By Eric Jackson, Forbes,
This is the 4th year in a row I’ve curated an annual prediction list for Forbes. Last year’s list is here.
It’s gotten bigger and better every year with a fantastic collection of participants – and this year is no exception. I really appreciate their involvement, as it helps all of us when we each share our best ideas.
Unlike a lot of prediction lists which show up at this time of year (in increasing numbers each year it seems), this is the only “Sleeper Ideas” List for 2015. A sleeper idea is something that few people see coming ahead of time, but then later goes mainstream.
Most of the participants on the list are entrepreneurs, venture capitalists, hedge fund managers or other market participants. I asked each of them to think about trends, stocks, or private companies that are “sleeper ideas” to watch for going into 2015.
Here they are (in no particular order):
Mark Pincus, Chairman, Founder and Chief Product Officer of Zynga & Founder of Superlabs, @markpinc
1. Airbnb. Again. They had an amazing 2014 but 2015 may be even bigger. They are poised for the kind of break out year uber had as will the sharing economy.
2. Xiaomi. May be on track to be biggest smart phone maker in the world.
3. Obama. Will start to be recognized for actually caring about innovation in tech and govt.
4. Climate change. Everyone will wake up and realize this is the only issue that actually matters. There won’t be any other issues without a planet.
Horace Dediu, founder of Asymco.com, @hdediu
1. Cyanogen. This company should develop a credible path for AOSP (non-Google GOOGL -0.34% Android) especially in India. I expect a lot of traction as OEMs who embrace Android reject Google.
2. iPad. Not as a consumer product but for the Enterprise. The iPad grows up into a solid product for business while being replaced by phones in consumer “jobs to be done”.
3. Blockchains. Not as a currency but as a way to create/manage contracts.
4. So-called sharing economy. I don’t like the word “sharing” because sharing implies giving and in all these instances people are selling resources. I would rather brand this phenomenon as maximizing utilization or the allocation of resources which are under-utilized. Software and communications have made it possible for cars and housing but what else could be covered? How about capital itself? Why can’t capital surplus be allocated to capital deficits with an app? What would that do to those institutions which claim this role today?
Matt Maloney, Founder and CEO of GrubHub, @M3aloney
In 2015, I think it’s going to be all about making meaningful connections with customers. To do that, companies need to concentrate on perfecting their operations and focusing on how they are serving their customers. A few companies that are doing that well now and will see more success in the next year are:
Shyp - Shyp is disrupting the shipping industry and making it easier than ever for people to ship items.
Casper - This company is rethinking how we buy mattresses and doing it in a way that makes it simple to buy a product that historically has been a pain to purchase.
Shinola - Incredibly designed utilities for men handbuilt in Detroit Michigan.
Belly - Helping independent businesses connect with loyal customers in a more efficient way.
Bill Gurley, General Partner, Benchmark, @bgurley
Two on the industry and two on investing.
1. The industry will increasingly recognize two different version of Android — Google’s “locked-down” or “closed” Android which Google can control and monetize, and the competing “open” Android ecosystem driven by firms like Cyanogen and Xiaomi. This may be the single most important issue in tech.
2. I anticipate that many interesting alternatives to YouTube will emerge. There is so much left to do in video — it feels like we are only scratching the surface.
3. People will begin to realize that having a “billion” dollar private market cap (based on a single one-day investment) is quite different from having a proven market cap that trades every day in the public market. Many of the “presumed” winner’s business models will fail to pan out (along with their valuations).
4. One of the reasons our industry is cyclical is that people unknowingly take on increasing amounts of risk over time. Investors today are willing to invest at higher prices, with lessor terms, increasingly in companies with less scalable business models and lower revenue quality. This trend will continue in 2015 until it one day abruptly ends.
David Kenny, Chairman & CEO of The Weather Company, @davidwkenny
The Internet of Things will drive an Internet of Observations. We saw this already with Waze for traffic, and we are now collecting mid-atmosphere data from aircraft to improve weather and turbulence forecasts. I think that citizen journalism will become a bigger part of news. I really like Burst as a next generation video journalism tool. And I think GoPro is at the very early stages of becoming a media and publishing engine. And the possibilities for health data through wearables and smartphones is huge.
Stephanie Tilenius, Founder & CEO of Vida, @stilenius
Apple Watch will sell at least 30 million devices and increase Apple’s market share of the app market where they will continue to see higher monetization than Android
Alibaba will struggle to succeed in the US with 11main.com and pursue other strategies as an eCommerce and payments platform, they may be aggressive about acquisitions – maybe they acquire Square, Stripe, Shopify or Squarespace
PayPal may need to do a few acquisitions of its own or radically increase its product development cycle and be aggressive about improving its mobile product or they will lose market share
Apple will be the sleeping giant in the payments space and slowly gain share through Apple Pay, more from in-app mobile payments than offline POS transactions, their success will no doubt push Google to invest in Google Wallet and TouchID for Android devices (with carriers)
Uber will enter the same day delivery space leveraging their marketplace of drivers and logistics backend enabling merchants to use an API to add “Uber pay and deliver” or just “Uber” at checkout. The same day delivery battle will ultimately be between Amazon, Google and Uber and is their’s to lose if they execute well. Other sharing economy companies will pose a threat, the question is how quickly will they scale? Will Instacart go beyond groceries? Will Postmates get acquired?
