The rise of computational entrepreneurship

© 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) Th e Ris e o f Co m p u tatio n al En tre p re n e u rs h ip Quan-Hoang Vuong http:/ / orcid.org/ 0 0 -0 0 3-0 790 -1576 The Centre for Interdisciplinary Social Research, Phenikaa University Yen Nghia, Ha Dong district, Hanoi 10 80 3, Vietnam hoang.vuongquan@phenikaa-uni.edu.vn Centre Em ile Bernheim , Université Libre de Bruxelles 50 Ave F.D Roosevelt, Brussels 10 50 , Belgium qvuong@ulb.ac.be A.I for Social Data Lab, Vuong & Associates 3/ 161 Thinh Quang, Dong Da district, Hanoi 10 0 0 , Vietnam qvuong.ulb@gm ail.com Abs tract: This short m anuscript proposes a new academ ic discipline of com putational entrepreneurship, which centers on: i) An exponentially growing (and less expensive) com puting power, to the extent that alm ost everybody in a m odern society can own and use that; ii) Om nipresent high-speed Internet connectivity, wired or wireless, representing our m odern day’s econom ic connectomics; iii) Growing concern of exploiting “serendipity” for a strategic com m ercial advantage; and, iv) Growing capabilities of lay people in perform ing calculations for their inform ed decisions in taking fast-m oving entrepreneurial opportunities Ke yw o rd s : Com puting power, high-speed connectivity, entrepreneurship, econom ic calculations, connectom ics Working Draft # AISD L 18 -0 (v.3) If y ou use inform ation from this m anuscript, please cite it as: Vuong, Q H (20 18) The rise of com putational entrepreneurship Working Draft # AISDL 18-0 2, Phenikaa University, Hanoi (Dec 15, 20 18) © 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) Th e Ris e o f Co m p u tatio n al En tre p re n e u rs h ip Quan-Hoang Vuong http:/ / orcid.org/ 0 0 -0 0 3-0 790 -1576 * * * U n n atu ral h igh -e n tro p y s e ttin gs In the increasingly connected world, the future job prospects for Ph.D students is highly uncertain Statistics have shown that only 3-4% of the PhDs students can find a tenured academ ic position However, in a recent survey of 5,70 Ph.D students worldwide, Nature finds that graduate program s not seem to prepare the junior scientists for their future jobs About 30 % of the respondents stated they did have useful conservations about careers with their supervisors, and the sam e percentage finds their supervisors’ advice on nonacadem ic careers (Editorial, 20 17) It is reasonable to assum e that m ost of them are not learning any useful entrepreneur skills Meanwhile, in the world of startups, things seem to be refreshing with the arrival of a new form of digital econom y The new econom y has been referred to by m any nam es: “the platform econom y,” “the gig econom y,” “the sharing econom y,” “the peer-to-peer econom y,” etc (Bodie, 20 17) Whichever nam e it goes by, the new phenom enon is characterized by four elem ents: real-tim e data, m obile paym ents, on-dem and delivery, and flexible pricing; these elem ents enable the success of Uber, which in turn inspires a bloom ing of copycat startups—the Uberization of everything (Freem an, 20 15) The reaction toward this new econom y has varied greatly At the one end of the spectrum , people worry this technological-driven econom ic shift will only exacerbate incom e inequality, at the other end, there is a beam ing optim ism about a post-capitalist world (McAfee & Brynjolfsson, 20 17) It is uncertain how the shift will unfold is uncertain, what is clear is the business world has never witnessed such disruptive change of this volum e and velocity before This level of disruption, which is powered by an unprecedented level of inexpensive advanced com putation and network, suggests it is tim e to revise our understanding of how business startups work We need a new m odel of entrepreneurship Trad itio n al vs co m p u tatio n al e n tre p re n e u rs h ip © 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) Entrepreneurship as an academic discipline started with the Austrian school of econom ics whose founder were Menger, Wieser, and Schum peter (Cam pagnolo & Vivel, 20 14) It is interesting that while m ost other econom ics schools developed m athem atical m odels, the theory of entrepreneurship and innovation of J oseph Schum peter has never followed this direction (Pacher, 20 14) Many researchers in this school of thought even distanced their works from statistical analyses The Austrian school of econom ics is fam ous for their m ethodological opposition to classical econom ics which utilized m athem atics (Yeager, 1997) As the consequences, although the theory of entrepreneurship has becom e m ore increasingly m ore im portant, entrepreneurship has always been considered an upstart, even an outsider of the m ainstream econom ic theories Conventional entrepreneurship possesses three m ain characteristics: risktaking, sm all-scale, and self-em ploym ent The developm ent of sm all and medium enterprises in Vietnam during 1990 (Hoang & Dung, 20 9) or the boom ing of large-scales start-ups program s (Vuong, 20 16) could illustrate these characteristics In these periods, m any start-ups operate according to the fam ily business m odel at sm all or m edium scale (Pham , Bell & Newton, 20 18) The traditional taxi business is also a type of entrepreneurship with a kind of “linear business developm ent”: the drivers usually start off working for a taxi company, then gradually m ove toward using their cars to m ake m ore profit In education, the lecturers or professors also start their businesses by offering tutorials to their classes; som e offer their expertise in the form of consulting (Bercovizt & Feldm an, 20 8) All of these traditional start-ups require risk-taking, substantial efforts and som e luck to achieve som e level of success However, perhaps the Austrian econom ists did not envision how m odern com puting power and connectivity would have influenced entrepreneurship The following exam ples illustrate this point clearly A group of scholars and scientists who are originally teaching at universities, rather than starting their business the traditional ways as m entioned above, they becam e fam ous in social m edia with their unrelenting attitude in addressing controversial topics; people refer to them as the Intellectual Dark Web (Weiss, 20 18) All of them started as a kind of intellectual YouTube stars, then they create their channels, m aking profits from either direct viewers-sponsorship, advertisem ents, books, or speaking engagem ents In any event, it is clear the digital platform s play a key role in their success Another exam ple is the fam ily of Ryan ToysReview, which according to Forbes, earns USD22 m illion in 20 18 with about 17 m illion subscriptions for their attractive children videos channels (Robehm ed & Berg, 20 18) All of these stories of successful start-ups points to three outstanding features: the increasingly networked world, the increasing num ber of sm all and super sm all businesses, and the lowering com putational cost These features signal the need to studies a new field: “Com putational Entrepreneurship.” This phrase is m entioned in passing in Dark Deleuze of Andrew Culp However, the concept has not been developed fully (Culp, 20 16) The author assesses this © 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) concept from the viewpoint of a traditional start-up, perhaps, that is why further developm ent is lim ited An e m e rgin g aca d e m ic d is cip lin e Here, we propose that besides inheriting the basic characteristics of the traditional entrepreneurship, “com putational entrepreneurship” has the following new elem ents which create a substantial change in the behaviors as well as the ability to m itigate risks of entrepreneurs: First, com putational entrepreneurship utilizes low-cost extensive com puting power, user-friendly algorithm s, high connectivity, and the use of technologies across platform s This leads to the second characteristics Second, com putation entrepreneurship takes place on a very large scale, which is supported by the high speed of the Internet as well as the developm ent of social m edia These platform s enable the ability to connect at the sam e time billions of consum ers Third, the differential calculation for cost-benefit analysis is perform ed to the utm ost details, even down to the level of paym ent m ethod (such as cash) that has very low value, but in a very large scale There are millions of these calculations done at the sam e tim e thanks to the inexpensive com puting cost This im plies the possibility of not only peer-to-peer but also hierarchical or m ultilevel start-ups, indeed, an ecosystem of newborn start-ups To illustrate these characteristics and understand their im plications, we need only to look at the obvious exam ples of Uber and YouTube These com putational platform s enable a m ulti-level ecosystem of entrepreneurs For exam ple, Uber founders are not the only entrepreneurs but thousands of drivers as well Here com putational entrepreneurship forces entrepreneurs of all level m ust calculate to m ake the m ost profit While Uber m ust m ake thousands of calculations sim ultaneously to arrange bookings to m ake a profit, the drivers m ust also m ake detailed calculations to m ake the m ost profit, e.g which hours of a day pay the m ost, whether to go a short distance m any tim es or a long distance fewer tim es, which booking to receive, which to cancel As m illions of people enjoy watching others play videos and com m ents, YouTube enables m any young adults to start-up as a professional gam e For exam ple, a fam ous gam e stream er called PewDiePie on Twitch can serve 75 m illion followers on YouTube by uploading video daily PewDiePie used to hire a team for creating contents, but after a while, he decided to fire everyone in order to be m ore him self (PewDiePie, 20 17): “I thought I had to be m ore professional But I think, in reality, the m ore I try to be a professional, the m ore I sort of lost © 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) touch and