Many parts of the world especially in Asia and Africa have leapfrogged telecommunications — they have mostly skipped landlines and gone straight to mobile. Can we repeat this story in other domains? Quickly enough so we don’t overburden the planet with environmental degradation or social unrest? Indeed, can we leapfrog infrastructure?
This post cannot do justice to the complexities in each domain. The focus here is opening a debate on a key trend and a particular challenge it poses for startups.
1) power — grid parity is here and it’s great… but it requires startups to move upstream in the stack
Can solar panels compete with fossil fuels? Enough skeptics aside, the consensus in the industry is that in 2017 we have achieved grid parity in several parts of the world, the US included. Which leads us to graphs like the one below:
So is Powerwall the future? Every house captures enough sunlight, stores it and feeds into the grid for clean, sustainable energy? Tesla may not be able to rebuild the hurricane-battered electrical infrastructure of Puerto Rico by itself but it’s no longer science fiction.
When it comes to startups, the obvious challenge is it will lead to a more competitive market, lowering margins, and presumably a consolidation of solar panel manufacturers into a few players. Amy Westervelt at GreenBiz outlined the argument well in this article a few years back.
Outlook: happening now
2) banking — cashless is starting to happen and will be great… but it raises huge issues in control, privacy and security
There are plenty reasons to go cashless, the most mentioned being i) efficiency, ii) taxes and iii) social. We are all consumers so the first one is the most obvious — be able to pay quickly using your phone, get the right change, be able to track the payment, among others, are all far superior to cash. The second is especially prevalent in emerging economies, where the government has been unable to extract its rightful tax on earnings and transactions. The third is the obvious benefit to the unbanked and the underbanked who historically didn’t have access to capital but now will, thanks to cell phones.
Sounds all incredible but there are huge challenges, here are some unanswered questions:
- How do you handle cross-border payments until everyone is cashless?
- Transparency over privacy — does abolishing cash hurt consumer sovereignty?
- Is a cashless society more prone to fraud since bad behavior can propagate on a much bigger scale?
There is naturally tremendous opportunity for startups in solving these questions. And the challenge, or good news if you are an entrepreneur, is there is a very long way to go. Ecuador was the first country to roll out a digital currency (while grappling with many questions around regulation) and that was only a couple years ago. India may be most emblematic of the huge majority of the world, where cash is still definitely king.
Outlook: happening near future
3) roads — “where we’re going. we don’t need roads”… but we are far from leapfrogging this one
Roads are the arteries of civilization allowing for the movement of goods and people. Yet in a world where drones do delivery and self-driving cars zip through with shared ridership, roads may not be necessary.
So it shouldn’t be unexpected that it’s the places in the world with the worst road conditions that are the most excited about leapfrogging them.
Startups should factor that in when looking for initial markets. In fact, when it comes to drone delivery, Matternet is doing blood samples in Lesotho and Zipline is doing medications in Rwanda.
The challenge of leapfrogging roads is huge though, even from a purely technical point of view. Drones don’t have enough range, need to be recharged reliably, and obviously have to be able to take-off, fly and land with the utmost safety. Same deal with self-driving cars which can operate pretty effectively in more constrained situations like highways or college campuses but not yet ready for every type of road or weather condition. There is wide debate in the industry but if you were to poll experts the consensus that comes up is 10 years from now. But make no mistake — time notwithstanding, drones will deliver you pizza and do a milk run, you just can’t beat the economics. Ahoy brave new world.
Outlook: happening medium / long-term future
These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). I would be stoked if they get people interested enough in a topic to explore in further depth. I work for Samsung’s innovation unit calledNEXT, focused on early-stage venture investments in software and services in deep tech, all opinions expressed here are my own.
