I’ve been spending some time lately thinking about things on a grander scale, trying to understand where we are today .. and where we might be headed. This is nothing new .. I often take whimsical thought-trips, stepping away from the laptop, lying down on my back and just staring at the (bland, nondescript) ceiling.

This time, though, I’ve decided to write my notes down after this exercise and hit the green Publish button.

Here goes nothing.

If I were to start a business today, what would it be?

Here’s the approach I’m taking.. I’ve listed down problems, the technologies that are really taking off (globally) and the industry trends that will likely continue in the near future.

Why this approach? 

Well, startups solve problems .. and that’s where all good businesses need to start (from the customer). So, problems. Note that these differ alot based on the region, so I’ve listed those that affect Middle Eastern countries. Africa will have radically different problems (e.g. issues of infrastructure, access to clean water, etc.) and we all know what first world problems are like.

Technology is an enabler .. or an accelerant. It allows us to connect things that look completely different in order to maximize the chances of success (more on this juiciness down below).

Lastly, trends. These are phenomenons that have stood true for years. By periodically inspecting trends, we start to notice things that people in the field might miss out. Opportunities to fundamentally change how things are done today, because the trend has tipped over into new territory .. so that something that was previously off limits is now actually conceivable. Again, this is me playing abstract nun .. so it can be hard to fathom in concept. Fear not grasshopper, for I’ll step down from my pedestal and talk about specific examples in just a bit.

Another way to picture this is on a timescale:

Let’s pretend for a second that you can read my horrible hand mouse-writing above.

  • Past = problems
  • Present = technology
  • Future = trends

Looking at any one of these 3 concepts without considering the others will show you only a piece of the picture. It’s by combining these 3 together that you really get all deep in it.

Problems:

  • Logistics (getting things from A -> B)

  • Adjacent: moving people around (getting someone from A -> B)

  • Payments (moving money around; e.g. from buyer -> seller)

  • Remittances (sending money back home without going bankrupt)

Technologies:

  • Virtual Reality
  • Solar
  • Artificial Intelligence
  • Bitcoin
  • Drones
  • 3D printing
  • Self-driving Vehicles
  • Battery density – at 200 Wh/kg today (growing at 8%/year – plateaus at 800 Wh/kg, in ~18 years) [2014 Energy Storage Symposium - Tesla CTO, JB Straubel, Keynote]
  • Transistor density / processor speed colloquially (2X every 2 years, plateaus when transistor size approaches atom size in ~20 years) [Moore’s Law] 

Combo time

Now the fun part .. starting with problems, we’ll add the Technology and Trends and stir vigorously (Warning: Never start with the technology just for the heck of it .. unless it’s a hobby, in which case it’s perfectly cool).

#1 - Logistics

Problemo:

Ah yes, the eternal problem. It’s almost incredible how we still can’t get a measly package from A -> B without it getting stuck somewhere, lost, confiscated or otherwise annihilated before it finally gets to us .. 35 years late. For the most part, we’re still using the same transportation mediums that’ve existed for the past few decades with very-little to no change. We still use freight ships for large container shipments, and aircrafts for smaller quicker deliveries.

You can already notice that to tackle a problem this huge, you’d have to break it up (both geographically, and by payload size):

What Technology & Trends bode for Logistics (according to my crystal ball)

Drones. The most relevant technology here would have to be, without a doubt, drones. Amazon has already opened our eyes to the possibility of using drones for making hyper-local deliveries (whatever radius it can travel to and back on a single charge).

Today: The best commercial drone we know of (not considering military UAVs) has a 25 minute flight time, with a top speed of 33.5 mph and a payload of 300 grams.

Factor in the trends and things get really interesting. Battery density is increasing by ~8% every year, and that’s going to mean drones are going to be able to carry a greater payload for longer (thereby covering an even bigger distance). Factor in Moore’s law and things get really spicy – the weight of the electronic brains plummet, which means even greater payload action. The great part is that you don’t really have to worry too much about signal distance, since autonomous drones are already within means.

