The end of free money

Few things have been such an important catalyst for entrepreneurs and startups over the last 15 years as the availability of basically free money. Not only has it been associated with low costs of borrowing. It has also provided investors with a higher appetite for risk as they have lacked other more ‘safe’ alternatives for placing their abundance of cheap capital. 

But now all of that is changing. Central banks led by the US Federal Reserve are looking to increase interest rates in order to curb rising inflation, and with that entire generations of primarily young people will need to learn and come to terms with what interest rates actually mean and how they impact the financial choices they can make for both themselves and for their businesses.

One of the more interesting parts of this major shift of fortunes (pardon me) is to get a sense of just how much of the economy is essentially built on the premise of access to cheap capital. How many startups and service companies do we have that would struggle or perhaps not even exist, if they didn’t have access to cheap financing? I don’t think anyone really has a clue. 

The rising interest rates create two major challenges and one major opportunity, as I see it:

The first challenge is the viability of various businesses and startups, which is likely going to be put to the test. If free money is no longer an option, does it make sense to keep the same burn to grow user/customer base? That’s just one question. And what will happen once you come to the conclusion that it doesn’t, and you start raising prices, and customers start walking away? Continue ad nauseam. It is a whole new both strategic and operational reality, many of these companies are looking into to. 

Following on as a close second is what the added cost of debt is going to do to founders and executive teams. Especially for the ones who have never experienced higher interest rates before, getting to know them and their impact will likely take some time and require a great deal of painful acceptance. Can that be gained without running the risk of making less thought-through decisions out of sheer panic? We humans seldom make the best decisions, when we feel we have our backs against the wall. 

Overall the declining access to cheap funding is going to be a ‘tour de force’ in the ability to adapt, which my gutfeel is many will struggle with – simply because they don’t have the tools or the experience to deal with it. 

From an investor point of view, it will also be a reckoning but at the same time also an opportunity to once again be less persuaded by the narrative and look more at the business fundamentals when making decisions on where to make investments; i.e. is there any indication of a viable business model in its own right or not? Maybe, in all fairness, it is as much a hope as its a gutfeel, as I have always been an advocate for businesses proving their fundamental viability without it requiring a 5 year plan. But we will see. 

Finally, there is also opportunity in the not so great news. Opportunities to innovate. Because God knows there are going to be a lot of people who will require help and various sorts of tools to navigate safely in the new reality. Those who can solve that and make people and businesses feel better of or safer despite the new realities on the ground, will be able to make it big. 

As the old saying goes, it is a terrible shame to let a good crisis go to waste. So let’s focus our efforts on how we learn to navigate and prosper in a world, where interest rates are once again a thing to be reckoned with. 

(Photo by Jason Leung on Unsplash)

From fad to phenomenon

Personally, I am no big believer in all the talk about the ‘metaverse’; the idea that AR, VR, crypto, NFTs and other good stuff is going to be woven together and present a whole new kind of digital layer to our physical existence.

But I am reasonable enough to agree that when enough big players with big, big muscles are talking about the same thing – or at the very least the same ballpark of a thing – the likelihood of it coming to fruition grows significantly.

Simply by applying brute force, so to say.

The way I see trends, I don’t see them as a force of nature. I see them as entirely man made. They are what happens when enough powerful people agree to move into the same general direction and drag all the rest of us along.

Thus a powerful tool for spotting trends is listening in on what people talk about and what the powerful people with ability and money actually does. What they do doesn’t necessarily have to make a lot of logical sense from a qualitative point-of-view – it’s all about the quantity here.

Does that mean that big trends will work for the better for all of us? Not necessarily. It just means that when there is money to be made from something happening and arguing its a positive thing for the greater good, it will happen. No matter if it is, indeed, good or bad.

That’s basically how you can turn a potential fad into a phenomenon.

(Photo by Richard Horvath on Unsplash)

The cue from Disney+

Disney+ has gotten a really strong foothold in my household, since it launched in September last year.

Where Netflix is just a plethora of content with hits and misses, the basic premise for firing up the Disney+ app is that when you do so you’re immediately immersed into a content universe, where the production value is just super high.

It rarely disappoints. The experience is key.

There is a lesson here for the rest of us;

Going forward I am not sure the winning argument will be the abundance of choice, the lazy-ness of ‘The Long Tail’.

