On 11 May Amazon Web Services (AWS) hosted a Summit in Stockholm with over 5,000 attendees, +50 sessions and +60 partners. AWS also offers a huge marketplace with third-party vendors. Key themes at the summit were the expanding AWS global infrastructure, security and trust, the growing capabilities in the AWS cloud and the data-driven business.

AWS has continued to expand its global infrastructure and recently launched a new AWS Europe Region in Stockholm. Millions of customers globally use AWS to become more agile and innovative while lowering costs through the scale that AWS brings. Currently AWS offers 26 global cloud computing regions that are made up of clusters of data centers with 84 availability zones to provide high resilience and availability. Eight more regions are coming soon. AWS has also announced more local zones even closer to end-users in a further 26 countries, including 12 across Europe. AWS is constantly adding more regions and zones.

Security and trust are a top priority for AWS today. Customers retain control of all their data and how you grant access to it — a key aspect of cloud computing as requirements and regulations become more complex. AWS now offers more than 230 security and compliant services. Security was a clear trend at the AWS Summit, with a focus on the special needs for decentralised environment of cloud native.

Today a key success factor for a cloud computing provider is to have a broad and deep set of services and capabilities to support any kind of workload. AWS now offers more than 200 fully featured services such as compute, storage, databases, networking, analytics, IoT, AI, machine learning, virtual reality, mobile, security, hybrid, application development and management. The cloud has become an enabler of a fundamental shift in the way business works. The pace of innovation is accelerating. In 2021 alone, AWS added more than 3,000 new capabilities and features. Many of these new features and use-cases were showcased at the AWS Summit Stockholm, like “Using ML in loan underwriting decisions.”

The cloud has changed the way we build business and at the core is data. Modern apps store massive amounts of data. Meanwhile that cost of compute and storage has come down. As a result, business is storing more data than ever. There will be over 97 zettabytes of data created in 2022 alone. However, many organizations are not ready to reap the benefits of data. A modern data-driven strategy needs to be secure, flexible and scalable. It builds on three pillars: modernize, unify and innovate. Organizations first modernize by migrating their data to the cloud to achieve scale, then unifying data storage, finally putting the data to work by leveraging with AI, analytics and machine learning on top of the data.

Some final take-aways from AWS Summit in Stockholm. AWS is today a must-have platform for players like VMware, SAP, Telia, IKEA and others. There is a strong focus on startups and certifications to get people onboard the AWS cloud. Cloud consulting is also big with groups like Knowit, Capgemeni and Accenture making AWS a core of their offerings. Telia just announced a strategic partnership with AWS. The bottom line? We think AWS will gradually take a larger share of the Nordic cloud market.

Originally published at https://www.mynewsdesk.com on May 15, 2022.

Co-native at AWS Summit Stockholm was originally published in Co-native on Medium, where people are continuing the conversation by highlighting and responding to this story.

Five years ago in 2016, I researched the current state of Artificial Intelligence in the Nordics and the World in two blog posts. It turned out we were far behind in AI, both in Sweden and the Nordics — and all of Europe. There were many good initiatives everywhere, but I found a very scattered AI-landscape, and the AI-superpowers US and China were far ahead of us. Where are we now, in 2021? This article aims to revisit the current state of AI in Europe, the US and the China.

AI and Machine Learning is booming in the US and China, thanks to the tech giants Amazon, Facebook, Apple, Microsoft, Alphabet/Google, Tencent, Baidu and Alibaba. And thanks to MIT, Stanford and academic powerhouses. But also due to political willpower, as we have seen in China. Europe is lagging behind, while the US and China racing ahead. Where are we now, in June 2021? Have the “data-poor” Europe caught up with the “data-rich” US and China? It does not seem so — rather, is the gap increasing.

In the global AI-race there are essentially three blocks; US, China and EU. To sum up the global AI-race in one sentence: US feels the pressure from China, and Europe feels the pressure from both US and China, stuck in between. How do they compare? A few snapshots from Stanford’s Global AI Index.

• Scientific AI publications: There are twice as many AI research publications in the US compared to Europe
• Investments: $40 billion were invested in AI startups in 2020 globally, whereof $23 billion was invested in the US
• China invested $10 billion in AI startups

The European Investment Bank (EIB) estimates in a new report that there is an annual shortfall of up to €10 billion in investments to keep the European Union in the global artificial intelligence and blockchain race. EU only accounts for 7% of annual equity investments in AI and blockchain, while the United States and China together account for 80%.

In their view on data, these three blocks have different views too. As rule of thumb, the US sees the data as the corporations’ property, in China the data belongs to the state, and in Europe we think the data should be owned (or at least controlled) by the citizens, borrowing an explanation from Swedish Member of the European Parliament, Jörgen Warborn.

This also explains EU:s new proposal for harmonised rules on artificial intelligence, released in April 2021. In short, EU acknowledge that AI can bring a wide array of benefits across industries and social activities, while the same technology can also bring about negative consequences for individuals or the society, trying to identify different levels of AI risks. This is the conflict surrounding AI in Europe — should we promote innovation or safety? Agreeing on the exact balance is a main challenge in Europe. It is in EU:s interest to maintain an eroding technological leadership, and at the same time ensure that Europeans can benefit from AI according to EU values, rights and principles. Rather than having a clear competitive edge in technology, EU has become a successful global technology regulator, as with the General Data Protection Regulation, GDPR.

In the US, the focus is rather on the technology race with China, not really bothering with the EU. The US Senate recently passed The US Innovation and Competition Act, a new legislation that provides more than $250 billion to maintain a competitive edge over China, including roughly $120 billion for investment in technologies such as AI and quantum computing. Regarding regulation, the US has chosen voluntary guidelines shaped in part by industry. Meanwhile, the US National Security Commission on Artificial Intelligence (NSCAI) recently released a report presenting a strategy for winning the AI era, and the steps the US must take to responsibly use AI for national security, defend against AI threats, and promote AI innovation.

From the Chinese perspective, the main focus correspondingly seems to compete with the US. While Americans publish twice as many AI research papers as the Europeans, Chinese researchers now publish more papers on AI and secure more patents than US researchers do, according to Harvard Business Review in Is China Emerging as the Global Leader in AI?. China is quickly closing the once formidable lead the US maintained on AI.

So who is winning the global AI-race? In all, the US is still the leader in AI investments and research combined, with China quickly catching up. Europe is in third place, far behind, in terms of both investments and research — forced to increase both capital for investments in deep tech, and resources for research, with the dubious opportunity to become the global AI regulator.

The US and Europe are on different paths to regulating AI, but might work together to take on China, Politico argues in China wants to dominate AI, the US and Europe need each other to tame it. NSCAI:S report (above) concludes that working with Europe and other allies to develop AI rules and invest in research is essential to defense and economic growth faced with China’s powerful competition. So, will we see two main blocks in the future? Europe and the US on the one side, and China on the other.

Currently, the European Innovation Council (EIC) is Europe’s most ambitious innovation initiative to support breakthrough technologies and disruptive innovations, “deep tech”. It has a budget of €10 billion as part of the Horizon Europe programme (2021–27). But according to EIB’s own report (above), this is the capital needed to keep up with China and US in just one year.

Who is Winning the Global AI-race Between Europe, the US and China? was originally published in Co-native on Medium, where people are continuing the conversation by highlighting and responding to this story.

Just a few years ago, digital infrastructure was not something that got people excited. Now it’s one of the hottest topics — politically, legally, strategically and technically. At the core of the new interest for digital infrastructure is who controls the data, your data.

So, who controls the data? This is one of the most pressing questions today. Is it companies selling the software products where the data resides, like Microsoft with Office 365 and other SaaS? Is it companies offering services that generate personal data from your usage, like Facebook and YouTube? Is it governments applying laws and authority to access any data, as the US Cloud Act? Is it the state controlling facial recognition and surveillance systems, like in China? Is it individuals and consumers, that supported by laws like GDPR get control over their own data? Is it infrastructure and cloud services providers where the data resides on their servers that you use as a service, like Azure, AWS, and Google Cloud? Is it in the various national telecom networks, soon upgraded to 5G, where the data flows? Is it the developers of the hundred of thousands of mobile apps that track your actions and movements? Who is ultimately the owner of data? And for parties that are obviously not the proper owner, incentives are high to get access to the data, especially if you are a foreign power or a competitor spying for your own interests.

If you are a company, government, university, research facility, hospital, airline, a personal individual or any other entity that has data, sometimes very much data, you are probably likely to assume that the owner of that data is you. And if you think you are the owner of the data, you want to control it and make sure no one else can get that data — especially if the data is sensitive. Today, you also recognize that you can be the guardian of data belonging to others under the GDPR regulation. And you also know that those same customers now have the right to their data, if you are a bank for example, enforced by the EU’s PSD2 directive, ensuring individuals that you can easily access your bank statements through apps that you give permission to. The same goes for hospitals, as they guard patient data that ultimately belongs to the individuals, not the healthcare system. SaaS companies like Dropbox, Salesforce, Evernote and countless others also store your data on your behalf.

If you’re a business, the purpose of data is to use it. Both for the basic running of your operations (for example running a bank), or for being more innovative and competitive (like a startup offering new smart services). But at the basic level you want to make sure that the data is stored properly, meaning that it is safe and accessible for any user that has the right to the data. That’s why both security and identity and Access Management are huge areas in IT. However, now there are growing concerns about who can actually access your data. That’s a problem, even if it only exists in theory.

So, whether you protect your own data, or guard it for others, your main concern is that the data is safe, and only can be accessed by those who you have given the authority to. You also need to make sure that it complies with the rules and regulations in the geography where you operate, in other words: Local Compliance. This is the starting point for one of the most discussed issues today. If you have anywhere near sensitive data, where can you put it so it both complies with your own safety standards and security needs, and the government and EU laws and regulations?

One answer is the Compliant Cloud, a place where your data is both legally and technically safe. Putting data in the cloud in a naturally global infrastructure used to be a non-controversial thing. If you were a regular company, you just did not care much exactly where geographically your data was stored. For example, if you use Office 365 or Dropbox, do you know or even care where the data actually sits? You just assume that it’s safe somewhere “in the cloud”, an internationally dispersed infrastructure of redundant, anonymous servers. Now that is not the case any more. An increasing number of users want to know exactly where the data is and who has access to it, especially if you are in the public sector like a government body or hospital, or any private sector company with sensitive data.

