Perfect Timing

The digital economy has been booming since years: The ecommerce revenue growth rates have been high (+10% p.a. in EU) and steadily high. Over the course of the last 15 years only the recession years 2008-2010 saw single digit growth rates (source: Statista).

As a rule of thumb 25% digital revenue can serve as a maturity index of an industry in the medium-run (coming 5-7 years). Some industries are prone to higher percentages such as books with currently 31% (2014, DE; source: buchreport.de) and travel at  +27% (2014 in DE; source: Verband der Internet Reisevertrieb eV). So if you look at industries, have a look at the % that is already digital to see the growth trajectory. Some industries such as furniture or food are still fairly below 10% (source: IfH) while fashion retail (source: GfK) are more than twice their rates. Multiply this % by the total  industry revenue and you get an idea of the market volume that is waiting to be digitized. It’s a lot!

You have chosen a great time to join the fray!

For entrepreneurs

The timing could not have been better. The traditional industry leaders struggle with the anticipation and execution of the new era. Just take clothing as an example where the leaders with cash resources, buying power, industry expertise where toppled by a handful of highly motivated graduates (Zalando) within a couple of years only. Digitizing existing consumer behavior patterns is a “safe” route to drive the % in your industry upward – ecommerce or marketplace models for instance.

But traditional industry leaders also struggle with innovation. That is, creating new behavioral patterns such as uploading photos of yourself with a filter on it and spreading it to an ever growing network of connections (Instagram). Access to technology (computing power, standardized software eg), lowered international boundaries to growth (the internet) and a new mindset of millenials (self-fulfillment, achievement, less loyalty to geography and employer) are intersecting to create a series of companies creating entirely new consumer behaviors. Large organizations struggle to create an internal intersection for themselves and fail to compete on digital innovation.

For entrepreneurs, the timing could not be better to build companies that stand a good chance against traditional industry leaders.

For employees

The timing to enter this world could not have been better, either. It finds its roots in the demand-supply model that determines the optimal price point – so the theory. If demand goes up and supply does not match the demand increase, the price point will increase.

Supply and Demand Model
When demand increases from D1 to D2 and supply S remains equal, price point P1 grows to P2.
With ecommerce growth rates in excess of 10% p.a. (source: Statista), the educational system fails to provide enough qualified personnel each year. Furthermore, know-how changes so fast, that text books are outdated the time they’re written. Hence, employees in the workforce enjoy a growing demand for their services. As the demand grows and the supply does not keep up, the bargaining power tilts toward employees. This surfaces not only maddening pay-scales for young engineering professionals for instance but also in increasing demands for sabbaticals, part-time, flexible work schedules, included child day care and the list goes on and on. Millenials have a heyday in negotiations these days.

Now some turn to the apparently low entry salaries typical for start ups (source: Payscale). True to start with, it usually tilts very fast toward the other direction once a base level of skill is acquired (+1 year of experience usually). Then the power shifts heavily in one direction.

But aren’t start-up jobs risky? Given the supply-demand relationship your job is actually fairly safe. As one start-up closes doors, three others open up. You’d be surprised to hear that headhunters scan the landscape for failing start-ups to snatch away employees before they even know it.

But there is a second reason why the timing is just about right for employees: Be part of history! Make history!

As mentioned above, companies digitize existing consumer behavior or they outright create new ones. Being part of either is a thrilling experience with all the ups and downs going head to head with industry leaders and often ending up winning.

Either way…

…you decide: You’re in for a great experience as an entrepreneur or an employee of a crazy cause. Enjoy the time. It’s yours!

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