Pinterest will explode with brands as it introduces an ad format where you can finally target granular interest graphs
Instagram video ads will enable Facebook to take share of traditional brand TV $$ and help Facebook fight the threat from Snapchat and others
Xiaomi will introduce a 3rd mobile OS and try to build an app platform that competes with Apple and Android
Zocdoc and Practice Fusion will go public fueling another doubling in digital health VC $$ in 2015
Ted Livingston, Founder and CEO of Kik, @ted_livingston
In 2015, we will see mobile chat platforms take off in North America, proving that the battle to dominate chat is perhaps the most important battle in the history of personal computing. WeChat and Line have already illustrated that chat platforms are viable and lucrative businesses in China and Japan, and even Facebook is starting to wake up to this.
Chat is the biggest opportunity since the internet. As WeChat and Line have demonstrated, you can build an entire computing ecosystem around chat, allowing people to book taxis, bank, chat, exchange goods, and play games with friends. Next year, the front-runners will start to emerge, and they won’t be the household tech names. What we know now is that the winning apps will have mobile-first chat at their core, and they will own American youth, consumers of the future.
John Burbank, Founder of Passport Capital
HortonWorks – HDP – leader in Hadoop with Cloudera which is private. Could be a huge company in time as the world turns to hadoop to manage a 50x increase in data next 3 to 5 years. Only $1bn mcap now but should double revs or close many years in a row
David Rosenblatt, CEO of 1stdibs, @rosenblattdavid
1. Luxury finally goes digital: Because of its high price point and concentration in verticals that have been late to benefit from consumer adoption of the Internet, luxury has had little migration to the Web. Now, because of the globalization of wealth and increasing consumer comfort with the medium, that will change. We already sees early signs of this in the leadership stresses at the large auction houses like Sotheby’s. 2015 will see native, digital first companies like 1stdibs – whose average order size is 50x the ecommerce benchmark – make the Internet safe for high end brands.
2. The mainstreaming of automated content generation: The initial expression of this will be in industries, like financial services and intelligence, that rely on making sense of vast amounts of data. While visualization is useful, images are not as effective as text in conveying more sophisticated ideas. Companies like Narrative Science are working today with large cap customers developing ways to convert data into easy to understand, plain English.
Pretty soon, no one will be able to tell if the advice they are getting from their financial advisors are machine written or human written, and most will be produced by software.
3. New York comes of digital age: New York will have 2 $1b digital exits in 2015. Rather than being perceived as exceptions, these types of wins will represent a new norm.
Aaron Levie, CEO of Box, @levie
1. Apple becomes massive in the enterprise and begins to take the opportunity far more seriously.
2. Non-tech companies (the ones with cash) will do major tech acquisitions in their push to digitally transform themselves.
3. Google will become a car company.
4. We’re going to see more collision between Silicon Valley and DC, and there will finally have to be a substantial and productive response from Obama administration in the final phase of his term.
5. Lots and lots of new startups tackling legacy or over-regulated markets like healthcare, banking, energy, etc.
Keith Rabois, Investment Partner at Khosla Ventures, @rabois
Tapingo (http://www.tapingo.com): Order-ahead system that’s currently focused on college campuses, but the possible applications are endless – any marketplace with retail density will benefit from Tapingo as they are building a network of merchants and customers. Already, Tapingo is the default way for food ordering at the top universities in the U.S. including USC, UCLA, NYU and the University of Arizona.
Chain (https://chain.com): Chain makes it easy for developers to build bitcoin applications. The secure infrastructure layer for developers will be key to bitcoin’s success in reimagining the financial system, but this is just the beginning. Chain’s vision is to be the foundation of financial and non-finacial uses of the block chain including everything from smart contracts to developing other digital currencies.
Narrative (http://getnarrative.com): Even with so much technology at our fingertips, people want to be present and in the moment. Narrative lets you capture moments seamlessly without being out of the moment and tell a story that’s meaningful and memorable. Narrative is the world’s best designed and smallest self-contained camera.
Rich Riley, CEO of Shazam, @rriley17
-Mobile disruption accelerates as consumers increasingly want to connect with the ‘real world’ from their smart device –proliferation of iBeacons and watermarking to connect ‘places’ and stand-alone Bluetooth/WiFi and audio/visual watermarking to connect ‘things’
-Next generation lending platforms/marketplaces (Lending Club, Prosper, etc.) continue their massive growth to the benefit of consumers and small businesses and adversely impact traditional banks
-Uber, Lyft, etc. expand beyond transporting people, to provide the world with a dramatically more efficient delivery fleet for goods…..to the benefit of consumers, retail, restaurants, etc.
Andrew Parker, General Partner of Spark Capital, @andrewparker
With the launch of the iWatch, wrist wearables will underwhelm early adopters due to notification exhaustion. But in the long term (beyond 2015) a native application for wearables will emerge, making it a must-have component in a computing toolkit. See Spark’s investment in Waterloo-based Thalmic Labs (maker of the Myo) for one such possibility. #investor
Cryptography will go through an ease-of-use upgrade phase. It will get baked into lower layers of the stack in a way that even trailing edge technology adopters will be using crypto as good as using PGP for your mail today. Google, Facebook, and Apple will be leaders in this trend. Long term (beyond 2015), full web transit will be encrypted.