One example of a datacenter offering a Compliant Cloud is City Network, based in Sweden and recently sold to the IT infrastructure group Iver. City Network “ensures compliance with specific laws and regulations concerning reputability, data handling and data security”. Their clients are from the financial, insurance, health and government sectors.

Having “data on the ground” can be a strong selling point for customers requiring compliance with local laws. (It’s of course a paradox, since all datacenters are on the ground). The point is to have the data in a locally owned datacenter. An example is Safespring, based in Sweden and Norway, delivering the service from secure datacenters with high availability. Their pitch: “Customer data never leaves Sweden or Norway where data centers are physically located within the country.”

At the European level, representatives from business, science and politics on a European level have created an alternative for data infrastructure, called With GAIA-X. It is promoted as a secure, federated system that meets demands of digital sovereignty while promoting innovation.

The challenge for the global public clouds like Azure, AWS and Google Cloud is to prove that they are locally compliant in the markets where they operate. Whether they really are “Locally Compliant” is an ongoing issue. There are now negotiations for a new EU-US Privacy Shield, governing the transfer of data between the US and Europe. Ultimately, it’s about trust. In an increasingly global cloud infrastructure, who do you trust with your data?

The Compliant Cloud: How Digital Infrastructure Became the New Data Battleground was originally published in Co-native on Medium, where people are continuing the conversation by highlighting and responding to this story.

EIF hosted their annual Ugly Duck conference in Luxembourg on the 25th of September and Standout Capital attended together with other VC and Growth Capital funds from all over Europe. EIF is an engine for the European VC ecosystem, supporting entrepreneurship and innovation by empowering the European Venture and Growth Capital Funds, with unique insight into the market. We wanted to share our findings and reflections with you in this blog post.

The European Investment Fund (EIF) is the largest European investor in venture and growth capital funds. Since 1994, the EIF has committed more than €17 billion in close to 700 venture and growth capital funds. EIF currently has some 600 VC and growth partnerships and €13 billion invested. As EIF always invest together with other investors in the market, that €13 billion has resulted in a total of €53 billion currently catalyzed for investment in European small and medium-sized enterprises (SMEs). For 2020, the EIF will commit an additional €3.5 billion to VC and growth capital funds, to invest further into growing businesses. More than 1 million SMEs have benefited from access to financing through the EIF. In short, EIF supports Europe’s SMEs by providing access to financing through their partners.

EIF’s purpose is to promote innovation, growth and jobs, while generating an appropriate return for its stakeholders. To this end, EIF invests in venture capital funds from the very earliest stages, and also backing growth capital funds, like Standout Capital, that support established, profitable and growing businesses that need more capital to take advantage of new opportunities. At the annual Ugly Duck conference, EIF brought together VC and Growth Capital funds from across Europe. These are some of the insights.

During the coming years EIF wants to put Europe at the forefront of transformative changes of our time, and have made a number of funding priorities for 2020 and onwards. The major themes are digitisation (artificial intelligence, machine learning, quantum computing and cyber security), societal challenges (impact investing, life sciences, healthcare) and green deals (climate, environment and sustainability). The overall mission is the long term competitiveness of Europe and the two main strategic sectors are information technology and life sciences. The new Invest EU initiative will provide some €48 billion in funding during the coming years. Main ingredients in building the capital ecosystem includes adapting to market environment and connecting policy-makers with market forces, create public private synergies with corporate investors and also favour the market development and IPOs and exits.

EIF’s investment approach in a new funding era is to support three categories of funds. First, to be a market developer by supporting new emerging fund managers that can fill strategic market gaps (12.5% of EIF’s funding); secondly, be a market catalyst by supporting established funds with mostly unrealised track record (70% of funding); and thirdly, provide market access to the best funds with proven track-record to external investors (17,5% of funding), in essence becoming a fund-of-funds offering the market to invest in its ecosystem.

With a 25 years track record of providing funding, EIF probably has the best data in the world for understanding and analyzing European VC and Growth Capital, and is now gradually opening up this wealth of data and is launching The Bench, a searchable database.

So how is European VC and Growth Capital doing? At the Ugly Duck conference, we got a glimpse of the EIF data and these are our key insights. There are healthy IRR returns in the EIF portfolio of 600+ funds and the range of the top 50 VC funds is 20–371% in the first quarter 2019, compared to 14–111% in 2018 and 10–66% in 2017, and life sciences marginally outperforms IT as a sector. The average MOC (multiple on capital) is 1.59 for IT and 1.86 for life sciences. In VC, especially, the value distribution across the portfolio companies is quite extreme. On average in all funds, 8% of the portfolio companies represent 39% of the value, and in the top performing VC funds 6% of the portfolio companies represent 79% of the value.

There is also a tendency that European companies are more capital efficient than in the US, shown by the increase in MOC at the time of exit. This is probably due to the fact that there is almost “unlimited” capital ready for investments in the US, and that US companies generally get more funding before exits, driving up valuations. For example, when a European tech unicorn reaches a value of $1 billion, the MOC is on average 4.8 and 5.5 at exit. While the US tech unicorn is the opposite, the MOC at the time of becoming a unicorn is 5.5 MOC, but only 4.7 at the time of exit.

Uli Grabenwarter, deputy director of equity investments at EIF, made his own personal predictions for the future. First, there will likely be some public market crash in the short term. For example, the Nasdaq index is quickly outgrowing US GDP, signalling that valuations are skyrocketing. There are unpredictable global trade patterns, most notably the trade war between the US and China. In addition, the pulled WeWork IPO shows that investors no longer buying whatever.

Second, VC is the counter-intuitive hedge. Before, digitisation was mainly complementary diversification, for example when retail expanded into e-commerce. Now, it’s more about antagonistic disruption challenging old business models, creating a need to expose to new business models and hedge against the disruption.

Third, there are new concepts of profitability. Personalized subscription based availability replaces ownership, as you get paid for selling less. We will see monetization of social values and ethical business, also resulting in more impact-weighted accounting.

We also got an interesting insight into the new world of quantum computing, a technology that will revolutionize processing power. Quantum computing is today the most powerful computing that the laws of physics allow, and most of the new tech still just exits in theory or in limited experiments. While traditional computer computers are based on the classic bit that can be one or zero, the quantum bits, or qubits are superpositions that can be anything in-between 1–0. The technology probably needs another 20 years to be commercially available, but the race is on to reach so called quantum supremacy. For example, Google recently demonstrated a quantum computer that could a calculation in 3 minutes that it would take a traditional computer 10 000 years to perform. But that’s a topic for another blog.

Finally, closing the Ugly Duck 2019 was an inspiring and thought provoking talk by Arlan Hamilton, founder and managing partner of Backstage Capital, not least as the audience was largely white males. Backstage, a west coast VC focuses on the opportunity to invest in the very best of “underestimated” founders identified by Backstage, for example backing women and entrepreneurs of colour. Arlan and her crew, as she calls her team, have backed more than 120 founders since Arlan started the fund from scratch in 2015. Hats off Arlan!

Who owns the EIF? The EIF is part of the EIB Group (the European Investment Bank), owned 60% by the EIB, 28% by the European Union through the European Commission (EC), and 12% by 30 public and private financial institutions.

EIF, The Engine of The European VC Ecosystem and The Ugly Duck was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Over 12,000 participants from 96 countries flocked to San Jose at the southern tip of Silicon Valley to take the pulse of the cloud, to network and make deals at the mega-conference SaaStr 2019, the biggest event in the world for the SaaS industry. Standout Capital was on location so please join us in this blog for a roundup of trends, stats and insights from some of the industry’s most successful people and companies.

SaaS is software as a service, or in other words — cloud-based software that users can access through any browser without the need for installing it on your computer, paid with a subscription for as long as you want to use it. It’s simple, efficient and a fast growing enterprise software industry. At SaaStr, “Where The Clouds Meet”, the industry’s own annual conference, you will find both established SaaS companies like Hubspot, Zendesk, Dropbox, Zoom and Slack as well as fast-growing new startups. Most of the valley’s VC investors are here, and so are the tech giants such as Amazon, Google and Microsoft. Standout Capital’s investment team and our portfolio company Miradore also went to SaaStr and here’s our five key highlights:

• SaaS is a fast growing industry approaching a market value of 1 trillion dollar
• As SaaS has matured as a sector, there is also set of standard benchmarks and KPIs
• SaaS companies are aiming higher today, $1 billion in ARR is the new black
• SaaS companies and public clouds like AWS and Google drive innovation together
• It’s not only technology, but also how to create successful and agile SaaS cultures

To set the stage, the SaaS industry is getting big. Byron Deeter and Kristina Shen from Bessemer Venture Partners provided some insight into the key data points of this relatively new market. There are currently over 55 private cloud companies with a valuation of over $1 billion. 2018 alone saw over $90 billion worth of M&A deals in the cloud and SaaS space and there was $44 billion in added market cap through IPOs. The demand for cloud shares has hit record highs. The total market cap of cloud and SaaS companies is now approaching $1 trillion (it currently stands at $690 billion).

The Annual Recurring Revenue (ARR), is at the core of any SaaS business, and it’s different from “revenue” which is backward looking and usually based on the previous calendar year or the Last Twelve Months (LTM), while the magic ARR metric is forward looking and estimates future “secured” or recurring annual revenue based on the subscription revenue in the last recorded month x 12. The beauty of the SaaS subscription model is that revenues are highly predictable, as long as you can fuel and forecast the growth, while keeping customer retention high (and correspondingly churn low). In this respect, SaaS, or any business with recurring models, is like the rent in real estate, but without the physical constraints of buildings and land. All you need is a sticky product with market-fit, great user value, low customer acquisition cost, a sales machine and the digital, global infrastructures for marketing and delivery.

