POST PANDEMIC – TIME TO REBUILD

 

Early consensus on the Coronavirus impact to the economic landscape has shown that while the economic activity of many key industries has been ravaged, the overall long-term outlook is that the crisis represents a temporary phase and business-as-usual will return in the near term. However, a closer look at a number of industries reveals that there are glaring problems and missed opportunities with this line of thinking – not just for a pandemic-ready economy, but for an economy that is ready to meet a variety of significant challenges. As such, businesses are now facing a scrutiny as to the focus of the problems they are solving, and in particular why the emphasis on solving large, meaningful problems has been overlooked in favor of market sectors such as social media, advertising, experiential marketing, and technology unrelated to solving problems.

 

In many countries and across many sectors, a deficient technical infrastructure both at intra-company levels and at larger macroeconomic levels has exposed an inefficiency in the current business-as-usual model for startups to generate long-lasting market value. One factor of this technology gap is the emphasis on consumption-driven startups, rather than value-driven or problem-solving-driven.

 

Part of the challenge in evolving the global infrastructure economy has been seen in the form of rising costs. Famed investor Marc Andreessen, who famously predicted the evolution of software as a dominant economy driver notes that the very nature of urban areas has plateaued in terms of its economic progress – “You see it in housing and the physical footprint of our cities. We can’t build nearly enough housing in our cities with surging economic potential – which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future. We also can’t build the cities themselves anymore. “ 

 

Andreessen’s central thesis for this phenomenon lies in the notion of regulatory capture, noting that “The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it, even if only to force the incumbents to build these things. And the problem is will. We need to build these things. “ This paradox is seen at both the government and corporate level, and seen as a barrier on free enterprise and innovation. Software innovation and technical infrastructure on the other hand faces lower barriers to entry at both the cost and regulatory level, which has been both a gift and a curse. On one hand, low barriers to entry enables a multitude of innovation and product iteration for bootstrap starters. 

 

However, the downside is that a business that can thrive off low cost often comes with the drawback of not solving a problem that is costly and significant. Creating an app from the comfort of a living room or a coworking space can yield a great audience, and maybe a significant profit, but it lacks the capital-intensive operation that is required to change society’s infrastructure, healthcare, politics, and economy as a whole. 

 

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