Why will the next successful Startup out of the COVID-19 era be AI-First?

This post was originally published by Sanjit Singh Dang, PhD, Contributor at Forbes (Innovation)

The impact of the COVID-19-driven crisis is far more significant than any other crisis in recent history. Besides the health impact, it is fundamentally changing the way human beings interact and conduct business. The businesses that are aligned with the new norm have seen an economic acceleration and vice-versa. Hence, COVID-19’s impact on the economy has been bimodal. On the one hand, some sectors like the small-and-medium business sector have taken a big hit, while others like the technology sector are benefiting from the adoption of Cloud, Automation, and Productivity enhancement tools.

Analyzing the past inflection points such as recent economic recessions or depressions, we notice that many famous companies emerged during these challenging times. Uber (2009), WhatsApp (2009), AirBnB (2007), MailChimp (2001), EA (1982), Burger King (1954), and Hewlett-Packard (1939) are some of the famous examples in this regard. Along the same lines, the coronavirus pandemic is acting as a rare inflection point in history to create an unprecedented opportunity to foster entrepreneurship. In fact, entrepreneurs are jumping on the opportunity to start new businesses during the pandemic. Using the data from the Census Bureau, Peterson Institute for International Economics released a report saying that startup business activity grew by 24 percent in the United States last year. Business startups grew from 3.5 million in 2019 to 4.4 million in 2020 in the United States. This contrasts to the declining rate of business formation prevalent in the United States for the last few decades. This boom in entrepreneurship is at a national level, not just in hotspots like Silicon Valley. The definition of entrepreneurship is broader than just technology startups that have mushroomed in Silicon Valley in the past decade. Like the United States, the number of new businesses has increased in Chile, Turkey, and the United Kingdom.

Let’s analyze the catalysts behind such a boom in entrepreneurship during the current pandemic. One likely factor is the massive support from the US Federal and State Governments for new business creation. The other factor can be the availability of highly skilled human resources. For a business to flourish, you need capable people who also have patience, persistence, and perseverance. Amid the coronavirus crisis, the unemployment rate reached an unprecedented level of 14.8% in April 2020 in the US – the highest since data collection started in 1948. This may be acting as a positive contributing factor for building a new business during the pandemic. As big companies lay off their employees, or existing businesses are forced to shut down, it brings top and seasoned talent into the market, available for grab by new companies. A deeper aspect of human capital available in such times is that a person who practices a business idea in a hard economic environment is a true entrepreneur at heart. He or she is likely to be highly dogmatic and has a deeper understanding of entrepreneurship traits than someone who starts a business during an economic boom. So, it is worth arguing that entrepreneurs who create startups during a pandemic are the best version of entrepreneurs. In fact, for some entrepreneurs, starting a new business may be the only way to survive. So, they move mountains to make the business work.

In addition to human capital, another key ingredient for entrepreneurial success is access to the right market. COVID-19 crisis has opened up doors to new market opportunities and has stimulated big changes in the existing markets. While this has created destruction on one side, it has resulted in the creation or upsizing of markets. Such new markets are ready to adopt solutions, hence providing the much-needed product-market fit to the solutions created by entrepreneurs.

So what kind of company can we expect in terms of the next big thing emerging out of this pandemic? Will it be another Amazon or Google, or should we brace ourselves for something entirely new? Perhaps a new form of digital and Artificial Intelligence(AI)-based disruption? Time will have the final verdict. But since automation and digitization have been two of the top trends in the COVID-19 era, we can assume that the next-big-thing being churned out will leverage these as pillars. The core enabling technologies for such a company can be Cloud and AI. In fact, such a company will likely be AI-first from the start to embed AI in virtually every aspect of the product or the service. From monitoring fitness to self-driving cars and shopping at retail locations, the applications of AI-first could be immense and unprecedented. So, let’s fasten our seatbelts and watch the rise of a new AI giant that will hopefully uplift a generation.

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This post was originally published by Sanjit Singh Dang, PhD, Contributor at Forbes (Innovation)

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