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Alena Eager

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Dubai’s TECOM Group has broken ground on its Innovation Hub Phase 2 development, which is expected to add more than 355,000 sq. ft. of space for technology, education, and new media businesses in Dubai Internet City.

Tecom Group

The expansion is the result of the fact that its Innovation Hub Phase 1 is approaching total capacity, which has been credited to Dubai’s legislative framework and ease of doing business attracting a high volume of international companies and investors.

“We’re seeing the success of our leadership’s economic diversification strategy reflected in our commercial and industrial real estate portfolio performance this year due to an influx of new companies and talent,” said Abdulla Belhoul, CEO of TECOM Group. “Bespoke solutions like the Innovation Hub strengthen Dubai’s position as an attractive global business and talent hub. This cements TECOM Group as the Emirate’s largest commercial real estate owner, and our key role in driving innovation and business growth development in Dubai.”

Related: The Middle East’s Startup Hub: Making Dubai A Launchpad For Innovation

Image courtesy TECOM Group.

Launched in 2018, the first phase of the Innovation Hub is home to tech giants like Google, Hewlett-Packard, Gartner and China Telecom a base in the region. With additional stages in the pipeline, the completed Innovation Hub project is expected to add more than 1.2 million square feet of space for technology, education and new media businesses of all sizes to the group’s portfolio.

TECOM Group’s Q3 2022 financial performance reflected the upward trend in the commercial real estate market. Revenue came in at AED490 million, increasing 12.48% year on year (YoY), driven by rising occupancy levels across the portfolio, especially for office, warehouse, and worker accommodation. The Innovation Hub Phase 2 expands TECOM Group’s assets with two high-end office buildings, four boutique offices, retail spaces and more than 800 parking spaces.

“For more than 20 years, Dubai Internet City has provided the necessary infrastructure and environment where the complete tech community can converge,” said Ammar Al Malik, Executive Vice President – Commercial Leasing, TECOM Group. “Ready-to-use facilities like our Innovation Hub enable customers to hit the ground running. Expanding our district’s commercial offering to cater to the Emirate’s growing business appetite will enrich our global community with innovation-driven brands and talent.”

Related: TECOM Group’s Co-Working Space D/Quarters To Enable More Community-Driven Entrepreneurship

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Dubai Future District Fund (DFDF), a UAE-based venture fund that aims to develop Dubai’s economy by building a scalable tech innovation ecosystem, has announced the launch of Venture Fellows, a program that aims to empower the next generation of Emiratis in venture capital.

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Said to be the first of its kind in the UAE, the program aims to target Emirati venture capitalists and entrepreneurs between the ages of 25 and 40, and equip them with innovative skills that can help them succeed in their entrepreneurship and investment journeys.

Set to commence on February 1, 2023, Venture Fellows will offer four modules over a period of 12 months. These modules will be delivered both digitally and in-person, and will have a curriculum that is tailored to the regional market.

“Our fellows will gain the knowledge, skills and network needed to thrive in the venture capital ecosystem,” Sharif El Badawi, CEO of DFDF, said. The rogram’s workshops will thus be led by venture capitalists who are committed to the program’s underlying mission of empowering Emirati investors and entrepreneurs.

Emiratis who fall within the aforementioned age bracket, with an interest in venture capital investment and technology entrepreneurship, are encouraged to apply to DFDF’s Venture Fellows 2023 program by submitting an application online here by January 20, 2023.

Related: Mohammed bin Rashid Innovation Fund And Dubai Silicon Oasis Partner To Support Emerging Technology Startups

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Although companies — especially tech startups — tout themselves as “innovative,” most are unclear about how innovation works or what it looks like. People throw around “innovation” as the newest buzzword, joining the likes of “creator” or “disruptor,” without ever truly knowing its meaning.

This is why major media outlets such as CNN reported on the latest smartphone emojis under the banner “Innovate.” These emojis get lots of press and accolades, but are they actually tech innovations? Not really, though it’ll be interesting to see how often we can plug a ginger root emoji into a text.

Too often, we equate “newness” with “technological innovation.” But a slightly amplified version of a product or service isn’t innovation. Truly innovative technology ruffles feathers and challenges orthodoxies. It might cause anger because change is unwelcome, especially within organizations. Remember: Organizational momentum is real. Companies develop inertia based on the philosophy that what’s worked thus far must be continued. “We’ve always done it that way” is a low-key red flag that your organization is allergic to innovation.

Yet, innovation doesn’t have to mean throwing everything out the window. A common misconception about innovative technology relates to its size and scope. Innovation doesn’t have to be a big-bang experience — at least not immediately. Innovative technology teams can start small, gain buy-in slowly and evolve from there.

Related: Why Innovation Matters (Especially In Uncertain Times)

Taking innovation to the next level

Innovation is more than just tired, incremental software and feature updates. The true spirit of innovation rests in bigger, bolder musings: “What if this process didn’t need to exist?” and “What if there was a novel approach to the underlying problem that’s never been considered?” Finding the answers to those questions requires a strong culture of innovation that enables, empowers and finances teams to experiment.

Unfortunately, most companies don’t know how to do more than make surface changes, a la new emojis. They conflate iteration with innovation. Executives need to change their philosophies and lenses around innovation to drive more robust, genuine cultures.

Here’s where to start.

Related: 5 Cultural Traits That Employers Must Implement In the Organization

1. Name an innovation czar

When it comes to getting things done, assigning a point person makes sense. So, make innovation someone’s job. Give them resources to back up their innovative technology experiments. Put them in charge of educating the rest of the team on how to challenge the status quo, oversee tests and conduct postmortems.

Not sure whether you have someone internal who can fill this role? The fastest workaround is to partner with an outside innovation expert to help set expectations and kick off the innovation mindset across your organization. Having an outsider’s point of view can be more than just refreshing — it can shed light on what’s possible with today’s technology, uncovering different audiences or brainstorming novel use cases.

With innovative leadership in place, you can forge ahead to generate greater buy-in. PayPal’s answer to drumming up innovation support was to offer workers the ability to place bets on the company’s annual Global Innovation Tournament participants. The wagers came in the form of corporate-funded blockchain currency. PayPal employees who bet on the winning participants could exchange blockchain tokens for experiential prizes. According to PayPal, linking innovation, competition and crowdsourcing improved the quality of the ideas and participation levels — it was a “good bet” on innovation.

Related: Why an Entrepreneur’s Ability to Innovate Will Make (or Break) Future Success

2. Insulate and empower

One of the most pervasive issues in “corporate innovation” is the corporation. A company can claim it wants to be innovative and spend a lot of resources to that end. Still, it’s unlikely to succeed until it gives teams freedom and agency to experiment and explore without the Kafkaesque corpocracy getting in the way.

I recently spoke with a friend who had to navigate his company’s “Innovation Committee.” I thought that sounded awfully oxymoronic. True innovation takes courage and room to fail. Putting guardrails and approvals and applying old processes will hamper you. A better approach is setting up an “intrapreneur” group, separating them from the rest of the organization and treating them as removed. Working with an incubator or outside firm can provide even more intentional distance and help lift and extract from that institutional momentum.

3. Tap into everyone’s inner toddler

What do young kids ask all the time? “Why?” It’s probably their favorite word — it’s also essential for innovating. Organizations can easily fall into the well-worn ruts that have worked for eons. Therefore, their employees never question anything. That’s not a recipe for innovation but for stasis.

Though you don’t want everyone throwing tantrums, you certainly want employees to take on a toddler’s inquisitive attitude. For instance, encourage your team to use the Socratic Method, which involves asking questions, challenging assumptions, building a hypothesis and testing the theory. Want a good kickoff point? Ask, “Why do we do this the way we do?” The answer might surprise you.

