Why our future is in the hands of innovation driven entrepreneurs

A data & AI driven world

There’s no doubt about it, we’re entering a new era driven by data and artificial intelligence.

History has taught us many things of fast change and revolutionary periods:

• Scientific and technological progress is inevitable, but the same doesn’t always apply to social progress.
• People tend to react negatively (usually violently) when they perceive change as a threat to their lifestyle.
• Conservative governments trying to slow change and shun progress have proven disastrous for their country’s economy and citizens.

When the question isn’t if, but when most jobs are going to be automated, replacing humans by AI, there’s a big argument to be made of this being the biggest challenge societies and economies have ever faced.

It’s true, many new jobs will emerge from the same tech companies that will replace some of the lost jobs in the transition.

It’s also true that the cost of living will be much lower, as efficiency will allow companies to sell at lower prices while maintaining healthy margins.

But this, in addition to the rapid growing world population, can’t deny that a large percentage of the population won’t be able earn a living by working.

This is going to lead to the growth and development of the economy around a universal currency everyone has: data.

The dichotomy

Since data is usually a heavily regulated issue, governments are going to have to choose between two options:

• Do nothing, or even worse, try to stop the emergence of the data economy.

This will lead to serious conflicts that could end up in chaos and violent manifestations, especially where citizens have easy access to weapons.

• Make the necessary adjustments in regulation to favor the development of the data economy, and work together with innovation driven tech companies to make the transition as fast and smooth as possible.

This is obviously the only viable option for long term stability and success.

Even when taking the right path, this doesn’t change the fact that the data economy can’t be developed in countries where there aren’t enough innovation driven startups.

This is the main reason, along with these companies making an ever increasing portion of the economy, countries have to make everything possible to attract and provide the right environment for truly innovative tech startups to grow.

The issue is, most countries are currently ignoring and neglecting innovation driven startups, and most important, making it difficult (or near impossible) for most entrepreneurs and highly talented people to have the opportunity to develop their potential, and build the future we all need.

Death by isolation

There’s no greater danger for a country’s future than to pursue isolation and stablish barriers to ‘protect’ it’s economy and society.

Obviously, the smaller the population and economic size, the faster the nasty consequences of isolation will take place, but no country is safe in isolation.

• First example:

China is well known for having an extremely difficult entry barrier for foreign companies, being the surrender of Uber to Didi Chuxing the latest example.

The problem of having a government that gives its companies an unfair advantage, is that it’s a double-edged sword strategy, it leaves its companies less prepared to grow and compete globally, outside of their home market.

• Second example:

40% of the largest U.S. companies (like Google, Intel, Pfizer, Proctor & Gamble, Ebay…) where founded by either immigrants or their children.

51% of current U.S. ‘unicorns’ ($1+ billion startups) are founded by immigrants. Of these, immigrants make up over 70% of key management or product development positions.

Despite these statistics, the number of H-1B visas continues to be ridiculously low, and the number of barriers, the long time it takes, and the burden that’s put into foreign entrepreneurs looking to stablish themselves in the U.S to build their startups, are just insane for the few that can do it, and practically impossible for most entrepreneurs in the world.

These practices from both examples could be seen as positive (or even ‘necessary’) by many people in the short term, but the truth is they will prove to be disastrous in the long term.

USA and China have huge internal markets, there’s no doubt about that, but the world is simply much bigger.

The necessary changes

Every country has a different starting point, but these are the most basic improvements they need to implement to attract and provide the necessary environment for innovative and disruptive companies to grow:

• Extraordinary talent. The most difficult yet critical action that will contribute to future success: finding and identifying the most talented individuals to give them the opportunity to develop their potential. This can only be achieved with the right public-private collaboration.
• Business ready. Anything longer than 48h to incorporate, open bank account… and a cost above $150 it’s not acceptable.
• Starting tax relieve. A new business, especially a tech startup, shouldn’t be ripped off with taxes from the first day. Taxes should be delayed for at least 12–24 months or until profitability is reached.
• Hiring and firing. Recruiting talent and laying off bad matches should be fast, easy and cost-effective. It can’t be a bureaucratic nightmare and a deadly cost for startups.
• Foreign entrepreneurs. Great entrepreneurs are everywhere, and it’s not their fault being born in the wrong place to build and develop live-changing businesses. Give them an opportunity, and the whole society and economy will thank you later.
• R&D Funding. Government should provide funding for huge potential radical innovative projects considered too risky by private investors.
• Immigration. Companies must be able to hire the talent they need from everywhere in the world, with no restrictions.
• Bureaucracy. It should be reduced to the absolute minimum, processes should be mobile optimized, and not require legal/accountancy assistance.
• Specific legislation. Startups are an entirely different animal to traditional businesses, and should be given a specific legal framework that fits their needs and everyday reality.
• Pollution. Intelligent people aren’t going to live and have children in places so contaminated that just breathing is a serious health threat.
• Location. An effort should be put in concentrating talent and innovative startups in the nicest city possible, with the best weather and natural features available. Examples include Barcelona in Europe, and Los Angeles in USA.

Specific challenges

• Big economies with huge populations (EU, USA, China, India).

These economies have the biggest short term advantage, as they have huge pools of untapped talent readily available.

But it happens to also be their biggest long term problem, as a huge population significantly increases the necessity of more tech companies to sustain their economy and society in the future.

• Smaller countries.

Here the situation is the opposite, so the main focus should be shifted to:

First, make it as easy, fast, affordable and attractive as possible for talented foreigners to move to the country, especially innovation driven entrepreneurs.

The smaller the size of the population, the more effort should be put on facilitating strategic immigration for the country.

Second, open up its economy as much as possible with new and improved trade deals with other economies.

It could cause some problems short term, but it’s the only viable option long term.

Race starters

One proof of what’s been said is there are already some countries looking to take the lead.

Switzerland and South Korea, for example, are implementing programs that include small amounts of equity-free cash (usually between $30–50k), to attract foreign tech startups.

Other perks commonly included in these programs are free office space in key startups hubs, direct contact with local big corporations, and a dedicated government office to take care of all business and travel bureaucracy.

Of course those ridiculous low amounts of money and perks aren’t enough to lure startups that aren’t already especially interested in their markets, but it’s somewhat of a good starting point.

Closing

Innovation driven entrepreneurs and incredible talented people are born everywhere in the world.

They’re looking for the opportunity to develop their skills, create innovative solutions to the worlds greatest challenges, and building the companies that are going to drive the future of the world.

What countries will move faster and implement the necessary changes to make sure they find and attract the most talented entrepreneurs?

How many of them will secure enough disruptive innovative startups to be able to guarantee the future well-being of their citizens?

Only time will tell.

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Adrià Hernández