Cross-posted from my Forbes blog The New Persuaders:
Everyone in Silicon Valley wants to know what’s coming next, and every year for the past 13 years, a panel of the most forward-thinking minds in technology and tech finance convenes here to provide a look at what innovations are likely to emerge in the next few years.
Last night it was time again for the Top 10 Tech Trends dinner, hosted by the Churchill Club, which puts on a bunch of Valley events with top tech folks every year. I wrote about last year’s here as well.
This year, the 14th, the panel is especially venture capital-heavy, but these folks are also, to a person, heavyweights in the Valley, so their opinions carry special weight. On the panel: Kevin Efrusy, general partner at Accel Partners; Bing Gordon, investment partner at Kleiner Perkins Caufield & Byers; Reid Hoffman, partner at Greylock and executive chairman and cofounder of LinkedIn; panel regular Steve Jurvetson, managing director of Draper Fisher Jurvetson; and Peter Thiel, president of Clarium Capital. Moderating the festivities in place of longtime emcee Tony Perkins, Churchill Club cofounder with Forbes Publisher Rich Karlgaard, are Forbes’ Eric Savitz, San Francisco bureau chief for the magazine, and Managing Editor Bruce Upbin.
The panel portion of the dinner, which attracts several hundred people (you can watch it live here for a fee), starts at 7 p.m. Pacific at the Hyatt Regency Santa Clara. The audience gets to vote–in past years, with red and green cards as well as electronic voting devices. This year, they’ll be using a Twitter-based polling system. Panel members have similar red-green paddles they hold up. I’ll post the highlights as they happen.
And we’re underway. Eric and Bruce will describe each trend and then the owner of that trend, one of the panel members, will explain it.
1) Radical Globalization of Social Commerce: Efrusy explains that companies today will be instantly global, or they will fall behind those that aren’t. For the previous Web generation, international was a distinct minority. Groupon, for example, was half international when it went public last year. If you want to be the leading global player, just leading the U.S. might not be enough. You can’t wait to win the U.S. and then open an office.
The other panel members wave half-red, half-green panels. Gordon, who waved a red, says that’s going to take awhile. Hoffman, also red, said the U.S. is still the most important. Thiel’s in-between, I think, but because he thinks it’s not very interesting. Jurvetson says it’s true, but 12 years old. It’s what every consumer Internet startup has been doing for 12 years. Thiel on second thought thinks it’s a worthwhile rule to go international early to avoid local copycats.
The audience shows mostly greens, matched by about 70% supporting the trend on TwitPolls.
2) Zero Marginal Cost Education: Public education faces massive disruption. Gordon (not Thiel, who has been flogging the excessive cost of college) says public schools are not very productive. Moore’s Law improves better than we’re growing great teachers. Anytime you see an industry propped up by monopolist unions and deferred investment, you know it’s tired. At Stanford University, great professors can get 150,000 students, not 150. We just can’t do it in ballrooms. People who grew up digital don’t like sitting around and listening to experts talk. “Technology can enable better education” seems to be Gordon’s message.
The panel is all greens. Hoffman agrees, but the point is the amplification of what people do. Khan Academy is an example. Enabling networks of people to communicate–EdModo, K-12 social network. They do reduce the cost, but it’s also reaching more people and making them powerful. Efrusy says he has three boys in Palo Alto schools, so he has seen the problem. (I’ve got one daughter and she’s thriving there. So there.) This needs to be reinvented and in a hurry. Thiel agrees with the trend but wonders if it will happen very fast. People in the middle class don’t know what else to do, so they teach. (Oh please.) Schools function as a babysitter. (Oh please again–will have to do a separate post on tech folks who think they know how to teach and what education is all about.) Jurvetson says his 12-year-old boy taught himself programming on the Internet. I share Peter’s despair with the existing system.
Audience is mostly green, same with the Twitpolls.
3) Massive Sensors and Data: Nearly free sensors mean they will be everywhere, gathering massive data. Hoffman, whose trend this is, says this combines with mobile computing devices, social media, and the cloud to create new applications that can tap into and make sense of all this data, from entertainment to medicine to traffic control.
