A Weeklong Series: 10 Tech Trends From the Decade That Was … and What Will Be
As we kick off 2020 — both a new year, and a new decade — it makes sense to take a step back, reflect on what’s happened, and identify some of the trends worth keeping an eye on.
I am reminded of how much has changed in the last ten years. In 2010, we were first hearing about the iPad, Facebook had just turned cash flow positive, and most people were celebrating (rather than criticizing) the growth of Silicon Valley and what was starting to be known as Big Tech. Over the last decade, there have been many innovations that have changed our lives by addressing long-standing pain points in age-old industries like transportation and financial services, and in so doing, raised complicated questions for policymakers and society.
As I learned in the early days of the Internet, technology adoption and evolution can be a slow and steady process, but once it hits a tipping point, it takes off. When AOL started way back in 1985, only 3 percent of people were online, and they were only online one hour a week. Most people didn’t think the market (then called “online services”) would ever take off, as few believed the Internet had broad appeal. That has certainly changed; we’ve gone from a period where nobody knew about or cared about the Internet, to a hyper-connected world, where everybody is connected, all the time. Indeed, the talk now is about the need to take breaks from being online, by vacationing in hotels that ban the use of phones or, going all-in on a digital detox.
Although we’ve come a long way, the next decade will likely bring about even more transformative change. Some of the ideas I outlined nearly four years ago when I wrote the book The Third Wave are well underway, and others are just starting to pick up steam.
This week, I’ll plan to share — in no particular order — two tech trends each day that I am keeping an eye on as we enter this next decade. We’ll kick it off with sectors many of us may be thinking about as we contemplate New Year’s resolutions: health, wellness, and diet.
Health & Wellness
Society’s focus on how we stay healthy physically and mentally has become a huge industry. And entrepreneurs see the opportunity, creating tools and services to help consumers stay fit. It was no surprise that the initial startup and VC momentum was around wellness, as that is the sector where consumers are in the most control; they get to decide what to buy, and they pay for products and services out of their own pocket. Wearables have evolved from fitbits tracking steps to watches capturing heart rates and the market for connected exercise and mindfulness products and services (Peloton, Mirror, Calm, etc.) has exploded. Now, the focus is shifting to reimagining the very core of the health care system — that in many ways is really a sick care system — as the industry (hospitals, insurance companies, pharma, etc.) focuses too much on managing illness, not maximizing wellness. This new frontier includes a wide range of medical devices that hold great potential, but will take more time — and more money — to get to market, given the regulatory requirements, including testing to ensure safety and efficacy.
I also expect the digital mental health sector to expand rapidly with interventions that use technology to help more people, more conveniently, and more cost-effectively. That’s why Revolution Growth invested in Talkspace, a rapidly growing company that is providing consumers, companies, and colleges with access to mental health via text messaging and video calls. And finally, the use of data to improve the diagnosis and treatment of disease holds enormous promise. I was shocked to learn that when cancer patients got to MD Anderson for second opinions, the first opinion is reversed 25% of the time. In other words, one out of four patients seen did not get a correct diagnosis the first time. Companies like Revolution Growth-backed Tempus are using data and artificial intelligence to change this and make precision medicine a reality for cancer and other diseases.
Future of Food
It’s long been said that you are what you eat and that health care begins at the end of our forks. But despite those truisms, the growth of Big Food over the past half century has contributed to poor diets, greater obesity and record levels of diabetes and heart disease. A revolution in food has long been needed, and we’re now seeing tremendous innovation in the $5 trillion food industry. This starts with innovations in food production, which has led to greater agtech innovation and a growing array of plant-based products. One of the hottest recent IPOs was for Beyond Meat, which went from being relatively unknown to embraced in just a few short years. We are also seeing a dramatic change in the way in which consumers order and receive food, with healthier menus, biodegradable containers, technology-enabled ordering and delivery systems, including the creation of ghost kitchens.