As experienced SaaS investors, Bessemer Venture Partners are interested in building resilient companies with sustainable growth and profitability. Their assessment model is based on a formula of: Year-on-Year % growth in ARR + customer retention + capital runway to take the company to the next stage + NetNew ARR compared to Net Burn (spending efficiency). By analyzing how good SaaS companies are at these four disciplines, they can attach a score. For example, the best SaaS companies today have growth of up to 200% Y-on-Y growth, 150% customer retention (meaning that the customers are growing faster than the churn), 2–3 years capital runway before next financing, while having high spending efficiency, adding up to 1.5 times more ARR than they spend (meaning that $50 million invested will generate $75 million new ARR). The average time to reach $100 million ARR for the top 25% listed SaaS companies were 5 years. The fastest of them, Slack, reached $100 million in just 3 years. The average valuation multiple is 10x revenue.

Jason Lemkin, the CEO and founder of SaaStr, offered what is the new milestone to reach for the new breed of SaaS companies, or “Generational Companies” (the SaaS companies belonging to the current generation of cloud-based software companies). The rule of thumb used to be reaching Annual Recurring Revenues of $100 million before you could go public. The new number to aim for is $1 billion ARR, and it doesn’t even mean that you are going for an IPO at that stage but keep on fuelling growth with private capital. Having said that, most of the major SaaS companies are now public.

For example, RealPage (property management SaaS), and Veeva (SaaS for life sciences), are now at an ARR of $1.1 billion, Shopify (e-commerce SaaS that recently acquired Swedish TicTail), has reached $1.6 billion ARR, Dropbox (file hosting), now enjoys $1.8 billion ARR while Workday (HR software), has an ARR of a whooping $3.8 billion. Significant and fast growing SaaS companies that are now approaching the $1 billion ARR threshold include Hubspot (marketing & CRM), Zendesk (helpdesk tool), Okta (identity management), New Relic (software analytics), Twilio (communication APIs), Zoom (video conferencing), and Box (file storage). These are all the new nobility of the tech industry and Silicon Valley.

So-called unicorns are companies with $1 billion valuation, but the good news is that there is a new generation of software companies that have or are on their way of reaching $1 billion dollar in revenues. This means that there is a real and fundamentally strong tech sector with substantial and growing software companies solving real needs for real users. And that is also one reason why there is currently not much talk of a tech bubble in Silicon Valley.

Ryan Smith is the founder and CEO of Qualtrics, a SaaS for real-time customer insights. He sold his company to SAP for $8 billion in 2018. How could that valuation be justified? Usually it’s the rare combination of a scalable tech business that is growing fast with profitability, with predictable revenues at already high levels, and a large customer base with high retention in a big market, set for further growth. In Qualtrics case, at the point of the purchase by SAP, they had 9000+ customers, with revenues growing 40% year-on-year with positive cashflow at some $300 million in Annual Recurring Revenue.

Most SaaS products are enterprise software, i.e. products and tools for use in businesses, which is also the focus at the SaaStr conference. But these business products are learning a lot from their consumer product colleagues, especially in terms if user experience. This focus on customer experience is essential as confirmed by Ciara Peter, Invision, Bela Stepanova from Box, Craig Villamor from Google Maps and Shanee Ben-Zur from Crunchbase in a discussion about how to build “consumer grade” enterprise software. It’s basically about “building products that don’t suck” and create the same great user experience in enterprise software as in consumer product, by thinking about the actual end user (which is not always the same thing as the customer, which might be a C-level manager making software purchases). That’s why a modern enterprise SaaS company should spend facetime with users, not only customers. However, although the “consumerization” of software is a buzz, the value finally comes down to usability and actual results in enterprises. And here a word of caution is needed. Consumer software is usually simplified to reduce friction and promote usage and create addiction. This is sometimes not always desirable in enterprise products.

Mark Roberge is the former CRO (Chief Revenue Officer) at Hubspot and a lecturer at Harvard Business School. He too underlines the importance to focus on the users and their product usage, not only revenue. You have to look at both the Annual Revenue Retention (the ARR at start of year — ARR churn) and Annual Customer Retention (number of Customers — customer churn). Churn is a silent killer. This is the key question; How do you identify and measure the customer success that makes the customer to stay? If the user value and experience is low, it will soon lead to churn in borth revenue and number of customers. That’s why identifying a leading indicator to customer success (and potential churn) is critical. So, how do you define your customer success leading indicator? It should be observable over a time period, preferable in weeks or months, not quarters or years. Ideally the measurement is automated and correlated to the product CVP (Customer Value Proposition). Look at metrics like repeat purchase, referrals, setup and usage. Just tracking revenue is usually a mistake. Here are a few examples of Customer Success Leading Indicators at three top SaaS companies:

• Slack: 2,000 team messages sent
• Dropbox: 1 file added to 1 folder on 1 device
• Hubspot: Using 5 of 20 features within 60 days

“Sales is first and foremost about creating customer value. Revenue and profits are an outcome of customer value creation”, says Mark Roberge.

Zendesk is the Danish star in the SaaS industry, growing ARR 40% in the last quarter and set to turn over $800 million in 2019 (from $600 million in 2018). The market value on NYSE is $8.3 billion (Zendesk listed in 2014). The founder & CEO Mikkel Svane says it’s a “crazy amount of change and disruption” going on and a challenge to grow an already big organisation at that pace. They moved to Silicon Valley early from the origins in Copenhagen as a startup in 2008. He thinks that 10 years ago, you could hardly build a tech business in Europe, as there was no startup community and not much venture capital. Now it’s different, and the main challenge is rather to build products with great user experience given the extremely competitive environment and quest for customers’ time and attention when everything is available all the time on every device. Customers have new demands and businesses and enterprise software need to be as agile as consumer services. “The next generation of consumers is ruthless”, he says. Zendesk has learnt much by working with Uber and others, products that have set a new standard for how consumers expect software to work.

Mikkel Svane says that much has changed also in the way software companies are build today. Before, SaaS-companies had to build pretty much everything themselves. Now, you can buy the entire stack from AWS and other clouds. What used to take a startup 12 months can now be set up in a few days. The role of the public clouds is growing in importance, and it should really be the main choice for both startups and established businesses, he thinks. It’s a paradigm shift. He sees the public cloud infrastructure as their platform, enabling flexibility, speed, agility and the ability to run faster. The user experience is Zendesk’s top priority, in summary; the service must have super ease-of-use. That also translate to the need to scale the applications with use, which is where the public clouds play an important role as they can help a SaaS scale seamlessly.

The big public clouds are where the SaaS companies, or at least their products, naturally reside, as digital infrastructure like servers and networks are now offered as services too. As a consequence, the relationship between SaaS companies and the big cloud providers offering their IT platforms and various capabilities (for example AI, machine learning and analytics), is an important strategic cooperation and partnership. And the big clouds accordingly display an obsession to build their customers’ businesses.

Sandy Carter, Vice President, Amazon Web Services (AWS), explains how they work with customer projects. They always start with the customer and their business, not the technology, writing “press releases” and “FAQ” to formulate a vision for the success they want to achieve before even writing a single line of code. They have small customer focused teams with a start-up approach to customer projects, working “50/50” (i.e. spending half of their time with the customers, and the other half in internal meetings etc). They also try to deploy AWS capabilities whenever possible, for example helping their customer Redfin, a real-estate website, to set the right house prices on their website using AI. As constant innovation is the only way to stay competitive, AWS helps customers to innovate and create “growth flywheels”.

Eyal Manor, Vice President, Google Cloud, outlines a number of trends in the cloud infrastructure and how it helps customers to stay competitive. The choice of partners is very strategic, it can accelerate your business. Also at Google projects start with the customers and development according to business objectives, maintaining the “voice of the customer”. There are so much more cloud services and capabilities than two years ago, for example emergence of new AI and ML services, and Google wants to be a platform that allows companies to focus on business logic. Meanwhile, the customers also demand much more technical discussions. One such technical concern is the rise of containers that enable customers to move between clouds, as they don’t want to be locked in. It’s thus a strategic consideration. Other questions involve security, local compliance (like GDPR in Europe) and how to make partner integrations. The two main themes are speed and data. Speed concerns maximizing development velocity and development team productivity for faster go to market, automated DevOps, using ready made models (for example AI and ML), aligning sales, marketing and product development.

Integrating engineering and marketing is a special issue, as new developments and product features need to be communicated to customers in a timely manner. But companies should be aware of bombarding customers with changes and new features, while still making sure they get the features they need and want.

Being able to use data for rich insights is getting crucial for businesses, especially for data-driven SaaS companies, while still protecting user data and integrity. Application Data Management (ADM) is important to help users govern and manage data in business applications, and make deep integrations from day one of the data pipeline.

However, a fast-growing SaaS is not only about creating amazing technology and products with great user experience, but just as much winning teams and sales organizations. Given the rapid pace in the SaaS industry with demands on speed, scalability and performance, how to build a strong culture is essential.

We enjoyed listening to Matt Schatz, the Global Head of Sales at WP Engine, a SaaS for managed WordPress hosting, as he shared his experience from building a sales organization for a SaaS business and scaling it globally. Everybody likes to work for a fast growing companies where they can get their own “first stories”; for example, “I was the first employee at the Paris office”. It’s an adventure and it looks good on your CV. In a strong sales culture where your core values is at work every day, everybody knows that it’s a hard job, but can also be the best job, with no politics or back-stabbing. A strong sales culture is also based on data where the A-players rely more on science than luck to win their deals. Maybe the hardest part in a scaling global sales organization is facetime, as the teams become geographically scattered. The solution is to spend increasing management time on visiting every office personally, a strategy that might be increasingly controversial in our age of “flying shame”. A SaaS offering like Zoom is a good alternative for meeting online instead, but just as often.

Keith Rabois at Khoshla Ventures, an investor in companies like PayPal, Linkedin and Square, offers more advice on building great teams. One challenge is the team set-up. You can raise the odds of success in a start-up with 50% just by changing the team composition, he thinks. So it’s a well invested effort to do matchmaking to add the missing team DNA. That’s why he also likes to get involved as early as possible to help with the team and get in before the “concrete solidifies”. Furthermore, it’s crucial to pay attention to individuals. Every person in a company has a growth curve — and the company itself has a growth curve. You can only promote people with a steeper growth curve than the company, he says.

