StageYou interviews Robert Hacker about his experiences and insights on how entrepreneurship and business strategy evolve with digitalization in the 4th industrial revolution.

Robert Hacker is the Director, StartUP FIU, Florida International University | Professor , Florida International University | Partner , GH Capital Partners | Former Faculty , Goldman Sachs 10,000 Small Business Program | Former Lecturer, MIT Sloan School of Management | Former CFO, One Laptop Per Child Association | Former Managing Diretor, Vaupen Financial Advisors| Former CFO, IDS Telcom | Former Vice Chairman & CFO , Mathari Putra Prima | Author

With an illustrious career spanning several decades, Robert Hacker has managed to accumulate many business achievements along the way. The most notable of which was turning a small family business in Indonesia into a giant – making a billion dollars in annual revenue, the largest retailer in that part of the world and also the biggest employer aside from the Indonesian government – all within the span of 7 short years. Even before this he spent a decade as a strategy consultant based in Japan for Fortune 500 Japanese companies imparting advice and knowledge with the aim of bettering business.

After moving back to the US, he spends a considerable amount of time using his business skills and acumen to give back to the global community. He was a key player in the One Laptop Per Child project that started at MIT focused at achieving 1 to 1 computing capability for children in the developing world. During his tenure as the COO/CFO, he orchestrated the complete overhaul of the company’s business model transforming it from a declining non-profit to a sustainable social entrepreneurship model while at the same time, greatly increasing the scope and benefit of the project to the intended children.

Robert has a keen eye for business trends, both on a micro and a macro scale. Whether it is related to small communities or businesses or global shifts such as the imminent 4th Industrial Revolution, he understands the positive effects that can come with access to digital resources anywhere in the world – especially in areas blighted by poverty where people have the highest urge to overcome their struggles.

He is an educator with a concentration on entrepreneurship. Having previously taught at MIT, he currently designs and teaches courses in this field that are widely sought after by the students at Florida International University (FIU).

He is also the co-founder and director of StartUP FIU which began in 2016 as an entity aimed at entrepreneurship, economic development and fostering innovation based at FIU. The mandate of which includes implementing business incubators and accelerators for real hands-on development of new companies and blending concepts such as design thinking and entrepreneurship into the general school curriculum.

StageYou: Supporting growing companies through an incubator-accelerator mechanism has the potential for these companies to impact the economy of South Florida. How has embracing digitalization enhanced the effectiveness of your work at StartUP FIU?

ROBERT: The analysis from the venture capital firm NSX shows that since 1994, an astounding 70% of the stock market value of technology companies is attributable to those that have adopted the network based model. I think that since digitalization improves the functioning and effectiveness of the network business model, it plays a significant role in impacting entrepreneurship here in South Florida as well as anywhere else in the world.

When choosing a company to incubate and accelerate growth, it is important to realize that a successful outcome will be dependent on two factors. One being what the company is about or what they offer and the second is their business model – the framework in which they function as a business. Selecting companies having models that are network based are much more likely to create real value as you execute. The progress in technology and digitalization gives a solid advantage and is the most compelling reason to participate in network based businesses.

StageYou: Could you illustrate the impact of a network based business model taking as an example a company currently incubating at StartUP FIU?

ROBERT: Well, for example, we have a company that has been in incubation for 2 years. Their goal is to create an alternative to Amazon with an additional unique feature for the user. The company asks the user a simple question ‘How much would you like to pay for merchandise?’. At which point, the company will scour the web for products fitting that cost requirement. So essentially instead of the company pushing products toward the customer (as is the case with Amazon), here the customer effectively pulls products through this platform. The platform is of course running a network based model where suppliers are linked to customers and this type of setup is something that would not have been possible 10 years ago.

StageYou: As an advocate of the looming 4th Industrial Revolution and the abundance of information technology that comes with it, could you show how its effects are manifesting in modern entrepreneurship?

