talk about how mobile technology might transform learning. Africa has 340 million mobile phones. Instead of talking, I soon learned it was much more valuable to listen.

    Communication is the key to so many of the issues raised by Umair – I remember working with fair trade coffee producers in the 80’s. Typically there are times when there is was no electricity. There were times when there was no telephone. Some time there would be both. Asynchronous communication (with 1200 Baud modems) via a bulletin board was the only option. Now central America has a viable fair trade industry.

    The mobile phone offers so much more. We explored the simplest of tools – how to learn in 160 characters. ZygoHubs txt groupware provides a great mechanism for small group mutual support and learning. frontlineSMS is designed specifically for NGOs and provides means of broadcasting information without interference by other channels through txt..

    Although many of the young African researchers and change agents I spoke with last week were keen to discover what solutions I had to offer – it became obvious that the solutions to Africa’s problems (apart from the G8 obvious!) had to have an African dimension and that ICT systems need to start from or evolve into an African context. What works in San Jose does not work for Addis. Returns on investment in Africa may not seem great at the moment – but there is real potential there.

    I suspect some of the real revolutionaries of the next wave must come from Africa.

    However one important perspective they did share on current ICT: the advantage they see in Web 2 is that “free” is a very good price for them.

  • Great post from martin above. Actually I’ve been hearing great things about Africa, and SA in particular, around the use of innovative use of “machine to machine wireless solutions”, and general 2.0 adoption.

  • Great post from martin above. Actually I’ve been hearing great things about Africa, and SA in particular, around the use of innovative use of “machine to machine wireless solutions”, and general 2.0 adoption.