Paul Papadimitriou, Intelligencr: “Startups that will shape the future are those who will find a way to stand tall”

A new citizen is born, with emerging values & behaviors, enhanced by emerging technologies. We all heard about The Digital Citizen sometimes not being aware that we might have become one.

How we transact, learn, consume, communicate and evolve is changing at an unprecedented pace. In this emerging industrial revolution, Paul Papadimitriou, Founder & Innovation scout at Intelligencr, examines how digital is transforming us.

He looks at the key signifiers in this crowded space and highlights what is important, what isn’t — and what it all means.

He advises companies on how to leverage the new consumer, most recently for the launch of a mobile ecosystem in China. He sometimes invests in startups that he believes are on the forefront of the revolution.

Paul has given keynote speeches on four continents, it will be his first time in Romania, so don’t miss his speech at How to Web Conference 2014 Future trends & Entrepreneurship track.

How to Web: What are some profound changes brought about by the digital revolution that we’re less aware of, but have a high impact on our lives as digital consumers?

Paul Papadimitriou: I believe the revolution you’re hinting at is much deeper than we tend to observe. The shift is multi-faceted. Technological, generational, societal.

The technological shift towards mobile is an evidence. It is poised to continue at a rapid pace — it’s the race to the next billions, the populations in emerging and frontier countries that haven’t yet access to the internet. Everyone of us becomes a connected node on a massive network, augmented by machines talking to each other.

The generational shift is the undercurrent. Think of it this way, social media was kindergarten, we started to learn communicating in a distributed way. We are now learning how to consume with distributed marketplaces. We will soon learn how distributed networks can change all types of human transactions, from finance to education.

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The societal shift is the byproduct. It’s power shift: the current hierarchical institutions, from government to corporations are in crisis — which explains a lot of clashes we’re seeing, from Uber versus the regulators to the political upheavals seen around the world.

In business model terms, this translates into is a race to efficiency. When you transact on a nodal system, you displace existing middlemen. You give way to new ones, from Amazon to AirBnB. The “sharing economy” model is about leveraging those efficiencies at the margin. It’s very capitalistic, as the term doesn’t imply.

But it’s in societal terms that we’re not fully understanding where this all will lead to. Think of it this way: the hardware is failing, we’re all unsure what the next operating system will be, but only that enhanced by technology, by human invention, it will come distributed.

What do consumers expect tech companies to provide nowadays?

Happiness. I realize that this term is overused, that it’s difficult to define. And that’s it a bit too soft for many to comprehend, especially within traditional companies.

When you follow the car that you’ve ordered on a map via your smartphone, there’s a feeling of satisfaction (or, one of frustration if you see the taxi catering to other clients first, like I did in Rio one day). Expand this on a larger scale, you want to feel empowered. It’s my car, my driver. Happiness through empowerment.

The new consumer understands that making sense of information flows is paramount — communication is information, product is information, capital is information. Understand those flows and you acquire knowledge. Interface those flows and you can change the world.

Tech companies that become those interfaces are empowering us. They make us “happy”, for a fleeting moment (the dot on a map) or for longer (life experiences).

How do different generations of consumers evaluate purchases? Could you provide some examples?

The concept of generations is a bit too strict to display all human variations. Different cultures behave differently. And not everyone in a generation is exactly the same—the newer “generations” are actually more diversified than ever before.

It still remains a good foundational concept to debate, but you have to go beyond it to understand your customer, the one who matters.

First, the consumer leverages the distributed power in every single point of the purchase behavior, from discovery to decision.

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Then, with the vast array of choice a consumer is given, competition is happening at a new level: it’s not only Coke versus Pepsi. It’s a competition of time and attention: I can drink a Coke Zero, or play Angry Birds, or go on Twitter, or browse Amazon for a new camera. Sometimes concurrently, sometimes not.

Thirdly, it all goes very fast. You listen to a song, you “Shazam” it, you click on the Spotify button and it’s in your playlist. The purchase funnel is flattened to the extreme.

It’s not limited to content. Think fast-fashion: a company like TopShop can offer more than 200 new items weekly. It surfaces emerging trends, fastens the supply chain and creates an experience for its customers, augmented by technology (in simple terms: data for the company, lifestyle app for the consumer).

All those are about understanding information flows.

Is it really different for older “generations”? To a certain extent it is. Not because they supposedly are “digital immigrants”, but because of inertia, a habit-forming trait we all share. Consumer technology is becoming so simple to use, do you really think it’s limited to 20 years old? Western societies are aging, there’s a massive opportunity to both empower those generations whilst creating new brand success stories.

