Design thinking, the chip war, and boss bankers
The future of innovation is global. We discuss it here
What happened to design thinking?
When I entered venture a decade ago, one philosophy permeated product and company development: design thinking. I loved this fabulous restrospective on the movement and the current status of the industry.
The approach, popularized by players like IDEA and Stanford’s design school was based on “a six-step methodology for innovation called design thinking, which had emerged in the 1990s but had started reaching the height of its popularity in the tech, business, and social-impact sectors.”
Yet the luster seems to have worn off. “Critics have argued that its short-term focus on novel and naive ideas has resulted in unrealistic and ungrounded recommendations. And they have maintained that by centering designers—mainly practitioners of corporate design within agencies—it has reinforced existing inequities rather than challenging them.”
And of course, not all problems can be solved by thoughtfully designed products: “the #MeToo and BLM movements, along with the political turmoil of the Trump administration, have demonstrated that many big problems are rooted in centuries of dark history, too deeply entrenched to be obliterated with a touch of design thinking’s magic wand.“
My take: we are at risk of throwing the baby out with the bathwater. Design thinking has an important place - it helps bring the customer into product design, unite multiple voices and take a fresh lens at intractable problems. It is of course not a panacea and should not be treated as such.
But what I love about design thinking is that it brings a combination of humility and humanity into business model and product design, something that should never go out of fashion.
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Where is the world of tech going? One widely read and thoughtfully composed tweet predicts a mass extinction event.
Just another reason to chase Camels not Unicorns.
That’s one of the reasons I think we’ll see Camels as an enduring VC trend in the future.
Actually a trend today. So much so that a new fund was launched (not mine!) called CamelFarm.
Great presentation on the brewing trends in technology globally in the U.S. and globally. There are a number of surprising takeaways. Rather than share them with you here, I share the following chart which will not be a surprise to our readers. Everyone likes views that reinforce their own, and I’m no exception. But I encourage you to read the rest of the presentation too.
The globalization of innovation is everywhere. For example, among the top 10 neobanks around the world, only one is in the US (@Chime), in this case measured by downloads. Often the pain points are much larger in other markets. In Brazil for instance, a highly concentrated oligopoly, low banking or credit penetration and sky high interest rates have made for a welcoming environment for challengers. 6/10 by downloads are there.
And outside of Silicon Valley, the tech headlines are not so dire. Against the backdrop of job cuts in the major firms in the valley, great reminder on how things play out in different corners of the innovation industry. "Big Tech companies like Amazon, Alphabet, Microsoft and Meta are laying off workers. But that is not true of the broader tech economy. Most technology workers do not work at tech companies. And while employment in tech occupations did slip slightly last month, by half a percentage point, it was 7 percent higher than in January 2022."
Last month, we did a deep dive into the future of work from A.I. Fascinating piece on A.I.’s first use in the court system. “An Artificial Intelligence (AI) lawyer is gearing up to make history as the first AI to defend a case in court. Dubbed the world’s first ‘robot lawyer’, the bot will give prompts to the defendant on how to best argue their case against a speeding ticket when the hearing takes place next month.” But like with everything, new context requires new rules. “While it may sound like the future of court hearings, there’s a catch – mobile phones and headphones are generally not allowed in courtrooms.”
What is the state of the public market fintech landscape? Some of the headlines are doom and gloom, but I enjoyed this report on the current state of the industry. Fintech valuations are down over 70%. The retrenchment was mostly felt in the most recent exits (and particularly in SPACs it seems). But, cause for celebration is continued underlying growth. LTM growth was on average nearly 50%. And there is still room to grow. Fintechs are still <10% of market in the U.S. (and arguably a much larger opportunity in more emerging ecosystems with higher underbanked rates).
I have written about one of the key advantages to embedded fintech being distribution. But a great piece for reflection on the topic asks the question: what to do when your boss becomes your banker? A growing trend is employer wage advances - often enabled by employers. “But these direct and indirect transactions are complicating the nature of relationships between employers and their staff. Workers are often giving away far more information about themselves to their bosses. It may also be an uncomfortable situation to owe money to your employer.”
How is money made? (in the US) Couple things I learned that surprised me: Every time the Secretary of the Treasury changes, so do our bills, as the signature is updated. This can sometimes takes months to implement (and years for a more major redesign). It is big business. Over 1,500 people's full time job is printing currency. The process is a mix of digital and analog which has greater security. Inspection is not just about quality control but about security. 40% of Americans are effectively cashless. Yet over $2t is in circulation.
Uplifting read: My wife and I often feel overwhelmed in a home with two toddlers and a full life. We often wish we could Marie Kondo our circumstances. But it is important to be kind to yourself. After all, turns out that Marie Kondo feels the same way we do. "But the ever-organized Kondo, it seems, is a bit frazzled since giving birth to her third child in 2021. Like most of us, she’s having trouble keeping up with all of it. Never fear, though: She is still sparking joy. It’s just that, these days, that doesn’t hinge on having a tidy house. Her new rituals turn inward, to more thoughtful things than a drawer full of perfectly folded T-shirts or an Instagram-worthy spice cabinet."
Book of the month
20th century geopolitics were in some ways defined by the quest for oil. 21st century may be defined by chips. During covid, industries like automobile production ground to a halt due to shortages, in part due to complicated, intertwined and mutually dependent global supply chains.
How are chips made? What does it mean to re-shore them to the US?
This month I’m reading Chip War: The Fight for the World’s Most Critical Technology. As the NY Times reviews it: “The galloping momentum of Moore’s Law is a perfect engine for Miller’s thriller. If any book can make general audiences grok the silicon age — and finally recognize how it rivals the atomic age for drama and import — “Chip War” is it. And one last note: Holy moly, it’s good to read a book about tech that’s not about software. Silicon chips are the substrate of digitization. Trying to understand the digital world by studying only Facebook or Google is like trying to understand architecture by studying only frescoes.”