Ecommerce companies will move strongly towards A) flagship retail presences in 2 – 5 major cities and B) subscription plans model on Amazon Prime. Brick and Mortar retailers will scale back retail locations dramatically.
3D Printing will continue to hit headwinds in trying to put a printer in every home. Instead, 3D Printing will find scale via retailers looking to personalize products quickly and efficiently. A few examples that are already starting to emerge (and will continue to gain traction): Shoe manufacturers will implement foot scanning to customize fit (similar to what is already happening with headphones). Toy manufacturers will leverage 3D printing for broad personalization in an effort to ween themselves off of costly licensing deals with IP owners like Disney (imagine buying Legos that are you and your friends as opposed to Spiderman and Iron Man).
Marissa Campise, Partner at SoftBank Capital, @marissa
1. The app store duopoly in the US will be challenged, and the way in which apps are discovered and distributed will be dramatically improved. In 2015, we’ll be announcing an investment in a company that has the potential to fundamentally alter the mobile user experience.
2. Mobile-enabled, curated marketplaces that rethink buyer/seller economics and traditional operating assumptions will continue to disrupt large service verticals. We’ve seen it in transportation and hospitality, and expect the trend to continue in other massive service verticals. We’ve made two investments here.
3. Facebook overtakes YouTube for most video *viewers* ( not just views) worldwide
4. Niche SVoD channels emerge as new programmers in 2015. We see the cable / MSO ecosystem finally breakdown
Victor Anthony, Managing Director at Topeka Capital Markets, @VicAnthony
Evine Live, a smallcap beaten-down TV Shopping stock should surprise to the upside in 2015
Snapchat should gain more mainstream user adoption (read: adults) and should see monetization kick-in
Seeing robust Apple watch estimates by analysts. Not so sure smartwatches will be as big an Apple category as most are speculating.
Ross Levinsohn, Board Member of Tribune Company & Millennial Media, @rosslevinsohn
Facebook will continue to buy as its core audience begins to fray and age. Users will begin to push back on its control of their feeds
Twitter will make a major acquisition to bolster its product
Fantasy Sports (daily games) will explode this year and be the hottest sector in gaming, booking billions in revenue. At least one league will foster legalized betting of this kind
Personal Security apps will pop up everywhere as the fear of being hacked on your phone will grow
China will have a roller coaster year, with inflated valuations coming back to earth
Uber will go public at north of $70b
Pinterest will be the darling of madison avenue in 2015
YouTube will make a significant product change and fully embrace the creative community and exit 2015 as a full fledged media powerhouse
Wild One: Comcast’s merger with Time Warner Cable will not happen and instead, they will buy Time Warner, and launch a viable competitor to Netflix
Yahoo will make a massive mobile acquisition of a platform of some sort in hopes of radically transforming its position in the marketplace (likely in the messaging space).
Thomas Thornton, Hedge Fund Trader,@TommyThornton
long XIAOMI short AAPL
long BABA will surpass 400b mkt cap
short BRK/B WB and CM retire
short DAL Airlines benefit from low Crude ends
long Coffee JO will be best performing Commod 2 years in a row
long TWTR, Short FB – Noto becomes CEO, FB growth stalls
Dan Nathan, Founder of RiskReversal.com, @RiskReversal
Google will use some of its $65 billion in cash to buy Twitter as their Social media strategy has not gotten off the ground as Google+ is a disaster. Twitter helps combat what I think is a growing blindside in real time search. Google will also look to compete with Facebook/WhatsApp on the direct messaging front. TWTR’s $23 billion public market cap is a joke compared to WhatsApp’s $22 billion price tag. A deal probably comes from lower levels than the mid $30s as I suspect Twitter makes a new all time low in Q1 2015 if there is not a management shake-up or M&A
-If Google does NOT buy Twitter they will buy PayPal to better compete with Apple Pay, combine with Wallet and make an early stand as opposed to be playing catch up in a year or two once Pay is well adopted among hundreds of millions iOS users that have already shown a propensity for mobile transactions.
Pandora gets TAKEN UNDER in a desperate move to remain relevant and combine with a large online property that prefers to buy vs build to compete with new offering from Apple (relaunched Beats) but at a price. Think Napster’s take under by Best Buy in 2008.
Tough year for Facebook: their hundreds of millions of fake users are finally revealed and the stock sees a re-rating. Bots are driving growth and ad rates, and the youths just care to be on Instagram. User Monetization on Instagram will be much harder as largely mobile and not conducive to ads then the core Facebook offering, and too a less attractive demographic to market too than the moms and pops on Facebook. They do not monetize the supposed 500 million WhatsApp users as other offerings arise calling into question their purchase price. The investment world finally concludes that Facebook shares at 13x expected 2015, with $220 billion market cap with rapidly declining growth rates is preposterous.
