Start-ups are the way forward
A rising population, fixed natural resources, and the pressure to do more with less.
Today, everyone has heard of the term start-up, or what some think of as a bunch of crazy, young tech nerds hoping to change the world. They’re not too far off.
What are start-ups in the first place?
Start-ups are new companies developed to offer unique products or services to the market. According to Rebecca Baldridge, editor for Forbes.com, “Startups are rooted in innovation, addressing the deficiencies of existing products or creating entirely new categories of goods and services, thereby disrupting entrenched ways of thinking and doing business for entire industries.”
Finding a new way
One thing that differentiates start-ups from traditional businesses is their approach. To simplify, a traditional business would copy a template of an existing model, and add a few tweaks here and there for personalization (think branding). A start-up, on the other hand, would try something different and create a brand new template. For example, in the agricultural industry, start-ups like Meicai and Freshket are disrupting traditional agricultural wholesaling by connecting farmers directly to restaurants and consumers through an in-house network of processing centers and distribution facilities.
Getting things done faster
The development speeds and growth rates of start-ups are also generally much faster than traditional businesses. By launching minimum viable products (MVP), start-ups gather feedback from users and work to improve their products while expanding their customer base. This aggressive approach means they burn big amounts of cash for early development and customer acquisition. They operate with great loss in the early years, in the hopes that they can reap the rewards later on.
While some may think that these start-ups were born out of greed, I believe they were born out of increasing incentives to find better ways. Market opportunity, that is. The world is becoming unsatisfied with traditional business models, and start-ups have been born out of this new need.
Start-ups show us a better way
The thing I love most about start-ups is that they create new opportunities without having to steal from others; a big fuck you to crony capitalism that monopolizes economic opportunity. Start-ups are veering away from distorted “free markets” that benefit the few on top and keep the masses under poverty.
“Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players”
— Chan Kim, author of the book Blue Ocean Strategy
By developing new technology, start-ups can create entirely new markets that lead to increased employment opportunities and higher wages within the economy.
Vivek Wadhwa once referenced a report by the Kauffman Foundation which found that:
“Startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.”
Think about Grab or Foodpanda riders now earning upwards of ₱40,000 (~$800) monthly, in some cases — yes, this is a decent amount in the Philippines where the minimum wage is $10 a day. Sucks right?
An individual with a bike would have found it challenging to earn this amount a few years ago. This new market provides earning opportunities for the rider and adds value to consumers by connecting them to any restaurant of their liking. Restaurants benefit as well by expanding their reach to a bigger set of consumers. These food delivery platforms then charge a reasonable fee, making it worth their time and allowing them to pay their own employees. It’s a win all around.
Increasing pressure to produce more
The world population, according to The World Bank, has grown from 3.03 billion in 1970 to 7.75 billion in 2020. This greater amount of need in the economy has put pressure on industries to drive technological advancement forward to meet greater consumer demand.
Meeting growing demand
Cloud kitchens like Kitopi, for example, have created more efficient, production-line versions of restaurants to meet the growing demand for food delivery. This allows them to reach consumers on a scale that stand-alone restaurants may struggle to keep up with.
Gobble, on the other hand, uses supply chain technology to distribute 15-minute dinner kits with patented sauces for those that want a more affordable, home-cooked meal. They understood that sauces are tough to make at home, but can upgrade a meal to restaurant-level quality. They’ve also removed all the prep-work involved by processing the raw ingredients to be used in each dish (cutting, peeling). This strong understanding of their customer’s needs has allowed them to carve out a new market between take-out and home-cooked food.
Producing more with less
In some cases, it has also put pressure on companies to produce more with less consumption of fixed resources such as wood and precious metals. You may be thinking that companies don’t care about fixed resource consumption, and they really don’t sometimes, but as these resources become more and more scarce, the prices of these resources go up. And if there’s anything a company cares about, it's their bottom line.
For example, due to rising costs of the raw materials used for producing lithium-ion batteries for electric cars, Tesla designed their battery packs to be recyclable. At the end of the battery’s life, the materials can be recovered in a Tesla service center, and eventually reused in a brand new battery pack.
Technological advancements, many of which are driven by ambitious start-ups, are driving our economy forward and enabling us to meet the needs of our growing population.
It’s not all selfless though.
For some of us, it’s simply our only way forward. We can’t just get on elevators like a banking job, stay there till we’re 60, and retire. With the rise of decentralized financial tools powered by the blockchain, who knows if those industries will be around in 45 years?
A report by the World Economic Forum estimates that “65% of children entering primary school today will ultimately end up working in completely new job types that don’t yet exist.” Just this year, we’ve seen a rise of play-to-earn games like Axie Infinity. Who knows what the next decade or two will bring.
For the younger generation to stay relevant and continue to pay the bills, we now have to build new elevators or hop along newly created ones — new platforms to create value, meet the needs of the market, and hopefully, charge for that value to pay our own bills. By getting ahead of the curve, we insulate ourselves from the risk of our jobs fading into irrelevancy.
So don’t worry, there’s hope. The nerds are here to save the day.
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