Some Thoughts on 2019

2018 was an exciting year for the tech industry. Despite some fumbles in the stock market, this year also saw some massive changes in the industry. ‘18 was the year that people realized how serious Microsoft and Amazon’s cloud businesses were as drivers of industry growth, “crypto” became a household category (and fell from favor), we saw alternative forms of transportation enter the transit revolution to compete with ride hailing, and the impact of Softbank’s Vision Fund became the new normal - with growth funds around the world raising massive rounds to compete at ever higher valuations.

And there was so much more.

2019 isn’t shaping up to be any less interesting. As we prepare to enter the new year, I jotted down five predictions; specifically, predictions that may seem a bit contrarian and the logic behind why.

1.We will recognize that data is not the new oil. We also realize that companies with differentiated access to critical signals are positioned to win.

I continue to hear the phrase that “data is the new oil” everywhere. When IBM started sharing that logic, it may have made sense. They were about to embark on an acquisition spree to get unique data sets like those maintained by The Weather Company in hopes to make Watson more competitive. Inherent in their maneuvers was the belief that not all data is created equal. Some is differentiated and worth a hefty price tag.

Unfortunately, the fervor around machine learning has led most to believe that the phrase actually means: the player with the most data wins. After all, crude oil is a commodity. If you have a lot of it, you can sell a lot of it. Who wouldn’t aspire to have OPEC level amounts of critical resources?

But data is not oil. It’s not equally valuable. And the companies who are positioned best to see beyond the curve and change their business models accordingly by leveraging data are often those with relatively small amounts of it. Consider Uber and Google. Google had the world’s largest set of traffic and movement data in the world. But one small data asset - who wants a ride and where - was actually the key to building a 100 billion dollar entity.

I believe 2019 is the year where people get wise to this. Companies with clever means of getting at the critical data in a given industry will rise to prominence. Meanwhile, those that made noise around data volumes and artificial intelligence to raise money or find customers will fade from significance.

2. Systems of Engagement will get a whole new meaning in the enterprise

During the early part of this decade, one of technology’s luminaries, Geoffrey Moore, began preaching that we were in the tectonic shift away from systems of record to systems of engagement. Simply put, the early history of the enterprise IT industry was about standardizing how we collect and report on activities within the firm and the new era was going to be focused on how we optimize and change the way in which those activities happen. The central question, how could our systems engage actively in the process of getting work done?

A system of engagement isn’t just a SaaS system that your HRBP can use to manage a workflow. A system of engagement is a tool you work in, day-in and day-out, to get the job done.

Since 2000, the self proclaimed standard bearer here has been Salesforce. The logic: CRM, as a category, is a tool used every day to streamline the sales process. But it’s really not. A CRM is really a reporting tool used to capture customer contacts and opportunity objects. Just like Workday is a reporting tool for HRBPs. This is why Salesforce had to jump into action so quickly to buy RelateIQ in 2014 after realizing that email and calendar were truly the systems of engagement that most sellers used to power their daily lives.

RelateIQ isn’t alone in seeing the impact of building a true system of engagement. Slack surprised us in orchestrating development related tasks - eating into Atlassian’s stranglehold on that community. Box and Dropbox solved an everyday user problem to change our perception of what a CMS should be. And LinkedIn created a living, breathing, catalog of customer records for everyone in the world to access that's now vital to any salesperson or B2B marketing expert.

The next wave of great enterprise software companies will look nothing like those of the past. Just like the developer oriented companies of the last decade (AWS, Twilio, Okta, etc.) looked nothing like the platform companies of the 80’s and 90’s, I’m betting that the next great application companies will find their way into the enterprise through a series of free tools that become pervasive in everyday work prior to releasing enterprise functionality and that we start to see CIOs and enterprise software companies around the world wake up to this new reality.

