Predictions by Canem Arkan
Managing Director, Endeavor | Heartland
Turkey’s annual inflation rate surged to 36.1% last month, its highest in 19 years. As a Turkish immigrant, I keep a close eye on the economy of my mother country because of a desire to see it thrive (shoutout to Endeavor Turkey and their work supporting entrepreneurship), and also as a cautionary tale of “what if” for the United States. And while inflation touches all aspects of our lives from the food we eat to the wages we earn, I specifically want to think about it in the context of innovation; and it is easy to conclude that inflation stifles creativity. Studies have shown that the more expensive it is for companies to spend on research and development, the harder it is to foster change. However, having spent the past year watching Endeavor companies globally (but specifically in Northwest Arkansas and Tulsa) disrupt the way we live and work, I have a different view on inflation. Perhaps the idealist in me wants to believe that entrepreneurship will overcome inflationary pressure rather than be hindered by it. But even more so, my thesis leading to this year’s predictions is that inflation, with all the difficulty it entails, will actually create opportunities for innovation.
Inflation in wages, spurred by Boomers aging out of the workforce, the Great Resignation, and the tragedies of COVID, has led to a workforce that is in search of more flexibility and better healthcare (including mental health, available thanks to companies like Sondermind, an Endeavor Entrepreneur from Colorado). And employees no longer have to move to find new job opportunities – even for the most senior level positions (watch Phil Libin’s conversation with Allen Taylor about his hiring practices at mmhmm). But to fill the gap of unemployment in sectors where that is not possible, companies are turning to AI and robotics. So, my first prediction is inflation + pandemic = automation which would have taken decades to become integrated into companies’ workflow, will now take months or years instead.
A strained supply chain, initially by the pandemic, continues to struggle under the weight of rising prices. And yet, while costs continue to rise, specifically around food and gas, we continue to see massive market disruptions in both the energy and agriculture sectors. It is not impossible to imagine a not-too-distant future where most cars on the road are electric, and solar panels abound, but that future may be closer than you think and the biggest changes may be happening on the margin.
“Inflation may do more to address climate change than congress.”
For example, Skyspecs, an Endeavor Detroit company, is helping to create more efficient management of renewable energy assets. Ten-Nine Tech, a company we’re working with in Tulsa, is creating a chemical to extend the life of single-use and rechargeable batteries. Hanging on to your batteries longer leads to my second “prediction”: inflation may do more to address climate change than congress.
As for our food systems, they were in the midst of evolution because of the pandemic, but I can tell you how real inflation feels as my chocolate splurge costs 8% more since December. Innovation in agriculture will happen as farm efficiency increases (thanks to companies like AppHarvest from Endeavor Louisville), and as the supply chain becomes more seamless through dark stores and micro-fulfillment centers (also read about drone technology investments from Bentonville). Additionally, financing options for farmers themselves will enable consolidation (to that end, you too can become a farmland investor through AcreTrader). And while the longer-term future of agriculture includes bioplastics or seawater farming, for 2022 my last prediction is this: inflation within our food systems means wasting less not creating more.
Perhaps it’s too naive to say that at the end of this “inflation rainbow” is simply a cleaner world where consumers have access to and awareness about their food and energy supply chains. What has become abundantly clear is that inflationary pressure is not something that discreetly affects countries like Turkey or Argentina. Our energy sources, food supply, and our health systems are all interlinked, and we must all row in the same direction.
A final sentence to thank all of our supporters – the Walmart Family Foundation, the Walmart Foundation, George Kaiser Family Foundation, Simmons Foods, Georges, NewRoad Capital, EY, and all of our amazing Board Members and mentors for all their contributions in 2020.