4. Toss out preconceived beliefs about problems

People tend to approach problems using preconceived notions. The problem is those notions are usually done as quick “mental arithmetic” exercises. They’re based on gut instincts, feelings and, sometimes, outdated data. Bertrand Russell once said, “As usual in philosophy, the first difficulty is to see that the problem is difficult.” That’s true when trying to innovate, too.

When you drill down to first principles, you can quickly see errors that went into initial problem-solving. For example, let’s say you started with the wrong information or presumption. If you built an “innovation” based on that information, your solution couldn’t be the best. So, ensure people check themselves for assumption bias when working on innovations. The less they assume, the more likely they’ll come up with remarkable ideas.

Heads-up: It can be difficult for people to see cognitive biases in themselves. That’s why it’s important to educate yourself, challenge implicit assumptions and let others challenge your beliefs. Discourse with others is a powerful social tool to check your own biases. Although this can be uncomfortable, it can lead to great insights and inroads. Be prepared to model this behavior if you expect it to be embraced companywide.

Every business wants to innovate, but few leaders make the changes necessary for their organizations to become true industry innovators. Even if you just launched and have minimal working capital, you have the power to innovate. All it takes is a willingness to see problems and problem-solving differently.

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Real estate development and construction have changed since the 1960s: Contractors typically built the container and let the homeowner fill in the rest. However, smart home technology is disrupting the industry, presenting a major market opportunity for designers, builders, entrepreneurs and investors. Recent research from Mordor Intelligence predicts that the smart home market, valued at $79.13 billion in 2020, is expected to grow to $313.95 billion by 2027.

As a result, I expect to see an increase in the term “smart home automation” — referring to Internet-connected devices that monitor and control essential household functions such as lights, cameras, locks and climate. As the industry transforms, it presents a prime opportunity for entrepreneurs, corporations and investors.

Touchless interactions and whole-home automation that drive efficiency and save energy are among the concepts driving consumer interest. Automated heating and cooling will see high demand, with new government efficiency regulations requiring replacing or retrofitting existing systems. In January 2023, all residential central air-source heat pump systems sold in the U.S. must meet new minimum energy efficiency standards.

This trend is about improving the home experience — from programming devices that always behave the same to automating devices that anticipate and understand the homeowner’s needs. As evidence,Grandview Research predicts that smart kitchens will see an impressive compound annual growth rate of 30.5% from 2021 to 2030. Grandview also predicts that security and surveillance technology installations will increase by 31%.

Related: 3 Aspects of the Real Estate Industry That Can Benefit Immensely from the Metaverse

Think keyless door locks that use a PIN or connected doorbells that always know when a guest (or delivery) has arrived. For multi-family developments, AI-powered, public space video cameras that track what’s happening around the community and automated exterior lighting will be in demand.

I see a significant market opportunity because the smart home market has matured over the past five years, poised to move from “do it yourself” to “do it for me.” Buyers will likely look increasingly for pre-built homes with curated technology. According to a Coldwell Banker Real Estate survey, 71% of buyers want a tech-enabled “move-in ready” house, while 61% of millennials favor smart-tech homes; so do 59% of parents with children living in the house.

Making this a reality is new artificial intelligence (AI) technology that learns its residents’ patterns and preferences, then intuitively sets ambiance routines to match. Energy-saving thermal windows add to a home’s efficiency. Every smart device in each home is choreographed to work in concert with each other, connecting to a centralized home management app that is very manageable and simple to use. Such systems are updated regularly via the cloud, and all hardware is housed indiscriminately in a central hub in the home. Technology fully integrates into the structure and blends into the minimalist interior design.

Second-generation, AI-powered smart home technology self-learns, adapting to the routines and preferences; with most software solutions offered via the cloud, it continues to improve over time. In the ideal smart home setup, all devices are synchronized and orchestrated, made accessible through a smartphone or a computer. Call it a smart home with a genius IQ.

Related: 5 Ways AI Technology is Making Our Buildings Smarter

Urban density

Growing urban density and awareness of environmental sustainability require designers and builders to think about domestic space in a new way. The new urban home is comfortable and welcoming while using space with greater efficiency, flexibility, and responsiveness compared to houses of the past. Not to be underestimated is the impact of the COVID-19 pandemic, which underscored long-held beliefs that the home can and should contribute to the health and wellness of its inhabitants.

A first-of-its-kind prototype is a multi-family community of 18 two-bedroom homes called HOMMA HAUS Mount Tabor, outside downtown Portland. This kind of home — purpose-built to become the foundation of holistic well-being for its residents — must include a versatile modern design, multi-functional use of space and curated, pre-configured technology built-in before the resident occupies the space.

A great example of this trend is in Portland, Oregon. The Portland market is attractive for builders and investors: The city is a rapidly growing urban center that needs high-density housing solutions that move beyond the traditional detached single-family home. Urban residents are progressive, seek balanced lifestyles and welcome innovation that challenges the status quo.

Real estate trends in urban areas

Real estate trends are pointing toward modern designed, open floor plans that offer adaptability. Large windows and courtyard views help residents connect with nature inside the home. A skylight in the stairwell adds natural light. Built-in storage under the staircase for storing shoes and other things keeps clutter minimum; an outside storage area next to the second-floor patio keeps large or seasonal items out of the living space. A community bike storage room within the building is convenient and frees up additional space within the home. There is the efficient placement of lights and sensors. An unassuming, out-of-sight cabinet holds all the technology hardware.

Residents in growing urban centers like Portland typically value a close connection to nature and regularly participate in outdoor activities. Developments such as this one take advantage of materials with an organic feel that creates a sense of connection to nature. Carefully selected oak flooring, Corian kitchen countertops, and cedar fencing bolster the environment. Landscaping with bamboo and trees creates shade and further mitigates sound to maintain quiet inside the homes.

Real estate will see more focus on balancing resident privacy with creating connectedness between members of the community. Smart technology, combined with well-designed common spaces, makes this happen. Modern developments often have courtyards with a balance of quiet space and gathering space for community members.

As the real estate industry evolves, holistic and adaptive urban living will drive the industry. Savvy builders will combine modern design, architecture, and technology into homes that provide are combined into one product — the home — that has been built to provide beauty, comfort and wellness. Startup founders, corporate executives and investors should keep an eye on these trends and be ready to capitalize on opportunities they will create.

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For brands, businesses and consumers, continuous digital innovation in business is the new normal. According to a recent report from the United Nations Conference on Trade and Development, the economic and global crises of the past few years have spurred a new era when digital capabilities and technological evolution reign supreme.

In my experience as a digital strategist, I’ve found that in order to achieve success and stability regardless of what’s going on in the world, digital experiences must continuously evolve. Even if you don’t have the funds or resources for bigger projects, doing small things that incrementally improve the customer experience will still propel your business in the right direction.

Organizations that adopt a philosophy of continuous digital innovation can position themselves to navigate even the most frustrating external shockwaves and come out on the other side stronger than ever.

Related: Moving With the Digital Evolution

How to future-proof your business with a digital evolution mindset

The Great Resignation and supply chain issues are affecting brands of all shapes and sizes. Thankfully, there are some steps you can take to create new digital capabilities that promote experimentation, speed, customization, scalability, stability and innovation. Here are a few starting points:

1. Set a North Star and align your efforts with it

In 2019, CB Insights charted the top reasons small businesses failed and found that failure often stemmed from undefined and unregulated processes. This means that before you embark on any journey, you must first establish a North Star. Your North Star can be the goal or ideology that guides your processes, practices and digital evolution. For example, suppose your North Star goal is to provide exceptional customer experiences. In that case, your digital innovation should focus on creating an accessible experience for all of your customers. This might involve simplifying on-site processes, adding helpful product or service information and implementing customer feedback.

