Monday Coffee Thoughts No. 5 (December 29, 2020)

It′s the last couple of days of the year – of 2020, a probably most memorable year for all of us! A year, which taught us that nothing is for granted in life. That the unexpected can happen and that we will have to be able to deal with it. A pandemic, that taught us the value of being healthy. That had a huge impact on our lives. That limited us in many ways, but, as every crisis, opened the door for completely new entrepreneurial opportunities.

Nevertheless, it seems like everyone I know is looking forward to a fresh start in 2021. With this fresh start into 2021 only a couple of days away, let me join the bandwagon and dare to come up with MY very personal TOP 5 predictions for 2021. And I am really looking forward to my Monday Coffee Thought Number 57, on which we will be looking back to my predictions on the very last Monday of 2021.

Prediction 1: Corona will continue to have a dominant impact on our social lives as well as on the business world.

We are all happy about vaccinations to become widely available over the next couple of months. However, they will most likely not bring the “old normal” back to us. Why? Well, for a couple of reasons. First of all, it will probably take until Q4 2021 to have a widespread coverage of vaccinations. And by widespread, I mean 65-70% of the world′s population, which is required for the often cited phenomenon of “herd immunity” leading to the virus slowly “drying out”. Aside from the operational challenges this brings about in terms of manufacturing, logistics and medical access to such a high percentage of human being, we still see another problem: vaccination skepticism. In Germany, less than 50% of the population is currently willing to get vaccinated. Sure, this may go up as soon as we see that there are no serious side-effects but still it will be ambitious enough to reach the required almost 70%. And even then, we still do not know, how long of a protection the vaccination will give us, whether we might still be infectious to others despite being vaccinated and, last but not least, whether we will be seeing mutations of the virus having a negative impact on the effectiveness of the vaccine.

So, as much as we don′t like it – Corona will continue to have a massive impact on our lives in 2021. Deal with it!      

Prediction 2: Innovative personalized as well as data-driven business models will continue their surge.

One of the major changes in our lives has been the limitations to traveling as well as to meeting others. And, as every limitation, that has had a negative impact on business models (e.g. travel industry, culture) whereas others have benefited from it. Some on the upside are, as the graph by Oxana Zeitler (https://www.dhirubhai.net/in/oxana-zeitler/) shows clearly, were your usual suspects such as amazon (allowing us to do shopping during lockdowns) or Netflix (giving us our movie theatre-like home entertainment). But my personal “Companies of the Year 2020” are clearly Zoom and Peloton. Zoom, because it let me do my job! At let me interact with students all over the world, with consulting clients and with my Vesto colleagues in California. And looking at a whooping +624% in corporate valuation, it seems like I was in good company and Zoom clearly enable many people around the world to continue communicating, to continue collaborating and to continue to have a personal lifeline. Peloton also scored big (+333%) because it brought the gym to our homes during the lockdown. One year ago, we might have thought about their products as grandpa's old home trainer. In other words completely unsexy! Nowadays, Peloton sells their rather expensive spinning bikes for home plus monthly subscriptions for additional workouts for a significant price. Exercise at home - enjoy the privacy and flexibility of doing so in your home, while having a gym-like experience. Great stuff!

Many of the business models listed in Oxana′s chart are offering personalized, digital services. And with limitation in contact or simply because we have gotten used to such in-home services, personalization will have to be based and business analytics. When I am no longer meeting my customers personally (e.g. in a store, bank, gym), the only way to get to know them and to provide them with the level of personalization they are increasingly expecting is doing you data right.

So, data analytics is the key to business success for remote, digital business models.

