Duncan Hawkesby
Director
HML
When I worked at a long-established transport and logistics business, I would look enviably at disruptive start-ups who were able to take advantage of emerging technologies at pace. The curse of incumbency meant our business was not as nimble as we would have liked it to be – and there seemed to be numerous hindrances to us embracing new technologies. What was once our moat: the size of our footprint and fleet; the investment in our IT systems; our ingrained and ISO compliant standard operating procedures and experienced staff – now all conspired against any radical change. It felt like we were running ‘defence’ in regard to embracing new disruptive technologies, while we tried to grapple with what was on the horizon and how we could pragmatically evolve towards that.
It is a glib comparison, but it wasn’t lost on us that Uber didn’t disrupt passenger transport from within the industry – nor did they come to market by acquiring an existing player (taxi operator). The same analogy could be drawn with Air B’n’B and other new entrants into industries.
I would suggest that any ‘digital strategy’ not only has to address the adoption of emerging technologies as part of continuous improvement, but also needs to address the ‘culture’ of self-disruption and the implications for your team, your customers and how you market your products and services.
It is difficult to think of a single industry that isn’t already being materially changed by the increasing cadence of emerging technologies, and the flow on effects of disintermediation (bypassing middlemen), democratisation (available to everyone) and dematerialisation (digital replacing physical).
In the investment office I work out of today, one of the first lenses we look through when considering an investment opportunity is ‘how will emerging technologies reshape this business and this industry’? We knew what it was like to be in the cross hairs of disruption – but we didn’t know what it was like on the other side of the fence, where you were the aspiring disruptor.
So, we spoke with a number of tech entrepreneurs, investors and early stage founders – to get their perspectives and to learn what we could. Ultimately your best learnings come from ‘doing’ – so we allocated capital to investing in some disruptive, early stage businesses who were leveraging new technologies. We shifted some capital from ‘defence’ to ‘offence.’
This required a significant shift in our investment approach, we had to set aside the financial fundamentals and due diligence framework that drove our traditional thinking and get up to speed with a different set of quantitative and qualitative analyses. We now look at a number of tech and early stage investment opportunities, from pre-seed to pre-IPO. We have invested in a handful of early stage disruptive businesses, in everything from online mortgages, to share trading platforms, to revolutionary pneumatic valve technology to SaaS businesses.
By having skin in the game, we are hoping to learn (and earn) from these businesses, gaining insights into how they think, how they grow, where they stumble – and what differentiates the winners from the losers.