Finally, Jennifer Lawrence (not that Jennifer Lawrence), Head of Sales at Duo Security (a SaaS for protecting sensitive data) shared her secrets for a great sales culture. First, get the whole company involved and create teams of hunters-helpers, not a bunch of “sales heroes”. Second, it’s not what you sell, but how. Here we’re talking data driven sales, and more specifically how you super-align sales with marketing, through analysing and selling to the right leads. Third, create a calm and positive culture, instead of increasing pressure, which might be a challenge given the extremely high pulse in the SaaS industry.

Building and running a SaaS company is an art in itself. Tomasz Tunguz from Redpoint Ventures is an experienced SaaS-investor and provided much insight into the nitty gritty of operating a SaaS business, and provided some of the the metrics and insights you should aim for based on their research and surveys.

• Annual contracts are better economics than monthly contracts
• Base your free trials on time or usage
• A long trial doesn’t make better conversions, shorten the trial instead
• Create strong lead generation, hire sales people to convert them (i.e. call leads)
• 4% is a good conversion number for unassisted conversions
• But shoot for 15% with assisted conversion (i.e. sales people)
• Require payment at the start of the funnel to increase conversion later

Finally some words on marketing, a key aspect of growing a SaaS business online. One of the leading figures in the SaaS landscape is Brian Halligan, the CEO and founder of Hubspot. One of his main ideas is that the traditional funnel in online marketing and sales is more or less dead. The funnel starts with marketing, that drives leads to a website or app where the leads are converted to actions like sales and sign-ups in an assisted (sales people) or unassisted (self-service) way. But what if the first part does not work? Brian Halligan thinks that trust today is at an all-time low, i.e. people don’t really believe in either news, politicians or advertising. Instead, people trust friends and colleagues.That’s why customers are your best marketers, and the best companies create products that can grow through their customers usage and network effects. Thus, as the funnel is not really working, the model is more like a flywheel with reinforcing dynamics that can drive growth. A great product will help create its own growth.

To sum up, the SaaS industry is growing fast and with increasing self confidence. You can even say that SaaS is eating software, at least the old kind that you buy and install on your server. And SaaS is eating the software market in two ways, by new SaaS companies that offer smarter solutions that were previously offered by traditional so called on-prem software (installed on premise instead of residing in the cloud), and by traditional software companies trying to transform their old products to SaaS. However, this was a story that we did not hear at SaaStr, most of the traditional software giants like SAP or Oracle were simply not there among this new generation of SaaS companies.

We Went to the SaaStr 2019 Conference, Here’s What You Should Know! was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

As the healthcare industry grows and tech giants are moving into the market, what used to be smartwatches and fitness trackers are turning into health monitors and medical devices as a new health ecosystem emerges. This is a logical development as consumers take more control over their health, and new players offer new products and services.

The annual Apple event on 12 September 2018 was significant in one way. While it didn’t offer more than upgrades to the iPhone X, the new Apple Watch 4 represents a paradigm shift. What used to be a smartwatch, a mobile computer and fitness tracker on your wrist, is now turning into a health monitor with ECG capabilities and Fall Detection. The ECG feature was cleared by the US Food and Drug Administration (the FDA), meaning it can be used as a medical device, highlighting Apple’s increased push to brand the watch as more than a fitness device.

This is one of many signs that tech giants in the consumer space are moving into the domain of medical devices. We would like to call this emerging trend “Healthcare as a Consumer Application”, and we can break it down into a few components.

• “Medical devices” is broadening into the consumer market, as wearables (i.e. smartwatches and other wearable computers) turn from fitness trackers to health monitors
• New players, i.e. both the established consumer tech champions and new startups, are entering healthcare with new products and services
• This leads to several effects, including the unbundling of the physical location where healthcare is produced and consumed, and the consumer in effect becomes a co-producer of healthcare services

What is a medical device and why is it an interesting tech market?

According to the World Health Organization (WHO), a medical device is “any instrument, machine, appliance, implant, software, material or other intended to be used for human beings, for purpose of, for example, diagnosis, prevention, monitoring and treatment of disease, supporting or sustaining life and providing information.” Medical devices are usually intended to monitor a critical health parameter or parameters related to a chronic condition and/or illness. Parameters include blood pressure, temperature, heart rate, galvanic skin responses, skin moisture, and blood sugar/glucose levels. For example, diabetes is a major health issue around the world, and many require their blood-glucose levels monitored constantly. There are several consumer products in the market today for monitoring blood-glucose. Will we see it as a feature in the next Apple Watch?

However, medical wearables, that we can call them, differ from those on the consumer market. Whereas consumer fitness trackers can help users stay in shape, medical wearables can detect life-threatening conditions and collect biometric data to help with patient diagnoses. Medical wearables are more mission-critical than a regular step-counter.

A key reason why wearable medical device adoption is not yet mainstream, is the more demanding safety and accuracy standards they must meet. Regulatory approvals , compliance and insurance issues are factors that must be considered in the broader use of medical-grade wearable devices. Wearable medical products must be validated by relevant authorities, and there’s a big difference between tracking how many stairs a person climbs per day — and measuring an irregular heartbeat that can be a matter of life or death.

The world’s big tech companies are great at producing innovative combinations of hardware, software and data. Thus, they are well positioned to move into the market of wearable medical devices. However, there is a clear distinction between devices and drugs, which are developed and produced by the pharma companies. It’s probably safe to assume that tech companies will not move into pharma as a core business, as life sciences is a very different field from tech and data sciences. However, tech companies are putting capital into biotech, and Google, for example, has participated in several drug-related investments.

Since healthcare is one of the world’s fastest growing industries and usually represents some 10% of any developed country’s GDP, it’s a big and potentially lucrative market. Given also that populations are ageing in most of the western and developed world, older people (i.e. people more likely to have health challenges) is an increasingly important target group. An ECG (Electrocardiography) is for example used to detect Atrial fibrillation (also called AFib or AF), which is abnormal heartbeat that can lead to blood clots, stroke, heart failure and other heart-related complications. It is estimated that 34 million people globally have AFib and 70% are between 65 and 85. Heart diseases is already the number one killer in the US. Meanwhile, the wearable devices market is expected to reach $5 billion in 2018. There you have two converging data points — and insurance companies are actually already subsidizing and prescribing smart watches for their customers.

Big tech is active in digital healthcare in several ways, usually as a enterprise software and data provider. Amazon’s AWS Cloud Computing for Healthcare, Microsoft eHealth solutions, IBM Healthcare Industry Solutions, Google G Suite for Healthcare Businesses and Google DeepMind’s AI-powered solutions for doctors are all examples of this. What we are looking at in this blog is rather how these tech companies are moving into the consumer health market.

What are Big Tech and startups doing in consumer healthcare?

The hardware products, that we usually think of as medical “devices”, range from digital scales, fever thermometers and blood pressure monitors for home use. These have been around at consumer stores for a long time. Now, tech companies are beginning to integrate them into their strategies. The integration of health related products and services into the consumer businesses of big tech companies are made in two main ways. 1) They build their own platforms, for both their own and third-party solutions. 2) They make strategic investments in various healthcare companies, products and services.

Let’s start with tech companies own platforms. Apple has mainly focused on building out its internal healthcare services HealthKit, CareKit, and ResearchKit, and the consumer app Apple Health. HealthKit allows developers to integrate health and fitness apps, and also various medical devices, for iOS and WatchOS. The new Health Records API lets users share their health record data, including allergies, conditions, labs, medications, vitals, and more. With billions of active Apple devices worldwide, there’s a solid hardware and software platform for connecting iPhones and Apple watches to healthcare systems. Meanwhile, Google has launched Google Fit as an integral part of it’s updated Wear OS smartwatch operating system that is now offered in the market to various watch and device manufacturers.

However, tech giants’ main efforts are probably to build health assets by investing in companies. According to research from CB Insights, Google is the most active tech corporate investing in healthcare in the US. Through its various investment vehicles, Google has participated in 14 of the 15 largest healthcare capital raises in 2018 that included big tech companies. All of its activity has gone through the investment arm GV, with 92 healthcare investments since 2012, including parent company Alphabet’s $375 million investment in Oscar, the tech-driven health insurance company. As data is at the heart of digital healthcare, it’s also not a surprise that Google has invested in Verily, a company at the intersection of technology, data science and healthcare with the mission to “make the world’s health data useful so that people enjoy healthier lives”. Sounds like Google?

Nokia bought French consumer health products company Withings (famous for its wi-fi connected bathroom scales) in 2016 and created Nokia Health (then actually sold it back). Apple recently acquired Finnish sleep monitor company Beddit, and also invested in Gliimpse, a Silicon Valley-based startup that has built a personal health data platform that enables any users to collect, personalize, and share their health data. Facebook acquired another Finnish company, Moves, a developer of fitness tracking apps. Amazon invested in cancer diagnostics company Grail and baby monitoring startup Owlet Baby Care (“Track your baby’s heart rate, oxygen levels & sleep”). Microsoft invested in Livongo, a company that uses personalized health insights to treat pre-diabetes, diabetes, and high blood pressure. Once the tech giants establish their consumer health ecosystems, it will encourage other startups, apps, products and services to develop for these ecosystems, and maybe sell their companies to them. Or being disrupted by the tech giants. One of the pioneers in wearable medical-grade ECG-monitors, AliveCor, now faces competition from the Apple Watch 4.

Furthermore, as the market grows, there is always the sensitive issues of privacy that becomes more urgent as more personal and medical data is stored digitally with third parties. Also, misinterpreting the data could be costly, perhaps fatal or at least prompt unwarranted health scares, which could result in unnecessary emergency room visits.

In the Nordics, the most visible example of digital startups moving into consumer healthcare are the “online clinics” like KRY and MinDoktor that offers doctors through video apps. Both KRY and MinDoctor have raised significant capital for further expansion. KRY announced a $66 million funding round in June led by international venture capital firm Index Ventures with Accel, Creandum, and Project A. In September, retail group ICA invested SEK 335 million in MinDoktor. These companies could never have existed without a solid consumer platform of iPhone and Android smartphones. These new digital players also underline another effect in the shifting digital healthcare landscape — the unbundling of time, place and services.