Rather I think it will be about the immersiveness of the experience. That we feel well taken care off. That someone has our backs and goes the extra mile to make sure that we get the best of the best.

Storytelling will play a big part of this. Storytelling that can – if you look at it with strict content lenses – move into franchises that can then again be expanded and added onto almost endlessly for the foreseeable future.

Strong, open ended narratives, where we feel at ease and at home.

I think part of what will also be driving this is a need to go more slow with some things. The rapid pace of change has been killing us for a long time, but the pandemic has shown us that a great fallback option to pick ourselves up and find our feet is just going slow for a while.

Just. Going. Slow.

Immersive experiences with strong open ended narratives will help us sit back, take a break, feel at ease and give us the sense that we’re not just pawns in somebody else’s chess game but actually in control of the game ourselves.

Businesses that can operate natively in this space and cater to that need for a greater experience will prosper well.

(Photo: Pixabay.com)

The WFH problem

The other day at work we were discussing a whole range of potential themes to dig more into, as the fall approaches, and we’re taking on exploring new, interesting ideas.

One of the themes, we of course quickly came to discuss is “Work From Home” (WFH) as a general trend. I don’t think I need to explain why:

WFH has become a necessity due to Covid-19, and we’re already seeing how different sectors are catching on. As an example real estate agents in Denmark has already started touting the availability of “the home office” as a cool feature of listed properties.

So a lot of things are being done, and people are looking for business opportunities in this New Normal. As they should.

However, I can’t escape the feeling that we have got this the wrong way – at least from a stand point of maintaining our ability to be innovative and creative about things (something fx the Danes have always prided themselves in).

What do I mean?

An awful lot of ‘success stories’ on WFH that I hear have to do with jobs, where you can tick boxes, i.e. task or to do-lists. People find it a breeze to be able to sit at home with little or no distractions and just get stuff done.

I get it.

But what we don’t hear so much about are the proactive, creative processes. Those that are necessary for innovation and creativity to happen and for those task lists to be generated in the first place.

Why?

Because they are infinitely harder to do remote. They crave for people coming together and finding new ways of doing things; of being in the moment, be open and just make a collective go at it.

“But there are a lot of people doing workshops remotely and being quite efficient about it”, you might argue.

Perhaps.

But still: Every article I see about how to fx do brainstorms remotely are ultimately guides into turning the creative process into a…manageable to do-list. And then we’re right back where we started.

I understand a lot of people will say and feel they have good experiences being efficient about creative processes and put real innovation on a formula. I just beg to differ.

I think it’s next to impossible for 99 out of 100 people to remotely ‘plan’ for creative breakthroughs that ultimately end up unlocking entirely new and valuable revenue streams.

I think it takes getting together, deploying all your human senses, be in the moment, let your mind wander, pick up on the little signals in the room etc.

Anyway, that’s just me and how I feel.

But what I am certain off is that we are looking at WFH through the wrong lens; that we’re (again) confusing short term results for long term sustainability.

(Photo: Pixabay.com)

Nothing is that far-fetched

The other day I was revisiting our list of potential ideas to explore further. It is a list we keep in our Studio team to jot down ideas and problems for potential future exploration, and – who knows – a new, exciting startup.

As I went through the list I was reminded of some of the thoughts that went through my mind, when I made the original list and how some of them at the time seemed very far-fetched. A very good example of this is this one:

Virtual vacation.

When I wrote it down in autumn 2019 it seemed pretty sci-fi. Now, nobody can travel, and tourist destinations are equipping locals with strap-on cameras to assist people in remote exploration of now in-accessible places. And it is being louded as breakthrough innovation.

This just goes to show that what may seem far-fetched today may be totally relevant and a real opportunity tomorrow. Therefore, don’t ever hold yourself back from having those borderline crazy ideas. You may in fact be on to the next big thing.

(Photo: Pixabay.com)

Privacy is the new luxury

Forget all the bling bling of this world. The newest luxury item – and a valuable one – is going to be privacy. Just ask Jeff Bezos.

With face recognition being unleashed in the public space and all the continued discussion around tracking of people and our data, there is going to be huge potential in a new market that helps give consumers – well off consumers – control of their own privacy back.

When that happens it will likely be one of the most defining moments for truly separating people in the ‘have’ and ‘have not’ buckets in societies rampant on tracking.

(Photo: Pixabay.com)