At Revolution, we’ve backed a range of food companies, fast casual restaurant companies like Sweetgreen, a pioneer in driving innovation (as detailed in this recent NYT article) that is often referred to as the “Starbucks of salads,” the rapidly expanding CAVA (which recently acquired Zoes Kitchen to become the leader in the Mediterranean food space), and Revolution Foods, which provides healthier school lunches to school districts across the country. But although this industry was slow to transform, I expect we are just at the beginning of the next big shift. The next decade is likely to include an even greater blurring between the worlds of food and tech, leading to hyper customized diets based on personal preferences and genomic predispositions.
Big Tech Backlash
Ten years ago the movie The Social Network was released chronicling the rise of Facebook and Mark Zuckerberg. While many predicted the movie might harm the young founder’s reputation, it counterintuitively made Zuckerberg an even bigger celebrity and further propelled the glamorized narrative of building a successful startup in Silicon Valley. Now, a decade later, Facebook is under siege, with Congress investigating how they deal with issues of privacy and data, and Presidential candidates demonizing the company. The backlash against big tech companies is not a surprise — it was an issue I discussed in The Third Wave — but the speed at which the backlash has formed, and the intensity of the negativity now surrounding Facebook, Google, Amazon, Apple and the other dominant platform companies has been a shock to many in Silicon Valley and elsewhere.
Looking ahead, we will continue to see Big Tech scrutinized on many fronts, putting more pressure on tech to be proactive in dealing with policy issues. One area, in particular, to keep an eye on is antitrust. Some believe the Big Tech companies will be broken up, much as the trustbusters broke up industries like Big Oil a century ago. At a minimum, I believe the greater scrutiny will lead Big Tech to act more cautiously, which likely will slow the pace of acquisitions. This will be a double-edged sword for startups; on the one hand, it could break down competitive barriers and enable new startups to challenge the dominant search and social platforms, but on the other, chilling M&A would limit the most likely exit strategy for most VC-backed startups.
Convergence
I have long believed in the idea that the lines between once separate industries would blur as tech innovation accelerated, and that would be particularly true as the tech, media and communications industries converged into one industry. That was the rationale for the merger of AOL and Time Warner, which was announced twenty years ago on January 8, 2000. Of course, we proved to be ahead of our time, and due to some ham-handed decisions (coupled with intense internal infighting), we couldn’t capitalize on the possibilities the two entities brought together, and a lot of people — sadly — lost a lot of money as the company’s value plummeted. Since then, other companies picked up where we left off, such as Netflix, Hulu, Facebook and Spotify. Two decades later, the media industry has finally woken up, realizing it is time to stop playing defense, and start playing offense. A visible case in point is Disney, which has launched a full-throated attack on Netflix (which Time Warner CEO Jeff Bewkes famously belittled a decade ago), with the launch of Disney+.
We’re now in the midst of what many have termed the “Streaming Wars”. The pundits have various predictions on who will be left standing when the battle ends, but there are three takeaways that I think are safe bets. First, that cord cutting will accelerate, and that most vertically-integrated cable and media companies will continue to lose ground, as the shift continues from programmers to programs. Second, that other industries will learn an important lesson about disruption, after watching AOL Time Warner and others steadily lose ground and relevance, and they’ll be much more aggressive in fighting off insurgents by embracing the notion of cannibalizing themselves, before others do them in. And third, that the biggest winner will be consumers, who will get more content, more conveniently, at more affordable prices.
Climate Tech
While some climate skeptics remain, the majority of people now recognize that climate change poses huge threats. But it also creates opportunities, and — after many stumbles in Cleantech 1.0 (many of the companies funded a decade ago took ended up disappointing customers and investors) — entrepreneurs and VCs are once again recognizing that startups can be a key part of the solution, and technology has advanced to the point that a wide range of solutions are now more cost-effective and easier to build and deploy. We’ve often seen that big ideas don’t work in their first iteration, but do later (one of the iconic disasters of Web 1.0 was Pets.com, but Chewy.com was a multi-billion dollar success a decade later), and that will be the case with this class of climate-focused startups. Billions are now being invested in a wide range of products and services, ranging from battery storage to nuclear power, to carbon dioxide catchers, to smart buildings, to even sewer-less sanitation. And policy is playing a role in creating market demand for next-generation offerings. For example, a global backlash against plastics and Styrofoam is creating new opportunities for entrepreneurs offering better alternatives. Revolution Growth is an investor in TemperPack, a company producing an alternative to Styrofoam, and its growth is poised to accelerate as the number of states banning Styrofoam increases.
