Entrepreneurs are no strangers to uncertainty. The willingness to take giant leaps of faith is what makes many founders so resilient. Yet even the savviest and most fearless entrepreneur would have been rocked by 2020. In all sectors, start-ups and small businesses were hit especially hard by the pandemic, with many suddenly finding themselves short of funds to continue.
As we look towards a post-Covid future, start-ups will be essential to our recovery as key drivers of economic growth and job creation. At this year’s SXSW conference, business people, creatives and public leaders came together to discuss how we can take the lessons learned from 2020 and chart an equitable path forward. Here are some thoughts based on discussions from the event, offering both insight and practical advice for entrepreneurs.
Entrepreneurial opportunities in the new economy
The digital acceleration over the past year looks set to give rise to new entrepreneurial opportunities as we enter what Jason Schenker, chairman of The Futurist Institute, calls ‘The Covid Clean Up’. The pandemic increased the use of tools like e-commerce, distance learning and telehealth technology to help businesses deliver their services digitally. Going forward, many companies that were forced to adapt quickly and invest in these tools are now beginning to examine their ROI and consider alternatives. Schenker predicts that this is a big opportunity for entrepreneurs to help corporations understand where the ROI is and ensure they are using these tools most efficiently.
Improving flows of information will be another priority in many industries as we navigate the new normal. Businesses will need to streamline how employees receive information from the different communication streams they access while working remotely. Customers and private citizens will also be looking to streamline the multiple channels in their daily life and avoid content overload. Entrepreneurs that take on the challenge of organising this chaos of information have the potential to assist personal and professional lives, as well as guide companies on how to produce the right content for the right platform.
There is also the task of helping industries that have severely struggled during the pandemic, e.g. the service industry. As we are bound to see more automation in hospitality, retail, and travel, companies will have to adapt to maintain a middle-ground between face-to-face and digital service; offering a complete and positive experience in both environments. These companies, who will still be facing the after-effects of lockdown, will need support in adjusting gaps, expanding possibilities, and helping brands maintain a connection with their customers; physically or virtually.
Solving the overlooked problems
Many emerging start-ups will set their sights on making incremental improvements to existing issues, caused or amplified by the pandemic. But what about entrepreneurs that are trying to solve a problem that’s never been solved before? During a panel on disrupting billion-dollar industries, Square’s co-founder, Jim McKelvey shared his story of how his efforts to fix a problem for an overlooked group opened a pandora’s box in the financial world.
McKelvey recognised that micro-entrepreneurs weren’t able to accept credit cards and were of little interest to big financial providers. He set up Square to help business owners take card payments with less hassle but to do that he had to change one convention after another. This is what McKelvey calls an ‘Innovation Stack’, an interrelated group of innovations that are all influencing each other. Having no choice but to innovate, McKelvey ended up targeting expensive billing models and long contracts. Now, Square is at the leading edge of finance and is used by millions of retailers in the US.
McKelvey believes that while ‘Innovation Stacks’ are the key to creating disruptive companies that go on to dominate their industries, most companies don’t actually have to innovate at all. The more relevant takeaway in Square’s success is in its ability to enable a group to participate where they previously weren’t able to. In all industries there is a segment of people that are not being considered; either priced out or not sold to through ignorance or intention. Seeking to empower the forgotten corners of the market would not only lower barriers to entry for consumers but create the basis for an industry to better serve its users.
Supporting diversity in entrepreneurship
Levelling the playing field was a key theme in several conversations around Black entrepreneurship. Black small business owners have suffered disproportionate effects of the pandemic, declining at twice the rate of white-owned businesses in the US. Even before the pandemic, Black businesses have struggled to stay afloat due in no small part to the historic lack of access to capital. A panel on the state of Black entrepreneurship described the racist stereotypes Black founders still face when seeking funding. For Black-led start-ups that primarily focus on serving their own community, there is the additional challenge of convincing non-Black investors that there is a big enough market for Black products.
Following the killing of George Floyd, a renewed interest in supporting the Black community led to many Black businesses seeing an uptake in sales. While that surge has slowed down, there has been a proliferation of resources and initiatives to support Black entrepreneurs, with commitments coming from both the private and public sector. As seen through the swell of online support and downloads of Black business directory apps, the shift towards e-commerce is lowering entry barriers to the marketplace and enabling Black-owned businesses to thrive digitally. Entrepreneurship equals empowerment, and the focus must now be on supporting Black businesses to scale.
Female founders have also faced unique challenges over the past 12 months. In a panel on the effects of Covid-19 on female-founded start-ups, Kimberley Whitler of the University of Virginia’s Darden School of Business revealed bleak statistics to illustrate the current situation. Relative to their male counterparts, almost three times as many female founders reported that their business was not in good health. On top of that, nearly 25% of female small-business owners were spending more than six hours a day on domestic responsibilities in comparison with 11% of men.
Yet, the panellists were optimistic, largely due to the ability to take advantage of a shifting work culture. The rigidity of commutes and full-time office-based work has been hard on working mothers. Many women are seeing opportunity in remote work to start their own businesses and freelance, where they can set their own hours and prices to combat the gender pay gap.
The uptake of video conferencing is opening up new opportunities in raising capital for female founders, as Amy Nelson, CEO of The Riveter, explains through her own experience:
“I was on planes all around the country, while I was pregnant and when I had a newborn, to go meet with venture capital investors and it was hard and exhausting. Now we have the opportunity to meet and pitch with investors over Zoom and that is an enormous change that could really democratise raising money. If you’re a founder in Ohio you might have access to VCs that you didn’t a year ago”.
There are also digital communities that can help founders improve their pitching skills; founder-to-founder groups, remote-only accelerators and online pitch events where founders can watch and learn from their peers in action.
The value of entrepreneurship in rebuilding society is clear. Not only can start-ups support and empower local communities, but they can also provide solutions to the challenges we face in the new normal. The success of many businesses still reeling from the pandemic will depend on the ability of new entrepreneurs to come up with creative ways to help them work more effectively.
Entrepreneurs can help build tools to create a more inclusive future and, if encouraged by a supportive ecosystem, a more diverse class of emerging business leaders can thrive and create further opportunities for the underrepresented. While Covid has been devastating for many, ultimately entrepreneurs will continue to keep finding ways to create change and add value. It’s all part of what makes them entrepreneurs in the first place.