“The best way to predict the future is to create it” – Vinod Khosla, paraphrasing iconic software developer Alan Kay, paraphrasing Abraham Lincoln.
Last Wednesday I had the opportunity to attend the Churchill Club’s 10th annual “Top 10 Tech Trends” panel – a gathering of some of Silicon Valley’s brightest folks with the intention of predicting future trends in technology and, as it turned out, much more.
Now, with any gathering of VCs, you can expect a certain amount of bias and grandstanding. After all, these folks are here to make money and, from their perspective, I think they would find it difficult to pass up an opportunity to shill their investments to such a targeted crowd. As a result, I went with saltshaker in hand to feed myself a steady diet of individual grains as the various predictions were made.
As it turns out, I was able to save most of my salt for the under-seasoned salmon they served for dinner. The 5 speakers (6 if you include moderator Tony Perkins) kept up a lively rhythm of banter and insight throughout the panel. Each had the opportunity to deliver two predictions, while others on the panel would critique them. The predictions themselves, which in my humble opinion ranged from “when pigs fly” to “Well, duh”, were well disposed to discussion. Interestingly, many other issues arose during the evening that were not predictions per se, but were closely linked to these issues. Some examples include privacy, network infrastructure and the impact of Gen Y on the technology industry as a whole. The good news is that almost all of these trends lend themselves quite beautifully to Sterling’s areas of expertise, so if they’re correct, we should have a steady stream of business for some time.
But we’re getting ahead of ourselves. Let’s introduce the speakers first and then review the predictions each made.
First, those of us that have been in tech for a while know who most of these folks are, if only by reputation. For those that are unfamiliar, I’ve provided a link to each to give you some background. Definitely peruse their bios and familiarize yourself with these guys – they each played a big part if defining the industry we are a part of.
Tony Perkins – the moderator, founder of AlwaysON and author of The Internet Bubble, which predicted the turn-of-the-century tech shakeout. Ironically, advance knowledge of this event did not save the bloated issues of his other media foundling, the Red Herring, from collapsing along with everything else. That always makes me giggle for some reason.
Steve Jurvetson – ultra-geek prodigy that speaks like Marianne on amphetamines. Provided you can follow him, he does have interesting things to say. He was definitely the most “far seeing” of the panelists.
Vinod Khosla – the King, the best of the best, yadda, yadda, yadda. When I grow up I want to be like this guy. As Tony Perkins commented “he makes 110 percent return without getting out of bed.”
Roger McNamee – If I were smarter, I probably WOULD be this guy. Long hair, librarian glasses, plays bass and has 6 phones clipped to his belt (really). Also happens to be one of the most successful VCs of all time, having invested in small companies like EA. Also, also – he bugs Laura G. a lot.
Josh Kopelman – baby face, but someone who I think probably identified the most near-term opportunity in the “Implicit Web” – more on that in the predictions
Joe Schoendorf – this guy would remind you of your Italian grandpa if your grandpa helped set the agenda for the G8 summit in Davos. Very warm, very engaging and able to articulate business opportunities with a sense of charm that makes him feel very accessible.
Now on the predictions! With a small bit of commentary by yours truly. Mr. Jurvetson starts us off with….
Demographics are destiny, creating opportunity – while this topic appears to signal the rise of Generation Y, in fact Steve means the opposite here. He’s referring to the 75 million baby boomers that are Internet savvy will soon present a plethora of investment opportunities. He envisioned what he called an “eBay of Information” and also a market for services, led by boomers that may be only semi-retired and willing to work part-time to provide expertise on various topics. He also felt there was an opportunity for “mental exercise”, as anyone over 35 has the same mental decline rate as octogenarians (no one from my team should comment on this statistic - ☺). While all of the panelists agreed on demographic trend, they generally felt there was little opportunity here, which I personally found surprising. Yes, the mental exercise market seemed like a stretch, but I know my own parents are already contributing to this nascent market, mostly through volunteering. If the opportunity to make additional money presented itself, I can see many, many boomers establishing themselves as part-time consultants.
The mobile phone will be a mainstream personal computer – I must admit, when Vinod presented this as his first stab, I was a bit disappointed, as I had big hopes for his prophecy. Instead, I felt like waving my HTC hermes in the air and screaming “Oh, do you mean something like this thing here?!” Of course the mobile phone will be a mainstream PC – everyone and their strategic partner has already made this prediction. However, once he began to elaborate, his true vision become more clear, as well as compelling. Specifically, he felt in two years that 1) most phones would have duel projection units that would beam both a display screen and a keyboard and 2) that most phones would have at least two cameras – one for taking pictures and one that focused on the user (for videoconferencing, etc.). Again, he predicted this would take place in two years – even a Khosla devotee like myself felt that was an aggressive timeline. So did the rest of the panelists – most everyone agreed on the topic, but few felt it would happen by 2010. The one person that disagreed was Joe Schoendorf, who said that he had learned not to bet against Khosla, since the last time he did was when he decided to not to invest in a little company Khosla was building called Sun Microsystems.