What are the governing principles that influence the underlying mechanics of our world, which are now almost fully connected to technology?

We have a tendency to focus on technology because, let’s face it, it truly can seem magical. It’s “sexy”. Human behaviors do not change at the same pace. They actually don’t change much at all—it’s mostly the expression of a human behavior that does. This is why we can read Greek mythology and still understand everything. The context has changed, not us.

We are still driven by hope (and fear), by love (and mortality). We want to belong, we want to make sense of where we’re going.

We have created societies to that extent, but with the distributed networks hierarchies are flattening and the cost of control is rising. Tension arises. Current institutions get into crisis.

The people are becoming empowered, we realize we can solve some of what we had lent to hierarchies—or, at least, we want to give it a shot.

This is what technology is surfacing and liberating: human empowerment. It won’t be all rosy. Technology is still not touching everyone equally. In a world when ideas enhanced by technology is becoming the priciest currency, there’s an evident risk of divide between the haves and haves not.

Which tech branches will be transformed the deepest under the impact of future generations of digital consumers?

Technology is affecting all human activities. The most spectacular impacts will undoubtedly be when the more regulated parts of our societies are touched, from healthcare to finance.

The most interesting question is how education will be transformed. As it is what shapes a society at its core, the effects on such a change will be really fascinating.

But remember, What You Don’t See Is What You Don’t Get. More often than not, it’s not the biggest wave that is powerful, but the undercurrent. It’s how we all define ourselves on distributed networks that might affect everything the most. For example, we might very well only favor transactions with companies that empower us.

How has the way tech companies receive validation changed over the past few years?

Valuations are highly dependent on the market but also how mature the company is.

Broadly speaking then, I see two factors that influence valuations.

First, startups tend to stay private for longer and are raising more capital in the process, not the least influenced by investors who want to capture value during the process.

Secondly, I believe the venture capital structure is changing. The arrival of non-traditional capital, especially from corporate venture capitalists, is of influence. The new type of emerging syndicates like Angel List’s is not without merit either.

The undercurrents are elsewhere though.

The falling price of technologies allows more entrants than ever before. With mobile, you’re always connected, with social, you’re always communicating, with marketplaces, you’re always one click away from buying, everything is always-on-demand at a very low marginal cost. Anyone of you can create a startup and have a shot of rapid growth.

There are huge opportunities and lots of players want to capture it. Valuations reflect that state of the industry.

The uncertainty of tomorrow is the other undercurrent. Society is changing fast, a lot is on the balance. It pushes investors to attempt capturing value today instead of waiting.

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How can tech companies live up to the promises they make to their global audiences? How distrustful or trusting are the new generations in these promises?

Why do you like a brand? You trust it to give you an experience.

As information flows faster so does brand loyalty—that trust can be gone in the blink of an eye.

You can move on, but have usually no full visibility on what happens with the data the brand has collected about you. There’s a delicate balance between convenience (what you willingly share helps you have a better life) and privacy (what you don’t want anyone to know).

We have a harder time defining the latter. Take DNA testings. They are en vogue as they contain a promise of self-assessment and forecasting. As long as we stay within those confines, the debate is timid: it’s after all just a choice (do you want to know more or not).

If that data is sold—or leaked—for insurance purposes, what happens? Should you pay a premium because you’re more likely than median to have a form of cancer?

On seemingly lesser matters—like declaring your interests online, we’re witnessing the rise of paparazzi effect, data can be used without context. Going from a private-by-default to a public-by-default mode in society has vast implications that we don’t fully comprehend yet.

Which are some of the startups you believe will shape the future of the world as we know it?

I don’t have data about the future. No crystal ball.

What I know is that when I stood in the middle of Shinjuku station, the biggest train station in the world, I had to make sense of the flows of people at rush hour to advance faster. To figure out how to make my way happily—which for me correlated with the fun of beating my own time record to get to my next train. I’m tall, so I’m advantaged.

Startups that will shape the future are those who will find a way to stand tall. Witness the information flows, make sense of them and find strategies to create better customer experiences. Happy experiences, by leveraging psychology, cultural history or behavioral economics. Which means one thing: to listen. To customers, to existing companies, to seemingly unrelated industries. Connect the dots, they will come to you if you just listen.

In this world of inescapable pace and complexity, there are vast flows that are still locked and unsurfaced. Many humans who don’t have access to happy experiences. Just listen, you’ll see them, and you’ll shape the future better than I ever will be able to.

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