As 2017 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 ’18. I’ve also included an analysis of my predictions for ’17 that I made last year at this time.
- Unicorns Mostly Defer IPOs in ’18, Supported Instead By Big Growth Funds. While I expect we’ll see a few unicorns test the IPO waters in ’18 (eg, perhaps Dropbox and Spotify, via direct listing), most of the largest, US headquartered, high profile unicorns will continue to defer IPOs, instead raising capital if needed from the likes of Softbank’s Vision Fund or other large growth funds. I expect we’ll see more mega sized ($2B+) funds raised in ’18 to combat or mimic the Vision Fund and richly capitalize high growth, private unicorns.
- Macro & Stock Market Snag. As the Fed begins to retreat from flooding the market with capital, as has been its agenda for the past nine years, and our tight labor market, coupled with the Trump era’s more stringent immigration policy, begins to push wage rates up, we’ll see the first signs of inflation fears in decades. This combination will concern the stock market and we’ll see 10-20% declines this year, ultimately slowing the macro economy (once the one-time boon of lower corporate tax rates courses through the system). This slowdown, while healthy, will be painful for lots of startups.
- Multi-Cloud Startups Surge. As I’ve written, the momentum around multi-cloud is already in full swing. In ’18, we’ll see the emergence of several new unicorns taking advantage of this trend. For example, DataDog is growing very fast monitoring apps and infrastructure across clouds, Snowflake is building momentum selling cloud based data warehousing and HashiCorp, a GGV investment, is promoting use of multiple clouds via Terraform for infrastructure provisioning and Vault for security. I expect big things from this group and others following the multi-cloud trend.
- Bitcoin Rising, ICO Implosion. Despite the mostly negative price action of Bitcoin in the last few weeks of ’17, growing interest in this cryptocurrency, coupled with fears of macroeconomic and global tumult, will propel Bitcoin prices much higher in ’18, from roughly $15,000 now to $25-30,000 by the end of ’18. Ether is likely to continue to rally meaningfully as well. Meanwhile, the bloom will come off the rose of the steady stream of ICO related financings, as many of these projects fail and regulation imposes higher scrutiny.
- Tech Giants Go To War With Each Other. We’ve been seeing skirmishes between Amazon and Google recently. This is just the beginning. Expect increasing enmity and aggression amongst Facebook, Google, Amazon, Apple and Microsoft. The battles will take shape around cloud and multi-cloud in the enterprise, and around content, services and commerce for the consumer. The Chinese giants, Alibaba and Tencent, will join the fray as well – this is a global war.
- China Solidifies Global Leadership. Speaking of global wars, China has done a masterful job usurping economic leadership in many regions of the world, where the US has been retreating. Look for China to continue in ’18 to forge trading partnerships with SouthEast Asia, Africa, the Middle East and South America.
Predictions for ’17 – How Did I Do?
- Unicorns defer ’17 IPOs after SNAP IPO delivers mixed results.
A year ago, Wall Street and Silicon Valley were both eagerly anticipating a blockbuster IPO for SNAP. My prediction that SNAP would deliver mixed results was controversial. I was concerned that Facebook would make life difficult as a competitor for ad dollars and users/ engagement. I’ve been right – SNAP surged post IPO to the $25-27/ share range and has since slumped to the $15 range. The IPO market has been fairly quiet, in part due to the tough outcomes for SNAP and Blue Apron, but the IPOs of some other less well-known unicorns have performed well, such as MongoDB, Redfin and Okta.
- As the US retreats from global trade and treaties, China ascends to true “Super Power” status as a nation, on par with US.
China has taken a pro globalization stance and in the vacuum left by Trump’s insular policies, is pushing China to the front of the global leadership race. Concerns remain that China isn’t fully open to foreign companies, but participation by global business leaders such as Tim Cook and Sundar Pinchai at the recent World Internet Conference and Fortune Global Forum in Guangzhou (as well as Canada’s PM Justin Trudeau) suggests that the world is leaning China’s way.
- US offensive cyberwarfare capabilities hit mainstream attention.
Last year I gave myself an A for predicting the start of a global cyberwar. The Russian’s meddling in the US presidential election ushered in a new era of state sponsored attacks. The theft by the Russian-linked hacking group Shadow Brokers of many NSA cyber weapons and subsequent release of these weapons added more momentum to their attacks. I expected the US to retaliate in a very public way. That hasn’t occurred at this time. We don’t know to what degree the US cyber command is fighting back, and we may never know. I expect cyberwarfare to become more commonplace and to achieve mainstream attention at some point soon but it didn’t occur in ’17.
- Silicon Valley says hello to lobbying and government relations with Washington and State governments.
As venture money has flowed into companies seeking to disrupt traditional businesses, entrenched interests are fighting back. Whether it be taxi commissions fighting Uber or hotel lobbies fighting AirBnB, we saw more and more of these skirmishes develop for Silicon Valley companies. Most Chinese startups have senior execs in charge of Government Relations (GR). Venture backed startups in the US are developing strategies to address federal, state and local regulators and legislators.