“What’s hot?” If you work in corporate innovation, you get asked this question all the time. “What’s hot, what’s new, what’s changing?” The answers inform partnerships, investments, even strategy and acquisitions. Everyone – whether bosses, C-level executives or others across your company – all want to know.
The answer? Maybe a great demo you saw last week or a trend you heard from meeting a venture capital investor who is pushing a portfolio company. It is anecdote stacked on anecdote. But the plural of anecdote is not data.
Data? you ask. What data? Because we are dealing with private companies, and everyone knows private companies follow a different set of rules. There are barely any financials, sometimes not even a product in place that can be examined to understand whether a team or idea has merit.
So you do your best. Your schedule is a marathon of coffees, lunches and dinners, all intended to meet and evaluate private startups. Perhaps you have some process, but often it devolves into chaos when a hotshot VC demands a meeting with a troubled portfolio company, or an executive sends you an intro to a brother-in-law with a startup.
The situation becomes more challenging as the pace of innovation accelerates. In some cases, entrepreneurs start companies, launch products and reach millions of users, all without raising capital. The sheer velocity of new company formation is at unprecedented levels. At the other end of the spectrum, “unicorns” emerge with multibillion-dollar valuations, but face limited scrutiny.
These private companies could be the partner or acquisition of the future. Or a career-ending disaster, if you make the wrong call.
Your job has never been more important. Your job has also never been more difficult. While the market spins like a tornado, internally you face other changes. Your executives – whether chief technology officer, chief innovation officer, chief marketing officer, chief digital officer and especially your CEO – demand a point of view, a methodology and, where possible, data.
But your process is manual, unstructured and random. You can barely keep up, let alone have a strategic perspective.
This situation, however, is deeply ironic. The very software and technology managing your supply chain, marketing and IT, creating untold billions in efficiencies, are absent from your innovation process. Big data, analytics and machine learning – all these approaches can be harnessed to provide a structured, thorough and real-time view on startups and new technologies.
Our modern world has evolved to the point where data on startups has expanded dramatically – not just a founder’s biography, but more interesting indicators of talent, like contributions to open-source libraries, publications to academic databases, patent filings and millions of other sources. Other data sets on startup health exist, such as app store rankings, marketplace metrics and countless others that provide opportunities to assess marketplace traction.
What I have described sounds possible but also incredibly technical and computationally expensive. The engineering requirements, the unstructured nature of data, and the cost make this idea borderline impossible.
But not improbable. We are SignalFire, a strategic advisory firm built on a technology platform tracking and analysing the startup ecosystem. Our team of experienced investors and advisers combine rigorous analytics with this platform to understand the macro and micro-trends within the innovation economy. Our technology incorporates the most sophisticated techniques in big data and machine learning to provide rigour and efficiency to what currently is a reactive and uninformed approach. Understand how sectors are evolving, which ones are sustaining, or fading, where clusters of strong teams join or leave.
Software keeps eating the world. The next course – your technology strategy.