A little over seven years ago, Marc Andreessen, the venture capitalist, famously said that software was eating the world.
Marc meant by that statement was technology, and in particular, software was replacing traditional products and jobs, from typewriters to slide rules and telephone, exchange clerks.
Andreessen foresaw just how much digital technology would impact the world of machines and hardware. However, it one aspect fundamentally wrong. He imagined that the digital revolution would stop once all manufacturers were using CAD design programs. Of course, this has not happened, and instead, you could say we have returned to the cottage industries of our ancient industrial past, but with a new digital overlay.
The Change Is Being Driven By Tech Companies
Startup tech companies are leading the charge with innovation and developing products for the real world. However, it’s been software, not the hardware, that’s been driving change.
For example, the smart-watch manufacturer Pebble was a Kickstarter crowdfunded startup and sold more than two million smartwatches at its peak, but now they’re no longer in business.
Where did Pebble go wrong? Its focus was on hardware, not software, and they found out hardware is expensive. Pebble could have sold at their peak for $750 million but held on and later had to accept an offer by FitBit for around $40 million. FitBit also suffered a buyout with Google gobbling it up in 2019 for $2.1 billion.
The tech giants acquire proven startups, but it’s not just in the tech sector. Other sectors suffer a similar fate with the smaller players selling out – usually when the price is right.
It’s Easier To Set Up In Manufacturing
Historically, if you wanted to start up a manufacturing company, you had to spend a lot of money on capital. If you wanted to set up a food business, you had to buy a conveyor, hopper, industrial over and membrane filter press, for instance. According to the Harvard Business Review, conditions for entrepreneurs are easier. Mark Hatch, the founder of Tech Shop, says that companies don’t need to buy their own custom-built factories to get their products off the ground anymore. Instead, they can simply rent space from larger businesses and sometimes use their tools for free.
Thus, the risks involved in manufacturing entrepreneurship are falling. Founders have access to capital, tools and support networks that simply didn’t exist five or ten years ago.
Lucky businesses that have the ability to inspire their customer base can crowdsource the capital they need to set up their operations. This was something that simply wasn’t possible in the past, and as we know, money makes the world go around. Without even the best idea, I will never see the light of day commercially.
Another major bonus for the industry has been the number of open source products and technologies. Companies no longer have to pay thousands of dollars for proprietary software if they don’t want to. Instead, they can choose from among the multitude of free, community-generated alternatives. And finally, cities like Miami and Austin in Texas have well-developed support networks, comprising incubators and “accelerators.”
Startups should follow their dreams and get their products and services into the market. Then, if a larger organisation acquires them later on, the Entrepreneurs can start over with another new venture like industrial robotic arms.