STARTUP ECOSYSTEM PRELIMINARY REPORT

TECHNOLOGY REVOLUTIONS
APPROXIMATE DATES OF THE INSTALLATION AND DEPLOYMENT PERIODS OF EACH GREAT SURGE OF TECHNOLOGICAL DEVELOPMENT 6
GREAT
SURGE
TECHNOLOGY
REVOLUTION
CORE COUNTRY
BIG BANG
INSTALLATION
IRRUPTION
FRENZY
TURNING
POINT
SYNERGY
DEPLOYMENT
MATURITY
The Industrial
1ST 1771
Revolution Britain
1770s and
early 1780’s
late 1780s and
early 1790s
1773
-97
1898 - 1812
1813 -1829
2ND
Age of Steam and
Railways Britain
(spreading to
continent and US)
1829
1830s
1840s
1848
-50
1850 - 1857
1857 - 1873
3RD
Age of Steel,
Electricity and
Heavy Engineering
USA and Germany
overtaking Britain
1875
1875 - 1884
1884 - 1893
1893
-95
1895 - 1907
1908 - 1918*
4TH
Age of Oil,
Automobiles and
Mass Production
USA (spreading to
Europe)
1908
1908 - 1920*
1920 - 1929
1929 - 33
EUROPE
1929 - 43
USA
1943 - 1959
1960 - 1974*
5TH
Age of
Information and
Telecommunications
USA (spreading to
Europe and Asia)
1971
1971 - 1987*
1987 - 2001
2001
-??
20??
Note: * Observe phase overlaps between successive surges
CRASH
INSTITUTIONAL COMPOSITION
FROM INDUSTRIALISATION TO THE
INFORMATION AGE
The largest companies of the last century were
born in the industrial revolution in the 1800s: massproduction
companies such as Ford, Volkswagen,
Toyota, GE, Bayer; and the suppliers of raw
materials such as Exxon, Shell, BP and BHP.
However over recent decades computer, software
and internet companies such as Apple, Google,
Microsoft and Facebook have been outpacing
more traditional companies. PWC’s 2014
report on the Global Top 100 Companies by
Market Capitalisation shows that Technology
and Financials are the leading sectors to have
grown market cap in the top 100 (+149% and
+136% respectively). Apple — the largest by
market cap — having almost quadrupled in value
during the past five years. 7 Digital and internet
companies are increasingly disrupting more and
more sectors, from finance, media and health to
more traditional sectors such as transportation,
insurance and energy.
TECHNOLOGY REVOLUTIONS & THE
DEPLOYMENT PHASE
To understand the current technology revolution
and ensuing economic restructuring that
takes place it is useful to look back at history.
Carlota Perez in Technological Revolutions
and Financial Capital looks at the past five
technology revolutions - industrial, steam, steel &
electricity, oil & mass production, and the current
information and telecommunications revolution.
Her research shows all technology revolutions
have two main phases, the installation phase and
the deployment phase. 6
Today’s technology sector is a long way from
the dot-com bubble of the late 1990s. The initial
excitement of new technology has subsided and
through this installation phase, from 1970 to
2001, the underlying foundations for the growth
in the technology sector have been progressively
laid. Core technology infrastructure has been
installed such as the digitisation of information,
increased computing power, broadband
proliferation, wireless networks, near complete
adoption of smart mobile devices and cloud
computing.
We are now at the beginning of the deployment
phase a period of productive growth where all
sectors are repurposed around the maturing
technology. Some companies are failing to adapt
quickly enough and are at risk of decline, however,
for those companies nimble enough to embrace
the change and allow it to drive their growth there
is tremendous value to be created. These industry
structural shifts are sizeable enough to override
underlying economic conditions for companies
taking advantage of them. 6,8,9
FULL STACK TECHNOLOGY COMPANIES
Computing technologies are being deployed
across all industries, with information technology
becoming an ever increasing portion of a
company’s operations. Increasingly the normal
borders between industries are being eroded
making it increasingly difficult to say whether a
new company like Uber is a transport company
or a software company. Much like access to
electricity, cars and cheap mass products are
considered a given when starting any business,
soon we will consider the application of digital
technology as equally fundamental. In this
deployment phase we should expect that people
will re-imagine existing industries from the ground
up, formed around the best technology we have
today; and that entrepreneurs will use technology
to capture an increasing portion of the value chain
within a market. To quote, US tech entrepreneur,
angel investor and partner at a16z Chris Dixon:
“The old approach startups took was to sell or
license their new technology to incumbents. The
new, “full stack” approach is to build a complete,
end-to-end product or service that bypasses
incumbents and other competitors.” 10
Notable examples of this “full stack” approach are
riding sharing or taxi services such as Uber, health
insurers such as Oscar and car manufacturers like
Tesla (and most probably Google & Apple).
16