Mike Dauber, General Partner at Amplify Partners, @dauber
1) Docker will be acquired by Cisco for over $1.5B
2) A cyber security attack on a Global 100 company will make Sony look tame by comparison
3) A very large, non-traditional cloud user (finance/health care) will announce a massive deal with Amazon Web Services to take over a large portion of their compute workloads
4) “Deep Learning” will become mainstream and surpass Big Data as a transformative technology
Anand Chandrasekaran, Chief Product Officer at Bharti Airtel, @anandc
1. Fully featured 4g smartphone available for under $100. Will shake up Android ecosystem.
2. A new e-commerce leader will emerge from outside US just like Alibaba in 2013-’14.
3. content and entertainment will lead mobile data consumption globally. A mobile only content service with will emerge to compete with YouTube.
4. 25 million new users will adopt a digital payments service and be financially included in 2015.
5. Cyber security related events and incidents will change what it means to be an e-commerce and retail market leader.
6. Mobile traffic will eclipse PC traffic in 2015 for every major service in India. This happened in 2014 for US traffic at Yahoo.
7. New access technologies and drone platforms will create platforms that change how we map, analyze and visualize our universe.
Tero Kuittinen, Wireless and Gaming Analyst, @teroterotero
I pick shorting FTSE 100, because the risk of Europe getting sucked into a genuine economic chaos in 2015 is now acute. The economic rebounds from the 2008 debacle were deeply flawed in the European Union. Germany has had years to re-examine its destructive, predatory approach to the rest of the Europe. Like Hapsburgs of old, Germany neither forgets nor learns. It is held captive by memories of the Weimar nightmare and so it has been locking the rest of the continent into a deflationary spiral. At the same time, France has lost half a decade trying to avoid the economic reforms it knows are absolutely vital. French economy is on the precipice of getting sucked into Italy-type permanent decay. Lower oil prices are a massive shock to Russian economy and are clearly triggering euro weakening that may become hard to control. It is difficult to say what an acute Russian crisis would mean for Western Europe, but various unsettling scenarios exist. Cheap gas is not much of a boon for many urban Europeans who depend on public transport – the destabilizing currency effects of the oil price spiral may be more of a bane than a boon for EU.
Ben Thompson, Founder of Stratechery,@monkbent
Google will buy a messaging service, probably Kik, maybe LINE
Facebook will challenge if not surpass Google in market cap
The storyline on Amazon will shift from inevitable e-commerce dominance to mortal threat from “sharing” type services like Postmates and Instacart
Eric Jackson, Founder and Managing Partner at Ironfire Capital, @ericjackson
Apple Watch will be a hit. Apple will launch new surprise product(s) this year. They will do an acquisition that’s bigger than Beats in the coming year, surprising all the Apple purists who say they only do small tuck-in deals.
Dick Costolo will still be Twitter’s CEO in a year from now. They will do a big acquisition in the Messaging space this year. Revenues will keep going up strongly.
Uber & AirBNB IPO this year. I think there’s an outside shot that even Snapchat IPOs this year. They will all be hugely popular.
I think AOL ends up getting acquired this year. Either in a merge with Yahoo’s core business or bought out by Time Warner.
Yahoo to $80/share this year. A combination of tax savings on a spin-out announcement of the Alibaba shares (possibly the Yahoo Japan shares too). But also some marginal improvement in the core business convinces investors it’s worth $15 billion rather than its current less than nothing valuation.
Google will face more mobile headwinds in 2015. There’s chatter about there being a hiring freeze in place right now at the company. They are at risk of losing search on the iPhone this year. They need to demonstrate that they can really win this year in mobile.
Alibaba brings in more global brands to sell through their platform in China. Should help take the stock to new all-time highs.
2015 should be big year for LendingClub and other peer-to-peer lenders. This company has the chance to really set itself apart as a unique online brand as distinct as PayPal, eBay, or Amazon.
Facebook will be allowed to enter China, but their revenues there will not increase materially disappointing investors. China ensures that the only Internet companies who make money over there are Chinese.
2015 should be good to lesser known tech IPOs of 2014 like GrubHub and TrueCar.
[Disclosure: Jackson is long YHOO and BABA]
Jason N. Ader, CEO and CIO of Ader Investment Management, @JasonAder
Daily Fantasy Sports (DFS) is one of the hottest trends within the gaming industry. Already well on its way to being a $1 billion a year industry in the US, it has the potential to be a $25 billion a year business globally as European football, Formula 1, cricket, and other professional sports are well suited to DFS, with the potential for increasingly larger prize money payouts.
Currently, a few key players dominate the Daily Fantasy Sports playing field. Upstarts like Fan Duel and Draft Kings have raised hundreds of millions of dollars over the last three years and have valuations that exceed $1B. Shamrock Capital Advisors, with participation from NBC Sports Ventures and KKR, participated in the last funding round of Fan Duel.
Both Fan Duel and Draft Kings offer Daily Fantasy Sports products, with $1 million plus payouts testing player skill every “game day” in NBA, NFL, MLB and other sports team management. These products appeal to users by creating a fun gaming interface. Unsurprisingly, DFS is experiencing its strongest growth among consumers who are thirty years old and younger, the same demographic that grew up with gaming and social media.
Bringing together sports fans within an interactive platform has already proven to be a winning combination. Daily Fantasy Sports payouts have grown from $1 million to $10 million over the last 12-18 months. Fan Duel is currently paying out $10 million per week. Over the next 12-18 months, the DFS prize money will be $25 million and with growth to $50 million and then to $100 million as player liquidity improves and prize money pools grow.