When defining these business objectives, you must look both externally and internally. Looking externally involves understanding your customers’ needs and finding ways to meet them. For example, some customers might want to order your products online. In that case, if you don’t yet have e-commerce capabilities, that would be an important project to include in your plan. On the flip side, looking internally within your organization could uncover that some employees are unhappy with their career progression. If that’s the case, creating a visible career path complete with online learning and room for growth could be an important internal goal to work toward.

Related: 5 Digital Trends That Are Here to Stay. Time to Embrace Them.

2. Look for gaps in your tech and resources

Today’s customers demand a highly personalized experience. They want targeted emails, personalized ads, hyper-relevant content and tailored product recommendations. And according to Epsilon, organizations that prioritize customer personalization stand to see a direct impact on sales, as 80% of consumers are more likely to do business with a brand that provides a personalized experience.

But that personalization can only happen if you have the right tools and data at your disposal. If you don’t have systems in place that integrate your data so it can actually be useful, you won’t be able to build customer journeys that resonate with your target audiences. You have to resolve tech stack issues before any continuous digital evolution or innovation can take place.

For example, imagine a customer who bought a winter coat on an ecommerce site. After the purchase, the customer continued to receive the same ads about the same winter coat over and over again. At this point, the customer is annoyed that they’re still seeing the same ads even though they already purchased the coat. This leaves a bad taste in their mouth and makes them wonder whether they should bother interacting with your business again. Fortunately, if you review your tech stack and integrate your systems for effective data collection, you can fix customer experience problems such as this one.

Related: Key Digital Transformation Challenges CMOs Must Overcome

3. Be adaptable

If the past few years have taught us anything, it’s that economic and customer needs can change without warning. Your road map to success needs to be adaptable and able to be quickly revised. As such, it’s necessary to determine and frequently reassess the needs of your business and how you can best serve your customers. Plans are never meant to be steadfast, especially in a fast-paced digital age when anything can happen. So how can you prepare your personnel to be more adaptable?

First, start by making sure your team members possess the right skill sets and have access to the right tools. For instance, your team might need access to a content management system, a product information management system, a customer relationship management system or a combination of these. Ensure every person who might need these tools has access, and offer certifications on all of these tools to empower your team and set them up for success. After all, the more empowered your staff members are, the more quickly they will be able to shift when needed.

Second, encourage team members to share diverse viewpoints and engage in healthy, productive debate. As mentioned in a Harvard Business Review article, airing concerns and participating in healthy debate can promote cognitive diversity, spur progress, lead to innovation and uncover breakthrough solutions — as long as it’s done respectfully and productively.

The past few years have been challenging for businesses of all sizes and in all industries. And if we can be certain of anything, it’s that there will be more difficulties that crop up as we progress into the future. One of the most important things to prioritize through it all? Engaging with audiences in a way that inspires loyalty and provides an exceptional customer experience. A surefire way to keep an eye toward this focus is continuous digital evolution, so make sure it’s a major component of your business planning as you move into 2023.

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Few governments in the world acknowledge the social and economic importance of technology, and then take the huge leap of actively supporting its advancement. But the UAE is an exception- a true tech innovator. It sees the potential game changing impact of tech on its economy, people, and presence on the global stage– pursuing the future, you might say.

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The UAE understands that diversification is a central tenet in a young nation’s sustainability, and so they looked ahead. While the energy sector continues to innovate –and the UAE is a big part of that process– the country has looked to the digital revolution as the path to future prosperity.

If this development has somehow gone under your radar, just look at what the UAE is doing across several key disciplines– specifically coding, blockchain, artificial intelligence (AI), and the metaverse.

THE CODE LESS TRAVELLED

In decades past, the safe trades in pretty much any part of the world were medical or engineering. While these traditional professions are still needed and valued, there is now a serious global shortage in the progressive and rapidly evolving world of tech. To put figures to the crisis, according to the US Labor Department, it’s estimated that by 2030, the global shortage of software engineers will reach 85.2 million.

Related: Entrepreneur Middle East Publishes A Special Report Looking Into The Crypto Universe

Coders, developers, techies -whatever you want to call them- are now the hot commodity in the recruitment world. The UAE understands this better than most countries, recognizing that to build great tech –be it blockchain, AI, or the metaverse– you first need technical experts. If there is already a shortage, then it’s crucial that initiatives are rolled out that encourage new developers to enter the industry. The UAE is leaning hard into the idea.

Partnering with more than 40 companies in the UAE and globally, in 2022 the UAE launched the boldly ambitious Coders HQ. This transformational project aims to build a new generation of coders, and give them the tools, education, and technology they need to excel, equipping them to design solutions to local and global challenges. It’s a brilliant vision, and one that is already having a major impact on the UAE’s growing position as a powerhouse of tech and innovation.

NEW KID ON THE BLOCKCHAIN

The hype around blockchain is fully justified. The fortunes of many have been transformed overnight through savvy (early) crypto investment.

But given the market’s extreme volatility, regulatory concerns around digital asset ownership differ around the world. As a result, many countries are reluctant to fully embrace it. Not the UAE, however. The nation’s progressive stance on digital finance and innovation is well-documented, and it’s no surprise that crypto assets were legalized in the UAE back in 2017.

However, that said, the get-rich-quick and HODL (the crypto slang term for those who buy and hold indefinitely) camps need to understand that crypto is only one piece of the blockchain pie. There’s a lot more to this disruptive, decentralized, ledger-based technology, from non-fungible tokens (NFTs) to smart contracts.

The UAE government set out an official, broader Blockchain Strategy 2021 in 2018, with plans to have a more robust framework in place by 2021– or, in the words of the UAE Government itself, “to transform 50% of government transactions into the blockchain platform by 2021.”

Though we’re now past the 2021 watershed moment, fast-forward to the tail end of 2022, and impressive strides have been made. The UAE continues to be one of the most successful global adopters of blockchain tech, and a recent research report identified more than 1,450 active web3 organizations in the country.

To support this trend, the recently formed Virtual Assets Regulatory Authority (VARA) is a testament to just how critical blockchain is to the UAE’s long-term prosperity, as it continues to attract already well-established players from across the digital globe, such as Binance and blockchain.com.

Needless to say, the future of digital transactions and governance has strong roots here.

Related: Meals And The Metaverse: An Unlikely Pairing That Go Together Like Peanut Butter And Jelly

METAVERSAL ACCLAIM

In tandem with the rise in blockchain, another much hyped web3 tech, is being set up for success in the UAE: the metaverse.

The concept of a digital realm has long been a sci-fi staple. While many may dismiss it as another digital fad, the metaverse is anything but. Perhaps best described as an internet-enabled virtual world, it’s a far cry from being a lockdown leisure pursuit or a downtime distraction.

As technologies such as virtual reality (VR) and augmented reality (AR) have advanced, the barriers between the digital and physical worlds have become less distinct. However, with the continued rise of remote working, e-commerce, online interaction and education, and the growth of blockchain and web3 technologies, it’s looking like a dead cert that the metaverse will be the next digital paradigm shift, the internet of the future.

Not convinced? Tech giants such as Apple, Sony, Epic Games, and others are already setting themselves up for metaverse mastery. Facebook even changed its parent company’s name to Meta, if you needed more evidence of their intent.

Ever keen to gain first-mover advantage, here in the UAE, in a step mirroring the country’s adoption of blockchain, in July 2022 the Dubai government announced its Metaverse Strategy, an ambitious five-year plan to create 40,000 virtual jobs and add USD 4 billion to the economy over that timeframe.

Related: Tech Innovation: The Path To New Revenue Channels For UAE SMEs

ARTIFICIAL PANACEA

Of all the tech infiltrating our daily lives, AI is the one taking the world by storm. We’re not yet dealing with rebellious robots and sapient systems, but AI tech can be found in many home gadgets and almost every corner of business nowadays– whether it’s in the form of automations that cut down on manual processing, or in algorithms that help businesses understand complex customer cost scenarios, such as insurance quotes.