All greens on the panel (and 80+% on the TwitPolls). Gordon says first we have to get algorithmicists, as he calls them, off advertising and onto big data. Thiel says he’s most interested in how this will play out in the trend to a much more transparent world–good and bad. Ubiquitous government surveillance, home security systems. Efrusy says it’s too easy to assume more data is better, but a lot of it is not useful, or at least not very salable. It reminds him of the notion of eyeballs a decade ago. There’s a lot of data that is just garbage. Jurvetson says the near-term challenge is interpreting all this data. He also implies that there will be just a few people controlling a cortical layer of data over everything, coming to a very bad end. (Uplifting, Steve.)
On TwitPolls, 84% like this trend.
4) All Vehicles Go Electric: So says Jurvetson, though he admits it won’t happen in the five-year time frame of the event. So what will be catalytic in five years? It’s more efficient to burn ethanol or oil centrally and turn it into electricity than in vehicles. Total cost of ownership of all the couple of dozen electric vehicles coming out in the next two years is less than a Taurus. There are now 200 million electric vehicles in China, mostly scooters. So a billion cars won’t shift, but a billion minds will.
Panel goes all red. Efrusy says natural gas will be first, but maybe not in five years either. Fracking means the incentive is for gas for the foreseeable future. Thiel thinks batteries are fundamentally old, based on chemistry. Electric cars have to recharge too quickly and have to be replaced too often. And oil prices are still too low. Jurvetson says batteries last 200,000 kilometers, not the 30,000 Thiel says. Hoffman says he mainly disagrees with the time frame, and he also thinks hybrids will rule for some time. Gordon thinks America just isn’t ready, unless it loses the trade war to China or 20-year-olds start voting.
Lotsa reds in the audience (“like the Politburo,” says Eric). On TwitPolls, 65% say no.
5) A Shift Toward Technocracy: Doing More with Less: Thiel says this is in stark contrast to both Democrats’ and Republicans’ beliefs. Technology can help make government services much more efficient, so that’s an important area for entrepreneurs to look for opportunities. (Convenient view for a libertarian VC.) Education, DMV, rockets, etc.
Panel looks split. Jurvetson, a fence-sitter, isn’t sure if Thiel is saying this will happen in the next five years, or should. Thiel says both. Michael Bloomberg is doing this in New York, says Hoffman, though he thinks progress will be slow. Gordon thinks Thiel’s idea is too much of a slogan. It’s more the government part that Efrusy reacts to, because he think making the cost of something cheaper means you do a lot more of what it enables–and that includes government, which will make itself even more powerful. We’ll try to starve the beast, but government can print money.
The audience is split too, but about 60% against.
6) It’s Just the Venture Cycle: The fortunes of Silicon Valley follow a 14- to 16-year cycle, separate from the macro economy. Bruce has no idea what this means (nor do I). Efrusy explains that today’s apparent bubbles are merely typical VC investment cycles–from the PC and associated applications to the Web. He figures the leaders of the next cycle are about 7 to 12 years old right now, so be nice to your kids or grandkids. Why always 14 to 16 years? Because that’s a generation. The new platform needs to be invented by a kid.
Three reds, one green. Thiel says you can’t depend on standard cycles–you have to work at it. Hoffman says the time frame is accelerating, with disruptive trends coming in faster and faster, thanks to Moore’s Law as it hits other industries. Jurvetson, the only green paddle, shows a chart that basically shows there is a twin eight-year cycle of VC and private equity, roughly adding up to that 16 years. (I admit I don’t quite see the point of the chart.) Gordon notes that 16 years equals about two orders of Moore’s Law improvement, so that may be the bigger reason for that cycle.
The audience is split, probably meaning they don’t get it either.
7) The Gamification of Everything: The battle for engagement will drive game mechanisms, says Gordon, a longtime game guy at EA and at Kleiner. Once you buy into a system of meaning with virtual rewards, it self-sustains. She who dies with the most points wins. Hoffman wonders how far he’s going: the gamification of toilets? Everything that competes for consumer attention, Gordon says. He bets there will be a gamified toilet in five years, probably in Japan. “Everybody Poops” is going to be a game.