The aggressive projections may seem too good to be true, but the game plan behind DFS has already been put into play by one of the greatest financiers of our time. Remember the $1 billion Warren Buffet NCAA college basketball bracket challenge last year? Buffett’s challenge is a prime example of the rationale driving DFS. Warren’s $1 billion offer for a winning bracket was based on a 1 in 3 trillion probability event. In short, the math works, and it may be better odds than the traditional 2% house advantage casino based calculus.
The aggressive growth of DFS has come as a shock to traditional gaming and gambling at large land-based casino companies and online gaming companies. The rapid growth of DFS among a younger demographic highlights a glaring problem facing traditional gaming establishments: casinos have yet to develop a strong strategy for appealing to a younger and increasingly valuable demographic.
To be sure, it’s not a question of having the spending money. The younger customers in Las Vegas are spending over $1000 on bottle service; however, these patrons have limited interest in traditional slot machines or table games. These newly affluent, post-financial crash professionals have grown up playing Xbox and Sony Playstation, a platform which doesn’t translate well to traditional gambling systems designed by International Gaming Technology (IGT), Bally, and other manufacturers. Where slot machines have lost out, DFS have cashed in. With the innovative and interactive gaming offered through DFS, the casinos have found at least one way to better understand what appeals to the demographic that will be the next generation of consumers.
Of course, the question undergirding the very popular and profitable growth of DFS is a legal one. At least at the federal level, fantasy sports is defined and exempted by the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The bill specifically exempts fantasy sports games, educational games, or any online contest that “has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance) and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events.” One could make the argument that winning big at fantasy sports is a matter of chance (which gave Buffett the confidence to put $1 billion on the line), but at least for now, it isn’t likely DFS will face any significant legal challenges to its steady, surprising growth.
In 2015, past performance predicts future success. Watch for Fan Duel and Draft Kings to continue to grow new products, Barclays Premier League DFS to come (cheer) into the sector, and expect larger payouts. I expect a very active VC pipeline of early stage-companies in and around this sector globally and it is very likely we will be seeing one or perhaps both Fan Duel and Draft Kings in the IPO markets.
Adam D’Augelli, VC at True Ventures, @adaugelli
1. Consumer Applications of 3D Printing
As camera quality on cellphones continues to increase and 3D modeling software continues to get more efficient, there will be an increasing number of companies that being to leverage 3D Printing for mass customization using a direct to consumer business model (in contrast to early examples of the technology used in conjunction with channel sales at companies like Invisalign and Brontes Technologies.) Some early examples include NRML and Solsf.
2. Opportunity in Soft Robotics
Robots have historically been made of hard components (steel) because sensors and compute were too expensive to build the necessary systems to have flexibility and dynamic shapes. The scale of the smartphone (and related consumer device market) has driven these costs low enough to foster experimentation in new materials such as plastic and rubber which could create “robots” that could work together with humans in consumer and industrial applications. There are a handful of research groups working on the problem now and tons of market opportunity for the right solutions.
3. Vertical Data in Healthcare
Healthcare is being entirely re-invented by software and data. Unlike traditional care, decisions will be increasingly made by computers leveraging tremendous amounts of information – both personal and from the broader population. Early examples of companies in the space include True-backed Ginger.io which focused on issues related to mental illness and beahvior and AliveCor which focuses on issues related to heart disease and the circulatory system.
Sam Pullara, Managing Director of Sutter Hill Ventures, @sampullara
1) Capabilities of drones will continue to outpace regulation around them leading to increased use (both government and individuals) that will come to a head in the mind of the public.
2) Oculus Rift will finally release the commercial version. There will be lots of hype but it will initially fail in the consumer market as being too anti-social. Magic Leap will take its $542m and create “spaces”, could be theaters, classrooms or labs where people can experience their technology and blow people away — together.
3) Tesla has announced their Autopilot technology but hasn’t released it yet. It will be a long game and it may be the latter half of the year before it is ready to ship. But when it does people will glimpse a tiny bit of the future of automated cars — and want them.
4) The first attempt to land by SpaceX may fail, but it will ultimately succeed in 2015 and dramatically change space travel.
5) Flash will be the undoing of the storage oligopoly. HP, EMC and Netapp will all experience the pain of the innovator’s dilemma as new entrants to the market begin to get major traction.
6) 2015 may be the year of enterprises moving to the cloud but it still won’t be the year of Linux on the desktop.
7) Radically different security companies will form in response to the attacks of 2014 that are not just targeting a band-aid but real, effective solutions to protecting a company’s valuable data assets.
Every enterprise will want to adopt containers and get rid of VMWare — this is their existential crisis as a company — but it will be a couple years for them to mature to the point that production workloads run on them at scale.
Steve Landry, Managing Partner at EastBay Capital, @stevelandry10
The next big thing for the “sharing economy” is…..monetizing unhappy couples. Double counting banker bubble math determines that 40% of the nearly 60m domestic married couples would be willing to spend more than their $100 monthly cable bill for a “little side action”. Do the math….this is a massive TAM with significant optionality in polygamy, global expansion, and a new cloud-based, SaaS, big data, last mile delivery product launching in 2016. Swingrz raises $100m over the summer at a $1B valuation which becomes $10B in the the sucker round just 3 months later. Will Smith’s 5% stake in Swingrz eclipses 50 Cent’s Vitamin Water windfall for most savvy celebrity investment of all time.