Related: Pulling No Punches: Robert Gryn, Founder And CEO, Metahero And Everdome

While many countries let businesses charge forward without a wider strategy for individual technologies, the UAE government has seen the true potential of AI and has built a comprehensive strategy to nurture the technology’s growth over the next ten years. The strategy has eight central objectives, with a clear focus on encouraging investment to attract even more tech talent to the nation.

Speculating on the impact of technology is challenging, but there is no doubt that AI and machine learning can process and analyze information at a rate the non-digitally assisted human brain could never achieve. This mastery of data could bring further breakthroughs in medicine and tackle such mighty conundrums as the climate crisis, improving people’s lives and maybe even saving the world.

With the UAE driving this technology, the country is leading the way to a better future through focused strategy and investment.

Related: Creating Impact (At Scale): Mundo Crypto Founder Mani Thawani

A PROSPEROUS FUTURE

Looking from the perspective of the challenges the world currently faces, coding, blockchain, AI, and the metaverse might seem like small pieces in a huge puzzle. But the truth is, they’re not pieces of the puzzle at all, but solutions to it.

The UAE government has made its position clear: it will become a global hub for tech, innovation, and business. The next generation of tech will touch everything from office efficiency to longer-term challenges such as climate change and disease control, and the UAE wants to lead the development of that technology and help solve those problems.

Related:Increasing Innovation In The UAE Through Diversity

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It’s an unspoken truth that something is wrong with the state of innovation in large organizations. Leaders argue back and forth about organizational innovation — how it’s to be fostered, what can be done to increase its sweep, etc. Companies invest in innovation task forces, tiger teams, weekly creativity interlocks and global offsites. They take all these measures to keep innovation alive.

But does any of it work? Is innovation a process that can be perfected? Can an executive committee conjure up innovation, or must we have it at our company’s inception, nurture it and keep it alive through meticulous caretaking?

Is innovation like a fossil fuel, a nonrenewable resource that once it’s burned up can never be found again? Or is it a matter of getting the details of our organizational structure and funding just right? Just how are we expected to make lightning strike in the right place at the right time —and is it something we can even control at all?

Related: 5 Ways to Create a Culture of Innovation

Small and swift vs. vast and slow

When I was at Napster, years ago, there were no committees for fostering innovation. There was no tiger team on innovation management either. We focused instead on creating something meaningful for our customers while enjoying each other’s company. We made a great team. Innovation just happened. Talking about it would have been like discussing the air we breathed.

When I left Napster, I spent a brief time at a giant company, where I was immersed in something I’d never heard of before: a global internal innovation initiative. It sounded great — but I could never figure out what it was. They put the committee’s goals in writing, but I would have had to hire an attorney to decode it. The goals were so vaguely, so obliquely defined.

It was an enormous company with a household name and a sprawling bureaucracy. I was asked, while there, to chair a committee on corporate meeting effectiveness. Given that the committee had no defined goals, I found that the most effective approach to my committee was to never have a meeting. No one asked when the next meeting was; they were busy with other meetings, and eventually, the committee died, leaving us all more time to do our jobs.

Innovation, or lack thereof, is a result of how we spend our time. We must be honest with ourselves about where our people’s time is invested in our organization. When we’re sitting in meetings, we’re rarely innovating. And the bigger and older a company gets, the more tribal fractions it has, and more meetings must be held to keep it going — or so the thinking goes.

Accept the inevitable

We can’t solve the problem of fizzling innovation by never letting our companies grow. That’s obvious. Time accumulates on an organization as inevitably as it accumulates on a human body. We age, we slow down, we need more help all the time, and our systems stagnate. In the case of a company, aging takes the form of expansion. It builds up a bureaucracy around itself. People on the outskirts lose touch with what’s happening at the center and vice versa.

But that doesn’t have to happen, at least not in a dramatic and detrimental way. As scientist and podcaster Lex Fridman once said, “I refuse to believe that large companies can’t innovate by doing great novel design and engineering. They can. It’s a question of leadership and culture.”

When a company transitions from a startup to a large conglomerate, it can age and grow like a person can, with grace and mindfulness, with a willingness to change and accommodate new realities of the constantly changing world. And it can start by keeping a handful of crucial realities in mind.

Related: 9 Ways Your Company Can Encourage Innovation

Incentives work

As I wrote in Fearless Innovation, I was at a meeting once where an executive started things off by urging us, half-joking, to give him some million-dollar ideas. A brave employee responded, also half-joking, “If I had a million-dollar idea, why would I give it to you?” The remark was met with shock and nervous laughter. But it was exactly the right answer.

Indeed, if one of our employees has a million- or billion-dollar idea, why should they bring it to us? Why shouldn’t they leave and start their own company? It happens all the time. So, to prevent that, what incentives do we offer employees who might bring a lucrative opportunity to our attention?

Incentives work. Most people would rather be fairly recognized and rewarded for their innovations and implement them with seasoned professionals within their existing organizations rather than go solo and start a new business from the ground up. So, make it worth their while to stay and share with us what they’ve created. Let’s make sure there are real benefits for those who might bring innovations forward — and that those benefits are both tempting and clearly defined.

Innovation dies in muddy waters

We’re always eager to share our organizational successes with employees — but we should tell them about our failures, too. It’s the right thing to do. For all we know, the problem that plagues the division that’s hemorrhaging clients could be solved today if only the right person working in another department were fully aware of the issue. Some secrets simply have no business being kept.

How available are our company’s leaders to our employees? Do the people who work for us know us? Do they trust us? Or more to the point: What have leaders done to ensure them that they can and should trust us with their ideas?

We can’t solve our problems if we live in a world of illusions conjured by our own corporate propaganda. We can’t expect our employees to wear rose-tinted glasses — or rose-tinted Meta Quest Pros, as the case may be — and give us the innovations we want or need.

One of the fringe benefits of this careful transparency is that when our people can see clearly what’s going on, they feel like they’re on the same side. It’s partly why every stadium has a scoreboard: Sometimes the losing team has to see their losing score, plain as day, so they are pushed to rally together and fight as one.

Related: 4 Ways to Drive Internal Innovation and Unleash Employees’ Entrepreneurial Side

Innovation is a team sport

“The bureaucracy is expanding,” said Oscar Wilde, “to meet the needs of the expanding bureaucracy.” It’s a phenomenon that plagues many large companies, but despite plenty of funding, this sort of thing rarely happens in startups.

Every startup is a team. And there is nothing quite like going to work — even when you work from home — knowing that the people you work with have your back and believe in you, or at least understand that you’re after the same goals and are willing to put in the effort it takes to achieve them.

It’s hard to feel like a team when you work with dozens of other people, most of whom you’ve never met — and yet, it’s a reality that many face. Working in a large distributed organization is an unending political process, and it’s unlikely to get better in a hybrid work environment. And so it’s our responsibility, as leaders, to reduce as much of that political burden on our people as we can. Michele Zanini, an expert on bureaucracy and a co-author of Humanocracy said it best: “No creative soul should ever be stymied by structures and processes that give more weight to political connections than the quality of an idea.”

Let’s start a new committee only when we must, and don’t schedule meetings that we’ll admit later could have been an email. Next time we talk about inclusion and diversity, let’s practice it by inviting everyone to the table and listening to all opinions, not just those of our resident bureaucrats.

Innovation is both a vision and a process

Innovation is the product of inspiration and the painstaking labor of making an idea work. But it can only come about in the right environment where employees are incentivized, information is freely shared and bureaucracy is kept on a tight leash. It is our responsibility as leaders to nurture that environment, and most importantly, get out of the way of the people we rely on to keep our visions alive.

