Leading in troubled times, indexing, and cars
Leading in troubled times, indexing, and cars
The future of innovation is global. We discuss it here. September 2021 Edition.
Topic of the week
Looking at the news headlines, the world looks rocky. The pandemic rages on, alongside fires, floods and wars. I have often argued that the best startups build like camels – with a foundation of sustainability and resilience.
But what should leaders do to prepare for future uncertainty?
The answer lies with entrepreneurs that have been building startups in the toughest ecosystems around the world, largely in emerging markets, facing macroeconomic shocks, cultural risk aversion to entrepreneurs, and in some cases markets where failure (bankruptcy) is illegal. To overcome these and many other barriers requires another playbook.
In this article for Leader to Leader (Leadership Journal for the Frances Hesselbein Leadership Forum at the University of Pittsburgh), which is based on my recently released book (Out-Innovate), I explore critical lessons for entrepreneurs to start, scale and succeed in rocky seas.
In short: by focusing on their mission, building diversity and ecosystems, and experimenting.
Full article here.
Interesting discussions
The best innovators are coming from everywhere. They are also defying stereotypes. This month, Canva, based in Australia, raised at a $40b valuation. Founded by CEO Melanie Perkin, it is also one of the largest privately held female-led unicorns. And as I’ve written about before, diversity begets diversity. In this case, nearly half the team is female.
What is happening these days in tech? One excellent take is that it is indexing. “To make outsized returns in venture capital, you need to believe in companies when others don’t. But for the last decade, many investors who claimed to be VCs were actually index investors chasing a checklist of 3x+ growth, 100%+ NDR, 70%+ margins, and recurring revenue. These investors are commoditizing overnight, just like stock brokers on Wall Street in the 1980s…VC is commoditizing more broadly – finance types have flooded in, growth funds are raised and deployed far more quickly, investment teams have scaled, and deal-level competition has intensified. It is no longer the boutique asset class that small funds were betting on. You need scale to make an indexing strategy work – this could drive a consolidation era of venture capital, with far fewer funds.”
I’m a venture capitalist, which means I’m perennially optimistic. But tech alone is not a panacea. “Think about some of the big issues that Americans are facing, in no particular order: the coronavirus pandemic, climate change, disagreements over the appropriate role of government, a reckoning over systemic racism, inequality in wealth and health, increases in homicides and other public safety threats and educational and social safety systems that fail many people. Technology didn’t cause these problems, nor should we put too much faith that technology can solve them. I worry that when we vilify or glorify what technology and tech companies do, it makes us lose focus on what’s actually important. Technology is part of the solution, perhaps, but mostly we have to find the answers through collective human will and effective action.”
I do see an important role for tech for certain problems, notably climate change. But tech won’t be the silver bullet: this article underscores the need for a comprehensive ecosystem solution, including with enabling regulation. “Too many Americans believe that when it comes to climate change, only the government is up to the task. The fact is, the main barrier to large-scale adoption of sustainable technologies isn’t a lack of government involvement, but too much — or at least the wrong kind.”
I have argued that new startup ecosystems should not be called Silicon X. Interesting piece arguing the need for Silicon to come back in Silicon Valley. “From responding to a pandemic — with novel mRNA vaccines — to building the future — with SpaceX’s rockets and Apple’s new chips — we are seeing that the material world still has the power to thrill. But even though many appreciate physical products more than ever, this esteem has not yet prompted a broad attitude shift to recognize manufacturing as a valuable competency in the world of technology. Software is fashionable, but we need more than software to reshape our physical world... Manufacturing capacity isn’t merely a nice-to-have to respond to emergencies, but is the key to realizing a technologically-accelerating civilization.
VCs looking globally are finally looking beyond China and India. “In the hopes riding on supercharged economic growth, venture investors have poured billions into hot, so-called emerging markets like China, Indonesia, Brazil, Nigeria, and India over the past decade. But in recent months, investors have been sending hefty rounds of venture capital funding to countries that in years past have often not emerged in rankings of most well-funded countries from a VC’s standpoint.” LatAM, South East Asia, Europe and other regions have become big beneficiaries.
We have long looked at market failures for not measuring negative externalities. But as this article argues, we’ve also ignored positive ones. It is time for this to change.
Silicon Valley may be about to have its Detroit Moment. Innovators around the world are building startup ecosystems that are specializing and in certain industries supplanting Silicon Valley. Fascinating to read about car-making in China, and the technological superiority there - perhaps outpacing both Detroit in car making and Silicon Valley in electrification.
Since I shared an article about leaders in crisis, I wanted to share a Creative Confidence Podcast where I discussed mindsets of leaders.
Book of the month
This month I’m reading the phenomenal book: The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World by Charles Mann.
The book juxtaposes two opposing views on human progress told through the stories of two original protagonists.
As the NYT Reviews it: “William Vogt and (particularly) Norman Borlaug are brought to splendid, quirky life. Vogt, mostly unread these days, is a writer whose 1948 book, ‘Road to Survival,’ Mann credits with helping birth modern environmentalism with its sense that humans should respect natural limits — he is the title’s ‘Prophet.’ Borlaug is the Nobel-winning Midwest agronomist whose patiently bred strains of wheat kicked off the Green Revolution, and is here Mann’s ‘Wizard,’imbued with a technological worldview that seeks always to overcome Earth’s limits.”
Which side of this epic debate do you fall on?
