As 2016 draws to a close, I’ve been trying to make sense of all that’s going on in technology and in the world more broadly. Below are a few predictions about what may transpire in ’17. I’ve also included an analysis of my predictions for ’16 that I made last year at this time (spoiler alert… I was WAY on a few but nailed an important one about cyber warfare – more to come on this topic in a future post).
- Unicorns defer ’17 IPOs after SNAP IPO delivers mixed results. Yes, Snap is an incredible company. Historically the public market has looked for two things from social networking companies when evaluating their stocks – user growth and revenue growth. These days, it seems the market wants both. Facebook’s stock floundered despite great user growth post-IPO as the company transitioned to mobile advertising sales from mostly browser based. Once mobile revenue started growing healthily and user growth kept marching upwards, the stock surged. Meanwhile, despite Twitter and Pandora both achieving great revenue growth, their paltry user growth has depressed their stock prices. Snap is undoubtedly growing users at an amazing clip. If the IPO prices at $30Bn+, however, revenue growth will also be closely analyzed. We’ll have to see if the company can deliver quarter after quarter, but they’re targeting some of the same dollars as Facebook. If they can’t sustain huge revenue growth, the stock may not deliver much beyond its likely heady IPO valuation once the lockup comes off. With a ho hum Snap IPO, other unicorns will likely defer to ’18 or beyond.
- As the US retreats from global trade and treaties, China ascends to true “Super Power” status as a nation, on par with US. We’ll see if Trump and his team deliver on all their protectionist rhetoric, but if they even only go half way, a significant vacuum will emerge in global trade around the world. China will carefully step into this void, becoming even more important as a trading partner for the EU, greater Asia, Mexico and the rest of South America, and Africa. China’s Yuan (RMB), much maligned presently, especially as rates rise in the US, strengthening the US dollar, will regain footing by middle ’17. The RMB will then begin to rally in the back half of ’17 as China’s economy strengthens from its growing strength as the world’s key trading partner.
- US offensive cyberwarfare capabilities hit mainstream attention. The US is already the world’s leading protagonist in offensive cyberwarfare, but this isn’t well known as heretofore, the murky workings of the NSA have been kept largely secret by the executive branch. That will change with the Trump administration, who will recognize the criticality of cyberwarfare in countering enemies, especially in the middle east. Given the importance to Trump’s presidency of letting his supporters know how tough the US is being with adversaries, I expect he’ll disclose far more than Obama about our offensive activities, indeed also far more than the NSA would like divulged. US citizens will learn more about what our agencies have been doing, both offensive and defensive, to secure our safety.
- Silicon Valley says hello to lobbying and government relations with Washington and State governments. Until now, Silicon Valley companies have largely tried to stay outside the main federal government fray. As venture money flows into companies seeking to disrupt traditional businesses, entrenched interests fight back. Whether it be taxi commissions fighting Uber or hotel lobbies fighting AirBnB, we’ll see more and more of these skirmishes develop for Silicon Valley companies. Most Chinese startups have senior execs in charge of Government Relations (GR). Expect to see similar hires at startups here in the US to develop strategies to address federal, state and local regulators and legislators.
Predictions for ’16 – how did I do?
- The IPO Window will re-open in ’16.
I had accurately predicted the paucity of ’15 IPOs but incorrectly assumed that a weak private market in ’16 would cause many highly valued unicorns to seek public capital. In short, most companies figured out ways to avoid the public market, fearing bad outcomes. Those intrepid few who went IPO were largely rewarded for doing so (eg, Twilio, Coupa) but the deluge never arrived.
- A major cyber-attack will be perpetrated on US soil by an enemy of the state.
Russia clearly meddled with our presidential election in an unprecedented way via cyber warfare. The core of our democracy, our presidential election, wasn’t safe from tampering. I hope Trump will at some point accept this, recognizing that to admit and better understand the attack is the goal, not worrying about fundamental legitimacy of his victory. As a nation, we can’t let this happen again. Look for another post from me soon on this topic.
- Facebook will officially enter China.
Facebook is clearly still trying to gain a foothold in China but, as of yet, no luck. I expect these efforts to continue. Zuckerberg, similar to Gates, understands the value of the long game.
- Big time sports will bet big on China.
The Pac 12 conference smartly has now played basketball games in China and the NFL has confirmed plans to play a regular season game in ’18 in China. This is an easy call – China is a huge consumer of American media and sports crazy. Expect all the leagues to follow suit. (MLB is already hosting training schools in China as a smart entry strategy.)