The rise of the “implicit” Internet – This was “rookie” Josh Kopelman’s first prediction and personally I couldn’t agree more. What he’s referring to is the “data exhaust” or records of movie tickets, book purchases, dinner reservations, flights, hotels, music downloaded and games played that now is being gathered by Internet sites everywhere. Until now, this data has existed in silos, accessible only to the individual site where you performed/purchased/wrote. Josh predicts that these silos are coming down and that new companies will find ways to build businesses that use data from across all silos. All agreed that this was an important trend, but what I found more interesting was the complete lack of specific predictions. They all thought it was a good idea, but no one could present a single hypothetical example of what role a business based on this model might perform. Still, it does present some intriguing food for thought.
What was more interesting to me about this trend was the privacy discussion that it sparked amongst the panelists. Essentially, this trend and others like it (I’m looking at you Procera team), dictate that the information we use on the Web will inevitably be used to sell us services and products. Roger McNamee agreed that this was inevitable, but was very worried about the prospect. He stated that “It’s one thing to have Google know what you’re doing, it’s another that the Chinese government knows what you’re doing.” (I’m paraphrasing there). Khosla essentially dismissed this issue, stating, “Privacy is a red herring that is used way too often.” He noted that there are many mechanisms to limit abuse (laws, regulations and other tech) so that shouldn’t be an issue. Joe Schoendorf believed that this course was already “out of our hands” and that those under 25 would answer it. “We don’t really have a say,” he noted, using his own daughters as examples of this issue.
Betting on smart phones: The mobile device migration to smart phones from features phones will produce even greater disruption than the PC industry's moving from character mode to graphical interface - Again with the smartphones! While there is little doubt that Roger McNamee is a smart guy, this trend was essentially self-evident, with most panelists believing that this wasn’t a prediction but something that had already happened. Interestingly, Roger was the only person to bring up anything related to network infrastructure, which, from my perspective and apparently his, this will be the true issue to solve in order to make this prediction come true.
Water tech will replace global warming as a global priority – As a member of the World Economic Forum and part of the Foundation Board of Directors, Mr. Schoendorf has a scope of experience and vision that was much broader than most of the other panelists. As a result, his commentary was often tempered by a perspective that went beyond just technology for technology’s sake. His prediction was indicative of this broader worldview as he presented a compelling vision of how “water tech” (technology designed to create and distribute clean water) could end political conflicts, create economic opportunity and most importantly save lives. He described Darfur as the world’s first “water war” (technically, the conflict started as a dispute between water resources, but it has most definitely evolved into something much more complex). He was very passionate and convincing in his delivery. Most other panelists agreed on water’s importance, but Khosla noted that these issues were closely related and we shouldn’t try to separate them (for example, lack of water could easily be caused by global warming in some instances).
Evolution trumps design – I found this prediction to be the most intriguing of the 10, but also probably one that is farthest in the future. In essence, Jurvetson predicts that Darwinian processes will replace traditional design methodologies for creating complex systems. These “evolutionary algorithms” could be applied in biotech, nanotech and eventually any other field of design. He claimed that a company in his portfolio had already delivered five times the results that humans could have performed on a microbial re-engineering project. Many panelists agreed that this was important, but that evolutionary algorithms were just one tool. Khosla noted that “synthetic biology” was another potential tool and that all avenues should be looked at.
Really cool stuff! But then, I’m a nerd…
Fossilizing Fossil Fuels – This was the one predication that all of the speakers unilaterally supported. Basically, they predicted that within 10 years, oil and coal would have a lot of trouble competing with biofuels for cars. Khosla believed that there would be proof points in 4-5 years for biofuels that would be well below $2 a gallon with no subsidy. Not corn, but other alternative plants that didn’t use much land or water. On the electricity production side, he noted that solar power had already become cheaper than natural gas and that power companies were turning to it not because it was a “green” tech, but because it was more cost-effective and not subject to the ups and downs of the commodity market.
Venture Capital 2.0 – Kopelman’s second prediction related to everyone sitting around him. Essentially, he was predicting a shake out in venture capital, as funding was slowing and the opportunities for a healthy exit (e.g. an IPO or an acquisition) were becoming more scarce. Almost all of the panelits viscerally disagreed. As Joe noted, capital “continues to pour in” and ticked off a number of emerging markets that would product new products. He also predicted that multiple FORTUNE 500 companies would be created within the next 10 years.
Within 5 years, everything that matters to you will be available to you on a device that fits on your belt or in your purse – Thanks Sherlock. Roger, we know Elevation is heavily invested in Palm but that doesn’t necessarily mean you have to shill it the whole time you’re here. Frankly, at this point, I’d rather hear you play bass.
80% of the world population will carry mobile Internet devices within 5-10 years – Stop the beating, the horse is dead.
So what do these trends mean for our business? Clearly, a few of them mean little to us in the near-term, unless Kawika can think of a way to incorporate evolutionary algorithms and synthetic biology into our toolkit. However, two themes mean we are clearly moving in the right direction. First, mobility – Juniper Networks, NETGEAR, Procera, Exalt, Reality Digital and many more have all hung their hats on this trend and are also reaping the benefits. That probably doesn’t surprise those account teams, but we still have to ensure we’re at the bleeding edge of this trend. Next, the Implicit Web is definitely something we’re following now. While there are no companies that are doing this currently, you can bet they’re on their way. First person to spot one gets a Coke!
