Thoughts on the 4YFN18
The fifth edition of the 4YFN is now over. It is, together with the South Summit, the largest innovation event in Spain. While the latter was born, as scrappy as the startups that now houses, in one of the tables of Instituto de Empresa’s Area 31, the 4 Years From Now (4FYN) had the privilege of growing at the foot of the most emblematic event in the telecommunications sector, the Mobile World Congress (MWC); a real blessing for Barcelona that has been transformed by its presence in a similar way to the effect of the 1992 Olympic Games, providing the city with one of the most mature innovation ecosystems in all of Europe.
Ecosystems cannot be bought with a checkbook, as discovered by many governments that squandered taxpayers’ money while promising new Silicon Valleys. Instead, they are an organic evolution fostered by the contribution of countless human factors, so having one of them next door is an incredibly powerful asset and a very sustainable competitive advantage.
The 4YFN ate the MWC for dinner
In fact, at least for the people who work in the sector, with this edition the 4YFN has eclipsed the MWC in terms of innovation.
One of the most widespread concepts in the world of technology — postulated by Everett Rogers in 1962 — is that of the “S-Curves”, also known as “Technological Life Cycle”: all technology goes through four phases: one of incubation where it grows slowly until, when it is ready to reach the mass market, exponential growth occurs, followed by a phase of maturity that portrays signs of depletion, until finally being replaced by a newer technology at the height of its own S-Curve, resulting in a superposition of logistic curves.
Regarding the MWC, we are already in a fairly advanced stage of maturity, approaching the geriatric center with a slow cane strike. Gone are the glorious times of 2008 to 2014 in which an updated version of the operating system or the launch of a phone by a manufacturer shook the industry, opening or closing market opportunities for a legion of companies. Now mobile innovation went from disruptive to incremental, and it comes out in the news for having a slightly sharper screen, a slightly thinner profile, or unlocking the phone with your face because, of course, using the fingerprint involves way too much effort .
Perhaps there is no better sign of the times than the return of Nokia with a line of retro phones, like a Super Nintendo controller with an USB port, which alternate between a dubious attempt to emulate the glories past of the Matrix movie and the success of adorning a generic Android platform with the stylized design of the Finish brand for the delight of nostalgic souls like mine.
Beyond that, the only reasons left to visit the MWC are taking a selfie in front of Ehang’s experimental taxi-drone, or admiring the gorgeous Nordic and Asian models that household corporations can afford on their stands (before I get criticized, it’s just innocent window shopping). These budgets are beyond the reach of most startups.
Simplicity Sells
All the fish is either sold or spoiled in the mobile world, and innovation has moved alongside the 4YFN, where you can even perceive an “App Fatigue”, a tiredness for the value propositions of that era. It is no longer enough to have an App whose traffic you intend to monetize more or less clearly; all companies have Apps, it has become a very crowded space in which it is difficult to differentiate and where the customer acquisition costs have risen to the point where certain marginal propositions are not viable anymore.
And although there were some companies that continued to bang on the message that millennials demand hyper-personalization, they want everything done to their measure, the truth is that in the face of this information overload via apps, websites and services, the dominant trend is evolving towards solutions that make our lives easy, that help us to manage our complicated lives. Simplicity sells, more than supply diversity, and even more than the traditional cost reduction proposition.
Despite its chronic attention deficit, the digital society is awakening to the fact that, still, the most precious and scarce asset is time. This is where artificial intelligence can show its most human side, not only in the conversational mode of Alexa or chatbots, but in a generic sense by providing ways to manage our daily environment that help us to free up time in our calendars and leave room for the really important thing: thinking, instead of organizing.
The Product-Market Equation
A mature innovation ecosystem has many positive effects, but also some pernicious ones. The proliferation of accelerators, incubators and venture builders in these years has caused promising projects to shorten their journey through the desert and reach the scalability stage in a more direct fashion, although it has also allowed many other half-baked projects to subsist, without a clear direction and an uncertain future.
On several occasions I was forced to say: “If you have really developed technology that can do those wonders … doesn’t it make more sense to try this other market, which is much more accessible at first?”. Either their applied science is not really that good or — as I could tell from their facial expressions — they had not thought about it before. Sometimes we forget that the product-market fit we anguish for is a binomial that can be approached from both sides of the equation: it is often advisable to pivot the company’s offer, but sometimes we simply need to change the market.
Startup Wars: The Clone Wars
When I got in this trade the proportion of proposals in seed stage that had to be explored in order to find something worthwhile was approximately 100 to 1. Now it seems to me that the figure has moved more towards 150 to 1, as a consequence of the startup blossom of recent years. Such an environment requires not only a lot of experience but time, resources and dedication for in-depth analysis. Without these elements this can become a hobby as expensive as going to the casino on weekends. You have to screen many, many proposals to find one that is really worth investing.
And I say worth investing, not necessarily original. Unfortunately, a large part of the national market is devoted to what is known as tropicalization: the copying of business models established in other countries, mainly USA, and trying to adapt them to the Spanish market, Tuenti style. “Let the Americans innovate!”, as Berlanga’s characters would say.
That can be a great proposal when there are huge cultural differences that act as a natural barrier to entry, like in the case of China, or when the very nature of the sector causes the original company to focus on domestic demand, but in Europe startups internationalize increasingly earlier and faster, so you may find that competition has already landed on the peninsula while you were still putting on your pants, as happened to several of the companies with which I had an occasion to speak to at the event, no matter how hard they tried to sugar-coat the pill citing dubious local advantages and trumpeting differences as thin as a hair.
In that sense, I was very pleased to realize that the message of Conexo Ventures has been received extremely well by the community, since our value proposition is radically different. We do not seek copycats, because we can add little value beyond Dumb Money. Furthermore, we want to work with genuinely innovative proposals to which we can add our internationalizing experience, our networks of contacts and our operational structure in the USA to turn them into global successes.
We may have to screen 150, or 300, or more projects, but it is well worth the effort in order to find the true gold that not only the shinning pebbles. Thus we join the remarkable club of Inveready, Adara and Nauta Capital in betting on authentic Spanish innovation; without nuances, nor diffidence, nor excuses.