Paypal never makes it to an IPO. The end game for EBay is ironically an auction for Paypal and Marketplaces. Facebook, Google, and Amazon join in a bidding war for the global payments platform. As for the remaining marketplaces biz, the market speculates for months if it will remain independent or Jack Ma will elect to “Buy It Now”.
Bumpy ride for Uber in 2015. There will be more regulatory defeats and PR miscues, but Uber’s biggest issue turns out to be driver discontent. The ineffective protests of 2014 over rapidly falling wages and poor communication turn into successful strikes and unions that cripple the service in major markets. Travis ultimately caves to some demands leading to the company materially missing internal projections and a delay in their IPO citing “market conditions”. Money flowing into late stage VC drops by 50% YoY as the market rethinks valuation, risk, and liquidity.
The success of FanDuel/DraftKings and the support of every league not named the NFL puts the ball in motion for legalizing sports gambling nationwide. Think regulated lotteries as opposed to the current sports betting operations that exist in Nevada and other countries today. The launch won’t be for a year or two out, but the writing will be on the wall with legislation in late 2015.
Rafat Ali, CEO & Founder of Skift, @rafat
1. Hospitality is among the most innovative sectors on the planet right now
Some of the biggest consumer and technology changes playing out in the larger world can best be observed by looking at habits in travel and its sub-sectors. Add to that travel’s larger role reflecting the geopolitical realities of the world, and what emerges is a heady mix that continues to make travel among the most exciting sectors on the planet right now.
But to understand the innovation, you have to peel the layers a bit.
For all the hype that airlines receive as the highest profile sector in the travel industry and for all the media attention online travel companies and new digital tools and services get, the future of travel — at the intersection of design and user-experience — is being quietly charted in hospitality.
The global hospitality industry, comprised of the organized hotels sector, the vacation rentals sector, and the still-nascent sharing economy sector, is driving all innovation in travel now.
2. For the first time since online booking of travel became mainstream, hotels are being rewired and rethought from top to bottom, and every obvious part of hospitality is being turned over, questioned, and retooled.
As consumers become self-serve and mobile-dependent, new models and approaches to both customer relations and local discovery are emerging, and hospitality is the big crucible where all of this is playing out.
We see this at every touchpoint in the hospitality industry: From how hotels are building direct links to customers in digital, to how customer service is being rethought through social and mobile tools. Within the confines of a property we see this in how hotels are redoing lobbies and how customers check in, as well as everything about the customer experience inside a hotel room, entertainment inside the hotel, and food & beverage offerings, too. Brands are also questioning customer interaction pre-, during and post-trip, as they examine and rebuild it in new ways.
Most major chains in the hotel industry are figuring out the right mix of digital and human interactions to create guest experiences that are personalized enough while respecting privacy, as digitally-empowered consumers demand a lot more.
Hospitality is also leading the charge to make Wi-Fi free, and this unleashes a number of possibilities on all fronts for building on top of pervasive connectivity inside their properties and out into destinations.
As Chris Silcock, SVP of Hilton Worldwide told Skift earlier in the year, “Because of connectivity levels, because of the adoption of the smartphone, because of the data that is available — and people’s willingness to share data, we, right now, have the opportunity to reimagine the hospitality experience, combining the physical and the digital.”
A huge appeal of disruption in hospitality is its size, diversity and ability to innovate with a mix of virtual and physical realms, something that other sectors of travel lack, or are unable to do for various legacy reasons.
Steve Cheney, SVP of Business and Operations at Estimote, @stevecheney
Expect a WhatsApp-sized social acquisition from Google. Likely Pinterest for $20B or Line for $10B. Disastrous results internally with social along with fear will hasten this.
Financings for on-demand services will keep accelerating. Uber will start buying, looking for its YouTube / Instagram. Amazon will make vs buy.
New Apple devices will delight people all over again. The Watch will outperform. So will Apple stock. iBeacon as a platform will surface magical ambient experiences.
Penny Herscher, President & CEO of FirstRain,@pennyherscher
Business analytics will get more personal: End users will expect their enterprise applications to provide analytics tailored to their individual needs, roles and goals within their company;
More big companies will break up: 2014 saw the break-up of some large tech companies, and 2015 will see more of this as activist shareholders take a more dominant role and businesses fight to cut unnecessary bureaucracy;
Executives will go on the offensive to get more women: 2014 pushed the issue of women in tech to a tipping point, as executives were confronted with the reality of gender disparity through highly publicized stats and reports. In 2015, these executives will go from defensive to offensive in an effort to diversify their workforces—and recruit the best talent from both sexes.
Vanessa Alvarez, Marketing and Enterprise-Lead at Amazon Web Services, @VanessaAlvarez1
Women in technology-A long standing issue, we’ll see a significant increase in not only women launching tech startups, but the old guard VCs also starting to acknowledge that there is a large untapped opportunity to invest in women. The success rates to date are proving that women-founded businesses and in leadership roles are not to be overlooked. STEM programs will continue to evolve and bring in more girls and young women into the technology world.
