Jeff Funk’s book Unicorns, Hype, and Bubbles addresses some of the most important topics of today’s business world: why startups are less successful now than they were 30 years ago, will AI have the impact on productivity that many academics and consultants claim, will the AI bubble pop, and why does there seem to be more hype about startups and new technologies than there used to be.
His answer to the first question is that they have mostly tried to commercialize low-tech opportunities and when they have targeted new technologies, they have assumed the new technology would experience rapid improvements and quickly diffuse and thus they didn’t need to think carefully about first applications and customers.
The book first explores the concept of value and productivity in which his emphasis on value is similar to Steve Jobs’ emphasis on customer experience. He has merely substituted value for customer experience because he wants to link value and productivity, arguing that profits often come from an advantage in productivity, which comes from a firm providing more value to customers than do others while incurring lower costs.
Second, the book explores low-tech opportunities such as ride hailing, food delivery, home sharing (Airbnb), healthcare, fintech, business software, education, and the mistakes startups made. Healthcare startups ignored the problems of multiple databases. Business software startups are also guilty of the same problem on a larger scale, leaving the incumbents to deal with issues of integration. It also describes why home sharing is more profitable than ride hailing and why Uber’s profitability has recently improved.
Third, the book explores hi-tech opportunities in which startups tried to commercialize new technology but assumed rapid improvements meant they could target mainstream customers as opposed to identifying early users. VR headsets aren’t getting smaller nor is field of view for AR goggles getting bigger while the problem of nauseousness still remains. Delivery drones cannot deliver packages to balconies of high-rise building, which dominate big cities, nor are they getting better at navigating power and telephone lines, a characteristic of suburbs. And AI’s hallucinations aren’t going away soon, and answer to one of the questions asked in the first paragraph.
Fourth, behind poor design decisions and businesses choices are rising hype and what he calls the “wow factor,” which is presenting optimistic goals without explaining how they will be achieved. Ride sharing will eliminate all private cars and thus all parking lots, freeing millions of acres in space. Cloud kitchens will replace restaurants because we are too busy (and rich) to cook for ourselves. Neo-banks will replace traditional banks because they don’t need a building and algorithms can make better decisions than can humans. Unfortunately, founders and venture capitalists never articulated the methods of achieving these goals.
One way that VCs hyped startups with the wow factor was by pushing the myths of genius entrepreneurs, frequent disruptions, and rapid improvements. These myths became so ingrained that VC funding became a measure of “output” not input in which cities, states and countries competed to obtain the most funding.
I highly recommend Unicorns, Hype and Bubbles. The publication date is October 22, but it can be pre-ordered from Amazon.
Author: Andrew Samu
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