‘It’s time to build’ - Three critical messages from Web Summit

Lisbon holds a special place in my heart ever since I first stepped foot in it. For a few days each autumn, its cobbled, hilly roads play host to a surge of visitors from all over the globe. Web Summit, one of the largest technology conferences in the world, is what draws them here. 

Sports stars, politicians, economists and more starry-eyed tech workers than you can count all converge on the Altice arena on the banks of the Tagus to discuss hot topics, sell their wares and partake in the festivities. This year, amidst all the sessions on cloud, investing and futurism, I even managed to get myself into a secret rave with David Guetta and Armin Van Buuren. 

There are always downsides to events of this magnitude. You spend a lot of time queueing for things like food, toilets and event access. 20 - 30 minute speaking sessions are never enough to go deep on most topics and you need to be organised enough to figure out exactly who you want to connect with in advance to make best use of your time. That said, a number of useful things revealed themselves to me with great clarity as a result of attending. More importantly, I found myself re-energised about what I am creating in my own life.

Here are three of those things that are still fresh in my mind.

This downturn is not going away any time soon - but this is an opportunity

The Bank of England and most economists are in agreement that the UK is heading into a prolonged recession. The bond yield curve has not been this inverted since the 1980s. Across the pond, higher risk growth stocks, particularly those in emerging tech, have tanked already - and the FAANGs have begun to follow suit. To combat inflation and preserve the value of their currencies, most central banks are raising rates quickly and knowingly sending financial markets to new lows - and their national economies - into sharp recessions. This is having pronounced effects for later stage ventures’ valuations and their ability to raise capital, but the shock waves are now beginning to be felt at earlier stages too.

The optimism that people active in the financial markets have enjoyed after over a decade of unprecedentedly low interest rates and shockingly easy access to funding, is now evaporating. Quantitative easing has stopped, and the quantitative tightening and exit of capital from public equities is showing just how much insane speculation has been taking place, particularly since the pandemic recovery kicked in. The rising interest rates are also causing governments to sweat about how much borrowing they have done over recent years and how much of that borrowing went into failed projects and unproductive assets. There should be no doubt now amongst founders that they need to adjust their fundraising strategy accordingly, aiming to raise a minimum of 24 months of runway. 

That said, if we look at the last major recessions such as the Global Financial Crisis of 2008 and the Dot Com Bust of the early 2000s, we see that it is often during these periods of market ‘resets’ that the truly game changing companies are formed. Only a lunatic, or a maverick capable of creating a billion dollar company would have the audacity to leave a stable job and take a risk during such economically precarious times Microsoft, Slack, Uber and many other prestigious names started in such downturns.

There is a global war for talent - and we’re losing

In the UK, where ‘job creation’ has been the primary measure of success of publicly funded programmes, there is now a drought of talent in pretty much every industry with many roles, particularly in software, going unfilled. Furthermore, the rapid development of emerging economies such as India, means that there are fewer and fewer suitable candidates to fill the huge volume of open positions at startups in the developed world. 

After years of being allowed to fester, regressive government immigration policies, disjointed social and economic strategy and a lack of appetite for enabling high growth enterprises are coming home to roost. No amount of tax reliefs or publicly funded programmes can make up for a difficult-to-navigate immigration process or poorly planned, unlivable cities. Miami-based Founder & CEO of The Venture City, Laura González Estéfani pointed out that culture and openness in communities plays a huge role in how well cities can attract and retain entrepreneurs and entire industries. 

I am of the general opinion that far too many funds, programmes and incubators are dysfunctional because they fail to actually return the resources invested in them. However, I was impressed by the Unicorn Factory presentation of Carlos Moedas, former EU Commissioner-turned Mayor of this thriving city. Lisbon’s origin story is a textbook case study of startup and scaleup ecosystem development. Political continuity across administration changeovers, taking calculated risks at the right time and development of an open and friendly culture have been key to its success. Liverpool could learn a lot from its fellow Atlantic-facing port city.