ROBERT: In my opinion, what is happening now is that modern business concepts are exclusively built around information technology and digitalization. People may talk about robotics as an example of a new concept, but in the end, robotics is just artificial intelligence or machine learning applied to information in a particular way. Another example would be the increasing prominence of blockchain technology, but here too it is fundamentally a network that is sharing information.

The 4th Industrial Revolution will make several new business concepts available to the future entrepreneur. However, the prevalent theme would be that all of these will inevitably be fully based upon or at least closely connected to information technology and digitalization.

Looking at physics and what it tells us about reality, it is not hard to make a case that all of reality is just information and energy. Information Theory was the fruit of Claude Shannon’s work in the 1940s and is the basis for all digitalization that has happened within most of the last century. Basically it shows that waves can carry information and we know that waves are nothing more than energy. Therefore we have energy carrying information and that’s what we are now advancing and developing to a very high degree during this 4th Industrial Revolution.

Although artificial intelligence was originally conceived in the 1950s it has taken over 60 years to develop it to the point that it is at today – which is a tool versatile enough to be productively utilized in an array of applications.

There is also a more daunting aspect that is a result of this development. For the first time, the process of learning or cognition is evidently branching into 2 main areas. One being organic human computation and the other is computer-centric or AI computation which has evolved to such an extent that machines can create knowledge. This is something unprecedented in human history and is going to open up a whole new frontier with a completely different set of rules and motivations, especially in terms of digitalization and the transformation of education as we know it.

StageYou: The One Laptop Per Child project was a vehicle to address the important issue of accessible education through enabling digitalization on a global scale. Could you elaborate on the project’s transition from an ailing donor model to a viable social entrepreneurship model in order to scale up, compete and fulfil the objective in an evolving business landscape?

ROBERT: The original working model for the project (which was a pure non-profit) was where 5 to 6 donors put up about 35 million dollars to launch it. However, during 2008 and the depression in the stock market, none of the donors were willing to reinvest and as a consequence, cash flow became a restriction for the first time.

This was when they realized that their working model was no longer viable and they had to adapt it to sell the machines instead. For them, this was uncharted territory and they did not have anyone on their team to guide them through this change. Subsequently they brought me in as an expert to turn the model to a more commercial one and during the course of 2 to 3 years, we transformed the whole operating style of the company to a social entrepreneurship whereby the computers were sold directly to the governments who thereafter distributed them to the children.

To me the experience of working with the One Laptop Per Child project was very meaningful as it involved a conversion of the business model to a more sustainable one. I feel that this is the right direction to move toward in the future.

Another factor supporting this is the emergence of micro entrepreneurship or the gig economy. It is apparent that progressively larger numbers of people are finding this attractive and many more opportunities are being created. The overheads in the gig economy are relatively low and this offers a distinct advantage over traditional non-profits (that inherently have high overheads). This in turn translates to more vendors offering the same services in the market thus increasing competition. Non-profit organizations may not be able to endure this and would then face the ultimatum of going out of business or scaling up – either through implementing a change in their business model or via mergers and acquisitions.

An interesting aspect in terms of digitalization is that I think that the small, non-profit organization that we recognize today will become extinct in the future. Therefore, my advice to non-profits would be to merge with other non-profits thereby achieving scale to an extent. Another would be to rethink the operating model and convert it into a social entrepreneurship which will give a better economic footing and continuance for adapting to the changes that are already upon us and overcoming their challenges that will ensue.

Robert Hacker

Robert Hacker is the Co-founder and Director of StartUP FIU, where he focuses on commercializing faculty research in emerging technologies and curriculum innovation. He is a professor in the Honors College at FIU and he previously taught at MIT Sloan. He teaches courses in social entrepreneurship, mental frameworks in decision making and the Fourth Industrial Revolution.

He previously was the COO/CFO of One Laptop per Child, an international social venture started at the MIT Media Lab. He also built a billion dollar publicly-traded company in Indonesia. He is the author of two books on entrepreneurship.