Deep Tech: The Fourth Wave of Innovation and the Future of Companies.
We are currently witnessing the emergence of a new wave of innovation that is set to transform businesses and redefine entire industries. For the last few decades, software and internet companies have led the charge in technological innovation. Giants like Amazon, Google, Facebook, and Netflix revolutionized how we shop, search for information, connect with others, and enjoy entertainment. However, we are now entering an era where the next groundbreaking innovations will come from the fusion of software and physical/engineering breakthroughs across diverse sectors.
The Roots of the Fourth Wave
To understand this fourth wave of innovation, it is instructive to look at the history of modern technological progress. The first major wave began in the late 19th and early 20th century with innovations in materials, energy, chemicals, and manufacturing processes that enabled mass production and laid the foundations for the modern industrial economy. The second wave came after World War 2 when large corporations pioneered centralized research labs and made fundamental advances in electronics, telecommunications, computing, and pharmaceuticals. For example, Bell Labs developed the transistor, laser, UNIX operating system among countless other inventions during this era.
The third wave represented the rise of lean, agile software startups which tapped into the falling costs of consumer electronics and the Internet to rapidly create innovative online services and disrupt established industries. Default tech giants like Google, Amazon, Facebook, Netflix exemplify these software-focused companies that ate the world. However, after dominating technology and business headlines for the past decade, software innovation alone is reaching its limits. Fundamental physical and engineering constraints across industries are hindering further progress.
The fourth wave is now emerging as a multidisciplinary approach combining recent advances in computational hardware and software with innovations in physical sciences, engineering, design, and business model innovation. The key drivers enabling this wave are
- Exponentially improving, specialized computing infrastructure like AI chips, quantum, and cloud computing platforms
- Falling costs of research equipment, sensors, and manufacturing techniques like 3D printing that democratize innovation 3)
- Open-sourced knowledge and big data that promote transparency and collaboration.
- An entrepreneurial culture focused on solving real-world problems by taking moonshots.
Unlike previous eras led by large stable companies or small disruptive startups, the innovators of this fourth wave are fluid networks of stakeholders spanning across startups, corporations, universities, and governments.
Open ecosystems allow members to quickly share ideas, collectively de-risk big bets, and build upon each other’s breakthroughs. Consortia like IMEC in nanoelectronics and public-private partnerships have emerged as hotbeds for pioneering technological achievements.
Examples of Fourth Wave Innovation
While most fourth wave companies are still in their early stages, their ambitions run wide and deep. Here are some promising examples:
Biotechnology: Startups like Ginkgo Bioworks, Zymergen, and Impossible Foods are programming microbes to produce materials and food previously made through agriculture or petrochemical processes. Their bio-foundries help clients bio-fabricate innovative enzymes, textiles, sweeteners, and meat alternatives. These companies sit at the intersection of software (AI algorithms), cutting-edge science (genetic engineering), and manufacturing techniques to directly program biology.
Quantum Computing: Players like IonQ are building next-generation quantum computers which leverage exotic physics phenomenon like entanglement and superposition to solve problems seen as impossible for classical machines. Quantum holds revolutionary potential in sectors like drug discovery, material science, machine learning, and cryptography. But mastering qubits requires expertise spanning physics, materials science, cryogenics, firmware, control electronics, and software.
Autonomous Vehicles: Startups like Waymo (Google) and Cruise are taking self-driving cars from science fiction to reality by combining innovations in machine vision, sensor fusion, geospatial mapping, robotics, machine learning, simulation, and vehicle engineering. Their goal is to make transportation safer, greener, and more accessible. The auto giants and Big Tech players are all racing to be leaders in this next frontier.
Space Tech: Players like SpaceX, Blue Origin, and Relativity Space are revolutionizing rocketry and satellite technology by applying an entrepreneurial Silicon Valley mindset. Instead of treating launches as one-off events, they take inspiration from the software practice of continuous delivery to make their systems rapidly reusable, upgradeable, and scalable. Their ambitions even extend to space mining and colonization.
These examples reveal how fourth wave companies converge once disparate disciplines to engineer impossible products. They feature heavy use of computation (AI, cloud, quantum, robotics) mashed up with innovations unique to their domain (synthetic biology, nanotechnology, neuroscience, quantum physics) to create solutions previously unattainable. This ability to deeply integrate software with cutting-edge hardware, devices, and materials unlocks new value chains and business models.
Implications for Large Tech Companies
Legacy tech titans should take note of this fundamental shift or risk disruption in the coming years. Players like Google, Microsoft, and Amazon have built their empires by taking advantage of exponential improvements in semiconductor chips to sell on-demand access to cloud computing and storage. However, with Moore’s law slowing, they will face growth limits in their core cloud offerings.
Some tech giants have already embarked on major initiatives to stake out their spots in driving fourth wave advances. For example, Microsoft and Amazon are heavily investing in specialized AI hardware chips to power their cloud platforms. Google’s moonshot factory X continues to explore radical technologies like delivery drones, self-driving cars, and internet balloons. However, more nimble startups unencumbered by strict quarterly earnings have an edge in placing bold bets that strain near-term profitability but seed massive innovation.
To avoid disruption, big tech companies will likely need to accelerate their pivot to physical-digital solutions, leverage M&A to access cutting-edge tech, and explore new positioning plays like becoming the digital layer on top of revolutionary hardware wares. Companies slow to make this shift will get left behind in powering and benefitting from the multi-trillion dollar fourth wave erupting across sectors.
The Future of Technology Companies
The fourth wave marks the beginning of a new breed of technology players that dissolve traditional sector boundaries. Leaders in materials science like Dow Chemical now discuss machine learning, cloud computing firms like Amazon build specialty AI chips, consumer drone makers like DJI invest in computer vision breakthroughs, and automakers like Ford acquire quantum algorithm startups. Even companies still focused on bits analyze how real-world data can improve their systems.
Tomorrow’s most valuable tech giants will tap into fields largely unexplored by software companies — climate change, space infrastructure, genomics, robotics, nuclear fusion, teleportation. Programming lifeforms will be as common as coding apps today. Supply chains will be AI-optimized, products will be atomically engineered, businesses will be machine learning-driven. Technology will invade sectors like manufacturing, agriculture, transportation that saw little digital disruption in past decades.
The new pace of software change will be grounded by hardware advancement cycles. Product cycles will extend from days to decades depending on hardware complexities. Business models will remain fluid — even giants unable to quickly adapt will face sudden demise.
Value capture will further concentrate around proprietary datasets and specialized engineering talent. Regulation will vary based on physical risks. Technologies like biohacking and AI will surface urgent ethical dilemmas.
Strategic alliances between innovators tackling ambitious ideas will define the ecosystem, giving equal footing to corporations, governments, academics, investors, and entrepreneurs. Shared ideation and IP creation will far outweigh licensing and IP litigation. Technological shifts will be measured over generations rather than software point releases. India with engineering, science and IT talent can emerge as a microcosm manifesting this future.
In conclusion, the coming together of diverse technological fields heralds an unprecedented wave of creative potential and human progress never before achievable. Companies that strategically prepare themselves to ride this wave will have the opportunity to shape the future for decades to come. But failure to adapt risks harsh obsolescence. The next generation of tech giants are already emerging from university labs designing improbable products integrating science, engineering and business. Incumbents need to either join their ranks or partner with these hackers of reality. Because software continues to eat the world, but the world is more than software.
Reference:
- Deep Tech and the Great Wave of Innovation
- Deep Tech will Shape the Next Decade