The ‘current thing’ must be challenged

When Russia launched its full-scale invasion of Ukraine in February 2022, Ukraine, and the defence industry, became ‘the current thing’. Prior to this, working in tech and supplying your product or service to your national government or its armed forces, was very much taboo - until overnight, it wasn’t. So much so, that it could get you cancelled. Look at Palmer Luckey, the two-time Unicorn founder who was ousted from the helm of his own business (‘Oculus VR’) for supporting the wrong political candidate, and then lambasted for daring to build his second company ‘Anduril’ which supplies technology solutions to the US Department of Defense. 

The problem with the masses only getting behind the current thing when it becomes the current thing is that it is then far too late to avert the most deleterious consequences of following what is trendy, not what is prudent. 

Now, I’m not advising that we throw caution to the wind and begin deploying population-scale AI-enabled surveillance like the murderous regime of Xi Jinping has done - but we (take ‘we’ as the UK and the EU, because we are all prisoners of economic geography) need to begin seriously looking at how we enable R&D, testing, production and procurement of emerging technologies into our public services and wider society. If we do not, we risk realising the frankly embarrassing future envisioned by Margrethe Vestager of being “a leader in the regulation of technology” (Seriously, Europe? That’s what we want to relegate ourselves to? We don’t want to actually develop and manage the technology ourselves, and instead we will float in the winds of the Sino-American cyber war whilst pontificating about the ethics of a global world order which we will not have the power to change?) I am not joking when I say that I have encountered more ‘Experts in AI Ethics’ than actual AI Programmers at this conference. I think that is a worrying sign of the stranglehold that ‘the current thing’ has over what we can work on.

The current thing tends to remain unchanged for many years, but then it shifts rapidly via black swan events such as pandemics and invasions. Then, a new current thing emerges (which can quite easily be the 180 degree opposite of the previous current thing) and it is endorsed by influencers, politicians and wider society as if they were always in favour of it.

That said, I cannot fault the superbly delivered call-to-arms made by Olena Zelenska, First Lady of Ukraine, on the opening night of Web Summit. She passionately made the case for the tech industry to engage in projects which support anti-missile defence, healthcare, psychological well being, combatting disinformation and economic reconstruction efforts. I hope, most likely in vain, that this most recent shift serves to wake people up and make them more open-minded as to what the future might have in store based on the consequences of our actions today and yesterday.

Western technological, cultural and democratic hegemony is not guaranteed. Indeed, it is under attack at all levels - not just by an alliance of rogue states overseas, but by bad actors inside our institutions here at home. A broad range of regressive messages are circulating into the mainstream, conflating some of the flaws of capitalism and historic actions by Europe and the USA with a suggested sinister, tyrannical intent which is supposedly inseparable from the ‘Western’ mindset. I refute this entirely and will never accept it - so feel free to put me in front of the firing squad first. 

Yet, whilst we are mired in a paralysed state of self-loathing in Western Europe, we can look to our Baltic and Eastern European neighbours for evidence that progress is still possible. Patrick Walsh, CEO of Dogpatch Labs - one of Ireland’s standout technology accelerators, revealed in a session on the Venture Pavillion, that Estonia last year did 6x the number of angel investment deals per capita than Ireland. The country leads the world on digital democratic services and integrating technology into the lives of its citizens in a non-invasive, privacy-first manner. 

We are going exponential. As Cathie Wood rightly pointed out on her main stage talk on Day 1 of the conference, the costs associated with virtually all enabling technologies and physical product inputs are, aside from temporary price shocks, going down rapidly over time. This is opening up an entirely new race, which the rigid, slow machinations of most ‘developed’ countries’ governments are ill-prepared to run.

It might sound like a lot of doom and gloom, but I am quietly optimistic. We tend to find a way forward, as people - and the good guys usually win, in the end. For places struggling to catch up to the current standard of economic development, these new technologies and the industries they support provide a sort of portal to not just catch up to, but completely surpass their neighbouring economies. That’s why it is imperative that places like Liverpool, that are undergoing a sort of collective existential angst, pay attention to and prepare for this emerging technology tidal wave - and that’s exactly what I’ll get back to working on the minute I step foot off my flight home. It’s time to build.