Quantcast

Welcome to the Industrial Intelligence Age

 

The science fiction of the Information Age isn’t fiction anymore.

We’re at the peak of human civilization thus far. We are more interconnected, technologically advanced, and educated than ever before, and the pace of technological innovation continues to accelerate as well: new technologies often have a compounding effect, enabling us to make new discoveries at an ever faster rate. We have enormous capacity to attack major injustices (of which there remain many), alleviate basic human hardships (that half the planet still face daily), and advance ourselves into new stages of civilization.

Yet, in the last decade, we witnessed capital and talent in the entrepreneurial sector over-index instead toward creating improvements to consumer and enterprise tech that makes life marginally easier for the affluent and for business processes. Too many of our top computer science graduates are crafting features for photo sharing apps or platforms for sales teams, and too many of our top systems engineers are streamlining wait times for grocery delivery. Most venture capital firms have been devoting their funds to simple-to-understand businesses with little to no technology risk, little government regulation, and little to no direct, substantive impact on the things that are most important to society.

The tide is changing, however. These markets are overcrowded, enthusiasm by smart investors has tempered, and — anecdotally — talent appears to be eyeing the door for more fulfilling work. A new wave of startups and venture capital is rising in its place, one centered on tackling hard problems by seizing the opportunity provided by advanced technologies and the growing openness to change in regulated sectors.

 

There are two macroeconomic trends that define the changes underway.

  • First, the Information Age is now aggressively hitting the long tail of giant, change-averse sectors like education, healthcare, and government.
  • Second, the next revolution — the Information Age’s successor that we term the Industrial Intelligence Age — is aggressively underway.

The economy undergoes cycles of innovation, described by Venezuelan economist Carlota Perez’s graphic below, with a rush of entrepreneurship and capital seizing new technology, an over-optimistic frenzy developing, then a tempering of the hype, followed by a subsequent, more gradual resurgence as the technology (and the cultural and regulatory comfort) ultimately catch up to the early ambitions. As outlined by Perez, prior cycles of innovation during the last two centuries all follow this pattern: the Industrial Revolution; the Age of Steam & Rail; the Age of Steel; the Age of Electricity & Industrial Engineering; the Age of Oil, Autos, and Assembly Lines. As one cycle matures, the next takes off.

AAEAAQAAAAAAAAsPAAAAJDJmOWE2ZGU1LTViZDItNDdlZS05ODI3LWU4MTYyYzM1MGNiMg

The current Information Age began in the 1970s with the microprocessor, accelerated through the Dot Com boom, tempered for the early 2000s (“Dot Com Bust”), then resurged with cloud computing, modern social networking, internet-enabled mobile devices, and machine learning (plus the new business models that became possible through them).

Now the Information Age is in its Maturity phase, following the rush of activity since 2008–16 due to startups in the Synergy Phase transforming less regulated consumer and enterprise sectors. The easier applications of digital technology have largely been handled now, and those markets are oversaturated with copycat products and investors.

As a result, the full potential of data and machine learning, mobile and other internet-enabled devices, and digital business models (marketplaces, software-as-a-service, pay-per-call APIs, etc.) is now striking the late adopters: a) the centralized, regulated industries that more directly shape humans’ lives and b) the developing countries that are only now gaining widespread internet connectivity and strong domestic startup ecosystems.

It’s not that these late adopters haven’t been touched by the Information Age yet, it’s that they have thus far delayed the paradigm shifts that come with a full embrace of the latest digital technology. In education, for example, I struggle to find anyone — student, parent, or teacher — who doesn’t think the school system is fundamentally broken and behind the times, however little about schooling has changed over the course of the Information Age thus far. It’s the same processed just moved onto a computer and edtech startups selling incremental improvements to administrators’ needs rather than confronting the biggest problems.

We’re nearing a tipping point however. The comparatively small number of startups pushing bold new approaches are beginning to have an impact. These innovations are enabling a pivot toward hyper-personalized support for each child, facilitating the invention of new school models with economies of scale, breaking down silos between different classrooms, and bringing new school- and job-readiness training to disadvantaged youth.

