Purpose Meets Opportunity
Schumpeter’s hypothesis that technology would only serve to concentrate ownership and wealth
towards large corporations now seems prophetic1
. Given the early promise of the internet era, it is
lamentable that the bifurcation of income between the ‘haves’ and the ‘have nots’ has become
even more profound during the internet age.
Despite market growth and increased prosperity, the vast majority of traditional tech startups fail
and the odds of their success are infinitely small even if they are executed well. Adam Smith’s
invisible hand is powerless against the tech giants.2 Their significant head-start on data gives an
application of artificial intelligence (AI) the potential to increase the scale of inequality and reduce
basic human rights to a free and democratic society.
We know a potential revolution is on the horizon as we escape the gravitational pull of the PC
internet era. The internet has come, it saw and it conquered us all with the data-mining-foradvertising
model. The PC internet era had a baby and that baby is the decentralized Blockchain.
Distributed networks on blockchain have the ability to transform the world of traditional apps,
technology models, business models, and economic models across the entire planet – right now.
While there is great promise, there is also a problem with Blockchain that is not commonly
acknowledged. The problem is that there are hurdles that make the technology elusive for early
stage companies and hard to adopt for regular users. Most Blockchain use cases are still in
development and unproven. Furthermore, many of these use cases are in areas an average user
would be hard pressed to engage with. Transactions are anonymous, so data has limited value
without context or relevance. This makes it difficult to employ critical technology such as big data
and machine learning in a world where these technologies are set to dominate the landscape.
Mission Impossible for Traditional Startups
Despite the challenges, the number of new online startups continues to grow and low barriers to
entry create a huge fragmentation of effort. Consequently, very few startups achieve scale. At the
same time, users are interacting with fewer applications and their expectations are very high. The
capability a new startup needs to meet these expectations is almost impossible to achieve.
Digital business models are often highly reliant on data mining for advertising and newcomers are
starting from a very disadvantaged position compared to incumbents. Ubiquitous platforms are
rapidly consuming new niches with their bigger, multi-disciplined and agile teams and access to
data anticipating market movements.
“The average app loses 77% of its daily active users within the first 3 days of the install.
Within 30 days, it’s lost 90% of DAUs. Within 90 days, it’s over 95%.”
– Quettra Mobile intelligence report 2016
Two key factors are working against market entrants achieving scale. Firstly, the number of digital
start-ups out there is rapidly expanding, fragmenting user attention, capital and technical resources.
Secondly, bigger platforms have a huge lead in user data, attention, capital and resource, which
enables them to either predict what’s coming or copy very fast.
On average, good plans, people, and businesses succeed only 1 in 10 times. This is because there
are many components that are critical to an enterprise’s success. The best companies might have an
80% probability of succeeding at each of them. But even with these odds, the probability of
eventual success will be less than 20% because failing to execute on any one component can
torpedo the entire company.