Purpose Meets Opportunity
Schumpeter’s hypothesis that technology would only serve to concentrate ownership and wealth towards large corporations now seems prophetic. 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-fora dvertising 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.
Centrality White paper