Prediction 3: Bitcoin will be hitting US$ 50.000,- (at least)

Sure, predicting Bitcoin to continue its surge in value is a no-brainer these days. And there's a couple of good reasons for it. First of all, it seems like since Bitcoin has surpassed the magic 20,000 US dollar mark, there's no stopping it anymore. Second of all, it seems like more and more investors are moving into Bitcoin in a low to no interest period which can safely be expected to continue for the years to come. During such times, investors are seeking the few interesting investment opportunities left - up to now mainly the stock market and real estate, with Bitcoin now seemingly moving in. The third reason, however, is something very new. It has been outlined very nicely by Sina Meier (https://www.dhirubhai.net/in/sina-meier-ciwm-624ab3153/) who has been describing how Bitcoin is becoming more of a transactional vehicle in B2B2C transactions. She has described the case of Fidelity Investments partnering with the leading crypto lending firm BlockFi, to offer cash loans using Bitcoin as collateral to financial institutions — mainly market makers, crypto-enabled businesses and funds. BlockFi’s revenue has grown ten-fold over the past year. The company now boasts more than $1.5B in assets on the platform, with a 0% loss rate across its lending portfolio since inception. According to Fidelity research, there has been increased institutional appeal in and adoption of digitalassets, with 36% of institutions surveyed invested in the asset class and more than 60% of investors saying digital assets have a place in their portfolios.

So, Bitcoin should definitely be one of the (crypto-)assets to watch in 2021.

Prediction 4: The surge of Bitcoin will be paving the way for blockchain-driven business models.

However, this increase of value of the Bitcoin is not only interesting for Bitcoin investors, but also for the development of blockchain as a technology as such. By using Bitcoin as a transactional “currency”, as outlined above, one can see the clear advantages of blockchain-based transaction systems. They operate quick, have low transaction costs and are enormously safe due to their full transparency and traceability of all transactions. Just imagine a typical money transfer. This can, nowadays, take a couple of days when we're talking about bank transfers with different currencies and unrelated banks in different parts of this world. Using a blockchain-based transaction platform, the transfer can be done within 15 seconds, for minimal transaction cost and is fully traceable and thereby secure. The more we see this work out flawlessly and the more investors and consumers gain trust in this “unknown alien” called cryptocurrency, the more it will move into our everyday life as well. It can be the lifeline of open banking infrastructures, which can be using stablecoins or transaction tokens, can enjoy a transaction cost-minimal, quick and secure transaction platform to have the various platform partners interact with each other. Therefore, the increase in Bitcoin will ultimately lead to an increase in blockchain based business models starting in 2021.

Watch out, in the long-run this will be killing non-value-adding intermediaries, such as traditional banks, when they are not able t0 deliver more than merely administrating a secure, but expensive transaction.

Prediction 5: Cybersecurity will be way more developing into a mainstream topic

Sure, you might be saying, cybersecurity has been a big topic for quite a while. But mainly for experts. And the recent cases of the cyber hacks into the US Ministry of Energy and the EMA has shown us the vulnerability of today's data infrastructure. Whereas in the EMA case, not too many details have been disclosed, in the case of the US Ministry of Energy, we know how easy it was to intrude the systems. The intruders have been using an update for network management software and have simply trusted the users to OK that - as they always do. So, you might be saying, cybersecurity is a big issue for corporates, but it will hardly affect my personal, my private life . Well, think again! When you see the table below, taken from the very recent Onfido Identity Fraud Report 2020, you will see that identity fraud, people stealing your identity for vicious purposes, is a big thing. Especially with the rise of digital business models which is, as described above, expected to continue) in the times of Corona and the masses of personal information, identity fraud has significantly been going up. And as you can see from the chart, it's growing in areas nearly all of us are active in. In online banking, online retail or other digital professional services.

(Source: Onfido Identity Fraud Report 2020)

So, we see that for us, on an individual level, doing what we can to keep intruders out (e.g. by keeping your virus scanners up-to-date) is vital. Moreover, it will also be more and more important for corporates, to win the race against intruders with malicious intents. Don't forget, in times of Industry 4.0, seamlessly connected intra-organizational value chains, all you have to do is leave one door one little crack open and the intruders are in. And they can do whatever they want to do. And believe me, it's never with your advantage in mind!

Cybercrime is on the rise – in b2b, b2c, b2b2c as well as p2p. So, beefing up Cybersecurity is as important as the air to breathe.

So, Ladies and Gentlemen, these are my bold (or not so bold) predictions for 2021. Time will tell!

Well, what do you think?