Startup Innovations in Complicated Times

Startup Innovations in Complicated Times: Necessity and Opportunity

Let’s put things bluntly: to survive the economic crisis, recession, and, quite possibly, depression ‘caused by our struggle to deal with COVID-19, businesses will have to do lots of heavy lifting. It’s quite a good time to remind ourselves: this is not the first instance in history, where the world economy faces a crisis. And while this pandemic might be the most impactful of them all - according to some of McKinsey’s estimates, the COVID-19’s consequences for the economy could exceed every crisis since World War II - we still can draw few parallels with crises, shortages, and other challenges humanity has dealt with in the past. In some of these, they were a great field for innovation.

Good ideas survive anything: Dropbox

For instance, in case of Dropbox, the development of technologies have reached the point where it was possible to offer people to “replace their hard drive” with a cloud-based storage, and the idea of Dropbox was born not related to the financial crisis: the founder forgot his hard drive on the way to a meeting and thought he Never Wants To Face The Issue Again. But - Dropbox totally survived the recession of ‘08-09, gained its first customers in that crisis, and continues pushing that innovative (technology meets demand in a simplistic way) idea and receiving traction right now. Because the idea was good, and it was what a lot of people and companies wanted.

Apart from nice functionality, Dropbox had (and has), frankly, amazing, easy-to-understand and easy-to-register marketing and platform’s UX, it was platform-agnostic, and the company encouraged to connect the service to social media, which, again, was innovative and deserved an A.

New customers/market realities launch new types of products: Fintech industry

In terms of the recession of the ‘08-09s, another good example is the loud appearance of fintech that seems good and familiar to us today. Fintech companies of those times used circumstances that already were in place. New kind of customer was "born" from the iPhone launch, and the financial crisis added to the anger and mistrust for the traditional financial system. Fintech companies managed to fit into the gap: become organizations people would trust with their finances and, simultaneously, focus on the use of new technologies and on the ways they can serve customers. That caused a surge of interest, both among users and investors.

Netflix: business/monetization models that fit into "minds in crisis" also stay

The innovation behind Netflix is subscription-based streaming (or renting) business - and its affordability in comparison to buying DVDs or renting them elsewhere. Movie industry made it quite well through the Great Depression, and in the 08-09 recession, the important thing was to give customers more flexibility, availability, and very, very low costs. Even in the increased competition later (Hulu, Amazon), the company managed to handle themselves well: its digital on-demand service was amazingly constructed from the UX point, personalization was in place, etc.

SARS epidemic as inspiration for JD.com and other e-commerce rapid development

Another good example of businesses, inspired to react to the new demand for a change, occurred because of a public health emergency. It's the e-commerce field in China. The SARS (Severe acute respiratory syndrome) outbreak in 2002-04 that happened in the country is often referred to as a point where “e-commerce has become a thing” in China which is, frankly, a bit of a lie. Platforms like Alibaba and eBay were already up and running, so let’s not exaggerate. But the outbreak certainly was a big inspiration for the industry to push through and grow.

In 2004, Richard Liu founded jdlaser.com that was an “ancestor” for JD.com - one of the largest e-commerce platforms in China (we’ve written about it in our article most funded healthcare startups of 2019). He lost the job to SARS outbreak and was inspired by SARS, because delivery in epidemics was crucial. Obviously, his company and its further extensions survived through the outbreak. The e-commerce industry, while being absolutely convinced - by SARS outbreak - that there is a large demand in the services like that, bloomed only in the 2015 year, with the rising popularity of WeChat Pay.

Innovation for crises: Drone Hopper & One Concern

There is a whole range of inventions and products that can be either designed specifically to tackle disasters - or re-adjusted to do so. For instance, drone delivery simultaneously occurs both in the USA and in the Netherlands. The latter used the invention to deliver defibrillators and provide live streams for paramedics, the former case demonstrated drones’ ability to transport taco. Medical drones are used, eventually, to safely transport lab samples and to deliver food, water, and first aid to dangerous areas where people need help (as it was done, for instance, in Rwanda.)

Some companies, like Drone Hopper, design special heavy drones. They are used for firefighting on large scales, can handle up to 300 litres of water and operate 24/7. Pablo Flores Peña, the founder of the startup, got the idea of Drone Hoppers after watching wildfires destroy enormous areas of land in Spain.