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This past weekend, I had a rare opportunity to kick back and relax. I needed a few supplies before I settled into my couch, so I grabbed my Amazon Fire phone and headed out to the local shops. I didn’t need to bring any cash — my Amazon Wallet had me covered. When I got home, I nearly tripped over the box of laundry detergent my Amazon Dash had ordered. I remembered to book my trip to New York City on Amazon Destinations, and just as I confirmed my hotel, the doorbell rang, signaling the arrival of my order from Amazon Restaurants. I grabbed my food, settled into my comfy couch and spent the rest of the day playing Amazon’s online game, Crucible.

Of course, none of this happened. Because while all of these Amazon products and services are real, they no longer exist. They were experiments that failed to achieve critical milestones, and Amazon shut them down.

One of the things that made Jeff Bezos a great founder was his embrace of experimentation and failure. He relentlessly invested in new product development. But he didn’t fall in love with any one product or tactic to fulfill his vision. Instead, if an experiment failed to meet minimum expectations for performance, regardless of the amount of time and effort invested, he was quick to pull the plug, making space for future experiments.

Innovation and experimentation are crucial to the journey of a startup. You’re in search of scalable product-market fit. Many of your assumptions are going to be wrong. Many of your experiments and tests will fail. That’s okay as long as you follow one essential rule.

Believe in your vision, but be ruthless in shutting down initiatives that don’t meet expectations. If you don’t quickly shut down unsuccessful projects, your team will become mired in work that can’t scale, draining time and money from much higher potential ideas. Here are three questions to ask when evaluating the potential of a new product or service:

Related: Fostering a Culture of Innovation, and What It Takes to Do It Right

1. Will your early adopters accelerate organic growth?

When you first launch a product, you should be able to find a core group of early adopters. Your target early adopters have problems to solve. You are launching a product that addresses those problems. If you hit the mark on features and price and can easily convey your value proposition, they should be willing to try your product with very little incentive or marketing effort. If they like it, they can quickly become evangelists within their community, creating your initial flywheel of organic growth.

You have a critical decision to make if you cannot find a group of early adopters that will help drive organic growth. Iterate and test again, or kill the product and move on to your next idea. Unfortunately, most startups’ biggest mistake at this crucial crossroads is to ramp up spending on marketing beyond a sustainable level under the mistaken assumption that they have a marketing problem rather than a product problem. This path only leads to accelerating cash burn and missed opportunities.

Related: 3 Common Mistakes That Are Inflating Your Marketing Budget

2. Are your customers coming back for more?

Once you discover messaging that attracts customers to your product, you must deliver on their expectations. Do they continue to use your product after those first few attempts? Do they keep coming back to buy more from you? Or are you suffering from high return rates, cancellations or product abandonment? You should have clear KPIs for customer behavior, consistently measuring to ensure you’re building a sticky enough offering to scale your business.

Successful startups are built on the back of customer lifetime value (LTV) that can sustain profitable, scalable growth. High LTV is powered by strong customer retention and consistent repeat buyer behavior. If most of your customers are one-and-done, it’s unlikely you can profitably scale your company.

Related: Are You Sitting on a Customer Retention Goldmine?

3. Do you have enough pricing power to deliver profitability?

Sales volume and customer retention only matter if each sale generates enough profit. The path to profitability and positive cash flow is a healthy contribution margin. Contribution margin is calculated by subtracting the variable costs required to produce and sell your product from your net sales price.

It’s easy enough to get customers to order a free trial or accept delivery of a try-before-you-buy subscription box. But can you attract enough customers willing to pay a price that delivers an acceptable contribution margin? Too many startups fall into the trap of focusing on vanity metrics to measure the performance of their products — downloads, gross sales and free trial downloads. In the end, your product, and your startup, will only be successful if you can consistently charge a price that will generate the profits you need to support sales and marketing, new product development and your day-to-day operations.

Related: 4 Reasons Why Pricing Is the Key to Startup Success

The Amazon Fire phone may have failed, but the technology developed for the phone accelerated the development of two very successful products: the Echo and Alexa. Building a culture of innovation isn’t easy. It requires an acceptance of failure, supported by a culture of measurement and accountability. But it’s a powerful force for finding product-market fit, profitability scaling your startup and building enterprise value. It’s also a much more fun and fulfilling way to build your company.

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You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

If you’re familiar with the comic book character of The Batman, you’re perhaps also acquainted with Alfred Pennyworth, his trusted butler and sidekick. But what does this sidekick to a hooded vigilante figure have to do in this story about a UAE-based human resources (HR) tech platform called Alfii? Well, I’ll let its co-founder and CEO Yousef Albarqawi explain.”The name ‘Alfii’ has a few different meanings, but the original idea was inspired by Alfred, Batman’s butler, who helped make things happen for the world but was never in the forefront,” Albarqawi explains. “He provided all the help and support that was needed behind-the-scenes. Our name is an homage to that: the support system that makes great things happen.”

Alfii
Dina Mohammad-Laity, Yousef Albarqawi, and Becky Jefferies, co-founders, Alfii

It was during his tenure as an operations leader, at early-stage ventures as well as global multinational firms such as Deliveroo, that Albarqawi first observed how overwhelmed and under-resourced HR professionals can be. That eventually led him towards the idea of creating Alfii, and he launched it along with two other co-founders: Dina Mohammad-Laity, a data scientist who has worked at renowned MENA firms such as Talabat and PropertyFinder, and Becky Jefferies, a brand-builder who previously led a MENA-wide marketing team at Uber. “I came to learn that many HR teams -some with a workforce of several thousand people- were still relying on spreadsheets or otherwise outdated and non-digitized systems to manage their HR processes and employee data,” Albarqawi recalls. “I also noticed that many companies invest in high-quality customer relationship management systems to bring customer data into one place and easily manage those relationships, but they lack an equivalent ‘single source of truth’ for managing their employees. And this was despite the fact that staffing costs are the single biggest cost item for most companies! That’s why I set out to build Alfii. I want to make sure all businesses -not just large enterprises- can help their people thrive.”

Set to go public in mid-December 2022, Alfii has now launched its private beta program across the UAE, Egypt, Jordan, Saudi Arabia, as well as the United States and the United Kingdom. Its early version aims to simplify the core HR processes of recruiting, onboarding, document collection and management, as well as payroll. And once publicly launched, Albarqawi assures that any business can sign up on the Alfii platform and straightaway start using it. “As a business-to-business (B2B) software-as-a-service (SaaS) company, our business model is subscription-based, and pricing is structured on a per-seat/per-month basis,” he adds. “Further down the line, we will be tackling other aspects of workforce management, which will likely include benefits, leave and attendance, engagement, and learning and development. There will also be additional managed, value-add services that will be charged on a per-use basis. But more importantly, our model is optimized for startups and SMEs.”

Source: Alfii

Now, with SMEs accounting for 50% of the UAE’s gross domestic product, and the nation itself becoming a global startup hub, catering to this market may well lend significant value to Alfii. “If we can enable our region’s startups and SMEs to deliver people experiences that are just as good as, if not better than, their larger counterparts, then we’ve done our job- the beginning of it, anyway,” Albarqawi adds. The co-founder also makes it clear that a key reason for Alfii to target this specific market is because HR-related hurdles faced by smaller firms are extremely complicated. “Many large organizations are benefiting from enterprise-grade tools, but for most of the 5,000+ startups and 350,000+ SMEs in the UAE, adoption of these tools is still comparatively low,” he says. “On one hand, enterprise-grade solutions are either too complicated and expensive to integrate, they aren’t user-friendly, or they are highly fragmented to the point that a single business could be using up to 40 different tools to manage their workforce. On the other hand, SME-oriented solutions in the region have left a lot of room for disruption. To quote my co-founder, Dina: ‘It’s 2022. Why are people copy-pasting the same stuff every month? It makes me want to cry.'”