The pivot point is fast approaching in other sectors too. In finance, new forms of data are creating new credit score and lending models, automated management of personal and small business finances, reduced fraud, easier cross-border transfers for commerce and remittances, and increased availability of financial products in underdeveloped countries. Simultaneously, government organizations are partnering with tech companies whose platforms create more financial transparency, improve collaboration between agencies, modernize workflow, better leverage vast data sets to improve policymaking, and make the public sector more responsive to the needs of citizens. Healthcare is likewise shifting to an era of hyper-personalized care, better coordination between care providers, and radically better data analysis to help patients earlier and to identify new efficiencies system-wide. Information Age technologies more aggressively confronting these industries is having a gradual unbundling effect, decentralizing them and creating a dynamic of data-driven experimentation and creative destruction where little has existed in recent decades.

As the Information Age matures, the Installation Period of the next global wave of innovation — the Industrial Intelligence Age — is simultaneously underway. 

This wave is fueled by a range of technologies that have been in R&D since the 1970s and 80s finally hitting their Model T moment: widespread commercial viability due to radical improvement in quality and exponential reduction in cost. Seemingly science-fiction technologies across software, hardware, and biotech are making the leap: artificial intelligence, computer vision, gene editing, augmented and virtual reality, nanotechnologies, synthetic biology, etc.

AAEAAQAAAAAAAAsCAAAAJGFlMDdhYTU2LTg5MWMtNDJhZS1iZGFiLWQxNGYwOWIzMmE4OQ

These technologies are hitting the more industrial fields first, because those sectors have the largest budgets for capital expenditures and stand to realize huge potential cost savings over the near-and long-term even if the technology remains imperfect. As costs plummet further in future years, like the cost of computers and servers did, more consumer applications will come.

In aerospace, SpaceX has cut the cost of launches by a fraction, opening the floodgates to new aerospace companies leveraging 3D printing, robotics, and nanotechnology to create nanosat networks. In energy, we’re seeing the rise of a distributed (and “smart”) energy grid, breakthroughs in battery technology for grid storage and electric vehicles, nanotechnologies contributing to the rapid reduction in solar panel prices, and the commercialization of advanced new models of nuclear reactors and oil & gas extraction technologies. The transportation sector, already under transformation by the Information Age’s “sharing economy” business model (i.e. Uber and Lyft), is in the final stages of approving autonomous vehicles, plus a wave of bold new experiments like the Hyperloop, several flying car initiatives, and Elon Musk’s latest “Boring Company”.

At the same time, manufacturing is shifting to faster, leaner production of small-batch, hyper-customized products without the need for human operators. And the life sciences are transforming at the hands of genomics breakthroughs (like the cost of gene sequencing and now gene editing), AI that will mine medical records and gene sequences in order to identify patterns then recommend new treatments and custom drug compounds, and robots that handle surgery more safely or that operate off-site laboratories to which scientists dictate their experiments over the cloud.

These technologies will upend the global economy (much like microprocessors and the internet did), albeit not all at once. This macroeconomic structure is not an absolute formula for investors to blindly follow: some technologies within it are on slightly different time cycles. Investors need to match their imaginations with the reality of each technology, and to evaluate each venture within its own specific context. Macroeconomic circumstances shape investment strategy in venture capital but individual investments are microeconomic bets: each is a question of the right team, with the right product, at the right time. The macro environment right now points to enormous upheaval across major industries though, which is the ideal playing field for smart investors and entrepreneurs to thrive in.

As we’ve mapped out our thoughts , we’re curious to hear from you. How do you think about and assess the next decade of tech?

 


 

This piece was coauthored by Eric Peckham.

Reprinted by permission.

About the author: Rayyan Islam

A former Wall Street investment banker, Rayyan Islam provides “edutaining” wisdom to AlleyWatch readers from a youthful-heart-wise-mind perspective. Rayyan’s passion to positively change the world has brought him to become a traveling tech entrepreneur, venture capitalist, Google Glass developer, writer, and co-founder of a Los Angeles-based public relations firm. When he’s not consulting start-ups or watching Dallas sports, the young executive and fashion connoisseur cooks, reads and partakes in adventure sports with friends.

No comments yet.

Leave a comment

Comment form

All fields marked (*) are required

© 2017 LA TechWatch All Rights Reserved
LEGAL· PRIVACY POLICY· TERMS OF USE

You are seconds away from signing up for the hottest list in LA Tech!

Don't miss any of the stories shaping entrepreneurship. Sign up today.