By now many of you have probably read this article in Business Insider where Fred Wilson talks about What Has Changed [in tech]. I’ve personally felt the slowdown coming for the past several months. My litmus test for the level of activity in the startup scene is based on how many emails from potential clients I get. There’s been a gradual slowdown since at least the summer. The article and the direction of tech in general I think points to many things, which many people in the User Experience community and those of us who build businesses have been saying for awhile. Specifically about the importance of business models and solving real problems that users or customers have. The big wild card in tech though, are those outliers that don’t do this. That build a company with no business model, or a risky business model – or betting on one that will evolve as the product evolves. As someone who really tries to drive home the importance of business models, this is also what makes tech so interesting and frankly, such a game. Almost everything in life is a bet and tech is no exception. The current climate and what we’ve learned over the past few years will no doubt change the way we think about digital products and building companies. Here are some quick thoughts on predictions:
A Shift Towards Business Software
This comes as no surprise, there is still a lot of opportunity in business enterprise software. This is one sector that is considerably behind the curve in adopting new technologies and great user experiences. The “buy vs. build” debate will continue to lean in the direction of buy because internal, corporate IT cannot compete with what small teams with a focus on modern technology can do. The bottom up purchasing power of teams within corporations lends itself well to more money being spent here.
Less Investment in Social
On a related topic, we’re seeing many social services fall flat on their faces. Most recently Color who arguably never got a real product to market with what was it…40 million dollars in investment money? Even the “Kings of Tech” like Facebook and Foursquare are being challenged. While I guess social is considered “sexy” I’ve never really seen the appeal – it’s such a tough nut to crack. Even if you can do it, where’s the money?
Quicker Deaths to Slow Growing Companies
As we see less Series B funding there will much more of an emphasis to become profitable and walk on your own two feet as a company before getting a second round of funding. If companies cannot do this, we’ll see them dissolving quicker. The upside to this is that hopefully it will make us all smarter in what we build, the downside is with less money going into riskier ideas – we may see less of those outliers come to fruition.
More Emphasis on Marketing & Sales
The market is saturated in almost every aspect. It’s not enough anymore to have product market fit, which used to be the one thing that almost guaranteed your success. Anyone who’s ever built something or started a company knows how hard it is to get customers to use it, not just once but repeatedly. Assuming you can get product market fit, companies will have to think much more about how they will get people in the front door.
What this all means is much more thought about who the customer really is and what they need and what they’re willing to pay for. User Experience and the role it plays in building businesses has never been so important than it is now, but companies are still slow to adopt. It’s not just about technology and user acquisition anymore. Product teams that really want to be successful need people who are trained to react to the market and customers extremely quickly and who can lead teams in this process. It’s not enough to be just a leader, or just a great CEO. We need to change the way we think and the speed at which we move forward.