The Key Factor for The Evolution of Habits: Tech and more
Have you had the opportunity to travel recently to places like the United States, China, or Latin America? When you traveled to the United States before the pandemic, the process was too manual, but nowadays the process is automated, including facial image recognition to identify the visitor and give them access to the country. In China, all you must do is put your face on a screen that will show you your boarding area. However, when you visit some Latin American countries the entry process is still 100% manual and rudimentary, it seems that governments have not transformed and do not know how to use new technologies for the benefit of their citizens and tourists. Immigration entry to any country is the prelude to how technological the society is.
Why is it that some societies have had great advances in technological development and in turn have adapted their habits to technology?
A country’s progress is clearly linked to technological development and adoption. Consider Tesla, a technology company that has managed to transform the automotive sector and whose market capitalization value is greater than that of large automotive companies such as General Motors, Ford, and Volkswagen. Tesla was a startup that developed technology creating high-performance electric and autonomous vehicles. It was born out of a great vision of the founding team that had no qualms about competing with the big car manufacturers and assemblers. However, General Motors has accelerated its plans to enter this huge market of electric and autonomous vehicles by investing USD$35bn from 2020 to 2025. Even Ford is in the process of catch-up by considering an investment of more than USD$20bn over the next 5 years in this sector.
There are companies that drive technology development through their initiatives. However, in many emerging countries, corporations lacking vision are only trying to maximize the profitability they can extract from customers, losing sight of technological advances and consumer leverage.
Technology adoption is a commitment not only for citizens but also for the private and public sectors. It must also be addressed through multiple factors that help to understand its adaptation in a country through education, purchasing power, technological infrastructure, and connectivity among others.
Education is one of the main elements in the evolution and adoption of technology in a country. It is no coincidence that Israel is one of the most innovative countries in the world with a highly developed VC and entrepreneurship ecosystem, because most of its population has access to quality higher education. The opposite is true in emerging countries, especially in Latin America, where some populist governments denigrate private education, and hinder quality public education in order to diminish the plurality of ideas and strengthen their political base. Furthermore, education is a clear element of social mobility that allows people to access better jobs and enjoy a better quality of life.
A society’s purchasing power determines the amount of income it can invest in technology, so the more purchasing power a society has, the more technological consumption it will have. In emerging regions such as Latin America, there are deficiencies in income distribution with important concentrations of wealth in the privileged classes. In addition, a large part of the population is unemployed or underemployed, deteriorating the purchasing power of families.
Infrastructure is key to technological adaptation. For example, the government of El Salvador has taken the decision to accept Bitcoin as a circulating currency, for which it is in the process of implementing all the necessary infrastructure (e.g., wallet, ATMs, digital currency market, among others) that will allow its citizens to have access to this digital asset.
Connectivity is essential for genuine technological advancement and use by the population. In India, technological connectivity through mobile data may be the cheapest and most efficient in the world, enabling consumers to use their mobile phones for multiple productive, educational and leisure activities.
Technological change and adoption are supported by influential groups that are driving technological advancement in a certain sector or geography. Facebook, now Meta, for example, is committed to reinventing itself and accessing a new consumer base through the metaverse and is dedicating significant resources to developing technology, infrastructure, and education.
Competition drives technological development. Today we are experiencing the third space race. Companies such as Jeff Bezos’ Blue Origin, Elon Musk’s SpaceX and Richard Brandson’s Virgin Galactic are competing to make manned trips into space, and even have in mind the idea of colonizing not only the Moon but also Mars. In Latin America it is the world of oligopolies where a handful of companies capture the market and inhibit the creation of new companies and competition in the sector. Fewer competitors discourage innovation and technological development, and thus technological adoption slows down.
The demographic pyramid that exists in emerging markets is probably one of the main factors in the search for new technologies. Millennials, generation Z and especially generation alpha are natives of these technological advances, so technology does not become a matter of adoption but is part of their reality.
Without a doubt, technological adoption is the true reflection of a country’s innovation and transformations. So, the next time you travel and pass-through immigration, consider that this is probably the technological development of that country.
“The technology you use impresses no one. The experience you create with it is everything”- Sean Gerety
Hector Shibata. Director of Investments & Portfolio at ACV a global Corporate Venture Capital (CVC) fund and Adjunct Professor for Entrepreneurial Finance.
Ricardo Latournerie. VC Investor at ACV.
ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.
Stay updated about Venture Capital, innovation, entrepreneurship and more! Sign up for AC Venture’s monthly Newsletter.
Follow us on LinkedIn: ACV_VC
Follow us on Twitter: acv_vc
Follow us on Spotify: ACV_VC