Missed the paddles. Hoffman disagrees with the “everything” claim but thinks a lot will be gamified. Ditto for Jurvetson. He thinks routine work holds the most promise for gamification. Thiel also thinks gamification has an ambiguous meaning. (Agreed–we’re well into the buzzword stage for this.) In fact, Efrusy seems to agree, saying that gamification can be shallow and fail to have lasting impacts. Better to just build a great application than gamify it.
A little under 60% of the audience disagrees with the trend (though maybe because they’re older–Gordon says it would be 90% yes in high schools).
8) The New Hardware: Bits to Atoms: Open source hardware, collective design, flexible limited-run manufacturing, 3-D printing. Hoffman, whose idea this is, says we’ll see revolutions in product design–eventually you’ll see printing of a new heart, though not in the next five years. You’ll also see personalized genetic medicines (a trend years ago by KP’s John Doerr if I remember).
Two greens, one red, and an in-between from Gordon, who thinks hardware and software people don’t really get along, so this is going to be harder than we hope. Jurvetson thinks it’s going to happen but not as much in the next five years as he might hope. The cost and clumsiness of 3-D creation gets in the way. Thiel agrees with the trend because so much can be done at the outset with software that it’s easier to create the physical product in a more customized way. Gordon just thinks it’s best in the long run to “short” atoms in favor of bits.
About two-third agree with the trend, despite a lot of red cards in the physical audience.
9) Moore’s Law Accelerates Beyond Silicon: The dropping cost of computation will accelerate, not drop off, as we move beyond silicon. Jurvetson, the promoter of this trend, shows a chart that Moore’s Law over the last 110 years continues to accelerate. Just about everything disruptive in innovation relies on this. A lot of people predict this will end in silicon. But we’ll have other kinds of improvements, new systems of computation and architecture or ways of building computers, maybe molecular computing. OK, Jurvetson goes on one of his trademark speed-talking binges–he’s excited about this.
Three reds, one green. Thiel, a red, seems doubtful because nobody’s talking about it or creating fundamentally faster computers. Efrusy also disagrees because he doesn’t know what the standard beyond silicon will be and the ecosystem hasn’t formed yet around it. Hoffman, another red paddle, simply thinks Moore’s Law and the existing ecosystem around silicon will carry the day because it’s doing just fine all by itself.
The clearly optimistic audience goes nearly 60% for this trend. (Though Gordon jokes that the Intel table here is all red.) (For what it’s worth, my gut says Jurvetson will be right, eventually.)
10) The Beginnings of Bioinformatics: Intelligent Design Over Random Drug Discovery: Thiel, this trend’s owner, believes that testing millions of drugs more or less randomly is a method due to end. You need a very different model. If there’s going to be a future in biotech, it has to be a much more information-driven approach. Genomics was overhyped, but a number of companies are applying it in interesting ways. We can better model drug effects.
The panel is all in. Jurvetson thinks we’re on the cusp of reengineering the systems of biology. It’s the continuation of Moore’s Law, says Hoffman. How soon will we see commercially available products? Thiel says the question will be how well they work; if they work well, the FDA could expedite them and we could see drugs designed like this in five years.
And the audience vote: 100% agree! Wishful thinking, maybe? OK, now down to 93%, but still. It’s so favorable that now the VCs wonder if they need to invest against it.
All in all, the trends seems slightly underwhelming–most I’ve heard before, mainly. But Jurvetson’s acceleration of Moore’s Law looks at once the most sweeping and the most sensible.
Filed under: advertising, angel investing, Facebook, gamification, Groupon, innovation, LinkedIn, mobile, Silicon Valley, social, social games, venture capital, virtual goods Tagged: | advertising, Bing Gordon, Clarium Capital, innovation, Kevin Efrusy, LinkedIn, Peter Thiel, Silicon Valley, social games, social networking, startups, Steve Jurvetson, venture capital