My yearly predictions, 2024 edition

I publish my predictions around tech and startups yearly and I rate my previous guesses to see how I fared. Last year I was quite spot on, you can find more info in my (spanish, sorry) blog post.

But here you have a shorter version for my english speaking readers!

2024 will also have its own challenges, in which boundary conditions (geopolitical, macroeconomic, and climatic conditions) are going to play a very relevant role, with a volatility that can change everything from one week to another.

It seems like an eternity ago, but it was only last year, at the end of 2022 when the first version of ChatGPT was published, which mesmerized us all with the brutal quality of its responses. And from there, the evolution of the models has been dizzying, with ever-increasing computing power and ingestion of huge volumes of data (watch out for copyright implications!). Gen-AI became the trendy hype and attracted astronomical investments and access to human talent as we had seen in crypto in the previous years.

1. So, my first prediction seems easy, it will continue to be the year of Generative Artificial Intelligence, after we were able to glimpse its impact in 2023, in 2024 we will see a very strong adoption in corporate environments and also in the day-to-day of users.

More than half of the companies in the last YC batch focus on Gen-AI and several will become unicorns. But to not stay general, I think we will see significant advances in:

a. Interfaces, where the keyword will be multimodality, surpassing chat as the only form of communication and we will see different interfaces to take notes, make calculations, share drawings, or videos.

b. Verticalization of models. As the limitations of generic models to solve specific corporate needs are discovered, we will see a proliferation of lightweight models for specific uses and an agnostic use of one model or another according to their need.

In addition, the adoption of Apple Silicon chips will make local inferences a viable alternative to large hosted models.

c. Appearance of the first virtual Humans or Digital Twins. As Chema Alonso announced last week, we will gradually have a digital twin to represent us when we can't be in two places at once and that reflects our way of thinking, our agenda, or our connections and access.

1. We will experience cyberattacks closer than ever, where the victims will be people from our environment or corporations from our environment.

There will be some terrible uses of generative AI in the context of identity impersonation or increasingly sophisticated attacks, and I don't think there are enough people talking about this right now, to educate our parents, friends, and to protect our companies from the coming wave. This also opens up opportunities for entrepreneurship and investment in the field of cybersecurity from B2C to B2B.

1. After a year of great resilience, we will see some catastrophic failures of scale-ups in the US and also in Spain.

In 2023 more than 3000 startups that had raised VC funds had to close, the worst year according to Carta in the whole decade, and 2024 will be even tougher. But we will also see how startups that have surfed 2023 with scars but with a differential product and a growing appetite from their customers, will be able to access capital and create global champions.

1. 2024 will be a year of investment opportunities, these are my preferred sectors.

Beyond putting money into another OpenAI API wrapper and a web or chat interface, I think it's a great time to invest in climate tech that includes hardware and AI, in Healthtech with regulatory entry barriers, in business models that facilitate access to software+AI for SMEs in almost any field, in AI copilots but for hardware creation, in robotic cybersecurity, in more efficient batteries, in AI guardrails, and in protections or watermarks for AI or in software that has access to proprietary data that allows training niche models. More than ever, Data will be "the new code".

1. Will VR/AR finally arrive? I think it will, at last.

I was wrong with this prediction a few years ago, but those who have been able to try Apple's Vision Pro say they are a game-changer, and Apple will surely launch a good handful of apps that will increase our need to spend money on them. And although the Humane AI pin had a lame launch, I think we will see devices like that on more lapels in 2024.

1. The valuations of startups will hit a bottom in Q1 2024 and will slowly recover throughout the year.

Following the historical series of the .com crisis and the great recession of 2007-2008 as per Tomasz Tunguz great article from a few months ago, it took about 9-10 quarters to reach the bottom of valuations, and it seems that this time we will repeat the pattern. The multiples of 2021 won't come back, but by the end of the year, it will again be normal to enter at 10X multiples in companies growing 100% year over year and the best will be able to aspire to multiples of 15-20X if their potential markets are large enough and grow above 200%.

1. We will see an uptick in M&A operations of startups.

Several effects will come together to generate more liquidity in the ecosystem. On one hand, the stock market will be a bit less volatile and allow big tech to have a clearer idea of how much their equity is worth as a currency for purchases. On the other hand, the revenues of startups will be somewhat more predictable after this year of such tough budget adjustments and therefore it will be more possible to analyze the synergies of a possible purchase. Lastly, the staggered reduction of rates will lower the cost of debt and increase the buying appetite of funds and corporations.

1. I was missing a crypto prediction for 2024, in Q1 approvals of spot ETFs for Bitcoin and Ethereum must be announced and this will lead to a rally of the market by being able to invest funds directly in these assets, with significant rises in Bitcoin, ETH, and others, which will possibly temper by the end of the year.
2. I will be wrong in at least 3 of these 9 predictions