In An Era of De-Globalization, What Are Startups Supposed To Do To Thrive & Survive?

As startups continue to redefine technology and business models in a variety of means from Web 3.0 to buy now pay later (BNPL), the reality is that startups are entering an era where socio-political stability is not part of the equation. Indeed, the advantages that startups have relied on in the past to thrive and grow such as globalization are increasingly under strain.

The geo-political trends that we now see are pushing society in the next decade towards a path of de-globalization. One can see that the trend has been occurring for quite some time. Whether one points to the Brexit referendum of 2016 or the rise of nationalist politicians around the globe, there is no denying the de-globalization trend that has been steadily rising. 

While the causes will continue to be debated at present and well into the future, there is no doubt that they will have both short and long term impacts on the startup ecosystem. The reality for startups in the here and now is how do they thrive and survive in these dynamic times?

There are no clear cut answers as the trends are relatively recent from a geo-political perspective but there are definite signs as to what startups will have to pay attention to in order to thrive and survive. These factors that startups will have to pay attention to in our increasingly de-globalized environment include:

1. Rapid Changes In Market Availability: It is increasingly apparent that a new reality is the rise of either full or partial trade wars will be a part and parcel of the increasingly de-globalized economy. As such, the availability of markets will wildly fluctuate impacting the ability of startups to achieve their growth projections and targets. While such changes in market availability have been a risk, such risks have increased and will continue to increase in the minds of startup founders.  
2. Rapid Political and Regulatory Changes: Coupled with the changes in market availability are the primary drivers which are rapid political and regulatory changes that are increasingly driving the next decade. The rapid rise of populism driven by a disoriented and increasingly fearful populace will lead to rapidly fluctuating political and regulatory regimes that startups will have to adapt to. Whether it is outright bans (i.e. crypto mining) or revolutionary realignments (i.e. El Salvador and its national acceptance of crypto as a form of payment), politicians and their associated regulatory regimes are starting to catch up to startups in terms of speed of execution. As such, startups will have to manage rapid political and regulatory climate changes with greater dexterity than before.
3. Increased Input Costs: Market availability and rapid political and regulatory changes are not only impacting startup growth prospects but their input costs as well. From hardware components to software packages to software developers, startups are facing increased costs across the board that will not abate any time soon.
4. Localization First, Globalization Second: While globalization has been beneficial overall, for many however, there is a widespread belief that the benefits of globalization have been very unbalanced and has led to massive inequality. For startups, this means that their potential market segments will increasingly demand that they “localize” their content beyond what is currently being offered. It will not only mean offering native languages but it may also mean the localization of employees, data and infrastructure that addresses the concerns of not only market segments but governments as well.

With all these challenges on tap for startups related to the de-globalization era, what does it mean for the overall startup ecosystem? Fundamentally, it means a new era has dawned for startups and the associated ecosystem. It is an era where growth is not only slower but more volatile as well. 

Instead of driving their own destinies, startups may find that they need to react to externalities such as dynamic market conditions and government policies. This greater attention to externalities will lead to a new way of managing startups that will further disrupt what is known in the startup ecosystem