MyFondia VirtualLawyer
November 18, 2015

Slush 2015: How Digitalization Killed Globalization and What an SME Entrepreneur Should Do About It (In Legal Perspective)?

It’s over once again, two days full of inspiring speeches, cutting edge business analysis, impressive pitches, late parties and general networking all smashed together on an epic scale. This year’s Slush had so many things going on it actually raises the question of where the event is headed next year, and whether the focus is shifting from a purely start-up point of view to wider “doing business in general” landscape. I guess we’ll have to wait till next year to see, but here are a couple of points to take note of from this year’s event.

Down With that Globalization, All Hail the Digitalization!

Remember “globalization”, the buzzword from 10 years back? It was supposed to either transform the business models of whole industries or drive the nation-states into an ever downward spiral of race-to-the-bottom regarding unit and labor costs. Well good news: it is dead now, thanks to the new savior – and buzzword – of the decade called “digitalization” (or “digital business models” and “industrial internet” as the phenomenon is better known out in the world).

Perhaps it would be better to say that globalization has morphed into digitalization, but either way the focus of global business models is at least partly shifting from traditional marginal profit seeking by means of big offshore production units into the digital world of low-cost, infinitely scalable and disruptive technologies. And this transformation will hit all industry areas and sectors, and it will hit hard when it does.

Which are the hottest industries to look out for now? Based on the analysis presented at Slush, healthcare and especially personalized healthcare and AR/VR (augmented or virtual reality) in gaming and entertainment business seem to have taken leaps and bounds forward so take my word for it: we will see some pretty crazy science fiction style stuff in those directions in the imminent future.

Strictly Legally: Where and what is the Fine Print on this Digitalization Hype?

Okay, so what will this gigantic transformation mean for an SME entrepreneur, legally speaking? I guess apart from changing the way business models, company strategy and structure and the whole industry ecosystems work, not really that much, strictly _legally_ speaking (those were some pretty big changes there for company management, agreed). You should, as always, take care to:

  1. Have all the important stuff in writing. Easier to look it up later that way, even if it feels idiotic at the time.
  2. Ensure your company has the rights to all its assets. Never mind protection of rights at this point (it comes a bit later), but make sure all that precious IP is transferred to the company.
  3. See to your personnel’s needs. Be it employment contracts or fringe benefits, the knowhow of a growth company’s personnel is often its greatest asset of all. Don’t make the employees leave because of mishaps in HR.
  4. Pay attention to data collection and privacy. This might actually be the one thing really differentiating the legal matters of an old school and 2015 SME. In most cases, the most potential for value in your start-up does not reside in your actual products, but more and more in the data behind them. And people (and regulators!) don’t like it when their data is collected and monetized upon without their knowledge, so take time to prepare those privacy policies.
  5. Be perceptive of both opportunity and risk. Agile and disruptive business models mean both potentially big gains but also big trouble if care is not taken in the form of scouting out ahead. Be active in engaging and asking for help from professionals in other fields (like us lawyers!) when it seems that the business is facing sudden transitions or you’re not sure where the wrong steps may lie.

So although business models will never be the same and start-ups take over the world by storm, you can rejoice in the fact that at least for a time legal aspects of this transformation stay pretty modest, I’d say. With time, even that may change as there will come a time when digitalization will hit the legal industry itself…and maybe not in the too distant future, either.