The bottom line is that the issue of climate change is going to be elevated in the decade to come. We will see more climate protests, led by TIME Person of the Year Greta Thunberg and many others, and governments will continue to debate policies and push to make progress on the UN Sustainable Development Goals. Those efforts will be important, but keep an eye on the startups, as in the next decade they may be the source of considerable catalytic change.
The Continued Rise of E-Commerce
A decade ago, e-commerce was a mere 6% of total retail sales. Today, it has more than doubled, and Amazon has emerged as one of the most valuable and powerful companies in the world. Indeed, the battle between Walmart and Amazon is shaping up to be one of the most interesting corporate battles of all time. But over the past decade, we’ve seen dozens of new consumer brands — like Warby Parker, Bonobos, Dollar Shave Club, Casper, Glossier and Framebridge (a Revolution Ventures investment) — get significant traction. Interestingly, the trend has been to launch an online-only offering, challenging the brick and mortar retailers, but then, once they have traction, to open up physical stores, to expand their reach and maximize consumer convenience. This innovation will continue in the coming decade.
Revolution’s Rise of the Rest Seed Fund has made more than a dozen seed investments in companies ranging from Summersalt (high-quality swimsuits at affordable prices) to Neighborhood Goods (disrupting the shopping mall by providing more a compelling retail experience for next-gen consumer brands). Revolution has also backed a range of companies focused on logistics and e-commerce infrastructure, including BigCommerce (a leading SaaS e-commerce platform powering more than $17B in merchant sales), Optoro (the world’s leading optimization platform for returns), FreightWaves (providing the truck industry with a Bloomberg-like data platform) and Dispatch (offering same-day delivery). Clearly, the e-commerce revolution will continue to accelerate in the coming decade, and no doubt dozens of companies you likely haven’t yet heard of will be the leaders of tomorrow.
Smarter Homes — Finally!
I first heard about smart homes in the 1980s when I entered the tech sector. But not much progress was made for several decades. Things really picked up over the past few years, as technologies matured, and tech giants including Amazon, Google and Apple, as well as dozens of startups, invested billions in the home — seeing it as the biggest post-mobile market opportunity. The virtual assistant sector has seen particularly strong growth, and millions have adopted Alexa, Siri and Google Assistant. But many other products, ranging from digital thermostats, to connected doorbells, to smart lightbulbs, to automated ovens, have also found their place in many homes. This trend will continue, but the advent of dozens (indeed, hundreds) of new products will lead to calls for greater compatibility and simplicity. Thankfully, there is (finally) some real momentum around open standards; last month several tech giants launched Connected Home, an effort to simplify development for manufacturers and increase compatibility for consumers.
AI For Good
Last year, a Pew Research Center study of public opinion highlighted how people in most countries believe that the nature of work will be transformed by robots and computers, with negative consequences for humans. People are understandably worried that automation will continue to hollow out good middle class jobs, further exacerbating the divide between the haves and the have nots. Indeed, this issue has catapulted entrepreneur Andrew Yang from being a fringe candidate to emerging as a serious Presidential candidate. The fears are well placed; technology will likely displace millions, and possibly tens of millions, of once “safe” jobs. And it’s not just autonomous cars and driverless trucks, which get a lot of attention; radiologists may be pushed aside as AI more precisely analyzes complex screens (this news from Google came out just this week). These changes will surely cause a seismic shift in our economy. But this is not a new phenomenon — two centuries ago, more than 90% of people worked on farms, but advances in automation enabled farmers to grow more food with fewer people, and now less than 2% of us work on farms. Thankfully, the agricultural revolution was followed by the industrial revolution, and we relocated millions of people from rural towns to big cities and retrained farmers to work in factories.