Internet of Things-the IoT was very prevalent in 2014, but more of what it might be. 2015 will define what the IoT really means. The emergence of wearable technology, trackable information (medical, health, athletic, asset management etc) will not only multiply, but will create a deluge of data, as the information coming from people becomes more real-time, more granular, and more precise. This will in turn provide valuable information for brands, as well as the medical field. Real time analytics will be critical, as faster time to market becomes more of a competitive advantage for companies. It will accelerate progress in the medical industry, and will make a big difference in life threatening scenarios.
Shaun Rein, Managing Director at China Market Research Group, @shaunrein
Top Positive Trends:
1) Mobile services & handset innovation coming out of China from Xiaomi
2) Major Chinese internet players buying stakes in Silicon Valley start-ups, a la Baidu and Uber
3) Chinese tourism to South Korea, duty free shops there will do well
1) Collapsing Macau gambling revenues because of China’s anti-corruption campaign
2) Russian outbound tourism, disaster for resorts like those in Sanya, China that cater to them
3) US Tech firms like IBM, Cisco that will hit rough patches because of Chinese security concerns
Jonathan Taylor, Founder and Managing Partner of Entrenext Ventures, @visionik
Oculus Rift – While it seems odd to call a $2b acquisition a sleeper, Oculus has been in attention-hibernation since Facebook closed its acquisition in July. One ride in an Uber made me realize it was game-changing. One session with an Oculus-powered Samsung Gear VR made me realize virtual and augmented reality will change gaming, collaboration, construction, healthcare, and practically every other industry. Oculus gives Facebook a multi-year head start on this revolution.
Sony – while the company has been hit hard by The Interview “hackening” and may ultimately lose its motion picture subsidiary because of it, Sony is pulling way ahead on other fronts. The Playstation 4 beat out the Xbox One in 2014 sales and is going into 2015 with great momentum. Sony’s 4K TV technology and content are unmatched – and growing. Sony is also first to market with a 2000+ Pixel Per Inch (PPI) screen that products like Oculus need to go mainstream. Sony is making visionary bets and the returns are just starting to come in.
Savant – KKR invested $90m in this quiet home-automation vendor in September. Historically Savant is known for high-end automation projects including Steve Jobs super yacht (in fact Jobs is listed as the primary inventor in a 2013 patent filed by Savant). Inertially Savant is using its KKR funding to move into the broader consumer market. Their new product pipeline makes me wonder if Jobs’ spirit actually lives on at Savant.
Francine McKenna, Freelance writer and CPA, @retheauditors
The New York Times’ financial troubles are far from over, as I explained in Forbes right before the media company announced its 2014 third quarter earnings. Voluntary redundancies came up short by year-end so 20+ employees became involuntary layoffs. The paper said it would cut, in total, more than its original stated target of 100.
I predict more layoffs in 2015, more disappointing results and then, finally, a move by Mexican mogul Carlos Slim who owns 17% of The Times shares. That stake came after Slim lent The Times $250 million at usury rates in 2009. Although the loan was paid back in due time, warrants gave Slim the chance to infiltrate what is otherwise majority rule by the Ochs-Sulzberger heirs who control The New York Times Co, publisher of the newspaper, through Class B shares..
Carlos Slim told The New Yorker in 2009, “Our business is to be the carriers. We think paper will disappear, but not the content. The content will be more important.” Slim thinks newspapers are utilities, conduits for supplying content like his telecom company, Teléfonos de México, provides communication capabilities. Utilities make monopoly profits not miniscule ones. The Times’ own David Carr admitted in an end of year column that the media industry’s “very tough math will be squarely on Mr. Thompson’s desk in the coming year.”
Daniel Ernst, Principal at Hudson Square Research, @danielhsqr
Apple | AAPL | Buy
While another 40% run seems unlikely for 2015, we continue to like Apple. The Apple Watch is by far the most anticipated new device coming this year, and although it won’t be as big as the iPhone, it will sell more than the bears think. The iPhone 6 and likely 6s will continue to dominate at the high end of the market, and this will be the first full year for a larger sized / higher ASP device in the mix. New products based on Healthkit and Homekit have yet to launch, and Apple continues to allude that new product categories and services are still in the works. Core cable/broadcast channels are becoming available to license for delivery via the Internet, there will be several competing services, Apple is well positioned to bring all of that together in a way that makes sense to consumers and specifically, to their 500M iTunes account holders. At 14x earnings, Apple is not a cheap as it was, but its still a discount to the market at 16x.
Netflix | NFLX | Buy
Expansion abroad masks earnings at home, but we think Netflix’s investment in content and distribution is the right move; Netflix is building the first truly global video network, they had 53M subs at the close of 3Q; likely ended 2014 with 57M, and in 2015 should approach 70M – making Netflix not only the largest Internet video service, but the largest video subscriber base period. They did slightly miss sub growth estimates in 3Q, but that’s not their strong period – they add the most number of subscribers when its dark and cold outside – during 4Q and 1Q. Content is getting better every day, they are new to original but have quickly earned Emmy nominations, and their licensed content now includes everything from AMCs Waling Dead to starting in 2016, Disney’s Star Wars. Netflix currently trades for $335 per total subscriber, and subscribers are growing north of 20% annually – so even without multiple appreciation, the shares should push higher with growth.
