We’ve mistaken “the rise of unicorns” as a sign of good innovation: Professor Rufus Black

“We have mistaken the rise of unicorns and tech giants as a sign of good innovation,” said professor and strategic advisor Rufus Black.

Speaking at the 2016 Creative Innovation conference in Melbourne in November, seconds after Donald Trump won the US election, the Ormond College master and ethicist asked: how did we get here?

Read more: Tesla’s Elon Musk joins Uber chief Travis Kalanick as Donald Trump’s newest advisers

In San Francisco, home to some of the world’s leading tech companies, the concentration of wealth and power has come with high rates of poverty and crime across the inner city, according to the Wall Street Journal.

And while disruptive economies are creating unprecedented opportunities for startups to drive new value creation, Black believes the high failure rates and exits through mergers and acquisitions (M&A) isn’t good news.

“[There has been] a reduction in the ability of startups to scale in a meaningful way,” said Black.

“We’re seeing the rise of oligopolies.”

Referencing an article published by The Economist, Black said the increasing concentration of ownership has allowed a handful of tech companies to profit at unprecedented levels.

“This means the fruits of economic growth are being hoarded,” The Economist reported earlier this year.

The Economist adds that since 2008, US companies have engaged in $US10 trillion ($13.8 trillion) worth of mergers, the largest round in American history:

“But high profits across a whole economy can be a sign of sickness. They can signal the existence of firms more adept at siphoning wealth off than creating it afresh, such as those that exploit monopolies. If companies capture more profits than they can spend, it can lead to a shortfall of demand … High profits can deepen inequality in various ways.”

Black argued the ongoing acquisition of small companies by the likes of Facebook and Google is creating an “anti-competitive” environment.

“How? They use their network effects to dominate,” he said.

His words echo those of Australian Competition and Consumer Commission chairman Rod Sims, who recently questioned whether the watchdog should keep an eye on the rise of tech companies and their effects on the market, especially for new and small players.

Read more: What tech entrepreneurs think about the ACCC regulating startup acquisitions

“We need to take a view on whether this sort of activity is taking out future competition and entrenching the incumbent,” said Sims.

“Of course we understand that sometimes when a big bank or a big company buys a startup, they can get the ideas and products out to the market more quickly, but if this is taking out a company that looks like a serious future competitor then I think we have to look at it differently.”

Black added that small players in the market don’t have the financial power to use regulation or regulators like the ACCC to their advantage.

“[Oligopolies] use patents in ways that restrict competition,” he says.

“Apple shouldn’t have been allowed to patent rounded corners.”

Creating a more inclusive tech sector

The trend can be reversed, said Black, who believes “much can be done to fix this problem.”

Black, who helped establish the Wade Institute of Entrepreneurship at Ormond College in Melbourne, believes more should be done to reduce the concentrated power of large companies. He wants harder and tougher action so smaller companies have a fighting chance of surviving longer. He suggests setting the bar higher on mergers and acquisitions so they don’t undermine competition, and he wants genuine protections for new players in the market.

“We need to think about how we open new networks so it’s more collaborative and inclusive,” he said.

In line with this, Black called for a “fresh look” on intellectual property.

“Forty to ninety percent of patents aren’t used by the owners, if you can’t use it – you should lose it,” he said.

“We need to be able to ensure that technology becomes more available to a wider group of people.”

Read more: John Oliver rips into “horrifying” patent trolls: Why startups should take notice

And as tech companies and the digital age takes over, he said startups are only a small piece of the puzzle.

“We definitely have to work on skilling up the population,” said Black.

“The role of startups is, yes to create jobs, [but] we’ve got to create startups that grow [and] create conditions for growth so a range of jobs is created.”

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Lisa Allington
Lisa Allington
3 years ago

One question and one question only. Does Coopers support Marriage Equality – openly and honestly? Their answer will inform my decision about their product.

Nigel Fuss
Nigel Fuss
3 years ago
Reply to  Lisa Allington

Coopers have just joined Marriage Equality however they are still funding Bible Society and LNP. The hypocrisy is mind boggling.

Jan Deane
Jan Deane
3 years ago
Reply to  Nigel Fuss

Do you actually know anything about the Bible Society or are you just indulging in a bit of grandstanding. And what is wrong with funding the LNP – the unions fund the ALP. But i guess you think that they are as pure as driven snow.

DM
DM
3 years ago

What a joke. The video was a respectful discussion on a matter to current interest and presented both sides of the debate in a civilised and polite way. That is what the Politically Correct crowd want to shut down. Stop civilised and polite debate in favour of name calling and personal attack. Shame on Coopers for bending to this insane political philosophy. I was planning on buying some Coopers to support them, but now I can’t.

Barry Baxter
Barry Baxter
3 years ago

Why do businesses find the need to support or not support such divisive issues that have nothing to do with their industry or products/services. They are damned is they do support and damned if they are unsupportive. We retail equestrian products and even within our industry there are several divisive topics – should everyone vaccinate for Hendra Virus, is horse racing bad for animal welfare, should all riders wear helmets. There is no benefit to our business if we voice an opinion on any of these issues, let alone some political hot potato like this one.

Jan Deane
Jan Deane
3 years ago

It’s ironic the fact that this product is halal doesn’t bother the self-righteous whingers on SM, when Islam openly vilifies and condemns homosexuality. It seems that it is only an issue when Christianity is involved.
Still, it seems that the bearded hipsters pushing grog in several of Melbourne’s trendy pubs and bars have seen an excellent marketing opportunity to get their businesses in the news and acted accordingly whilst basking in their own sanctimony.
Coopers, its not a good look to grovel and back-pedal in order to please the braying mob. Believe me, you will never win when there are endless opportunities for the perpetually outraged to indulge in very public virtue signalling.

Peter J. Tonkin
3 years ago

Watch the eyes!! They are reading of a teleprompter and from their body language you can tell that they don’t believe in what they are saying. Very contrived. Standard PR crap..

Jan Deane
Jan Deane
3 years ago

They should have just kept a low profile for a few days until the next ‘controversy’ errupted. SJW have a notoriously short attention span.

narrismo
narrismo
3 years ago

I want to thank the Marriage Equality lobby group for giving me a handy website to know who to boycott. I wasn’t aware Oporto, McDonalds, Kmart, Target, seemingly all the big banks, and many other businesses, did not want my money. I will now defer to their website to eliminate companies that put themselves into an issue that their business has nothing to do with.