Starting from how we read books, watch movies and pay bills, transformations out of digital technologies have been popping up. The fusion of digital technologies forms a powerful technology core. It’s strong enough to reinvent various products. Hence, there has been a growing interest in digital entrepreneurship for developing Creative waves of destruction. Often, they grow from the beneath as a strong force of Disruptive Innovation. Furthermore, due to the zero cost of copying software and data, digital innovations are highly amenable to Economies of Scale, scope, and network externality effects. Hence, although it’s easy to get into digital entrepreneurship, the race gets monopolized—ending up a winner takes all. Therefore, digital entrepreneurship skills are not limited to mastering technologies, launching digital products and services, and mobilizing risk capital. As digital technology competence is getting commodity, the core challenge is creating market power out of scale, scope, and externality.
Digital technologies comprise smartphones, mobile internet, cloud platforms, sensors, IoTs, edge computing, and a few other tangible parts. We have a toolbox comprising software engineering, programming, data analytics, machine learning, web technologies, blockchain, AI, computer vision, and many more to harness their capacity. Once we fine-tune and fuse them, we get a powerful technology core. It’s competent to reinvent and unleash creative waves of destruction. In addition to offering better alternatives, they destroy existing firms and turn tiny Startups into giants. Hence, there has been a surge of digital entrepreneurship to create fortune through creation out of destruction. Unlike conventional businesses, invariably, digital entrepreneurship begins the journey from the global market. Contrary to cookbook-type recipes, digital entrepreneurship demands ‘do it’ and reflects on that experience. But experience should systematically contribute to scale, scope, and externality advantage creation.
Nature of entrepreneurial journey in global digital space:
The digital entrepreneurship canvas is quite vast. Starting from selling eggs online to writing e-books and uploading casual videos on YouTube, there have been countless ideas for leveraging digital technologies to offer an alternative to the existing way of doing things. It does not matter whether it’s your solo part-time activity or an organized one, your market is global from day one. For example, once you have an AdSense account, by uploading videos that people would like to watch, you may start generating revenue from all across the world.
The question could be how much capital you need. The answer is simple: zero or as low as $30. You may start your venture from free platforms like YouTube. Or, use your $30 to buy a domain and basic hosting service for the first year. By the way, you need to have your smartphone and laptop computers with an internet connection too. The challenge is to draw traffic to your offering. Hence, you need to know what kind of products you will offer and how to outperform the competition to attract traffic.
The next challenge is to have basic skills to get it going. Fortunately, there is a virtually free solution for it. There have been numerous videos on any skill you need to kick start your digital entrepreneurship journey.
If all these are so simple, are all digital entrepreneurs wealthy? Perhaps, no. It’s pretty easy to get in. Generating revenue is a bit harder. Well, it’s not that difficult to get your first dollar; the challenge is to scale to make your living. And if you are after big fish, like online food delivery or ride-sharing, your digital entrepreneurship journey begins at a loss. How to turn it into a profit is a tough call.
Digital entrepreneurship examples:
Starting from Netflix, Amazon to Spotify, we all know many global success stories of digital entrepreneurship. Here is a story from Bangladesh. A 13-year-old seven-grade student has embarked on digital entrepreneurship after mastering Internet technology skills through self-learning. His Sanbir Trading has been mediating e-commerce transactions between 400 buyers and sellers of multiple countries. Although the average salary of fresh engineering graduates in Bangladesh is USD4000 per year, the yearly net income of this digital entrepreneur has already crossed USD12,000. Despite the success, Sanbir’s business runs the risk of losing relevance due to robotic process automation (RPA). However, in addition to overcoming threats, he can leverage it to develop economies of scale, scope, and network externality advantages.
Like Sanbir, there have been many budding digital entrepreneurs from all over the world. It seems that essential technologies are pretty easy to learn. Even self-learning is good enough for high-school and college students to master many of them. Due to the low entry barrier, many of them have been experiencing the early success of developing global business, even from a remote corner of Bangladesh or Kenya. Upon creating initial success, the challenge is to cope with the impending threat of software bots and RPA.
Furthermore, as there is a natural tendency of concentration building out of tipping, these digital entrepreneurs face the challenge of either being a winner in taking all or keep migrating from one niche to another. Hence, digital entrepreneurship success demand two essential skills. The first one is about self-learning. And the next one relates to systematically developing market power by creating economies of scale, scope, and network externality advantages.
Self-learning, rapid experimentation, and self-motivation:
First of all, basic digital skills are easy to acquire through self-learning. A plethora of videos, blog posts, and animations are available on the Internet on any topic. Furthermore, the needed skills are dynamic. Hence, instead of spending months and years at training institutions to gather the skills for embarking on digital entrepreneurship, the focus should be on self-learning.
The next one is to ‘do it’ and reflect on the experience to do better next time. The basic skills you need are self-motivation, 4E formula, readiness to embrace all odds, problem-solver attitude, consistency, and value proposition attitude. By the way, 4E stands for be energized, energize others, execute and be empathetic.
Leverage scale, scope, and network externality effects: the core challenge of digital entrepreneurship
Leveraging of all those above skills demand scaling up the humble beginning into a large business. First of all, it requires how to keep making the offering better and cheaper. From a simple idea of adding a feature, this endeavor may end up in removing the whole middle management activities with AI, automation, and software robots. For example, for improving the quality and reducing the cost of delivery of foods from an online platform, DoorDash has removed the whole middle layer. Algorithmic self-servicing tools and real-time dashboards have taken middle management role in supervising more than 200,000 drivers and 340,000 restaurants. Management apps play all managerial roles, such as taking orders, collecting money, keeping track of orders from pick-up to delivery, and maintaining restaurant ratings. Similarly, Amazon removed papers, ink, printers, publisher, and postman for scaling up the online book retailing business.
In addition to scale, digital entrepreneurs should focus on taking Economies of Scope advantage to reuse the same core assets. In fact, Amazon got into the cloud business to leverage the economies of scope of its huge e-Commerce computing platform. Last but not least is to build a network Externality Effect so that the perceived value of your offering keeps going up with the customer base.
Either take or lose all—no middle ground
It seems that digitization of goods and services tends to benefit from scale, scope, and network externality effect. Hence, bigger is better is the norm in the digital space. Despite the ease, to begin with, attaining the capability of being bigger is a tough call for digital entrepreneurship. It seems all those easy to acquire popular technology and soft skills are not good enough. Success strategy demands a systematic approach of theorizing unique attributes of digital platforms and learning for consistently creating a Flow of Ideas for expanding the scale, scope, and network externality advantages. In its absence, early success will neither scale nor sustain, as someone else from anywhere in the world will scale and take away all.
...welcome to join us. We are on a mission to develop an enlightened community by sharing the insights of Wealth creation out of technology possibilities as reoccuring patters. If you like the article, you may encourage us by sharing it through social media to enlighten others.