just the direct connection with what’s so good about YouTube.” This is how com putational entrepreneurship takes the concept of self-em ploym ent to another level: it has created a one-person arm y As for the ideas of an ecosystem of newborn start-ups, a successful YouTube star can attract the sponsorship of other entrepreneurs, such as food producers, e-legal service, fitness equipm ent producers in the case of J oe Rogan, who is a m em ber of the Intellectual Dark Web (Weiss, 20 18) As the success of YouTube stars can be attributed to the fact that their personalities are attractive to certain niches of viewers, the sponsors, by choosing the right person to fund, can advertise to a m assive num ber of custom ers that have a high probability of enjoying their products Traditionally, this kind of effective m arketing is im possible Advanced algorithm s and low-cost com puting power arguably enable all of these In the future, the system s can be further im proved and becom e even m ore advanced com putational platform s Here, it is likely that the entrepreneurs will still be individuals, they will keep creating an ecosystem them selves through the real-tim e data generated in their econom ic activities, such as price inform ation, transaction tim e, the total value of a transaction, the dem and-supply equilibrium Scie n tific an d s o cie tal im p licatio n s For the study of econom ics, the rise of com putational entrepreneurship m ight be disruptive and subversive for the m odern mainstream econom ic theory cham pioned by Keynes and Hicks, which is translated to m athem atical m odels of Arrow and Sam uelson These m odels are static; they started with the assum ptions of a closed econom y with two goods Arguably, in the chaotic and uncertain business environm ent that we live in today, these m odels m ight not be helpful Perhaps, with the rise of a new type of entrepreneurship perhaps, it is necessary to build new m athem atical m odels start with the basic assum ption of an extrem ely open econom y in a greatly connected world with m any goods As the rise of com putational entrepreneurship has caught the academ ic world by surprise, governm ents and other sm aller-scale social organizations are no exception With the proper understanding of the new econom y powered by the new entrepreneurship, these bodies can form plans to navigate the unusually high-entropy world better In 20 15, the global protests against the rise of Uber arguably m ight have been a result of such lack of com prehension (Arthur, 20 15) It is clear the clash between the new and the traditional business is inevitable, but how to survive it without losing too m uch depends on the creating new knowledge suited for the new situation Econom ic policies of governm ents need to adapt to the new phenom enon in startups, business strategies for com panies also need an update For businessm en and wom en, com putation entrepreneurship m eans they are operating in an environm ent filled with a vast am ount of m oving-information and intense com petition Inform ation quickly piles up, and it can spread to m any © 20 18 Q.H Vuong—WD# AISDL 18-0 (v.3) people at the sam e tim e, this situation creates a very fast-closing window of opportunity To spot the opportunity, entrepreneurs need an ability to filter and m ake a judgm ent based on the “serendipity” principle (Napier & Vuong, 20 13) Science started when Socrates walked around Athens and debated with the citizens Gradually, the reasoning process is supplanted with statistics, and in the beginning, statistics is used from an adjective that com es before a field such as “statistical m athem atics” (Aitken, 1942) With tim e, science keeps branching out and develops m ore in-depth fields This is why statistics becom es too large, and other term inologies m ust be applied including “com putational.” The term inology com putational was first used in chem istry, physics and biology (Clark, 1985; Krogh et al., 1994; Potter, 1973) and then it spread to the social sciences such as com putational econom ics (Am m an et al., 1996) or com putational folkloristics (Vuong et al., 20 18); now it can handle a huge volum e of complex data and supplem ent theoretical studies The com plexity of data and algorithm s does not exclude entrepreneurship For that reason, we believe “com putational entrepreneurship” will develop further and becom e a new academ ic discipline The current m ovem ent of the world’s econom y, with its revolving around startups, will bring “computational entrepreneurship” back to the m ainstream of econom ics Ack n o w le d g m e n t : The author thanks research staff at A.I for Social Data Lab (AISDL), Vuong & Associates for exchanging opinions and assistance in research, particularly Dam Thu Ha, La Viet Phuong, Ho Manh Tung, Ho Manh Toan, and Vuong Thu Trang Re fe re n ce s Aitken, A C (1942) Statistical Mathem atics London, UK: Oliver and Boyd Am m an, H M., Tesfatsion, L., Kendrick, D A., J 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