The question now is how many industrial workers can be retrained for the innovation economy, and the answer to that will be clearer in the next decade. Of course, the core of this is rebooting our K-12 education system to teach a more forward-looking curriculum, including building skills that machines can’t easily replicate. But the business sector has a big role to play as well, as they — not government — need to lead on retraining.
And of course, entrepreneurs will be a source of breakthrough innovation, as well. Two companies I will be watching closely are Rise of the Rest Seed Fund investments Catalyte, a Baltimore based company that is using AI to uncover untapped opportunity (for example, a UPS driver more than doubled his income after learning coding skills), and Indianapolis-based Kenzie Academy, which equips people with new skills and support to enhance their careers. While technology will surely destroy lots of jobs, I’m encouraged by the work of these companies and others to offset that — at least in part — by unleashing untapped talent to create better opportunities. I expect dozens of other companies to be created that can prove that AI can be a force for good, whether it be upskilling, or saving lives (increased accuracy in treating disease like the Revolution Growth-backed company Tempus I referenced earlier in the week). Of course, there are reasons to be concerned, maybe even fearful, about where things are headed, but if we can empower more entrepreneurs, we may be surprised by the benefits of new technologies, not just the risks.
Main Street Investing
When AOL went public, the valuation was $70 million. A decade later, it was $160 billion. That money went largely into the pockets of individual investors, who believed in the company’s potential, and bought shares. Even now, 28 years after AOL went public, I often run into people who tell me how life-changing the money they made on AOL stock was for them, enabling them to buy a house, or fund a college education. Sadly, this is no longer the case. Companies now wait to go public because they can usually raise all the expansion capital they need from private sources (growth funds, hedge funds, etc). That’s good for those funds, and those companies, but bad for individual investors. Indeed, it exacerbates income inequality, as the only people able to invest in fast-growing companies are the wealthy, who meet the standard of being an “accredited” investor (which in essence means you have enough money that you can afford to lose money invested in new companies). This was a focus of mine eight years ago, when I worked with President Obama and then Majority Leader Eric Cantor on policies including the JOBS Act, which legalized crowdfunding, and made it easier for startups to go public. But we still have work to do. I’m pleased to see the SEC now focused on this issue, and hope they will change the rules to enable “average” investors to invest in private companies they believe in. I’m also pleased to be one of the founding investors in the Long Term Stock Exchange, a new stock market that encourages companies to go public without some of the current fears about only attracting investors with a short-term mindset. I’m hopeful that in the coming decade we will continue giving more people the opportunity to benefit from the innovation economy.
Rise of the Rest
For much of the past decade my passion has been leveling the playing field for entrepreneurs, so more people, in more places, can start and scale companies, and in the process create jobs and economic vitality. That has led to eight Rise of the Rest bus tours, visiting 43 cities, and the launch of two Rise of the Rest Seed Funds, which so far have invested more than $100 million in more than 100 companies, with $200 million of “dry powder” to be invested. Our goal is to shift the mentality that innovation can only happen in a few places, like Silicon Valley, and increase the amount of venture capital in most parts of the country. We feel we are making some progress (and were grateful that 60 Minutes showcased our efforts), but the data suggests we have a long way to go. Indeed, one of my predictions last year — that we’d see an increase of VC going to “rising” states, proved to be wrong. It actually went up, from 75% of VC going to just three states (California, New York and Massachusetts) in 2018, to 78% in 2019. But I’m sticking with my prediction: a lot of anecdotal evidence gives me confidence that 2020 will be the turning point, and this trend will finally reverse. The rising cost (and the beginnings of a backlash) of Silicon Valley, coupled by the multi-billion exits we’ve seen recently in rising cities, leads me to end my predictions with this: Rise of the Rest is a trend whose time has come.
The future is always uncertain. Some trends can be easy to identify, but the pace of change is always hard to predict with precision, and inevitably new ideas and startups will come out of left field and surprise the world. But that’s what makes it so exciting. I hope this gives you some ideas of trends to keep an eye on. I’ll be back next year to let you know how my predictions fared!
Happy New Year — and Happy New Decade!
