Why We Need Fewer ‘Unicorns’ & More Panama Canals in 2017
The scope for technology making everyday lives easier is huge. However, asks Martin McNulty (pictured below), CEO, Forward3D, are we missing the point? Writing exclusively for ExchangeWire, McNulty explains how changes technology, like VR and IoT, should be driving a revolution, not an evolution.
No one was talking about unicorns in 1851, when work began on the Panama Canal. By 1914, sixty-four years in the making and with the loss of almost 20,000 lives in its construction, the canal finally opened and still there was no talk of unicorns. If the canal had been built today, most likely it’d have had snappier branding (Canal-X?) and a charismatic entrepreneur at the helm. The tech press would drool over it and legions of VCs and PEs would hype it. And rightly so. When the canal opened, it cut the time and distance for the transportation of goods between Atlantic and Pacific coasts in half and changed the world, yet few people cite this innovation today.
Twenty-first century innovations still bring utility; but the barriers to entry, access to funding, and the sheer speed at which companies can be built from nothing to something have changed the landscape, and not all the changes are for the better. Where, previously, governments funded huge infrastructure projects, today it’s the financial industry. Their goal is to create value for their respective investors as quickly as possible, and so their measure of success isn’t the impact on society, but the value at exit. They are, in many cases, far more risk averse than their forebears and their entire apparatus is geared around protecting their assets up until the point of exit. This conservatism brings a huge bias towards a) consumer focus that can support scale and b) minimal infrastructure. The name they give these sorts of businesses is ‘disruptive’. VCs in particular like to disrupt stuff. This is code for making things that already exist easier, and often cheaper, by removing inefficient infrastructure and/or people. But these things only really work if they scale, because usually unit margins fall, but with scale, total margins grow. Yet, with this approach comes problems.
Today, despite the incredible power of tech, innovation centres on changes to existing products and consumer-facing solutions that can support scale, together with lots of hype. Think about a product like Transferwise, which offers cheaper exchange rates. It’s great for saving on money transfers, but it’s hardly life changing. It’s the same old service, but cheaper. Its founders will get rich – as will its backers Atomico – but for most people, little will change. The world won’t feel different. Yet it’s these companies that garner vast amounts of press coverage. Why? Not because of the utility they’ve created but, because of the value they attract (USD$1bn+) and it’s this mechanic that ultimately wrong-foots us all and puts in place the hype machine around every innovation. A hype that typically involves a consumer focus. No matter what the innovation, it always seems to need a consumer hook to make it valuable or resonate.
With this in mind, let’s turn to the trends that were promised in 2016, but didn’t materialise, the themes they share, and the net gain of what they tried and failed to offer.
Martin McNulty, CEO, Forward3D
We can all relate to the futuristic images of hover cars that pick us up and speed us to destinations without a soul at the wheel, but is this really where our present focus should lie? I’m still puzzled at why being in a car but not driving it is really all that. It’s not like public transport doesn’t exist. It’s also not as if ‘driver assistance’ isn’t already in the market (parking, auto stop, etc.). The radical promise feels very far from the realities of the experience. At the same time, I can foresee a lot of non-consumer applications for this tech; logistics and public transportation being two examples. Having trucks and buses capable of running 24/7 without the need for drivers feels like a step change. The ability to shift an entire class of vehicles, that take up lots of room on the road into their own streamlined system feels like it could materially change the way transport works for the better. Turning roads into rails for 30% of the world’s traffic feels like revolution not evolution. However, it’s not really a consumer product in these two environments; it’s a business product.
The net result? A lot of consumer hype, but no real consumer traction (pardon the pun).
Creating visualisations that transport you to another place sounds fun; but surely the point of VR is about what you can do in these worlds, not how cool they feel. My instinct tells me that being able to interact in places that are difficult to reach with remote equipment (think drones under water, not Hobbits in the Shires) is where the value lies. But, again, these aren’t consumer applications, they’re aimed at specific industries that face huge, and costly, logistical challenges.
The net result: loads of consumer hype without any serious consumer applications (but loads of cool and weird stuff that you try once) and a nightmare scenario for – often already struggling – games manufacturers, which now face exponentially high development costs without much certainty of a pay off.
Controlling lights with voice, heating systems that learn as they go, and access control from anywhere in the world are pretty cool. I’ll admit I love keyless locks, but from an efficiency perspective they’re gigantic vanity projects. If your house is inefficient, chances are it’s utterly mundane stuff like insulation, ventilation, and heating equipment that will really save you the money, not installing expensive voice activated light bulbs. If we were serious about improving the efficiency of homes, we’d invest in projects like this at scale as part of vast infrastructure initiatives, not by changing how light switches are operated in a handful of homes. Don’t get me wrong, I love the convenience that these devices bring, but they’re little more than that. If the industry could find a way of delivering cheaper electricity to my home I’m pretty certain that would wipe out any savings that might exist for switching over to products like NEST. Also, how about letting my boiler talk to its manufacturer via the IoT so it can predict when it’s going to fail and automatically send a repair guy in advance? That way I might avoid a nasty surprise on December 23rd (as was my experience last year).
The net result: Smart Homes are nothing more than hype for an expensive thermostat that looks cool but doesn’t really do much more than the old ones with the plastic dial that your dad was always turning down.
The common thread in all these innovations is that the consumer angle is only one angle – and I’d argue it’s often the least interesting. This means there’s often a disconnect between the hype and their adoption. This is why none of these projects really took off in 2016, when more than likely their non-consumer angles could, although we might not know about it yet.
The one thing I’m consistently passionate about is the IoT, but not at a consumer level. I want the people who make things to continue understanding their products long after they ship. The radical transformation I want to see is the notion that selling something is where the relationship between a product and it’s creator begins, not ends. I like the idea that innovations around big data and AI can start directing their power around the stuff we use every day, so that those products can change for the better.
2017 should be the year of the mundane becoming extraordinary, and of the unexpected happening without us even realising it, just like the Panama Canal. With not a unicorn in sight.
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