Healthcare in new places, produced and consumed in new ways

A professional healthcare environment is a hospital or a clinic where you’re likely to meet highly trained healthcare specialists; doctors, nurses and therapists. In contrast, a consumer healthcare environment is typically your own home. It can also be your workplace, gym or outdoors.

In traditional healthcare, the service is typically produced and consumed in the same physical location, the hospital, the clinic or possibly by a doctor visiting you in your home. We can now see an “unbundling” of healthcare services, meaning that it can be produced in one place (the doctor sitting in a call center communicating via video) and consumed in another (the patient’s home). Or the patient can provide data through her wearable (instead of coming to the hospital) and transmit it to a doctor at another place, or maybe an AI in the cloud.

Healthcare thus increasingly involves the consumer as a “co-producer” of the services, while the other co-producer (that was previously a doctor) might be a health analytics algorithm in a cloud. Thereby, the healthcare service is increasingly produced outside the traditional environment, i.e the hospital.

According to a study in the scientific journal Nature, Google’s DeepMind has trained its algorithms to detect over 50 sight-threatening conditions to the same accuracy as expert clinicians, and recommend the most appropriate course of action for patients. Diagnosing eye diseases from ocular scans is incredibly time-consuming for doctors due to the complexity. Due to the aging global population, eye disease is also becoming more prevalent not less, increasing the burden on healthcare systems. Imagine making an eye-scan with your smartphone’s camera and then send it to Google Cloud for analysis, and you have an image of the future of healthcare with devices, consumers and AI working together. There is already iris-scanning security technology in use in smartphones.

Another example of this “unbundling” of services, producers and places is when traditional healthcare systems (i.e., patient electronic health records) extend to patients through consumer interfaces where patients can access the systems directly themselves. BCB Medical, a software company Standout Capital has invested in, together with Elisa, Finlands biggest telecoms operator, have combined their expertise and digitized the clinical pathway for specialised asthma care with remote measuring and asthma registry. The measurements taken by the patient through an asthma pipe connected to a smartphone via Bluetooth are forwarded straight to the electronic health record system used by the healthcare personnel and combined with the data in other healthcare systems. This enables remote care, continued monitoring, saves the patient and health providers from time consuming medical appointments, and gives the professionals more time for actual healthcare work. The new service is already in use at HUS, the Hospital District of Helsinki and Uusimaa.

“The data collected from the remote measuring by the patients is combined with the care data stored in the asthma quality registry. The care data in the registry has been entered there by healthcare professionals, or it has been automatically obtained from the medical information systems through integrations. All this data is combined in one view so that the healthcare personnel have all the essential information they need in order to provide the best care for the patient” says Petteri Viljanen, CEO of BCB Medical.

In summary, what are the implications of the “Healthcare as a Consumer Application” trend? We think that it is fair to assume that:

• We are likely to see more consumer medical devices (i.e. innovations combining hardware, software and data for the benefit of health) from big tech companies
• Big tech will continue to invest in healthcare (both their own platforms and putting capital into other companies) at an increasingly active pace, as this new medical consumer market develops
• Meanwhile, new startups and products will enter the larger ecosystems to offer more ways for consumers to run parts of their healthcare themselves
• The consumer applications will merge with the powerful capabilities in Google Cloud, AWS and Azure (think how an AI will interpret your health data), to form new services
• Existing healthcare software will increasingly offer consumer extensions so patients can export and import data themselves, outside the hospital environment.
• As data is at the core of this trend, the development will put even more emphasis on collecting, owning and using data for various purposes, and making sure the data stays private and secure

To conclude, we expect to see much more of the Healthcare as a Consumer Application trend in coming years. It will continue to be an exciting investment area.

Photo by rawpixel on Unsplash

Healthcare as a Consumer Application was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Amazon Web Services, or AWS in short, is at the center of the digitalisation of everything, and AWS Summit in Stockholm is Amazon’s biggest Nordic event with over 5,000 visitors. The endless line to the registration desk is proof alone that this is probably now Sweden’s largest annual tech event. The reason, of course, is that 2018 is the year AWS, the world’s largest cloud, is launching three new data centers in the Stockholm region, to serve all of the Nordics.

Judging from the audience, AWS Summit is attracting a wide range of stakeholders, from developers and engineers, to entrepreneurs, corporate management and venture capital. Everybody’s here to engage in one way or the other with the most expansive company in the world at the moment, the unstoppable Amazon. Standout Capital was on location.

The event is a combination of exhibition with AWS partners like NetApp, Cloudability, Snowflake, RedBridge and Opsio — and seminars on such topics as “Serverless computing”, “Building Your Data Lake on AWS”, “Machine Learning”, “Harness the power of infrastructure as code”, “ Scaling From Zero to Million Users” and “How to be a fintech startup in the cloud”.

But let’s start with some figures about AWS (the cloud business of Amazon). AWS now has a leading 35% market share of the global public cloud market, ahead of its main competitors Microsoft Azure, Google Cloud Platform and Alibaba Cloud. And AWS is getting bigger, currently growing with 46% year-on-year with a $22 billion annual revenue run rate. That’s about 12% of Amazon’s $178 billion revenue. With millions of customers in 18 regions currently with 55 Availability Zones, or AZs, (which is another word for data center) across the planet (with 4 new regions and 12 more Availability Zones coming soon), AWS is expanding its global network.

The most impressive aspect of AWS is the pace of innovation. Last year AWS added 1,430 new capabilities (or features, functions and products) to its cloud. While the old world of hosting was about storing data, the new cloud offers everything you need to run a modern business like machine learning and analytics, all delivered as a service.

In the Nordics, AWS is now launching three new Availability Zones (AZ) in 2018, located in Katrineholm, Eskilstuna and Västerås. From these facilities, AWS will offer low latency networks other services across all Nordic capitals, Stockholm, Helsinki, Oslo, Copenhagen as well as the Baltic states. Low latency is a big deal in the digitised society. It’s essentially a computer network that is optimized to process a very high volume of data messages with minimal delay (latency). These networks are designed to support operations that require near real-time access to rapidly changing data. So AWS is well positioned to meet the high demands of the Nordic region’s most advanced tech companies.

“Cloud is the new normal”, says Guido Bartels head of AWS Nordics. Amazon expects the market to understand that using all the features of a public cloud is a cost-efficient, secure and operationally innovative way to run a business going forward. In addition, all the three data centers in Sweden will run on renewable energy. And AWS promises “data sovereignty”, in essence meaning that no foreign power can mess with your data, as AWS offers an alternative to the local private clouds. However, it’s still unclear what the US Cloud Act, that gives US government the right to snoop into clouds, will mean in this perspective. Anyway, the Nordic organization is established with offices in Stockholm, Copenhagen and Helsinki and is fast growing org with local employees.

Keynote, Werner Vogels is the CTO of Amazon. Not only AWS, but the entire Amazon. He’s in charge of the technology vision and architecture of one of the world’s biggest technology companies. It’s clear that he loves AWS and its customer offerings. It’s maybe useful to see AWS as a collection of powerful capabilities and features. “We want to offer the best tools to build your own house”, says Vogels. But AWS will not instruct you how to build the actual house, that’s up to you. So, what are the tools? It’s a great deal about code.

First, you have to rethinking the “code value chain” and traditional development (write code > check in the code > build > test > deploy > operate). WIth AWS Cloud 9, it’s now easier to write the code and immediately operate the applications.

Second, you can use AWS’ ready-made applications. Let’s start with Machine Learning and AI, probably one of the main topics for any digital company today. What does it mean? It’s all mostly about predicting the future, but as we all know, no-one can predict the future. You can, however, take data from the past and make a pretty good estimate. That’s Machine Learning, and as a consumer you are likely to encounter it as recommendations on Amazon, Netflix and Zalando.

Amazon has a long history of Machine Learning, but there is a apparent urge to get even better, use more data, offer more applications. The fight is on with the other AI-giants like Google and Alibaba. AWS’ mission is to “put Machine Learning in the hands of every developer and data scientist”. Again, it’s all about offering powerful tools to build your business. Amazon SageMaker is a collection of Machine Learning models and algorithms available. Other tools include Amazon face recognition, photo and video analysis, applications for speech & hearing and text processing.

In essence, AWS is moving the hosting industry from data storage to capabilities. It also shows how this development will play out. Companies will have various needs, and solve those needs with a combination of on-premises solutions (for sensitive data), local private clouds (for other less-sensitive data) and public clouds like AWS to apply tools like Machine Learning on the data for better customer experience. Thus, the future is a hybrid of clouds. Simultaneously, a new service and consulting market is emerging, to enable companies make use of the vast range of tools and opportunities available. Some of these AWS-partners in the Nordic eco-system were also present at the summit, for example the Nordic cloud specialist Nordcloud from Finland.

Other tools and capabilities in the huge AWS cloud includes Amazon Aurora, for migrating databases to AWS. Amazon S3, AWS Glue offers data lakes and analytics tools. But the most exciting development might be serverless and the elimination of infrastructure management. “Builders want to build, not manage clusters”, says CTO Vogels. Computing is moving from from server to serverless (Virtual Machines -> Containers -> Serverless). Some of the companies that are now running serverless on AWS are Tobii, Daniel Wellington, Telenor, Husqvarna and Reuters.

However, the lasting impression that Werner Vogels, the CTO of Amazon, wants to make, is security. “Security is everyone’s job”, he says. Systems are becoming increasingly vulnerable in a digital world, and one of the most efficient ways to solve it is encryption. AWS offers a feature called “Ubiquitous Encryption”, and Vogels thinks everyone should use it, at least when it concerns customer data. This is a new take on the European Union’s new GDPR directive, that forces companies to have policies to protect data. Amazon and Vogels obviously think it’s better to let technology (encryption) protect sensitive data.

Who are AWS’ customers? No tech evangelist event is complete without convincing customer testimonials. AWS offered no less than three visionary and happy clients.

