At the most recent Stanford computer science career fair, there was a line of about 20 eager Stanford students attempting to talk with recruiters wearing bright yellow shirts from Snapchat. Others tried to grab a cupcake with the company’s ghost logo icing. Student after student placed résumés into the stack, hoping to score a job interview or coveted internship. At the adjacent table sat a biotech research company without a single treat or line.
This scene is not an uncommon one – the entrepreneurial ecosystem today disproportionately favors companies that pursue social-mobile businesses. Since the advent of smartphones, businesses have increasingly engaged customers within mobile and social networks that have profoundly enhanced connectivity. These social platforms have spawned a very substantial consumer marketplace. This marketplace, however, is dominated by companies that focus on entertainment and gaming. In 2013, over 102 billion apps were downloaded on the Apple App Store alone, with the “Games” category capturing the highest percentage of downloads.
Not only are startups looking to carve out a portion of this social-mobile marketplace–they are solving first world problems. Washio, for instance, launched last year to provide an uber-esque, dry cleaning delivery service. In Manhattan and Brooklyn, another startup adopted a Fluc-for-booze business model called Mini Bar. Far from solving the most pressing problems of our time, these companies leverage the power of the new mobile market to capitalize on the minor inconveniences of everyday life.
Talented grads are not only flocking to startups, but to large, sexy brand name tech firms like Facebook and Twitter. While one can argue that these companies solve problems and enrich connectivity and communication, they are fundamentally businesses. As such, a significant contingent of their staff is focused solely on the monetizing and revenue-generating functions: optimizing and enticing user engagement with advertisements. Jeff Hammerbacher, the founder of Cloudera, mourned this phenomenon: “the best minds of my generation are thinking about how to make people click ads.”
Tracing backwards through the ecosystem, it is clear that venture and growth equity investors, who eliminate capital constraints for selected companies, serve as a powerful catalysts in influencing the entrepreneurial landscape. To this end, venture and other equity funds, notorious for seeking quick, profitable exits, foster an environment wherein entrepreneurs are incentivized to build quick-to-scale business models. To be sure, investors and their limited partners play a crucial role in this development process and cannot be condemned for seeking return on capital. Nevertheless, the mobile-social marketplace is an ideal launching pad because it boasts massive market reach, sticky network effects, and low customer acquisition costs – all ingredients for billion dollar valuations. Again, while companies that micromanage daily tasks or solely dedicate themselves to digitally revolutionizing communication are not intrinsically malignant, their popularity begs the question–what if this brainpower were invested in solving the challenging problems in science or in fixing our nation’s educational shortcomings?
Oculus Rift is a revolutionary head mounted display developed by Oculus VR. The company recently raised over $75 million for the advancement of the product less than two years from its conception. The headset allows users to be a player in a virtual world, tracking their head motion to simulate motion within the game. Oculus VR employs some of the brightest minds in the computer science and electrical engineering fields, as uses advanced accelerometers and magnetometers coupled with 3D graphics and stereoscopics to provide the headset wearer a portal into the virtual reality of their choice. This technology, however, is currently only available as an extension for gaming platforms.
Although entrepreneurship is at a historic high and the growth of supportive infrastructure in the form of incubators, accelerators, angel investment and equity funds is impressive, it’s still worth asking ourselves: is the true power of computers being harnessed to solve the most urgent problems of our time?