Another good example - AI-powered algorithms are a decent technology to implement everywhere where real-time monitoring is necessary. Floods and wildfires are situations that just ask for tools like that. They can help emergency teams to a) find areas where to focus their efforts, b) find people who need them the most. One such tool is called One Concern, and it was founded by Ahmad Vani who was shocked by the impact the flood had on his native Kashmir: he and his family stayed without food and water for a week. Now, his efforts expanded beyond floods - and he builds solutions that will, sooner or later, aim to help people deal with the consequences of climate change.

Inventions that were developed after the disaster are what should have been there in the first place, and they are built to react faster and with more efficiency. Building such products within the crisis, while being quite challenging, is often rewarding.

Is the crisis of 2020 an opportunity?

Basically, yes.

If you want to provide tech aid in the fight against COVID-19 or shortages (like food shortage) and health issues (like mental health crisis), keep in mind that your tech solution development will be (or is) literally the easiest part of the process. Then, you will have to show it to public and to healthcare specialists and, quite possibly, to governments, to communities and social organizations, so even if you develop a simple chatbot, telemedicine service, or real-time monitoring tool, it is a good idea to already talk about their application in the community.

We love a good success story. Right now, lots of media talk about technologies that help fight the outbreak (we are talking about them, too, because it is great to see tech and healthcare finally actively collaborate), but remember that these technologies often were not developed overnight - or during the last week. The pandemic provided a field for these businesses to test these products. We really advise you to not wait for the immediate success of your COVID-related solutions. Focus on a core product, its value, UX, and performance - and on getting in touch with communities. Partner with people who're doing things you can't do right now, both in your community and outside of it - collaboration and diversity will help you address challenges of lockdown and other consequences of a pandemic for different people with more precision.

In humanitarian crises, technology is about humility and pragmatism, said Francheska Ferrario in her article on how tech can aid Ebola, and that applies in today’s situation as well.

Few additional recommendations: it is very easy to tempt ourselves into using shortcuts. For instance, you know that entertainment is on its peak (because self-isolation), so you planned to release a player. Yet, numbers, for instance, show that Spotify and Apple Music are less popular in quarantine than before.

Secondly, it's good to be prepared for a numb reception of your work. Even if investors appreciate your product, the number of funds might occur disappointingly. Prepare for that beforehand. Innovations are possible in crisis, but don't fall into survivor's bias- the possibility to fail is still very big.

In addition to companies who emerged from the 09-08 recession, companies like Microsoft, IBM, and General Electrics also begin their history from one, just thirty years earlier. Recessions are sometimes filters for old startups, but they often help new startups bloom. There was, for instance, almost 150% growth in student startups after the 08-09 crisis up till the 2015 year. Surely, not all of them survived, - but startups pretty often die, all pandemics and disasters notwithstanding. So, a crisis is certainly not a sign to stop innovating.

In fact, marketing solutions like Hubspot and others survived the recession, partially, because they helped larger businesses innovate - which was the only way to stay alive in those times. Consider this: perhaps your startups can aid other businesses not die. Soon, they will be ready for you. What you need to do is to demonstrate that value with the maximum clarity you can achieve.

This crisis also offers lots of opportunities. For instance, you’d thought virtual reality devices (VR) would be popular only for gaming, as people are staying at home and finally have time to play with their new tech, but no: company AltspaceVR, for instance, receives lots of requests for helping host conferences. No wonder, if you’d remember how much public events were cancelled since the beginning of the pandemic. Look for these opportunities everywhere.

Right now, COVID-19 is the centre of attention because it moved through countries and continents, like a giant, and even in this, a most recent case, a lot of people start taking it seriously only when the sickness knocks on their door. It’s always a crisis, or war, or lack of resources somewhere - we just don’t take it seriously enough until it affects us, specifically. It’s a good idea to keep that in mind when thinking about innovations today: in the middle of the COVID-19 outbreak, all issues that flickered in the corner of your eye before multiplied.

Consider this, as well: during all these times we were telling you it is a good idea to launch startups when they are addressing specific issues in specific communities. There are lots of such issues walking around.


Alex Koshykov
Alex Koshykov (COO) with more than 10 years of experience in product and project management, passionate about startups and building an ecosystem for them to succeed.

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