Yousef Albarqawi, co-founder and CEO, Alfii. Source: Alfii

That an HR team’s inefficiency often trickles into other areas of an organization is probably a fair assessment. But Mohammad-Laity, the co-founder of Alfii who’s also its Chief Technological Officer, offers a narrative here that isn’t highlighted very often within such a discourse. “We need to understand that what further amplifies the frustration for HR teams is that they actually care deeply about making a difference for people -that’s usually why they pursued a career in HR in the first place- but they rarely get to focus on the most rewarding and gratifying aspects of their job,” she says. “No matter how well-intentioned they are, they keep getting sidelined by paperwork and administrative tasks. By removing repetitive administrative tasks, we’re increasing the amount of time they can spend on meaningful work that is best handled by a human. This meaningful work directly impacts the entire team, due to the people-focused nature.”

Related: Startup Spotlight: Predixa Is Helping Companies Across The UAE Unlock The Financial Value Of Diversity, Equity, And Inclusion

Incorporating a human touch thus became a necessary facet of Alfii’s operations. But the key to doing this right lay in leveraging the power of technology wisely, says Mohammad-Laity. “Data is a big part of the way we’re addressing the human element,” she explains. “We’re designing our platform with a powerful back-end that can provide advanced analytics and deep insights surrounding employee satisfaction, engagement levels, and other important metrics to keep a pulse on their people. I like to say that data is the voice of humans at scale, and by designing the product in the way we have, with the development principles we have, we ensure that users’ data is central to how the product works and gets developed over time.”

Dina Mohammad-Laity, co-founder and CTO, Alfii. Source: Alfii

So, how does Alfii reduce the mundane and repetitive tasks for HR teams? “One example is our offering of a self-service experience for employees, wherein instead of asking their HR business partner for official documents (like a salary certificate, for example) or for updates to their personal data, they can help themselves directly through the platform,” Albarqawi says. “One of our favorite features is a customizable drag-and-drop template builder, which simplifies things like offer letters, employment contracts, employee policies, and so on. By integrating e-signatures into the workflow, new joiners and employees can sign documents digitally without leaving the platform. We’re therefore committed to putting out a product that people actually like using -just like our favorite apps- which is why every aspect of the user journey has a human touch; that’s a big part of our DNA as a brand.”

And as per the startup’s co-founder and Chief Marketing Officer Jefferies, the need for such people-centric features has become more significant in the post-pandemic world. “Despite the recent macroeconomic climate leading to layoffs and other challenges for businesses of all sizes and stages, it’s still clear that for companies to remain competitive in today’s work environment, they have to win on talent- and that’s why so many of them are consciously making a shift towards becoming people-centric organizations,” Jefferies says. “It may seem like a buzzword now, but we believe it’s here to stay. And considering most of us spend the majority of our waking hours at work, that’s good news for all of us!”

Jefferies’ claims are backed by hard facts, of course. For example, Deloitte’s 2022 Gen Z and Millennial Survey highlighted that good work, life balance, and learning/development opportunities were now the top priorities when choosing an employer. And if other workplace shifts such as “The Great Resignation” and “quiet quitting” are anything to go by, it is evident that catering to this millennial-majority workforce will require businesses to rethink the human element of things. This, perhaps, is the right time to introduce the other meaning behind the startup’s name. “The word Alfii in Arabic also happens to mean ‘millennial,’ which is soon to be the world’s largest workforce segment,” Albarqawi explains. “The product we’re building is for the future of work that they’ll soon be the biggest part of!”

Becky Jefferies, co-founder and CMO, Alfii. Source: Alfii

Jefferies adds that having two female co-founders at the helm of Alfii is also one of its greatest strengths. “When it comes to how female leadership is helping to shape things at Alfii, one of the first things I would point to is the empathy factor,” she says. “Empathy is often viewed as one of the ‘superpowers’ women bring to the table, and given the importance of letting customer feedback drive product development, this gives us an edge that we’re constantly leaning into. We’ve spoken to hundreds of HR leaders across many different geographies, and being able to listen to, understand and relate to their pain points and challenges plays a big role in shaping our product offering. With that insight, we can purposefully design the platform for what HR teams need the most.”

With a public launch now right around the corner, the co-founding trio hope to see all their plans for Alfii convert into tangible results very soon. “Alfii’s ultimate vision is to help businesses build a more connected, higher-performing, and happier workforce,” Albarqawi says. “We want to do that by building the most user-centric and comprehensive people experience platform. It’s a big product vision that we intend to build well, and fast!”

Related: A New Era Of Innovation: How MENA Entrepreneurs Can Get On The Fast Track To Success

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Image Credit: Bobby Fisher; Hair & Makeup: Imogen Marrone; Clothing: Dim Mak Collection


Most people heard noise. Steve Aoki heard music.

It was just, in his words, “intentionally abrasive” music.

What’s the difference between noise and intentionally abrasive? This was back in the 1990s, when Steve Aoki was a kid growing up in the California punk and hardcore music scene. Bands were playing loud, cacophonous stuff. His parents called it “devil’s music.” But Aoki was intrigued, because although this music turned most people off, it also drew a community together. It wasn’t just garbage; it was a barrier to entry, and an appealing puzzle. “It didn’t fit with the world, and that was what spoke to me,” Aoki says. “You have to climb through the noise to find the gem.”

In one way or another, that mindset has guided Aoki through a singular career. He is ever curious about the opportunity that others are overlooking, because it might seem too small or weird or noisy. Then, he says, he “brings that noise out from the corner and into the masses, and builds a community around it.”

He is, for example, among the world’s most famous DJs — the rare artist to transcend the club scene and achieve mainstream awareness. But he’s also a savvy entrepreneur who absorbed brand-building lessons from his father, the founder of the successful restaurant chain Benihana. Aoki is a celebrated music producer, creator of the record label Dim Mak, as well as a clothing line called Dim Mak Collection that has partnered with the likes of Adult Swim and DC Comics — and he was recently named the “chief music officer” of Orangetheory Fitness (which means he sets the tone for the company’s workout classes worldwide).

Related: Web3 Is About More Than Tech, Thanks to Its Inclusivity

Lately, he has also thrown himself headfirst into the world of Web3, and has become one of its most vocal, prominent, and successful advocates. Because these days, if you want to talk about the future of business and technology, there is no better synopsis of Web3 than “you have to climb through the noise to find the gem.”

Surely you’ve heard of Web3 — but it is so new, and often so abstract, that the average entrepreneur may puzzle over how (or if) it’s actually going to be useful. So let’s back up to explain.

The current internet is known as “Web2,” and is defined by intermediaries: You buy things through Amazon, you reach others through TikTok. If you play the game Fortnite, you can buy a weapon for your character in the game, but you only “own” that weapon inside the game’s universe. It cannot be moved somewhere else, and Epic, the maker of Fortnite, could make it disappear at any time. Web3 promises something different: A universe where everyone who surfs the web can own their digital assets, where individuals (and companies) can easily connect and exchange things with each other without intermediaries, and where every transaction is trackable.

“Web3 is all based on the idea that when we go in, we own it,” Aoki says. “Who’s going to want to play in a world where they don’t own stuff?”

That sounds interesting, but what does it practically mean? Admittedly, this depends on who you ask.

Critics will say we are very, very far away from making Web3 useful to the average business. Indeed, Web3 doesn’t really even exist yet. The bones are there, thanks to existing blockchain technology (more on that later), but the refined visual layer we’re used to in Web2 (i.e., websites to surf and things consumers can engage with) has yet to arrive and make it a fully operable ecosystem. For now, it’s mostly a lot of big talk and splashy projects — something a celebrity like Aoki can capitalize on, but most people can’t.

But if Web3’s many evangelists (Aoki included) are correct, we are only seeing the beginning — where, yes, it may seem ridiculous that someone can sell ownership of a wacky piece of digital art called a non-fungible token (NFT) for millions of dollars (and Aoki’s sold many pricey NFTs), but the future won’t just be a playground for the most famous entrepreneurs. Instead, Web3 is set to become an increasingly accessible tool. It’s a trajectory that most new technology follows. Before the bicycle was the bicycle, for example, it was the “dandy horse,” an expensive plaything exclusively for the rich. Then the technology behind its manufacturing improved, the cost went down, and anyone could use it to ride to work.

