4 key opportunities for startups in 2023
How startups can grow and thrive even in the tough times ahead. …
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What do Electronic Arts, Cisco, Airbnb and Square have in common? They are just a few of the successful technology leaders that were founded as startups during times of economic uncertainty. And they didn’t just grow; they changed the way people worked and lived.
It may be that tough times make startups scrappier, building cultures focused on efficient growth that endures. Certainly, they launch into a market where customers are ready to try something new and be more efficient themselves. After all, older ways aren’t working like they used to, and there is a lot more necessity around changing behavior. Look no further than the growth of cloud computing after the 2009 downturn, where startups and enterprises took to the cloud to take advantage of new cost efficiencies.
2023 looks like it may be one of those times of economic trials, and if history is any guide, that means that today, somewhere, the next world-changing startups are forming. What’s the next big thing they will develop?
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I don’t think any of us know with certainty what market leaders are being born today, but I’m confident they will be built with the most advanced tools available for platforms and environments that will grow in the coming years. And by looking at the most promising emerging tools, technologies and markets, we can begin to find signals for what to look for in great startups. Here are four key areas I think will be opportunities for startups in 2023.
Real data and artificial intelligence
AI and ML have become increasingly cheaper and easier to use, so applying them to everything from online shopping to manufacturing quality assurance is a natural step. It’s a matter of lower costs and greater ease of use broadening a potential market.
There’s more to it than that, though. Existing companies will be looking for new ways to get value from their extensive and growing data holdings, and will seek new insights from combining multiple data sources in ways they haven’t before. That creates opportunity not just for AI/ML services, but for new ways to cleanse, align and securely combine multiple data sources, both inside and outside companies. With many enterprises hesitant to spend a lot of capital, there’s an opportunity for new companies that can either do this as a service or automate parts of it.
There are also many industries where new analytics and AI approaches haven’t yet played a role, either because of costs, unwillingness to change processes, or a lack of knowledge about these industries among the data community. That may well change in 2023.
The vertical opportunity for startups
Economic pressures change labor patterns. In a labor market where many people are already electing to work later in life before retirement, layoffs, hiring cutbacks and other staffing challenges may lead folks to return to work or seek part-time and consultative work. That creates a new knowledge base around all sorts of niche industries that large companies haven’t approached, where experts with years of knowledge can look to apply things like cloud-based data analysis, targeted mobility solutions, chatbots or robotics, among others. They can team up with people with modern tech skills who may leave one industry and migrate to another, seeking new opportunities or a different lifestyle.
The startups that succeed in niche industries will seek adjacent businesses, or even find a process that can be adapted to something truly revolutionary for mainstream markets. Sometimes startups create entirely new verticals, something that seems particularly timely in areas like sustainability, biosciences or agriculture. That kind of adaptation is easier today than it was in the past, thanks to the flexibility of cloud-based software, and cloud practices like microservices and serverless computing. Better still, the investment community is hungry for these types of opportunities.
Many of today’s technology companies have been able to grow rapidly while maintaining their experimental DNA. But it may soon be more challenging to succeed at first with a broad new platform offering, as opposed to finding and establishing a business with a clearly focused product. In an era of tougher fundraising, where investors are looking for more evident data points of success, bringing a clear value proposition to a vertical that’s ripe to be changed through the application of new technologies is a winning formula for startups.
Distributed systems, distributed teams, distributed companies
The underlying technology of networked blockchain ledgers will likely find an increasing number of practical uses in the years to come. It happened 20 years ago when the underground and undersea cables laid during the telecommunications bubble made things like offshoring and outsourcing during the post-bubble downturn possible. Blockchains, which distribute information over a broad set of computers with a means of authenticating in real time activities like the completion of work or financial transfers, will probably find new uses.
In parallel, the collaboration technologies that proved so important during COVID have made it possible for large groups to organize and execute work from numerous locations at the same time. That means that teams and companies can self-organize and develop products more cheaply and better than ever. The capacity inside large cloud systems remains large, and it’s likely we’ll see more startups organize without a physical headquarters.
Helping startups grow and thrive
To continue providing startups with the support they need to build, grow and thrive, the Google for Startups Cloud Program has been ramping up skills training for startups, building out more mentoring and information-sharing opportunities for startups to connect with engineering and product development, and identifying more ways to help startups find customers and improve distribution through channels like our Apps Store.
The startup ecosystem is larger and more diverse than ever, and the pace of that growth is quickening; it’s good for everyone to see that growth. Mentoring in technology, product development, and regional and global expansion are both a good idea and good business on both sides — which is why I, and the Google for Startups Cloud team, are excited to work with and support even more startups in 2023.
After all, it wasn’t that long ago that Google, too, was a startup looking to grow during hard times, build a culture that lasts, take new technologies further and build something big.
Ryan Kiskis is Director, Startup Ecosystem at Google Cloud.
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