It's been two years since the Fintech South Conference hosted by the Technology Association of Georgia took place in person. A lot has changed and has impacted the economy since then.
Last year, company valuations skyrocketed because of pent-up investor demand. Five local startups reached unicorn status. But in recent months, company valuations have been reset, going down anywhere from 40% to 70%, making it more difficult for companies to raise money. In recent weeks, fast-growing companies Sonar Software Inc., Terminus and OneTrust LLC laid off a number of their workers.
Cryptocurrency, though on a downturn right now, has also become a hot trend in the innovation economy. Atlanta, already seen as a financial technology hub, has potential in the growing cryptocurrency and digital asset industry. Ongoing supply chain issues related to Covid-19 have added more interest to Atlanta's growing logistics technology ecosystem. Companies such as GreyOrange and Stord are benefiting.
At this year’s Fintech South Conference, Atlanta Inno caught up with TAG President Larry Williams about what these developments mean to Atlanta.
One thing that I have heard a lot at the conference is how more companies are restructuring to focus on social benefits more than profit, have you heard the same?
I think it's taken a front seat here in Atlanta, but it is a broader thing we're seeing in the economy. The consumers are doing it for a lot of reasons. One of them is principles, the other is seeing those cost benefits in sustainable products and they want to benefit from that as well.
It is companies like NCR, Home Depot, Coca-Cola, most of the major brands that are putting this out in front. Large companies are thinking about things like electric vehicles, alternative fuels, all the way to how they distribute products and what they are putting on their shelves.
I attended a panel here and heard someone say America is going cashless, moving towards completely digital transactions, by 2030. Do you agree with that projection? With Atlanta being a fintech hub, how will the city benefit from that?
How much cash are you carrying on you right now?
I admit I don’t usually carry any cash on me.
If you do the math about the evolution of things, most people your age would reflect that. Gen Z, with millennials on the tail end of that, they are not carrying cash. In one session we talked a lot today about how younger people don’t want to carry cash, and they don’t want to talk to people. A wonderful quote I heard from a young person was “If I want to talk to you, I’ll text." That’s part of that evolution. Is it going to drive more frictionless payments? Is that going to drive more things digital? Yes, by all means.
The great thing about Georgia is we've been on the forefront of creating all the iterations of the innovation that drive fintech. We didn't just stand up yesterday and say “We're gonna do this.” We got up here and said “We've been building every iteration.” So we know how this is built and that can inform the future, and then we have the talent behind that to build that next generation.
One thing that is on people's minds a lot more than it was two years ago is cryptocurrency. What are your thoughts on crypto and how do you think Atlanta will grow in that industry?
Have you heard our general stat that about 70% of all debit transactions are processed through Georgia? Well 80% of all commercial crypto transitions in the world are processed through Georgia. A lot of that is thanks to a company called BitPay, but we are really at the essence of this.
A lot of news is saying that we are officially in a bear market. What are you seeing in terms of investment going to startups?
One thing about Georgia is it does have a very resilient economy, and it comes from a broad base of the different industries that we represent from consumer brands to supply chain and enterprise software. Just like anytime, you want a balanced portfolio. That is what we have.
One thing about a bear market is that it's a good time to invest and so people that have done well, that have cash in investments. They can invest in smaller companies and startups and innovation as well. So I think you're going to see some of these drivers. The concern on the consumer side is if you're going to start to see people pull back, then they might start to guard their cash rather than spend it.
Factors that should help Atlanta in an economic downturn is its concentration of business-to-business companies and diversity of industry. Are there any other factors that make Atlanta well positioned?
Part of it is not only do we have a very diverse workforce, but we also have a very loyal workforce. I think people will stick with their companies through hard times, and that'll be a competitive advantage for us as well. Some companies as we've seen have been doing layoffs, but then other companies will pick those workers up quickly because the demand is that high.
How will all this change the labor market? Will laid off workers stay in Atlanta? Will they remain in tech? Will Atlanta be attracting workers from outside the region?
My crystal ball is that we will retain a large percentage of those workers and they will be absorbed into other companies because the demand is so high. They may enter a new industry, but the skill sets they need — engineering, programming, product development — those are still in high demand. Atlanta continues to be a net importer of talent. If you think about anything in the Southeast, people come here for their next opportunity or big adventure.
What are some of the counter moves startups and investors could be doing to better survive the current economic state?
The biggest thing the startup community can do is really build their customer base. Beyond some type of equity loan, getting a customer that provides them with a great revenue stream will be the best thing to help with their cash flow, converse cash and build up some reserves. At the same time, they got to be open to who those customers are.
Which companies and sectors have the most opportunity for growth right now?
Cybersecurity is going to continue to grow and be in high demand. Threats are broadening as we speak. Digital health is one of the things about the last two years that’s really grown with things like telehealth and telemedicine. Accelerating digital records in the medical industry is going to be in high demand. Supply chain will be in demand because we have to be as efficient as we can. If you look at some areas where there's demand for talent, we have to find other ways to fill those voids namely with machine learning, AI and robotics. It's not so much displacing workforce as it is trying to fill a void where there isn't a workforce.
Since Atlanta is a logistics hub, has it accrued economic benefit from the ongoing supply chain issues?
There's certainly expertise here where we are able to lend and solve a huge problem. You really do have to look at a Georgia-wide lens. If you go around I-20 and I-95, that whole logistics corridor is built up with warehousing which is really the intersection between the Port of Savannah, now one of the most imported ports in the East Coast, along with the airport and how we get cargo to market, we are geographically in a wonderful position. Solving the fact we have a deficit of 80,000 truck drivers nationwide right now, that's something that's harder to solve but there are people looking at other ways to get that done with autonomous vehicles.
Covid-19 has shifted a lot of things about the workforce. People aren’t just going to L.A. or New York anymore, they’re looking at places that are more affordable where the weather is nicer. From what you’ve seen, is Atlanta a winner in this change?
Texas has done a great job with incentives and buying the business. Austin is the biggest winner in that. I'm from Raleigh. I love the area, but there's nothing like Atlanta. In the Southeast, we are winning. Just look at the brands that are coming here. The Googles, the Microsofts, the Fanduels and the Ciscos are all expanding here because Atlanta is evolving from being the value play to being the most important play for technology talent in the country. CEOs in theare tired of what they've been paying, and they're moving east. Atlanta is big on that list. There's going to be some folks that benefit as well but Atlanta will continue to win at this game.