What will Web3-for-everyone look like? Because we cannot actually see Web3 in its future form, we will instead work with the best of what we’ve got — Steve Aoki — and use his insights to draw a line to the average entrepreneur.

Related: Time to Reinvent: 5 Tips for Boosting Creativity and Innovation

This is Aoki’s Web3 ecosystem in a nutshell: His first NFT collection, Dream Catcher, generated $4.4 million when it was released in March 2021 and set a record on Nifty Gateway, the NFT auction site where it debuted, with a piece selling for $888,000. He’s since parlayed his own IP — like a comic book collaboration — into more fast-selling NFT collections. He’s teamed up with Sotheby’s and Lamborghini on Web3 projects and has become a brand ambassador for sports betting company DraftKing’s Web3 endeavors. He’s folded much of this work into his own personal Web3 ecosystem, A0K1VERSE, to which members hold a “Passport” that gains them access to special events, opportunities, and products curated by Aoki. He’s done all this (and more) in less than two years.

What does that have to do with you? Aoki has ideas. So does his longtime manager, Matt Colon. And so does Chris Liquin, senior vice president of strategy at Vayner3, a Web3 consulting firm belonging to entrepreneur Gary Vaynerchuk (who isn’t known to be involved in Aoki’s Web3 pursuits but is working daily with entrepreneurs as they find opportunity in this space). Here, all three of them weigh in on where the average entrepreneur can uncover Web3’s most immediate value.

Image Credit: Bobby Fisher


Lesson 1: Enter with caution.

If you wanted to build a website in the 1990s, you often needed to know some HTML. Now, of course, you don’t — services like Squarespace and Wix offer a beautiful, simple layer between you and a website’s underlying code. You can think of today’s Web3 space as the ’90s all over again: To engage, you need to know some details.

Aoki admits he only “understands the broad strokes” of this world, like the basics of what a blockchain network is. (That’s the core technology that fuels Web3; it’s often described as a public ledger, where every transaction is permanently recorded and available for everyone to see.) While he focuses on the tangible human connections that Web3 can create — things like community-and loyalty-building, which we’ll discuss later — he relies on his manager Colon to assess the technical details.

Related: Here’s a Beginner’s Guide to Crypto, NFTs, and the Metaverse

That’s wise, says Vayner3’s Liquin. Because learning which marketplaces and Web3 platforms make the most sense for your business requires seeking out both information and expertise. “Doing the research is number one,” Liquin says. “Every blockchain or tech partner will pitch you a new, cool solution, and there’s just so much noise in this space.” If you want to engage, you need enough basic knowledge to filter that noise.

Where to start? Liquin recommends Twitter, which is where Web3 aficionados converge most readily to discuss the ecosystem. You can follow and join their conversations. Aoki recommends partnering with someone who’s immersed in it, which, he cautions, may not be someone with traditional tech or business world bona fides. The ideal Web3 resume might look more like a list of blockchain conferences attended and Web3 projects contributed to than a series of impressive companies someone has worked for. “A 21-year-old kid might be way more advanced,” Aoki says, than someone who’s spent 20 years at Web2 powerhouses like Meta and Google. “I’d be way more comfortable with this kid that’s hungry for this information,” he says, than the longtime tech veteran.

If that’s too much investment, you can join any number of entry-level communities that are designed to help. Media entrepreneur Randi Zuckerberg hosts one called HUG. Investor Brit Morin has another called BFF.

Image Credit: Bobby Fisher


Lesson 2: It’s all about “smart contracts.”

After learning the Web3 basics from trusted developer partners, Aoki dove in headfirst. In March 2021, he minted his very first collection of NFTs — just as many other celebrities have done, with reportedly staggering profits. Aoki’s team claims they earned $3.3 million in the first five minutes of release. (Although, even in a world dedicated to transparency, NFT profits are hard to confirm: Many people have been accused of secretly buying their own NFTs, or coordinating with others to buy NFTs, as a means of driving up the cost and claiming large profits — which is not to say Aoki did any of that.)

The NFT marketplace was on fire in 2021 and has significantly cooled since. Critics say it was a bubble, and woe to those who spent millions on digital art that will one day be worthless. But Web3 experts say that’s fine, because NFTs as we know them were never the point. They were only the most visible usage of the technology that powers the NFTs, which has much wider and more practical potential uses.

Those things are called “smart contracts.”

These contracts store the ownership history of a digital item, signify its uniqueness, and allow owners to set a price for that item and sell it to someone else. Most importantly, these contracts can be programmed to automatically carry out actions given certain inputs, and those actions are all recorded and viewable on the blockchain.

What does that mean? For NFT sales, they enable the transfer of ownership: Once the buyer sends the right amount of cryptocurrency to the seller, the transaction takes place and is forever viewable for others to see.

Related: Technology Is Already Disrupting Our Lives. What Will the Future Look Like?

But smart contracts can do much more than facilitate sales, which is why many startups are currently exploring how to turn them into a standard business tool. For instance, smart contracts could provide a level of transparency for businesses hoping to inspire trust among consumers. Say a company wants to crowdfund for a specific aspect of its business, or donate profits to a charitable organization. These are both important ways to engage a community — users like being a part of the creation of new products, and are more apt to support businesses that share their values and meaningfully act on them. But right now, consumers must take a business at its word. Was the money invested properly? Was it donated as promised? Nobody knows…but a smart contract can solve that.

“The community can all agree that, yes, this mission has been fulfilled, or yes, these funds have gone to a charitable cause we approve,” says Liquin, “and then the money is released. These smart contracts can hold that money in a kind of escrow, and then deploy it towards those causes.”

Smart contracts can also offer transparency in other areas of consumer concern, like supply chains. These days, consumers are attuned to the sustainability of companies’ practices, and companies can use smart contracts to record and make public their supplies’ origins and shipping journeys. “Smart contracts can demonstrate the authenticity of luxury goods, or the clean, ethical sourcing of raw materials through a full supply chain into the final product,” Liquin says.

They can even alert business owners when something goes wrong in the shipping process, like in the case of a smart contract coded to detect if the temperature of a crate filled with perishable items gets too high or too low. If something’s wrong, the contract might ensure the business saves its money. Or, they could improve employee loyalty at a company: Smart contracts can be programmed to trigger bonus payments to employees who meet certain goals, or to increase transparency about salaries across large sets of workers. Yes, these things can all be done manually now, but Web3 evangelists argue that smart contracts make things more efficient and trustworthy.

Image Credit: Bobby Fisher


Lesson 3: The secondary market awaits!

Artists have a problem: They often cannot sell their work directly to consumers. It’s just too difficult, which is why art galleries and record labels exist — helping facilitate distribution and sales, and then taking a cut of the profits. If an artist makes something unique, they might be able to sell it to a fan once…but if it becomes extremely valuable, and the item gets resold for a profit, the original artist never profits again.

For this reason, Web3 has been especially appealing to artists like Aoki. It gives them more control over what is sold, and more ways to profit off of what is resold.

Aoki experimented with this in 2021, when he became an equity partner and cofounder in a company called MetaZoo. It makes trading cards, Pokémon-style, that feature mythical creatures, which immediately excited Aoki. “It literally was an instantaneous — ‘Wow, this is a goldmine IP,'” he says. In April, according to Aoki and his team, MetaZoo sold more than $2 million worth of skateboard decks with its logo on them in just 14 minutes. Aoki even sold MetaZoo cards with CDs of his album, HiROQUEST: Genesis, in September, precipitating the sale of more than 27,000 CDs.

Related: If You Have No Clue What Web3 Is, You’re Not Alone. Here’s a Breakdown of the Future of the Internet.

