When it comes to tech, I have been known to diss entire years. But I’m
confident 2016 is going to be different. The year ahead won’t be a cake
walk, but it will be wild and fun, in a way that tech has struggled to
be for some time.
Prediction 1: There will be blood.
If you think the so-far minor adjustment in the valuations of private
tech companies has brought them in line with reality, I have some hot
pre-IPO shares in online retailer Jet.com to sell you. This coming year
will be when many winners and losers in startups are sorted to their
proper places. The true unicorns and decacorns—startups valued at more
than $1 billion and $10 billion—will vacuum up even more cash, while
many other companies will see their valuations get slashed.
This isn’t a bad thing. In fact, it is a great thing: the markets at
work. If there is a flaw in this system it is that the market for shares
in pre-IPO startups is relatively illiquid and there is limited
information available about the true performance and potential of these
companies.
If the analysts with the unenviable task of seeing through the smoke and
mirrors of slide decks and new money from nontraditional investors
manage to do their job, a whole bunch of big-name startups are going to take a haircut.
But that is just the beginning. Some startups could cease to exist in
their current state in 2016. Whole sectors are ripe for flameouts and
consolidation, like food delivery, ad tech and fintech, or financial
technology. The lesson of the last tech bubble is that creative
destruction isn’t just for incumbents; the volume of friendly fire in
the advance of the “new” new economy is substantial. From the wreckage
of these startups will come the warm bodies and hard-earned lessons that
build the next tech giant.
Prediction 2: Some other tech titan will buy a media property.
It is a common myth that the builders of tech fortunes want to replace traditional media. As Facebook Inc. Chief Executive Mark Zuckerberg once said, one of his goals is to create the world’s
greatest newspaper. And who’s going to provide the content for it? How
about Jeff Bezos’s Washington Post and Jack Ma’s South China Morning
Post?
There have been so many acquisitions in media this year that the
pickings are getting slim, but the same egos that drive CEOs to conquer
whole industries demand the kind of influence that can only be achieved
when you’re buying ink—or pixels—by the barrel.
Prediction 3: Predicting the future will become embarrassingly easy.
Prediction algorithms—the fruits of big data—have become so ubiquitous
that we take them for granted. They are how the most sophisticated
lenders know you are a good risk, and they are the reason weather forecasting is
now better than ever. As the code behind these algorithms and the
knowledge required to use them diffuses, we are fast entering a world in
which the only barrier to divining usable predictions about the
behavior of many parts of a business—from its inner workings to the
behavior of customers—is gathering the right kind of data.
This doesn’t mean CEOs can ask for crystal balls to predict anything
they wish. The tricky thing about big data is that you never know what
factors will be predictive of a desired outcome. But if your business
isn’t employing the glorified actuaries known as data scientists, you
might want to ask yourself if you can afford to get eaten by competitors
who are.
Prediction 4: You are going to develop a love/hate relationship with virtual reality.
Just in time for the holidays, Samsung Electronics Co. released
the first pretty good, relatively affordable, consumer-grade VR
system—the Gear VR. Unfortunately, it only works with Samsung phones,
but a raft of other devices are coming to market in early 2016, from Oculus, HTC Corp. and
others. Even if you aren’t an early adopter, you probably know someone
who is, which means 2016 is the year many of us will have our first
experience with VR.
Let’s not mince words: VR is
awesome. It is also very likely to be nauseating or at least a little
disorienting, an effect that hits most folks sooner or later when they
wear the headsets. You are going to try a game in VR and want to stay
there for hours—but, depending on how sensitive you are, you might not
be able to do that. Unfortunately, that is likely to be the state of VR
for the foreseeable future.
Prediction 5: Tech predictions are worth what you pay for them.
This year I almost wrote a column about how all the graphs that analysts
publish about the future market for X or the likely outcome of Y are
generally laughably wrong in hindsight.
Technology is a game of unpredictable disjunctions rather than
straight-line growth or deceleration. So keep that in mind the next time
a confident numerical prediction comes across your screen—just because
it comes with a graph doesn’t make it any more valid than any other set
of assumptions.
That said, given how bullish I am about data analytics as a competitive
advantage, who am I to argue with Michael Dell when he says big data
will be the next “trillion
dollar” industry? He didn’t offer a timetable, so we don’t have to
figure out the x-axis on that graph until his prediction is a foregone
conclusion.
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