In November 1998 Pets.com was launched and by early 2000 they could claim investors like Amazon, they had raised nearly $100M on the NASDAQ and had a high profile brand even including a Super Bowl ad. It was the height of the dotcom bubble, and the company was happy to lose money on almost every sale to take market share. But there are only so many ways value is created online without introducing real new technology innovation and so by the end of the year the bubble had burst and the demise of Pets.com is today seen as an exemplar of the period’s excess.
Some decades later and the range of online services have continued to burgeon, but the underlying digital technology and connectivity are still roughly the same. Most of us have had careers immersed in the digital and information revolution perhaps leaving us with a view of innovation that is heavily weighted to a few major advances in Information Technology which has left us blind to the deeper opportunities of innovation with science, so-called “deep tech”.
The closest most of the last three decades have gotten to true scientific and engineering disruption has been through the continuation of Moore’s Law and the increasing computing power squeezed onto constantly decreasing silicon real estate.
But it was inevitable that the move of digital into the real world through the Forth Industrial Revolution would collide with the urgent reinvention of our greenhouse gas producing energy economy. Everything from batteries through to drones, solar panels through to nuclear energy are going through a revolution which is bringing the so-called deep tech ecosystems into direct contact with the digital innovation community.
The digital and deep tech ecosystems are not yet entirely comfortable with each other. Arguably, the worst example of digital innovation approaches being applied to deep tech has been the blood testing company Theranos which tried to create complex medtech (medical technology) focusing so heavily on the “fake it until you make it” culture of Silicon Valley that lives were put at risk and regulators were forced to act. But at the same time, SpaceX is perhaps the best example of borrowing “test and learn” approaches from successful digital platforms preferring to launch and trial rocket technology rather than plan to perfection which has historically been NASA’s approach.
There is no doubt that innovators of the coming decades will need to get more comfortable in deep tech as the niches available within digital platforms get even narrower. Advertising, personalisation, and disintermediation can only provide so much new productivity and wealth. But, these same innovators are also going to have to help reduce the time-to-market and heavy costs that have traditionally been associated with major science investments.
For most people working today, innovation and digital disruption have gone hand-in-hand. The greatest changes in our society have been driven by technology, specifically digital, and heavily enabled by the revolution that was the Internet. Breaking into a new “s-curve” is the only way to open-up growth and solutions to some of the world’s greatest challenges.
Innovating with existing technology is, by its very nature a competition on the same “s-curve”. There must be ways to use all that we have learnt of the digital revolution to be better at realising opportunities across climate, transport, space and infrastructure at a time when we simply don’t have decades to waste.
Deep tech and similar terms have been around for many years, referring to the realisation of complex science and engineering solutions as useful and commercial technology services. The problem is that deep tech needs to compete for funding with better understood digital tech which is likely to gain a more certain (albeit less breakout) return. Perhaps the choice for investors between deep tech and digital opportunities is the same as film studios face when choosing between a worthy story and another superhero sequel. The former will move the artform forward with the potential for a major breakout hit whereas the latter is more likely to provide a predictable return. Unfortunately, predictability tends to win out.
As governments look to leverage complex science and engineering solutions to problems across societies, they may consider also looking to the market for capital and see whether they can make encourage a shift in investment towards deep tech through policy nudges. At the same time, executives and investors from traditional digital realms should take a good look at deep tech innovations, many of which are genuinely white space opportunities.
In the 1990s it was not obvious that digital would be as pervasive as it is today, yet many executives and investors made a leap of faith. With the challenges we are facing, it has never been more important for leaders to show the same courage again.