No one gets that excited about CDs these days, but Aoki knows why people see value in them: “The reason why people are obsessed with getting these products, like the skateboard decks, is that they’re selling for like $60 when we launched it, and they’re selling on the secondary market for $200, $300,” Aoki says. “In the last 16 months, we’ve already grossed over $50 million in revenue. It’s my Beats by Dre.”

Most entrepreneurs can’t rely on their personal cachet to sell out a “Beats by Dre”-level NFT collection, of course. But Web3 smart contracts, which can be preprogrammed to give royalties to whoever originally created an asset, could open a world of new possibilities. That’s because these NFTs can be paired with things that customers might want to resell — whether that’s a car or a comic book.

They can also be paired to things that already have real-world value, but that just weren’t as easy to execute before. For example, consider Gary Vaynerchuk’s “Dinner Deer” NFT. It is an amateurish digital doodle that seems worthless until you read what its ownership entails: There are 10 Dinner Deers, and everyone who owns one can join a 90-minute dinner with Vaynerchuk. He’s hosting one every year for three years. The NFT, therefore, is a ticket to sit down with one of the most in-demand entrepreneurs in the world — something that has inherent value, regardless of Web3. But the NFT element makes it easy for owners to resell the ticket, which will go up and down in value.

Image Credit: Ethan Miller | Getty Images


Lesson 4: Build a community.

Selling products is one thing — but as any entrepreneur knows, and as Aoki has learned in the music world, community is everything. That’s why, after his success with the MetaZoo NFTs, Aoki started thinking: “We already have this substantial, healthy secondary community that supports the ecosystem of MetaZoo,” Aoki says. So how could he bring them together?

His answer: We’re going to create tokens that give them early access to products. The tokens, which are a kind of digital currency, would be the rewards for people’s loyalty: They could collect them, trade them, and then spend them on special benefits. Aoki says it worked; not only did future product releases sell out quickly, but he could see these collectors talking and trading among themselves, as they bonded into an online community of fans.

When evangelists talk about the power of Web3 technology, this is a theme they always come back to: It facilitates community. Of course, you don’t need Web3 to build a community — there are endless ways to do that already. So what’s better about Web3?

Advocates often describe a kind of technologically-backed psychology: Sure, someone could be part of some Facebook group now, but that membership doesn’t have tangible value. When people have something like a digital token, and that token can be resold, it gives people a feeling of ownership. It’s like owning company stock — except that stock also gains them access to special company events. That, in turn, makes them feel like they’re part of a special club.

These things all exist and could be done using current platforms, but Web3 combines a lot of these functions in one simple piece of technology. Plus, today’s Web3 early adopters are really into interacting with others who are part of their communities, often using communication tools like Discord to stay in regular contact. People like Aoki are betting that, as more people engage in Web3, they’ll become similarly engaged.

Related: Why an Entrepreneur’s Ability to Innovate Will Make (or Break) Future Success

That’s why Aoki wanted to focus on building a community that was truly his. So in February 2022, he launched what he calls A0K1VERSE. Futuristic as it sounds, you don’t need to enter some virtual space to find it: People can just go to the website a0k1verse.xyz. (Dot-xyz has become the Web3 community’s extension of choice; many other companies in the space also use it.) There, they can buy a “Passport” that gains them access to what is essentially a Web3-enabled fan club full of perks. The way he sees it, A0K1VERSE Passport holders “aren’t fans. They’re members in our group that are really interested in the whole network of the IP, or the company, Steve Aoki.”

Just like any tech build today, Web3 projects are made with third-party partnerships. In Aoki’s case, a company called Manifold powers the Passport, and his virtual events for Passport-holders are hosted in metaverse platforms like The Sandbox. These companies are part of an ecosystem of third-party Web3 programs that are rising to work with brands — not just celebrities.

“If you’re building a product, any entrepreneur knows that you need as much customer feedback as possible,” Liquin says. “These programs could let you give access — not to yourself as the entrepreneur — but to new features that you’re considering rolling out.” One of the more high-profile ones, for example, is a company called Try Your Best, founded by former Outdoor Voices leader Ty Haney. Its pitch to consumers: “Become a member to cocreate with the brands you love.” In short, the company creates spaces for a brand’s fans to meet, engage, earn tokens, and share feedback.

“As that brand grows, as those products improve, and as you as a user keep using those products, you now have this vested stake,” Liquin says. “It’s not ownership, or a security, but it is an asset that links you directly to this company and their goals. That alignment of incentives is really powerful for loyalty.”

Image Credit: Bobby Fisher


Lesson 5: Embrace loyalty programs and utility tokens.

Why would someone keep coming back to the A0K1VERSE? Aoki’s answer: Because the more they engage (and spend), the more access they get via “Credits,” of which there are 25,000 total in supply — either purchasable by fans or given away through various promotions. Aoki sent Credits to people who’d purchased an NFT from him prior to A0K1VERSE. He also built bridges to other NFT communities — like collectors of NFTs by the DJ 3LAU, who Aoki has worked with on multiple projects — so that those fans could enjoy status in his world too.

Aoki sells the remaining Credits for $130, although the price fluctuates, same as any digital asset. One credit gets you things like previews of his unreleased music and access to his exclusive A0K1VERSE chatroom. Four credits include perks like “guestlist privileges on select Steve Aoki live performances.” And the top rank, at 1,024 credits, allows you to record a song with Aoki himself. So far a few people have reached that level, but no songs have been recorded…yet.

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In addition to being a community, Aoki sees all this as a richly enabled loyalty program — which is another thing Web3 evangelists often tout. This technology, they say, makes loyalty programs richer and more interesting.

Of course, just like before, there are plenty of non-Web3 loyalty options today: Companies like Belly facilitate them for small businesses, and large businesses from Starbucks to Hilton built and manage their own. But a crop of Web3 startups claims that “the future of memberships will be powered by NFTs,” as the website for the loyalty company Hang says. (Hang, which announced a $16 million Series A round this year, has already run programs for big brands including Budweiser and Pinkberry.) They argue that Web3-based assets like NFTs make loyalty programs more dynamic, exciting, and profitable.

The programs can also become more efficient, thanks to the nature of smart contracts. For example, Aoki recently wanted to add a perk for his A0K1VERSE fans: access to an exclusive Halloween event. It was easy, says Colon: It was just a matter of telling people, “I got your contract code. All your community members are already included, don’t worry,” says Colon. “Twenty-five hundred people [from A0K1VERSE] are now automatically able to purchase tickets.”

Image Credit: Bobby Fisher


So, when’s all of this coming?

Despite Aoki’s enthusiasm for Web3, he and Colon admit: It’s not transforming their lives just yet. “Somewhere between 10% to 20% of [Steve’s] business is Web3-based,” Colon says. Live touring remains Aoki’s bread and butter, with brand partnerships coming in as a “relatively distant second.” He hasn’t lost sight of either of those revenue streams, though, by diving into Web3. “We’ve gotten to a great place where the three feed each other,” Colon says.

For example, A0K1VERSE grants token-holding members tickets to live shows and products created with Aoki’s brand partners. Most of those brand partners are collaborating on Web3 products with Aoki, which he can in turn promote at his live shows, where A0K1VERSE members get special access and fuel the hype.

Web3 could prove to be transformative. Or it could prove to be a lot of hype about nothing — just an incredibly complicated way of doing things we’re already doing perfectly well. When it’s this early, it’s hard to say. But as more startups begin offering Web3-based services, it will become easier and easier to engage with them — and, if you’re like Aoki and enjoy being able to “climb through the noise to find the gem,” there’s plenty of noise to climb through.

“We are literally creating our own culture and community, and building our own narrative and ecosystem,” Aoki says. It reminds him a lot of those early days in the hardcore music scene. Except this time, he’s excited for others to hear the music too.

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