What’s driving leaders of emerging technology companies and the venture capitalists (VCs) who back them? Here’s a look at three trends that were hot topics for discussion at the recent TechCrunch Disrupt SF 2018 conference:
Trend #1: The shortage of skilled tech talent is prompting a search for new markets.
Highly skilled technology talent is hard to find in today’s tight hiring environment — especially in major tech centers like California’s Silicon Valley and New York’s Silicon Alley. That’s not news, of course. But emerging technology firms are still experiencing some sticker shock when negotiating salaries with in-demand professionals in these and other top markets. Even early-stage startups need to be prepared to offer competitive compensation and standout benefits and perks as they compete for talent with the likes of Apple and Google.
The severe shortage of talent in current hotbed technology cities is causing tech execs and their VC backers to seriously consider whether other markets, such as Austin, Denver, Los Angeles, Seattle and even Miami, could become the next centers for technology innovation in the United States. Some forward-thinking investors are also eyeing locations like Omaha and Chattanooga, which are ripe with companies and industries waiting to be digitally disrupted, as well as technology entrepreneurs on the hunt for venture capital.
There is another very sound reason for technology firms, big and small, to look outside of major markets for expansion: business continuity management. Having all of your innovation talent concentrated in one area is a tremendous risk. Companies build data centers in the desert to keep their data safe from major earthquakes, floods and other disasters. They may also want to consider how their talent would be affected if a disaster took their headquarters offline, and deploy a similar strategy.
Trend #2: The collision of the physical and digital worlds is opening more doors for innovation.
The rapid pace of technological disruption has many business leaders wondering how their workers will learn to interact seamlessly with next-era technology, particularly artificial intelligence (AI).
The good news for technology companies is that there is tremendous opportunity to develop ways for people to do exactly that: work harmoniously with the digital world. Just look at all the innovators exploring viable replacements for QWERTY keyboards — typing with your voice, employing virtual reality and using your brain waves are just some of the solutions now in research and development.
The collision and increasing convergence of our physical and digital worlds also have companies thinking about how to bring AI seamlessly into more of our everyday experiences. And that has more businesses opening their technology ecosystems to third parties to turn those experiences into reality even faster. Look at BMW, as an example, which is working with both Amazon and Microsoft to create AI personal assistants for its cars. (And BMW itself unveiled the BMW Intelligent Personal Assistant for its cars at TechCrunch Disrupt SF 2018, just weeks after launching its integration with Amazon’s Alexa.)
Trend #3: Regulatory uncertainty has many tech firms looking for the best path forward.
Another key topic of discussion for many who attended the 2018 TechCrunch Disrupt SF conference was more of a question: How can the makers of disruptive technologies — like cryptocurrencies and blockchain solutions, for example — operate within the bounds of new regulations that haven’t yet been defined?
Even though some technology companies and venture capital firms are collaborating with regulators like the U.S. Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) on evolving regulatory issues, many things remain unclear. For example, the cryptocurrency industry and U.S. lawmakers have asked the SEC to provide more insight on how it plans to regulate cryptocurrency.
Many start-ups are trying to be smart about potential risks and keep one eye toward the future when thinking about potential compliance demands. Emerging technology firms understandably want to know how their businesses — and their innovations — might be regulated.
One strategy for U.S. startups to consider, if they want to take a proactive approach to controls, is to adopt significant non-U.S. compliance mandates that could impact their business as they grow. The European Union’s General Data Protection Regulation (GDPR) is one measure they might consider.
Emerging technology companies could take other steps, too, such as upgrading their financial reporting process and their governance, risk and compliance capabilities (GRC). Those actions will give them a head start on the public company transformation process.
What do these three trends tell us? That emerging tech firms face significant challenges in achieving sustainable business success. But they also have a wealth of opportunities to seize, from building new technology markets to helping people and businesses work productively with the digital world, and not just in it, to helping regulators overcome their inertia and respond appropriately to change. Fast-growing startups that not only recognize these opportunities but also successfully take advantage of them will, in turn, increase their chances of becoming the industry leaders of tomorrow.