According to Pedro Janela, “We are at the advent of the 5th industrial revolution, in which will be a new economic opportunity much more significant than was the digital one”.
Pedro Janela studied Electrotechnical Engineering at Instituto Superior Técnico, but would eventually go into marketing after completing, in 1995, an executive program in Competitive Marketing Strategies at the Wharton School of the University of Pennsylvania. He was the founder of WYgroup in 2001, of which he is the CEO. Passionate about communication and technology, he says that “marketing today is more engineering than management”. Also because, increasingly, marketing is the product itself.
Entrepreneur and business angel through eggNEST seed capital fund, he says that “we are at the advent of the fifth industrial revolution, in which will be a new economic opportunity much more significant than was the digital one”.
Pedro Janela also questions the use of European funds for the digital transition of companies. “Whether it’s for digital training or a new information system, these are things that if a company can’t do, then maybe it shouldn’t even exist”, he considers. “It is a business strategy that does not require public sector investment. If we talk about what are new waves of technology and science, then yes, it makes sense”.
[ECO] In preparing this interview I came across a study by Credit Suisse according to which the longevity of companies in the S&P500 index has dropped from around 60 years in the 1950s to less than 20 today. Has the ability to adapt become essential to survive in the market?
The S&P500 has companies that with digitization have been extraordinarily valued. The old ones left and the new ones are recent companies, which changes the average age of companies. And it will continue to be that way. We are at the advent of the fifth industrial revolution. The fourth, which is digitization, is halfway through. The fifth is bioengineering, genome, and genetics. And this is so overwhelming and disproportionate from the point of view of what it is going to do to the human being because the human being is altered in its genesis, that we don’t understand what is going on.
With the fourth industrial revolution, with digitization and the explosion of technology, we can understand the human genetic code and make vaccines in two days. We are still at the beginning of this, but it is the opening of a completely new market. A company like this overnight is worth billions because it managed to solve a problem for humanity. Healthcare will continue to be the largest market in the world. The biggest economic sector in the world will undergo the biggest change in the next 40 years with the advent of the fifth industrial revolution, where Europe naturally has a role to play. The big chemical energy companies were the pharmaceutical companies that started 100 years ago and many are still European. A new economic opportunity, much more significant than the digital one, is now being born.
[ECO] There is a digital marketing author and consultant, Tom Goodwin, who popularized the term “digital Darwinism”.
That’s the way it is and only one wins. They are platform races. The invasive plants… I mean it’s not the weed, but the explosive and exponential growth of platforms that are built on the virtuous circle of data — more data, better standards, better products, more customers, more data — is so strong that platforms kill everything around them. The communication of the products is made after purchase, that is, it is the customers who bring new customers, with a viral effect and Rt greater than 1. It is overwhelming.
In my classes, I talk about the case of Jio, a telecommunications operator that today has more than 400 million customers in India and did not exist five years ago. How did they enter the market? It wasn’t selling a product, saying: “You want a phone, you pay 25 euros and you have unlimited data”. No. He says, “There’s a phone here and you pay zero.” Because it will sell other products on top. They blew up the market and nowadays Google and Facebook have to pay them 20 billion to be able to access those customers. They transformed the market. The cost of the data went from 4 dollars per Gigabyte to 0.06 cents. They don’t monetize the platform in what the incumbents did, which was selling data. They sell is services, access to content, digital payments, and television. Infrastructure is given. This case is very funny because it comes from an oil company, Reliance. They must have had a consultant who told them that the data was the new oil, they took 20 billion and made a telecommunications operator. In five years they are already leaders. It is the biggest customer acquisition ever in any market.
[ECO] This is happening in other sectors and other markets.
It is happening. It starts with an entity that understands how to put zero on what is now seen as a cost. Facebook saw this very easily. I’m going to give content to zero, you’re going to do it and I’m going to put publicity on top of it. Google the same thing. They took the oxygen out of the media. What is happening in these markets is happening in many others. It’s just a matter of the market being completely digital. When there are physics and atoms, it is more difficult, because it requires logistics.
[ECO] A little while ago, he used the expression weed to give the idea that platforms kill everything around them. Does that mean there has to be more regulation on these platforms?
(laughs) It kills everything around it and grows very fast. I do not doubt that regulation is needed. Google is from 1998, Amazon from 1994, Facebook from 2007. These are companies that ten years ago had no relevant existence and a state cannot react in ten years. Because those who are there are from the past generation, they are still understanding what this is, they do not have the real implications of the transformation that is taking place in the market. Regulators are not aware of weed progression. Government cycles, local regulations, the absolute truths of market opening. As much as the Directorate-General for Competition goes there to fine Google a billion, Google makes a billion… [pause a second] That’s it, another billion. They are companies with an unbelievable intellectual heritage and technological capacity. It requires a mindset and a vision, at scale, that only Americans, Chinese, and Indians seem to have. Now that there has to be some regulation, there is.