And don’t forget Solar. I believe we’ll be seeing longer-range autonomous drones with solar panels covering ranges in the hundreds of kilometers in the not-so-distant future.

You may see now that it doesn’t take a whole lot of imagination to expect a real change in how hyper-local, low payload deliveries happen over the next 5 years (for context, consider that 86% of products sold on Amazon are < 2.3 kg in weight).

Applications here in the Middle East context: Food deliveries baby! I can’t think of a better place to test out a solution like this .. since places like Dubai or Bahrain are really dense and already have a huge reliance on home delivery (apparently, you can’t get Starbucks to deliver to you anywhere else yet).

Of course, the big question here is around legislation. Is flying a drone for commercial purposes even legal? The UAE has already issued a law on Drones that requires explicit permission for the usage of drones for commercial purposes. Sounds fair.

3D Printing. Yeah, this is something to consider as well. While not as obvious as drones, there is a potential for 3D Printing to change the need to ship products in the first place. We’re already seeing people build prototypes using 3D printing (just download any sketch you like, and voila .. you’ve got it). Much the same way music was transformed from a physical products like CDs to a virtual file .. we will get to the point where you just pick which items you want and simply print them.

#2 - Payments

el Problema:

Here we go. This is one that I’ve already started pursuing with White, but there’s still plenty to be done. The fundamental problem with payments is that moving them around costs way too much! It’s insane, especially considering that in most cases no physical money is being moved around. 

If you buy a widget from a store and pay by credit card, the store owner loses ~3% of the transaction amount. Seriously. The same happens if you buy online (though that % usually increases – e.g. Paypal charges UAE startups 5%). This is only possible because Visa and MasterCard have created the mother of all walled gardens, governed almost entirely by suit-wearing people that take themselves way too seriously. They are charge, and they pass no opportunity to remind you of it – passing decrees when they see fit (something they do quite liberally, considering how insanely hard it is to accept credit cards as a merchant). 

The next payment method that comes by is NOT going to be a credit card – that much is clear.

Why does it cost so much to process payments today? Here are the biggest two reasons:

  • Credit-based transactions. Yes, when you use your credit card, you’re being loaned that amount by your bank. Banks don’t lend money for free. This also helps us understand why the fee is a percentage of the transaction, and not a fixed amount (there’s greater risk with larger amounts).
  • Chargeback protection. Card networks provide their customers chargeback protection (e.g. if the customer was charged fraudulently and demands a refund, they get their money back). Where does this money come from? You guessed it .. the merchant. The card networks charge a fee for mediation and issue resolution.

What Technology & Trends bode for Payments

Bitcoin: Obvious, ain’t it. There’s been alot of talk about bitcoin as an alternative to payments traditionally made using credit cards, debit cards and cash. There’s a fundamental issue with Bitcoin, and that is exchanges. It’s still pretty damn hard to convert currency to BTC, and back to currency. While there are plenty of exchanges in places like the US and Europe, we’re still behind in the Middle East .. and that’s the Achille’s heel of the bitcoin system. 

Once free exchanges are setup, it’s not a stretch to realize that Bitcoin will EXPLODE. And it’s only a matter of time. I would argue that the true power of bitcoin is most felt when, ironically, it happens in the background .. when you don’t even know that it’s there.

Imagine a fictional remittance service called TrustMeWithYourMonies.com where the user deposits funds in AED and it pops up the other side in Indian Rupees, or whatever other currency .. with the Bitcoin action happening in the background, converting AED -> BTC, and BTC -> INR in an instant.

(This, of course, is only possible if exchanges exist in both the UAE and India. Luckily, we’re already seeing a bunch of these bad boys come up with Yellow and BitOasis alive and kickin’ in the UAE.) At the end of the day, very few people care about Bitcoin for Bitcoin’s sake. It’s all about what problems you can fix with Bitcoin. That’s where it’s at.

One last question

You might wonder .. If these ideas are so great, why don’t I work on them?

The answer is: I will. I’m already working on Payments, with White – but if no one steps up to address the former, then I’ll find a way to do that too.


Please let me know what you think in the comments below. Come to think of it, I’d love to hear your predictions for the near future!