Tech Boom 2015: 3 Key Trends
WHY YOU SHOULD CARE
Because this tech boom doesn’t look like it’s bursting yet.
By Michael Moe
There are people who make things happen, there are people who watch things happen, and there are people who say, “What happened?” With 2014 in the rearview mirror, here is our attempt to anticipate the future, and if possible, to influence it. We think the pundits will be reflecting on three key trends that defined the Global Silicon Valley in 2015.
Copycats + Billion Dollar Babies
Describing Apple’s product development process in 1996, Steve Jobs famously quipped: “Picasso had a saying: ‘Good artists copy; great artists steal’ — and we have always been shameless about stealing great ideas.”
2015 will be the year of the Copycat. It’s a huge land grab for entrepreneurs and investors over the world’s emerging economies — much of which will involve grabbing mobile and e-commerce ideas that work and racing to serve the world’s rising middle class. You’ve heard of $41 billion Uber. But you may have missed the global copycats. Lost in the news cycle of Uber’s latest mega-financing was GrabTaxi, a Singapore-based lookalike serving Southeast Asia, which announced a $250 million cash infusion from SoftBank less than 24 hours earlier. Days later, ride-sharing service Didi Dache, backed by Chinese social media and e-commerce giant Tencent, announced a $700 million investment. Ola, the “Uber of India,” which raised $277 million in 2014, is poised for its own massive financing in 2015.
The clones are also coming to e-commerce, with Billion Dollar Babies popping up across the developing world, following Alibaba’s road map to a $22 billion IPO (here again, SoftBank was a major winner). Look for Amazon imitators to continue their rapid expansion — including Snapdeal and Flipkart (India) and Tokopedia (Indonesia), which together raised more than $4 billion in 2014.
The physical has already transmuted into the digital — from the stuff you buy (Amazon) to the stuff you share (Facebook). But in 2015, the digital will finally reach its arm out of the screen to touch, and change, the physical.
Think Big Data, Artificial Intelligence (AI) and imaging software, affecting everything from the Milky Way to our DNA. The Space Race 2.0 will take center stage. Inexpensive satellites called “nanosats,” weighing as little as 5 kg (a far cry from the 3,000-kg monsters Sandra Bullock battled in Gravity), will bring Internet access to the developing world while enabling the cost-effective monitoring of everything from crop cycles to traffic movement and weather patterns. Led by emerging companies like Planet Labs and Skybox Imaging (recently acquired by Google for $500 million), the number of satellite launches is rising … to infinity and beyond.
Traditional aerospace players like Boeing, Lockheed Martin and Airbus will face competition from Tech Titan-sponsored upstarts Blue Origin (Jeff Bezos), Virgin Galactic (Sir Richard Branson) and SpaceX (Elon Musk), which is already offering a space launch service at less than half the traditional cost.
Tech is coming to our bodies, too, and not just through much-hyped “wearables” like the Apple Watch. The number of genomes sequenced in 2015 is projected to double versus last year, and we can now analyze small blood samples in all new ways — see the company Theranos, which investors have valued at more than $9 billion. Not only does this tech enable noninvasive tests for many medical disorders, it also empowers pharmaceutical companies to quickly analyze and adapt treatments to infectious parasites like malaria — and to develop more effective vaccines for diseases like Ebola.
And then there are a slew of cool products for everyday consumers: Recent GSV investment Lytro is transforming the camera into a powerful photography software platform. Backed by blue-chip investors like Andreessen Horowitz, New Enterprise Associates and Greylock Partners, Lytro has developed the world’s first consumer Light Field Camera, which offers photographic capabilities never before possible, including focusing pictures after they’re taken. There’s more to come in 2015.
You Pay, iPay
Tinder shook up the world’s “oldest” profession. And the second-oldest profession — banking — is now past due for a sea change. What will it look like? At last, the complexity of financial services is set to be unbundled into apps. Apps worth a lot of money. It’s easy to see why growth investors are excited. There is more than $25 trillion in assets and $1.5 trillion in market cap in the 10 largest banks alone — all ripe for the picking.
Innovative peer-to-peer lending companies boomed in 2014. Lending Club went public in December and is now valued at $8 billion. OnDeck, its small-business banking cousin, IPO’d a week later. In 2015, look for the rise of mobile payments, which will balloon to $1 trillion over the next two years. PayPal, the industry leader, processed roughly $50 billion of mobile payments in 2014.
Apple will drive much of the momentum as it combines the more than 400 million credit cards logged in iTunes (four times the amount of payment information Amazon holds) with the surging iPhone 6 — the first Apple device armed with a chip that enables wireless in-store transactions. Bye bye, plastic.
And then there’s Stripe, which powers purchases for Apple Pay, Facebook, Twitter and Lyft. Valued at $3.5 billion following its recent funding from a leading syndicate of VCs, Stripe replaced Amazon Payments this month as Kickstarter’s payment platform. The e-commerce giant had processed more than $1.2 billion for Kickstarter to date.
But the most profound change relates to money itself. Globalization, repeated security breaches of traditional payment systems and the rise of virtual “nations” like Facebook make digital currency an inevitability. If the sentiment in Silicon Valley is any indication — Bitcoin startups raised more than $300 million in 2014, up from $2 million in 2013 — we’ll be there sooner than most could have guessed a year ago.
Taxi Photo by Jonas Gitner.
- Michael Moe, Michael Moe is a co-founder of GSV Asset Management, as well as its chief investment officer. Regarded as one of the world’s preeminent authorities on growth investing, his honors include being named to Institutional Investor's All-America Research Team and The Wall Street Journal’s Best on the Street. His firm, GSV, is also an investor in OZY. Follow Michael Moe on TwitterContact Michael Moe