Soili Mäkinen is the CIO of CargoTec, a Finnish company in the global container cargo business, operative in 100 countries with 11,000 employees and €3.2 billion revenue. CargoTec handles 25% of the world’s cargo traffic, which involves extreme logistic challenges at container terminals. The challenges include lack of central overview or transparency, planning for maximum utilisation of capacity, resulting in moving empty containers across the globe and an estimated €17 billion annual inefficiency. With AWS, CargoTec built a digitalised platform to make sense of data from multiple source like shipping companies and harbour operators, creating automation and modern intelligent cargo handling.

Christine Stanley is the head of clinical laboratory at WuxiNextCode, a global network for rare diseases, connecting patients. The purpose is make connections to accelerate diagnosis, and the need is to store, analyse and share massive amounts of data. There are around 500 million patients in the world with rare diseases, that means 1 of 15 people. Each human being in the world represent one set of DNA, or genome, which equals 100 gigabyte. 500 million people thus represents 50 exabyte of data. With the AWS partnership, WuxiNextCode could analyse 100,000 genomes in under 1 minute. As Christine Stanley says, “The Internet of DNA 2.0 is about connecting people and genomes.”

Heikki Verta is head of engineering at Supercell, a global games company, now running 4 games globally on 5000 servers with 5 terabyte data per day, enjoyed by 100 million daily users. Heikki says that Supercell has a simple philosophy, “The best teams make the best games”. The company today has 250 “supercellians”, with about 20 people in each team. In short, the success is based on the best people, the right culture, and an optimal platform. Of course, Supercell runs an efficient operation on AWS.

As Amazon’s CTO Vogels points out, the 5 pillars of a well-designed architecture is operational excellence (offering the right tools), security & compliance, reliability, performance efficiency and cost optimization. On that last note, there is now a new market for cloud optimization tools emerging, just like the emerging market for Google AdWords and pay-per-click triggered an industry of bid-management tools, of which most are gone now. The need for third-party optimization tools is driven by the fact that a traditional hosting market with fixed pricing, is now transforming into a “financial market” where customers buy IT as services with variable pricing on demand.

The reason why Amazon and AWS will be a key player in the Nordic hosting and cloud market, is that they offer a business model and set of features & tools that are game changing, and in a good position to attract both customers and developers. And that’s why 5,000 people are flocking to AWS Summit 2018 in Stockholm to learn more. However, both Google and Microsoft Azure are very active in the market and competition for customers is expected to be fierce, especially since Microsoft has a traditionally dominant position in the Nordics. Both Google and Microsoft are also adding new capabilities to their clouds, elebit not at the frenetic pace of Amazon. AWS Nordic launches their three Swedish data centers in the fourth quarter 2018, and be prepared that the Nordic cloud market will go crazy from the beginning of 2019.

AWS Summit 2018 in Stockholm, Sweden’s New Biggest Tech Event was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

The global cloud market is expected to double in size in the coming years to some $400 billion. Also in the Nordics we see fast growth of the cloud market. This quiet revolution is driven by the transformation of IT to services, the need to handle IT security and also by flexibility and innovation. The trend is manifested by the emergence of global cloud networks. In Sweden, one of the clouds services, Amazon Web Services (AWS), is expected to launch in 2018 with three new data centers. We take a look at the cloud market in this blog.

What is the cloud, really? On the surface it’s just another way to outsource your IT with the same basic technology, but it’s actually a completely new business model. To understand “the cloud”, it makes more sense to also view it as a new set of services, sold with a new price model and delivered in a new way as “IT on demand”.

With this new business model, a group of giant clouds are now fast forming global networks, led by Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform and Alibaba Cloud. We think it’s a major and quiet revolution, and we will tell you why.

The global cloud market — including public & private cloud services and legacy IT — is expected to grow from around $180 billion in 2015 to almost $400 billion in 2020. (Sources: IDC, Gartner, Forrester). The Swedish cloud market — both public and private clouds — is expected to grow from around SEK 20 billion in 2017 to almost SEK 30 billion in 2020, a healthy annual growth of almost 20%. (Source: Radar Group).

We have long talked about the cloud and cloud services, as a metaphor for IT and system resources accessed easily over the Internet. Actually the first references to cloud computing appears as early as 1996, but it was Amazon who popularized the term in 2006 with the release of its Elastic Compute Cloud (EC2) product, now a central part of Amazon Web Services (AWS). But why is the cloud market taking off now? There are four important drivers behind this growth.

1) IT is moving to operations as a service. As traditional IT is transformed to a set of services that can be purchased on demand, the functions of the traditional IT department is consequently moving to operations in a company — production, sales, marketing and finance all run their own IT services from the cloud. Most companies today, when they need for example a CRM or Business Intelligence, buy and use these functions as Software as a Service (SaaS). The driver behind this movement to IT consumed as services is not cost-savings (as were the case with the old outsourcing of hosting to a third party data center), but rather flexibility, functionality and innovation. Simultaneously, the IT cost in a company changes from capital expenditure (CapEx) to a running operational cost (OpEx). The price model changes from depreciations on investments or fixed yearly costs to an outsourcing partner, to subscriptions or hourly fees, depending on what you buy. Hosting of applications changes from manual handling of your own servers, to self-service through APIs, code and online interfaces of applications in the cloud

2) IT security drives the needs for private clouds. Another driving force is IT security. As the general digitalization of business and society increases the vulnerability of our digital systems and data, the demand for IT security is growing. Beyond the obvious market demand for security software and cyber security consultants, there is also a need for more secure hosting in local private clouds with more control. Private clouds are owned and maintained by a company or organisation, sometimes managed through a third party (a managed service provider). The private cloud might be based on hosting resources and infrastructure already present in the organisation’s on-premises data center or on new, separate cloud infrastructure. The private cloud offers more control over the organization’s data.

3) The growth of public clouds. A public cloud is an independent, third-party provider, such as Amazon Web Services (AWS), Google Cloud Platform or Microsoft Azure, that owns and manages IT resources like drives, servers, operating systems and applications that customers can access as a service over the internet. Public cloud users share these resources, and while the IT security level is naturally high, companies might still think that some of their data is too sensitive to store in a public cloud. The driving force behind using a public cloud is rather flexibility and innovation. Besides the typical “hosting” of applications and data, the public clouds also offer a wide range and fast growing menu of functions like artificial intelligence, machine learning, voice recognition and business applications that are all easily available as online services. This is really the quiet revolution — that many of the products (like a CRM or office software) is increasingly available “on tap” from the big clouds, over time disrupting traditional software markets.

4) The hybrid clouds. The majority of companies IT infrastructure is still “on the ground”, in existing on-premises legacy systems or private clouds, and will remain there for some time, while in parallel there is a need for using smart public clouds for specific reasons. This results in a need for hybrid infrastructures, or hybrid clouds. A hybrid cloud, consequently, is a model combining private clouds connecting with a public cloud infrastructure, allowing organizations to manage workloads across two different cloud environments. The public cloud then becomes an extension of the private cloud to form a single hybrid cloud. A hybrid cloud set-up requires a high level of compatibility between the underlying software and services used by both the public and private clouds.

The emergence of the global giant clouds, or the “hyperscale providers” that Gartner calls them, is a major trend. The big four AWS, Microsoft Azure, Google Cloud Platform and Alibaba Cloud are all growing fast, but AWS is in a league of it’s own with an estimated 35% market share, with Microsoft, Google and Alibaba catching up behind with some way to go.

Notably, there is no big cloud in Europe competing with the giants in the USA and China. And it is not very likely that any major European hyperscale cloud is going to emerge in this market, it is already too competitive and the existing hyperscale clouds are already too big. So Nordic and European companies and organisations will have to decide whether they want their data in an American och Chinese cloud, and probably in combination with their local private clouds. There is now a great menu of smart functionality building up in the major clouds and many companies are starting to look at how they can combine there functions to be more competitive.

Even though Microsoft as a software supplier is dominant in the Nordic region, it is still likely that many Nordic companies and organizations will turn to AWS (which have been established in Sweden since 2011) as Amazon is now building three big data centers in Sweden around Stockholm, launching in 2018. We also expect AWS to open more data centers across the Nordics in the coming years. This in turn will probably set the foundation for an interesting Nordic market and local ecosystem of cloud consultants and specialists, managed service providers, SaaS developers and complementing local private clouds.

We also see a wide range of sectors adopting cloud services. Many banks and financial institutions, for example, are already migrating to the cloud, with as many as 97% of CIOs (according to one study) anticipating some form of cloud adoption by end of the year. A huge number that suggests an overwhelming acceptance of the technology or at least, a private-public hybrid solution.

The emergence of the global cloud networks is similar to the last time when Silicon Valley established a new business model that quickly came to dominate a whole industry: online advertising. Google launched its global digital ad infrastructure, AdWords, based on a new online service, simplicity, effectiveness and price model. It quickly became one of the most successful business models in history. Today Google and Facebook, who became two of the world’s most valuable and powerful companies thanks to their global digital infrastructures, together control close to 70% of global online advertising. In the process, a new industry of data-driven online marketing specialists, e-commerce companies and product developers emerged that forever changed the advertising business. The same is now happening with the traditional IT infrastructure industry. The cloud market is a quiet revolution in the making.

Originally published at www.standoutcapital.com on April 19, 2018.

The Quiet Revolution — How the Giant Clouds are Taking over the Sky was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

We went to Trondheim to explore one of the Nordic’s top tech hubs, built around the large university, with a dynamic ecosystem of innovation, research and startups. We also discovered how the salmon industry is creating an exciting industry around Aqua Tech, and how you can finance a VC fund from selling beer.

Did you know that Trondheim is the largest tech university campus in the Nordics? Some 39,000 students study technology and natural sciences at the Norwegian University of Science and Technology ( )*, a grand academic institution focusing on IT, health, energy and ocean space. Add the Trondheim-based Foundation for Scientific and Industrial Research ( ), the largest independent research organisation in the Nordics with some 2,000 employees active in digitalization, ocean space, health, energy and other areas, and you have an impressive Norwegian scientific cluster. It’s a Norwegian tradition for companies to outsource their research to academic institutions, unlike in Sweden, where industrials are often running their own R&D, says Haakon Skar from NTNU.

