2016 Predictions

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It’s hard to believe the holiday season is nearly upon us. While 2015 has been fast-paced, I expect 2016 to bring a new level of excitement. I’ve been thinking about what might transpire next year. Here are a few predictions. Below these, I’ve also included the predictions I made 12 months ago for 2015 to see how I did.

For 2016:

OpenWindow

  • The IPO window will open much more widely. As you can see below, I predicted that there would be a paucity of big IPOs in 2015, and I nailed this one.  2015 has been the slowest year for IPOs in the last five and one of the worst of the past decade.  That’s all going to change next year. Demand for IPOs is going to steadily grow and ’16 will be a very good IPO year. Public investors have enjoyed Nasdaq returns of over 8% in 2015, including a strong Q4. Meanwhile volatility remains low and there’s a shortage of high growth stocks in the public universe. As a result, public investors will start to flock more aggressively to new issues. Supply of high quality, fast growth companies who opt to IPO will increase as well. The private market alternative, which has been extremely attractive for the past 18 months, is losing steam. I’d expect valuation and capital availability to tip in favor of IPOs versus private financings, so don’t be surprised to see some enterprise and consumer “unicorn” companies approach the public market. As always, high growth will be prized, and high growth companies who are also able to show profitability, even if moderate, will see great enthusiasm.  Atlassian, which just priced its IPO last week and was very well received, should be a good harbinger of things to come.

cyber attack

  • A major cyber attack will be perpetrated on US soil by an enemy of the state. We live in an increasingly fractious world, and terrorists are becoming more and more sophisticated. These groups recognize that havoc can be wreaked by employing cyber attacks as part of an overall terror campaign. Compounding the issue, federal, state and local governments are ill prepared to protect against attacks of critical technology infrastructure, power plants, water supplies, transportation assets and other essential services. How will we respond to this type of attack? Preparation will be key. In fact, attacks are already launched regularly, so some layers of defense already exist, but the need for stepped up vigilance is obvious, as is partnership with strong allies. Groups like Anonymous make for strange bedfellows with our federal government but perhaps they’ll make a difference in ’16.
  • Facebook will officially enter China. The progress Facebook has made in its quest to connect the world is really quite amazing.  Every day, over one billion people connect to the service, representing over 1/7th of the globe’s population.  That said, Facebook will never fully achieve its goals without operating behind the great firewall of China. To date, the Chinese government has blocked Facebook traffic in China, clearly concerned with the free, unregulated speech that occurs on the site. Mark Zuckerberg now sits on the board of trustees at Tsingua University and has given two famous speeches in Mandarin on Chinese soil. Unlike Google and eBay before him, he’s playing the long game, proving his trustworthiness and interest in China in authentic ways. I’m guessing 2016 will be the year his hard work pays off, with Facebook finally becoming a sanctioned service in China.
  • Big time sports will bet big on China. Just as Facebook senses the momentous opportunity in China, so do the NBA and the Pac-12 collegiate conference, both of which have held games in China. Expect others to follow, and we’ll see a growing number of on field and on court competitions in China, as professional and big time collegiate sports attempt to tap into this market. 2016 will be a big year for this activity. Oh, and the Warriors will repeat as NBA Champions, the Giants will continue their string of World Series victories in even years, following up ’10, ’12 and ’14 with an improbable win in ’16, and Stanford will defeat Iowa in the Rose Bowl!

Predictions for ’15 – how did I do?

  • US Internet will venture to China.

Grade: B+

We’ve seen Uber rush into China, guns blazing.  AirBnB has stated its intentions to grow meaningfully in China as well. That said, Facebook has yet to venture into China formally (see my ’16 prediction), nor have many other large internet players such as Pinterest and Dropbox.

  • There will be a security breach at a government agency & the US will declare a cyber war.

Grade: B

There have been a bunch of big breaches this year, including the Office of Personnel Management (OPM) breach, where the social security numbers and other personal information of over 20M Americans were stolen. That said, we haven’t seen an all-out, publicly declared cyber war… yet.

  • A lack of big IPOs.

Grade: A

I nailed this one. The private market alternative has been highly attractive and many companies that braved IPOs, performed poorly. As a result, there were fewer IPOs in ’15 than in any year over the past five. As mentioned above, I believe we’ll see a major reversal in ’16.

  • m-Commerce replaces e-Commerce.

Grade: B

This one really depends on your point of reference. m-Commerce is clearly growing as a percent of overall e-Commerce in the US but, in China, we’re seeing m-Commerce rapidly becoming a majority of e-Commerce. That’s not yet the case in the US, but it’s certainly growing.

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