3. Crypto’s winter arrives. And spring will come soonest in emerging markets.

I will start by admitting that I’m, by no means, the only one espousing the belief that we’re entering the trough of disillusionment with the broader crypto / blockchain phenomenon. To me, 2017 was the last year serious VCs were bullish on investable opportunities in the market - recognizing that limitations were real and would need to be addressed. 2018 was the year that unsavvy corporate executives, everyday investors, and teenagers with newly minted Coinbase wallets got on the bandwagon and got hammered (BTC is down ~70% this year, if you haven’t paid attention) signaling over inflated expectations and a lack of real understanding. It’s no surprise we’ve come crashing into year end in the crypto markets.

I don’t think this will turn around in 2019. Companies will realize their hundreds of Blockchain PoCs will likely yield minimal result in the near term (beyond actually driving good industry collaboration and standards setting). Investors will prepare for a long haul in building businesses on blockchain protocols (it took 30 years from the ArpaNet days before we had the dot-com boom… it’s only been 10 years since Satoshi’s white paper). At the same time, there has been a lot of real innovation in the crypto space. Work being done to both stabilize pricing, increase transaction volume, and enable easier development will offer real upside to those in need of the advantages of a such decentralized systems.

But those people that need such systems won’t be in developed economies with trusted clearing houses and established regulatory bodies. In 2019, people will start to realize that the promise of crypto’s potential will be realized first in areas where stability and trust are not taken for granted.

In the last decade we’ve seen the impact that mobility has had in emerging markets. Phones brought compute capacity into users’ hands around the globe. They decreased the price of access to information and computation. They drove financial inclusion and education. I believe that real institutions will start to make headway in emerging markets leveraging the true promise of decentralization. And that will be awesome - for the networks AND for the world at large.

[Also - we’ll certainly see some real progress elsewhere (non-fungible tokens, etc.). But if you’re beating the blockchain drum in G-20 countries, I think you’ll be in for a tough year.]

4. People realize that “Solectric” arrived and the implications are massive

Mark Suster once stated that being early is the same as being wrong. At the end of 2015, I made the same call that I will make again - cleantech will come back into vogue.

I was wrong then, but I am maintaining my commitment. More than 8% of the global economy is devoted to energy. For the last 100 years, manufacturing, transportation, and energy production have left us reliant on dirty fossil fuels. We benefited with unprecedented growth in global output. But we’re all aware of the price that’s been paid - we’re nearing extinction level impact of climate change.

While there is no silver bullet - this year solar reached near price parity levels with natural gas at utility level installations. We also saw Tesla deliver an electric car that had mainstream success at production levels which shouldn’t be scoffed at. Chargepoint accelerated the placement of its charging stations across North America. And Chinese OEMs have developed truly competitive lower cost EVs for one of the world’s fastest growing economies.

In 2019, I think people will realize that Solar Power and Electric Vehicles (Solectric) will play an enormous role in gaining energy independence from dirty sources. This won’t necessarily drive a mass of investment into new companies; but I imagine it will drive a great deal of regulation to encourage switching. When the answer is cost efficient, more performant, and cleaner - it will be hard for public institutions to stay captive to the interests of large corporate donors.

5. Advanced Robotics find an unlikely patron: Driverless Cars

If you haven’t spent much time in an advanced manufacturing facility, you may currently be enamored with the promise of businesses like Boston Dynamics, Rethink Robotics, and the opportunity of the Robotic Operating System. I know that I am.

But the reality is that most manufacturing environments are quite well orchestrated and optimized. Because the environment can be controlled, solutions like Kiva and Grey Orange are much easier to roll out than general purpose robots fulfilling a multitude of tasks that are aware of their environments.

That’s probably about to change. Not because there have been any major improvements in robotics or any companies making order of magnitude contributions to the industry, but because the spillover from investment into Autonomous Vehicles will be monumental here. 5G networks, cheap lidar systems, centimeter accurate GPS, edge systems optimized for Deep Learning; all of these innovations will change how we produce and distribute product across the globe.

My guess is that 2019 sees a Cambrian explosion of companies taking lessons from AVs and applying them elsewhere. Whether it’s in retail store aisles, warehouses, hospitals, or manufacturing facilities we’ll start to see more intelligent robots - aware of their surroundings - become commonplace.