And just as Silicon Valley and its entrepreneurs, innovators and venture capitalists grew around the Stanford Campus in Palo Alto, Trondheim has emerged as an exciting Nordic tech hot spot built around NTNU and SINTEF. According to the annual Impello Report , there are over 500 technology companies with some 10,000 employees in Trondheim and over half of these are IT-companies. Between 50–60 new companies are started each year. Jon Ragnar Viggen and his partner Björnar Reitan at , a networked corporate finance firm in Trondheim, emphasizes the importance of NTNU and SINTEF for research resources, commercializing innovation and producing a steady stream of startups. SINTEF is running its of own fund, SINTEF Venture, with funding from the European Investment Fund.

Trondheim is the headquarters for Norway’s largest VC investor, government-owned Investinor with NOK 4.2 billion under management. The city, situated on the Atlantic coast and number three in Norway by population after Oslo and Bergen, is also home to a large salmon fishing industry and the second largest church in the Nordics, the impressive Nidaros Cathedral. During the viking age, Trondheim was the capital of Norway until 1217.

The viking spirit is still present in Trondheim, as we discovered how tech entrepreneurs have sailed west and established companies in the US, but more frequently sold their businesses to American buyers. It’s a challenge in the highly innovative Trondheim region. Lars Iversen, the head of Technoport (an organisation supporting the local ecosystem and one of the sponsors behind Trondheim Tech Guide ), thinks it’s important to grow Trondheim companies to a larger scale, create more of a critical mass, before they move or get acquired by a foreign giant. Norwegian entrepreneurs have less experience in scaling up, he says. Unlike their viking forefathers, are today’s Norwegian entrepreneur maybe more risk-averse? Or is it the curse of a university town? People come and go, and so do their companies.

For example, several successful semiconductor companies have been acquired by US groups. One of the most known is Falanx that was bought by ARM in 2006. We met with Borgar Ljosland, with background at NTNU as many other entrepreneurs, and one of Falanx’ co-founders. He confirms the impression that companies seldom reach a larger scale in Trondheim before being bought or moving out. He’s co-founded , a well-known co-working space in Trondheim, and is now helping startups. Work-work is basically a bar selling beer, with offices to rent on top. But the most spectacular thing about this place, is that it’s really a VC fund called Kick-Ass, funded by the proceeds from the bar. This must be one of the best examples of a win-win situation we’ve ever heard. The more beer that entrepreneurs drink at the Work-Work bar, the more funding the Kick-Ass VC gets to invest in startups. The fund has so far invested in four companies. Now we’re looking to deploy AI and a data-driven approach to increase the funding (sell more beer), and maybe offer a new cryptocurrency based on the assets in the fund, says Borgar with a smile.

The largest private VC fund in Trondheim is Viking Venture , or it’s actually a growth capital fund nowadays, investing in later stage enterprise software companies. Most of the deal flow is from Norway, and leading tech clusters such as Oslo, Stavanger, Bergen and Trondheim, says partner Jostein Vik. He also confirms the view that the Nordics (or at least Norway) is not really like the US in terms of risk-appetite. The Nordics innovate and start companies, the larger international players acquire the technology. Of course, that makes an active capital market with both interesting deal flow and exit opportunities. Viking Venture makes 2–4 new investments and exits per year in the Norwegian enterprise software market, mostly to trade and financial buyers.

Tom Arnoy, the founder and CEO of (a mobile app company) is another Norwegian entrepreneur who successfully choose to sell most of his company to fund further expansion. In 2006 he sold 80% of Zedge to an US industrial investor, instead of raising capital from a typical VC, and the move was probably useful for establishing the company in the US market and creating more of an international traction and awareness. Zedge went public on Nasdaq in 2016. Tom is still running the company as CEO from Trondheim, and is also active in a group of angel investors in the local ecosystem with it’s mix of both institutional and private money. Other local investors include the family office of Byggteknikk and Salvesen & Thams .

Tom points to other important tech players in Norway like StartupLab in Oslo, Katapult Accelerator , Angel Challenge and the new Norwegian AI fund. He underlines the general image of Trondheim, saying that there are many startups — but they have to grow. Trondheim is an important tech region, but companies need more of a “hunger” to go big, he thinks. Tom wonders if there is a risk of too much money in Norway, and especially too much seed capital, since it can make startups “lazy”. There are actually few examples of Norwegian startups becoming global champions, before being sold to a foreign buyer.

That turns us to a Norwegian industry which is indeed a true global leader from a local base. The salmon business. And Norway owns the global salmon industry. The top-4 salmon companies in the world are all Norwegian, and the biggest is Marine Harvest (NOK 28 billion revenue), based in Bergen with almost one-third of the world’s total output. In fact, of the world’s 20 top salmon producers , 11 are based in Norway. , the world’s fourth largest salmon company (NOK 10 billion revenue) is headquartered in the small town of Kverva on the island Fröya outside Trondheim, and owned by the Witzöe family, locally famous salmon billionaires. However, the reason why we got interested in salmon is not because of the fish itself, but the technology industry growing up around it, “Aqua Tech”. From automated ocean-based salmon farms and sea lice technology, to enterprise software, digital communications, self-driving boats and battery research. It’s natural that innovations in self-driving cars happens in California, in a country of car-drivers, but as Norway is nation of shipping, they lead in autonomous boats. In fact, the SalMar family also runs , a large investment company exclusively focused on Aqua Tech and the marine sector. Another private equity investor focusing on the marine sector is Broodstock , purely investing in sea food.

From seafood innovators like to the next generation of tech companies such as , and AIA Science , Trondheim is growing. The next step for Trondheim, according to Lars Iversen at Technoport, is to increase the critical mass from 500 to 1,000 tech companies and 20,000 employees. So there you go. Technology, startups, Aqua Tech, a beer-financed VC and friendly vikings. Trondheim is truly inspiring, and worth a trip. We’re looking forward to come back soon!

*Comparing NTNU and SINTEF with the Nordics, there are around 24,000 students at The Royal Institute of Technology (KTH) in Stockholm and some 10,000 students at Chalmers University of Technology in Gothenburg. At Aalto University in Finland there are 12,000 students and at the Technical University of Denmark (DTU) you’ll find tech 11,000 students. As an international comparison, there are around 16,000 students at Stanford University in California, counting all disciplines.

Nordic Tech Hot Spot: Trondheim was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Our worry about technology taking our jobs is age-old. Now, with the exponential development in Artificial Intelligence, computer power, new software and robotics, the discussion is hot once again. In this blog, we take a look at the future of work and automation, and think there is plenty to discuss.

In March 2017, Fortune magazine told their readers that ”Robots Could Steal 40% of US Jobs by 2030”. Robots stealing jobs undoubtedly sounds like a worrying future prospect. The background is a PwC report, “The Impact of Automation on Jobs”, that suggested that robots and automation could take 38% of the jobs in the US, 30% in the UK, 35% in Germany, and 21% in Japan.

Why is the potential job-loss higher in the US? The report points out one central aspect; the US has a large financial retail sector, with financial workers in more routine jobs that is likely to be automated. And think about it, the Automatic Teller Machine (ATM) was one of the first “robots” to “steal” jobs from the traditional bank teller, an employee that deals directly with bank customers. According to the ATM Industry Association, there are now close to 3 million ATMs in the world. How many jobs have these machines taken from bank employees, without us even noticing? Another “robot” that then “stole” more bank jobs was the Internet bank that allowed customers to do even more routine jobs themselves, such as paying bills, transferring money and opening accounts, thus enabling bank employees to focus on higher value add jobs such as selling mortgages and managing mutual funds. Now, as asset management is also being automated and run by algorithms at super-low fees (since running an index fund is really just routine too), the financial jobs are going elsewhere again. And what about the old ATMs? New technology, such as mobile payments, are taking their jobs as we move towards a cashless society with no needs for robots handing out paper bank notes. New robots are taking jobs from older robots, not only people.

Humans have long been worried about “technology unemployment”, and history shows that old jobs have always been replaced by new ones. The enabler between the old and the new job market is education and our ability to develop new skills. Some argue that the current technology development is faster and more far-reaching, as machines can do ever more of human work, mostly thanks to AI and progress in robotics. It’s a significant difference for humankind between technology historically replacing manual tasks, for example in agriculture and factory assembly lines, to now replacing human intelligence.

Today there is more private capital than ever around to further fuel the digitalisation of business and society. The case for investments in technology is strong, as automation enable companies to reduce labour costs (usually the largest single cost in a company), thereby increasing productivity and profits, freeing up resources for more innovation that will enhance competitiveness, and ultimately drive return on capital. That’s why, in the struggle between capital and labour, capital will once again be the winner in the digital era. This is ironic, since many private equity firms manage money for pension funds, and the investors actually acts as catalysts for job-loss, by making investments in technology that may displace the jobs for the ultimate beneficiaries of the pension funds (i.e. employees and future pensioners), in order to create returns on their pension capital. But as private capital is also used to grow companies and create new jobs, the net effect is hopefully positive.

An opinion piece in the Wall Street Journal, “The Challenge of Our Disruptive Era”, calls our time the largest economic transformation in recorded history. At the core of the change is jobs. They are no longer permanent. “We are entering an era in which we’re going to have to create a society of lifelong learners. We’re going to have to create a culture in which people in their 40s and 50s, who see their industry disintermediated and their jobs evaporate, get retrained and have the will and the chutzpah and the tools and the social network to get another job.” says historian Ben Sasse.

Many of these evaporated jobs are displaced by automation, something that we tend to generalise as robots. So, let’s sort out a few perspectives. First, what is really a “robot”, the machine that is “stealing” our jobs? Second, where is automation happening? Given huge inequalities in the world’s economies, is automation really a global phenomenon? And does automation affect all jobs? And thirdly, what about the short and the long term effects? Should we be worried, longer term?

What is a robot? The robot has become the general term for any technology that displaces human jobs. For example, it’s a chatbot in retail guiding customers, as we have shown in an earlier blog (“The Meaning of Bots”), it’s applied Artificial Intelligence used, for example, in video or text analysis (as we explored AI in a ”The Current State of Artificial Intelligence”), or an industrial robot used in car manufacturing. A “robot” can be both software or hardware, and usually a combination.