T-Mobile US | TMUS | Buy
Sentiment for U.S. Wireless could not be worse, and TMobile fell 20% in 2014, largely as a result of the Sprints regulatory induced aborted merger attempt. Ultimately stocks follow results, and the results that matter in wireless are subscribers. The U.S. market is fully penetrated, and T-Mobile’s base is up 21% Y/Y this year, and we don’t expect them to slow down. Given the upfront costs of adding subscribers, T-Mobile is under earning, as a result of growth, but even still the shares are around 6x EBITDA vs. 6x to 8x for its peers.
Blackberry | BBRY | Sell
At its peak in FY12, Blackberry generated $4.1B in very high margin service fees paid to them by wireless networks – under new contracts that revenue stream is going away, and in that services revenue will be $1.6B this year and around $900M next year. Those service revenues have accounted for nearly all of their profits over the last few years as handset sales declined and handset margins along with it. While hardware is back to above breakeven, its very hard to make significant hardware margin at low volumes, especially at mid-market pricing. Meanwhile, Blackberry’s market savvy new CEO is attempting to convert the company into an enterprise SAAS provider of mobile communications management. At its peak, Blackberry generated $300M per year from enterprise – primarily software maintenance fees on Blackberry servers. Blackberry has set a goal of doubling enterprise revenue this coming year from $250M to $500M. In other words, they want to generate an incremental $250M from this new SAAS model. Their competitors, Good, Mobile Iron and Airwatch (acquired by VM Ware) are doing between $100 and $150M annually selling similar software. Meanwhile, Apple is getting more aggressive in the enterprise with IBM, and Google and Microsoft are hardly idle in the space. We think Blackberry will miss their target, and their core user base will continue to erode – even if the diehard keyboardist remain, profits will be hard to come by.
2015 – The Year of OTT
First there were the big 3 Broadcast Networks– that took TV from the 40s to the 70s. The cable networks led television growth from the 80s to the present, and now led by Netflix and supported by Amazon Hulu and perhaps YouTube, the 3rd Network – the Internet is on the rise. Meanwhile both broadcasters (CBS) and Cable Nets (HBO) are seeing the light of day and going online. In addition, several bundles of Internet delivered channels are launching – Sony’s Vue is in beta now, and DISH is expected to launch an OTT service in 1Q. In February, the FCC is expected to rule on Net Neutrality, and even if they don’t give the upstarts as much as they want, the ruling will provide some clarity. In addition, the FCC has floated a proposal to mandate broadcasters and cable networks must license on fair and non-discriminatory terms their content to Internet delivered providers just as they do to cable and satellite providers. Further, with Comcast hoping to merge with Time Warner Cable, and with AT&T hoping to merge with DirecTV, none of those firms can be seen as bad actors – at least not this year. Although, the end number of true cord cutters (vs. cord menders and core neverers) may not be that large at the close of 2015, the ground work will be well laid out, setting the stage for future growth, and the unwinding of the cable bundle. As noted above, with those pieces in place, like with music, we think Apple is well positioned to make sense of what will likely be a fragmented set of options. And finally, we strongly expect Netflix will be core ‘must’ have part of any consumer package of Internet delivered television.
Tae Kim, Yahoo Finance Contributor, @firstadopter
1) Take-Two Interactive Software (TTWO) will reach grand new heights later in 2015. Their new intellectual property Evolve may start the year off with a whimper, but Take-Two’s Rockstar will announce the sequel to Red Dead Redemption and the anticipation for this enormous blockbuster hit will be all that matters.
2) YouTube’s total domination of internet video is still being under-estimated. Traditional cable and TV companies will suffer greatly as the demographic shift of young people watching YouTube over TV is a mega-trend
3) Netflix subscriber growth will decelerate materially as the U.S. market becomes saturated.
Rob Majteles, Founder & Managing Member, Treehouse Capital LLC, @treehcapital
My break-out theme for 2015 ? Personalization. Data, content, e-commerce, medicine
Start-ups focused on predictive analytics
My overall view is negative — repricing risk, first in debt markets and then in equity will unwind a great many theories and valuations. Until I can see through this more clearly, not finding myself excited about break-outs.
Jeremy Greven, Managing Director of Six Squared Capital, @jeremygreven
$CERN Cerner has been taking a kicking over the last few years at the hands of Epic, a huge Verona Wisconsin based private EHR vendor. After spending huge sums to implement, Epic adopters are now starting to question whether they will ever see the ROI promised during the sales cycle. Healthcare IT is a small community and as the stories continue to come out we may start to see some big wins for CERN.
$WBMD Analysts may believe that their 2015 estimates are too high but I believe 2015 will be the year we start to see them revealing the dawn of some new monetization strategies. With over 3.17 billion page views per quarter they have an incredible audience to work with.
SZ DJI Technology (http://www.dji.com/): One word: Drones – or more technically, UAV. I believe 2015 will be the year of the drone. With the recreational space exploding, China based private company DJI is the world’s largest commercial drone manufacturer by revenue. Their Phantom drone retails for around $1000 and is becoming synonymous with everything good (and bad) with the industry. Nearly every time you read about a drone incident gone wrong (ie shot out of the sky with a shotgun or crashing in Manhattan) it’s a Phantom. Today their most popular usage is usually photography related, but as the price drops, so to will peoples’ creativity in deploying them to help solve everyday problems. Coming soon to a sky near you…