900 people work in Amazon’s public relations department, more than the Washington Post, which is owned by Jeff Bezos. There are 900 people just dealing with the corporation’s image. They learned the lesson when the telecommunications in the US broke down when the surgical companies broke down. These monopolies are natural in every industrial revolution. There is a company that ends up taking over the sector and it is the regulator that goes there.
[ECO] Returning to digital Darwinism, when you look at Portugal, what portrait do you do? Is the country managing to adapt?
Let’s look at the numbers. Portugal is a country where all data are typically above average and there is very funny data which is consumption in e-commerce as a percentage of GDP. We buy both online and in Dutch. Portugal is very developed in this area. On the other hand, we have a significant delay in the digital literacy of older populations and usage. There are projects, such as the Portugal Digital and MUDA projects, that try to bring the use of digital tools to these segments. We cannot forget that Portugal is the third oldest country in the world, with an average age of 46 years. There is a certain range where it will no longer be possible and that will create an addiction to the metric.
[ECO] The Government allocated 650 million from the Recovery and Resilience Plan for the digital transition of companies. Does it seem like enough?
I don’t have the math to know if it’s enough or not. My perspective is that governments have to make massive investments where it is not economically reasonable for the private sector, nor will they obtain sustainable returns. The digital transition must be sustainable for the company. It is a business strategy that does not require public sector investment. If we talk about what are new waves of technology and science, then yes. When SpaceX succeeds in making rockets, it’s because NASA and the State gave Mr. Musk money to do it. After all, otherwise, it wouldn’t have the capacity. We are talking about very specific investments in cutting-edge areas that would probably not happen in the same way. Either public investment goes to cutting-edge things that will create economic value because they are innovative, very different, and relevant, or it doesn’t make sense. Whether it’s for training in digital or for a new information system, these are things that if a company can’t do, then maybe it shouldn’t exist.
[ECO] Money could be put to better use.
The main problem facing humanity today is the climate transition, and the PRR wants to do that too. Although the digital transition is linked to the climate transition, to what extent is the second not more important? If there is a problem to solve, this is it. In the digital transition, since we can generate value, we must be able to do it without major investment by the State.
[ECO] What are the big trends in digital marketing that companies should be looking at right now?
There are three big trends. When we talk about digital marketing now, it’s mainly about product design. Marketing is the product itself. When we look at the customer journey — pre-purchase, purchase, and post-purchase — there is a giant migration from what are pre-purchase investments, and advertising, to post-purchase systems. In other words, the customer talks about it and brings the customer. Which means that the investment in advertising is much lower. The product itself, because it is very good and innovative, makes its communication. It’s no coincidence that you’ve probably never seen an advertisement for the applications you have on your phone. There are “viralization” systems for the product itself.
We see this in our international customers, where the marketing, sales, and after-sales departments disappear and a customer and customer experience department appears. That is, there is not a department that looks at pre-purchase (marketing), purchase (commercial), and post-purchase, but a new one that looks at the customer’s life cycle in an integrated way, which is always the same. This type of structure places much greater importance on marketing automation and customer experience systems than advertising itself. This is the first trend.
[ECO] And the second trend?
The second trend has to do with the most relevant thing about marketing and advertising which is where the consumer’s eyes spend time. Where is the share of the market of attention? And this one is on the phone, on social networks and it’s different according to the generations, some more Facebook, others more Instagram or TikTok. Mastery of these tools is essential. Then most people who are still in front of a television, for a great part of the time, are not looking at the television. It is in a consumption synchronized between what is happening on television and the telephone. This creates a problem, but also a huge opportunity from a marketing perspective.
[ECO] And what is the third big trend in digital marketing?
The third trend is data. These days it’s more engineering than marketing management. If on one side there is a customer experience department on the other, organizations are being focused on a data lake and business intelligence. This component of the essence of the data that supports the power of decisions, not only in the pre-purchase, but also in the purchase, but also post-purchase is critical. It is this data that then informs decision-making in the customer experience.
Much of the customer experience, particularly on the most advanced platforms, is not a human decision anymore. What appears next depends on a decision that a machine has made, not exactly someone who says it should be like this or that. This machine-made hyper-customization is the trend for the next 20 years. As time goes on and technology progresses, the technology that is available today for large entities will become available for small ones and will make some more digital Darwinism.
This interview was originally written by André Veríssimo, and published in ECO.