Where is automation happening? Another distinction is that job-losses due to automation is likely to happen primarily in industrialised, developed economies like the US, the UK and Germany, and less likely in poorer, less developed and digitised countries. However, the poorer countries are still likely to be affected in other, indirect ways by automation. For example, most of the outsourcing in recent years happened because manufacturing moved from rich (expensive) countries to countries with lower labour costs in Asia or Eastern Europe. If robots can produce even cheaper in rich countries, the manufacturing might move back again, then affecting poorer countries. And as we will see later, different jobs are also unevenly changed by automation.

Third, automation of jobs must be viewed both in a short term and a long term perspective. Short term, there will be job losses at the hands of automation, but long term these gaps will likely be filled with new jobs that we could not have imagined. This is the general idea anyway. For example, today, a clerk operating a computer with a web based ticket-handling tool at a customer support center is considered a rather low-skilled job, but compared to a farmhand in the agricultural society (a job now mostly gone), the computer operator is a very advanced job, unimaginable to the farmer a 100 years ago. In the long term, we have not much to worry about then, according to lessons from the past. Question is how long societies can survive the pressure of the short term job loss squeeze, especially if the short term effects, say the coming 20 years, are more dramatic than ever before in history.

A recent post in TechCrunch, “Technology is Killing Jobs, and Only Technology Can Save Them” refers to several studies that show how automation is indeed displacing humans, and argues that the only way to fight the job losses is to train the talent that we have. It also argues that technology rarely automates major occupations altogether. Studies could only find one job that had disappeared completely — elevator operators. The first jobs to go are usually the ones that we don´t want anyway, called the “three Ds” — dull, dirty and dangerous jobs. However, by reducing these jobs, automation also dramatically reduces the opportunities available to unskilled workers. But technology is also creating jobs. For example, collaborative robots is a major growth potential for the industry, leaving the machines to handle the “three Ds”, while human coworkers handle tasks better managed by people. An article in Packaging Digest, “What Are Collaborative Robots and Why Should You Care?” argues that the robot is just like a new member on the team.

These new team members are, however, not like you and me. For example, robots do not pay any tax (at least for now). Probably the most famous promoter of a robot tax is the world’s richest man, Microsoft’s Bill Gates. In a recent article, “The Robot That Takes Your Job Should Pay Taxes”, he explains how there will and must be taxes that relate to automation. “Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”, says Bill Gates. He thinks the tax could be used to temporarily slow down the spread of automation and use the tax to finance education and fund other types of employment for the humans displaced by robots.

A New York Times article, “The Long-Term Jobs Killer Is Not China. It’s Automation”, finds that around 2 million jobs were lost to outsourcing in China in the 2000s, but automation have reduced even more jobs. Compare this to the job-loss in just one of many US industrial sectors, steel production, where over 75% of the work force, or 400,000 jobs, has been lost because of new technology since 1962. President Trump can maybe force companies to keep production onshore, but it will be difficult to stop them from staying competitive by automation and innovation, and thus the jobs will disappear anyway. A study from Ball State University attributed only 13% of manufacturing job losses to outsourcing and trade while the rest to automation that enhanced productivity.

Technology and automation will destroy current jobs, and create new ones. To be able to take on these new jobs, workers need to keep up with technology change by lifelong education. To this end, both governments and companies have to rethink the way education is designed, defined and delivered. The Economist dedicated a recent issue to the pressing importance of lifelong education, and in a leader titled ”Equipping People to stay Ahead of Technological Change” they stated:

“When education fails to keep pace with technology, the result is inequality. Without the skills to stay useful as innovations arrive, workers suffer — and if enough of them fall behind, society starts to fall apart. That fundamental insight seized reformers in the Industrial Revolution, heralding state-funded universal schooling. Later, automation in factories and offices called forth a surge in college graduates. The combination of education and innovation, spread over decades, led to a remarkable flowering of prosperity. Today robotics and artificial intelligence call for another education revolution. This time, however, working lives are so lengthy and so fast-changing that simply cramming more schooling in at the start is not enough. People must also be able to acquire new skills throughout their careers.”

We assume the effects of robots and automation will be dramatic, but while there are many jobs and tasks that have the technical potential to be automated, that potential varies much across different types of work. Automation is thus not only unevenly distributed geographically in the world, but also looks different in various industries. Several studies are devoted to finding out which jobs are the most likely to to be automated in the short term. Such studies tend to get attention since they indicate 1) who is likely to be unemployed going forward (and needs to re-think and re-train), and 2) what are attractive future jobs (and thus influence career and education decisions). For example, in a previous blog we showed how Swedish university students are increasingly interested in AI-courses, since that field is perceived by young engineers as future-proof.

A study from McKinsey, “Where Machines Could Replace Humans, and Where They Can’t”, looks at the technical feasibility to automate jobs, as the percentage of specific activities in that job that can be automated by adapting today’s technology (not whatever technology available tomorrow), thereby identifying the most and the least “automatable” activities. What are typical automatable activities? McKinsey finds, not surprisingly, that the most automatable jobs are predictable physical work like an assembly line, food processing and packaging, generic “3Ds” jobs (dull, dirty and dangerous). Here, the technical feasibility of automation is estimated to 78%, suggesting that so many jobs or activities are likely to be displaced by “robots”. The hardest activities to automate are those involving managing and educating people (estimated to only 9 percent automation potential) or expert jobs involving decision making, planning, or creative work (18 percent). The McKinsey report indicates that mostly typical blue-collar jobs will be automated, while white-collar workers are less likely to be replaced by robots. This is not really the case, as other studies indicate.

In a much cited study from Oxford University, “The Future of Employment: How Susceptible are Jobs to Computerisation?”, the authors estimated the probability of computerisation for 702 occupations in the US, and found that about 47% of the total US labour force is at risk.

What about the Nordics? A report from the Swedish Foundation for Strategic Research, takes a similar approach as the Oxford study: looking at a large set of jobs in society, breaking them down into specific activities and assessing what activities can be automated by software. This is, in essence, the general digitalisation that goes on in society. The many parts in human activity that are gradually digitised. As we discussed in our blog post “Digitalisation and the Nordic Opportunity”, every enterprise software, e-commerce site and online payment platform together make up the digitalisation of both the society and its jobs.

The Swedish study analysed 109 different professions and found that 53% of today’s jobs (or 2,5 million of the total 4,7 million people employed today) are likely to be affected by digitisation in the coming 20 years. Professions that require creativity, social skills and persuasion are less likely to be automated compared to routine work in process industry, retail and sales. However, several white-collar jobs in finance, sales, marketing and HR are also estimated to be partly or wholly automated, up to 46% of the workforce in these sectors or around 50.000 jobs. No job is really safe, and what was considered unlikely just a few years ago (for example self driving cars) is now a reality.

The Nordics is especially vulnerable to automation since we are industrialised countries with many jobs in manufacturing. However, most jobs likely to be automated are in services, for example online media. When Google launched AdWords in 2001, they established a global online advertising infrastructure with self-serve accounts and no need for sales staff, that in turn created new jobs for online marketers managing ad campaigns. Media agencies now risk being automated as much of the sales and advertising work previously done by humans moves to automated real-time bidding platforms, just as stockbroking was made electronic in the 70s. The owners of the algorithms and platforms that run global online advertising, primarily Google and Facebook, have quickly become the world’s richest companies as the old media giants that still primarily rely on people fight for their survival. The case for automation is just as strong in other industries. So, both manufacturing and services are likely targets for automation. What are the conclusions for the Nordics, or any developed country, to stay ahead in the automation race?

The Swedish Foundation for Strategic Research lists a few areas. First, countries need a strong innovation policy. This includes, for example, resources for research and a positive climate for commercialising new ideas and make innovation flourish. Second, we need policies for lifelong learning, competence development and a modern education system that is designed for the future. Third, we also need to consider tax reforms as employment and traditional income taxes probably cannot be the main base for future tax revenue, as it is today.

The automation of work is not only a way for businesses to become more competitive and profitable. It has, as we have shown, also several effects on the larger society; education, taxation and welfare. It is maybe not surprising that people with deep insights into technology, like Bill Gates, have opinions then about technology’s role in society, and the need, for example, to tax automation to slow down the pace and help people get up to speed with technology.

Elon Musk is another famous tech entrepreneur that is paradoxically worried about the technology development, and its risk for humankind. In Vanity Fair’s feature story “Elon Musk’s Billion-dollar Crusade to Stop the AI Apocalypse” the rebel entrepreneur takes the issue further calling AI and robots humanity’s “biggest existential threat”. He has therefore co-founded OpenAI, a billion-dollar non-profit organisation for safer Artificial Intelligence. One purpose of OpenAI is to distribute AI to the world, rather than let it stay in the hands of powerful organisations and governments.

Elon Musk also has a vision for human-machine cooperation that goes beyond the collaborative robot. Musk’s new company Neuralink wants to turn AI into an extension of the brain. His previous two companies Tesla (electric cars) and SpaceX (space travel) redefine what future humans will do — Neuralink wants to redefine what future humans will be. So if this is a hint about our future, maybe it’s not about robots versus humans, but how how we join forces to work in completely new ways.

In his book Sapiens, A Brief History of Humankind, author Yuval Noah Harari outlined how humans during our 75.000 years of history have shaped the world with innovations like religion, money and empires. It’s a generally positive story about human progress and development. In his new book, Homo Deus, A Brief History of Tomorrow, his outlook is more apocalyptic and he envisions a future where most humans never catch up with the super-intelligence, technology and the resulting job-loss, thereby creating an enormous “useless class”, dominated by a rich techno-elite in power of the algorithms, networks and capital.

This takes us back to the main question. Are robots “stealing” our jobs (a dystopic scenario of the future where we have lost control), or are we humans innovating as we have always done (a positive outlook where we are in charge)? It’s up to us, time will tell. Enjoy your breakfast while it lasts.

Image: Robots deliver dishes to customers at a Robot Restaurant in Harbin, China

Will the Robots Eat our Breakfast? Exploring the Future of Work was originally published in Standout Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.