Having celebrated the Chinese New Year last week, I’ve been reflecting on the state of the country’s booming tech industry. According to a Wall Street Journal article last month, the amount of fresh capital invested in Chinese startup and take-private deals reached US$60bn in 2015, a significant rise from US$14bn the year before. Uber-rival Didi Kuaidi saw its valuation shoot up from $6bn to $16bn between February and September, securing a strong return for investors – a picture that’s recognisable across a whole host of tech businesses in the region.
The future looks less rosy, however, with China’s recent stock market woes holding back IPO activity, while high valuations and the cash-burn rate of startups has caused later stage investors to pause for thought. Instead, attention is turning to potential mergers and consolidation – just as we saw when Didi Kuaidi was itself created by the merger of Tencent’s Didi Dache and Alibaba’s Kuaidi Dache a year ago today.
Being at the forefront of the consumer technology sector, The MBS Group has been lucky enough to hold the hands of many talented tech entrepreneurs through the pivotal points of their business’s growth – and their own personal development. We even incubated Signal Media, a market intelligence platform startup which has made big waves in a multi-billion dollar market, helping us to really understand the growing pains for ourselves. The reality, of course, is that no industry is safe. If you’re not thinking how to disrupt your own business, you can be sure somebody else is.
Working as a strategic partner with our clients, we are fortunate to be able to meet some of the most inspirational leaders and innovators changing the industries we work in. As the face of retail and other core sectors has changed beyond recognition, attention is turning more and more to traditional service sectors where such drastic change was simply not on the cards a decade ago. The new startups ripping up the rule books across real estate, medicine and banking, for example, are engaging with consumers – particularly younger generations – by breaking down traditional barriers and providing quicker, more seamless processes.
Companies such as Auctionata and HouseSimple have entered their respective markets with a bang, providing disruptive solutions to what we’ve always thought of as physical services in the past.
“It isn’t a question of consumers adapting; our consumer get this way of doing things better – the behaviour is there. We have the tools and all the data behind it – it is faster and more efficient. We can sell more, faster.”
⏤ Sophie and Alex Gosling – Co-founders, HouseSimple
However, a deeper look into tech companies that offer the same services as more traditional ones shows that the relationship between traditional and innovative doesn’t necessarily need to be a competitive one. The NHS recently partnered with video consultation provider Push Doctor to bring the technology offered by the startup to doctors who work within the public health service. Its Push NHS offering enables NHS general practitioners to expand their practices, increases patient choice and increases value for both time and money. The benefit to consumers is obvious, with technology allowing for easier and quicker access to the service, while the decades of experience from the NHS provides a greater level of depth and experience to the practice.
As the tech and startup sector continue to grow and show no signs of stopping, larger and more established companies must reconsider not only their own digital initiatives, but how they can reconcile the competition offered by this newer sector. Just as many larger and smaller companies within the same industries have been able to benefit from each other mutually, so larger corporations must also continue to build on their existing strengths to innovate as they cross the virtual line to the tech sector. New services and products can add variety to a larger portfolio, while a smaller and newer company can benefit from the depth of knowledge and marketing base that a larger corporation might already have.
Consumers are the ones who get to vote which types of companies provide the best services and products for their time and money. But with the average attention span of an adult limited to 8 seconds, which ones will win out? Let me know what you think, and have a great weekend.