A tremendous year is upon us.
That is how most prediction or outlook articles start off. A promise that THIS YEAR will be significantly different than past ones and they pour into a long list of why you need to be excited. To be fair, if you follow the philosophy behind Louis C. K.’s fun rant about how “Everything’s Amazing and Nobody’s Happy”, then you could argue that 2015 really will be the best year ever. We are all lucky to be alive at this point in history.
Hyperbole aside, I do believe that this will be a special year. As explained in this outlook, there are too many industries and movements coming to a peak or after a decade in obscurity finally gaining momentum this year, for it not to be tremendous.
Below you will find a collection of thoughts, some based on research and user interviews, some based on countless beers & coffees with entrepreneurs and VC’s, and others that are merely my personal assumptions. If you see a * it means it’s a personal note from me.
Baby Boomers are The New Millennials
2015 will be the first year where a substantial amount of new resources will be poured into the development of new devices, apps, processes, and entire industries servicing the aging Baby Boomer demographic.
Why? Three key reasons (….there are dozens of others).
1.) For the last twenty years, Boomers have watched in mass, as their parents begin to deteriorate and pass away before their eyes. They have seen beautiful minds shredded by Alzheimer’s and dementia and bodies torn apart by cancer and diabetes. Through all my interviews and research, one thing has become abundantly clear: Boomers refuse to age the way their parents did. Boomers do not want to deteriorate the way their parent’s bodies did, look the way they looked, feel the way they felt, use the same equipment they used, etc…
2.) In the U.S. alone, 76 million Boomers were born between 1946 and 1964, with 65 million alive today. That doesn’t take into account the 1 billion globally. It’s pragmatically impossible to ignore the wants and needs of demographic that massive, especially when they control ¾ of all the wealth. They have the ability to pay for premium devices, premium services, and represent unmatched buying power among any other demographic for discretionary purchases. Additionally, these will be first time purchases for most of them, so the argument of it being a waste of time to target older buyers with preset brand & buying preferences is irrelevant.
3.) The next yet-to-be-developed trillion dollar industry will emerge to service Boomers. It might be a whole new category of smart devices or software. It will most likely not originate from young founders. There is a common misconception that first time founders are typically 22 yr. olds sitting in dorm-rooms. The real average age? 39 years old. This is a wonderful thing, as empathy for the true needs of Boomers is much more likely to come from a 42 year old who has witnessed the digital revolution hands on and is starting to get their first taste of aging, than a 22 year old trying to ride the Snapchat valuation rocket with their sharing app.
The Startup Opportunity: The need is very real for Boomer startup incubators that can guide startups and give them hundreds of hands-on “Boomer user testers”, startup <-> Fortune 500 partnerships to speed mass adoption of new developments to this demographic, and a large swatch of entrepreneurs willing to take a meaningful jump into the market for Boomer focused products / services. Someone will emerge as the “Apple of human mobility” with next gen walkers. Someone will be the “Google of in-home care and remote medicine” allowing Mom & Dad to remain fully independent into their 90’s. In the luxury market, there will be the “Prada of camouflaging worn medical devices”. Don’t expect the current incumbents to solve these issues. They will most likely come from the same place they normally do, enterprising entrepreneurs who see an unmet need.
Connected Home Becomes Affordable. And Overwhelming.
Has Walt Disney’s Epcot housing dream arrived? For those who haven’t visited the park, one of the attractions used to be a look at what the future of the home might be, which featured a visionary future of full home automation, positioning its occupants more as “passengers in the experience of home”. As of 2013, the old Epcot exhibit and its replacement, the newer VISION House, had already become a reality for the earliest of adopters and the wealthy (typically a combo of both). In 2015 it’s poised to start trickling throughout the middle class and average tech consumers.
1.). Security of the connected home will become a real issue. The wonderful power of smart devices is just that: they are smart. The risk of smart devices is just that: they are smart. Nearly all smart devices out there or in development are connected to the outside world either directly through wi-fi or via Bluetooth to a device that is connected to wi-fi or cellular data. Phillips found this out the fun way with their Hue Bulbs being hacked. But that was a minor case that affected something rather benign like an LED bulb. I’m more interested in a group of hackers turning everyone’s Nest up to 105 degrees in Florida in July and down to 20 degrees in the Wisconsin in January. Opening everyone’s Chamberlain garage, while simultaneously turning off their home’s smart interior lights. While most scenarios will pose debatable physical danger (…minus things like disabling Nest smoke alarms), they will certainly cause temporary terror in the minds of their owners. Your home “consciously” making bad decisions on your behalf is new territory.
2.) Expect the first major hack of an Internet-of-Things company to lead to heavy hand of the government taking notice and holding discussions of what the implications of a connected home are from a regulation standpoint. (*Updated: Speak of the devil!) The real discussions will only happen after the first major hack, which will most likely happen this year because of steadily increasing adoption of these devices.
3.) Connected and automated home will begin to become affordable. By this holiday season, you will start to see prices on fun products like Nest, Wally, August Smart Lock, LIFx, Sense, Big Ass Fans, etc… drop significantly, from their uncomfortably high current prices. Many manufacturers will come out with lower cost models as well (…think iPhone 5c). Not wanting to miss the train, everyone from LG to Belkin to Logitech will launch “me-to” versions of all the cutting-edge products above, at a fraction of the cost, thus providing even more downward pricing pressure.
The Startup Opportunity: Continuous reinvention of dumb devices into smart ones represents a trillion dollar industry globally over the next decade. Platforms like Kickstarter and Indiegogo, combined with cheap 3D printing and CNC milling, means there is an unprecedented opportunity to think up a connected smart device and make it a reality on limited funds. In 2015 a quickly increasing number of entrepreneurs will chase this dream because the allure of creating physical products is so cathartic and the “Maker Movement” is becoming more mainstream tech.
One the software side, lifestyle and the experience curating startups will emerge. What is the point of having a dozen connected home devices if you can’t program in a beautiful symphony of events based on mood, time of day, events, security situations, etc…? Sure, platforms like IFTTT offer duct-tape like solutions, but highly specialized and eventually AI enhanced platforms will emerge solely for the connected home space.
*Yes, I realize not everyone will be a character from a Chuck Palahniuk novel. Most scenarios will be more like “Movie Night”, “Christmas”, “Oh shit, Mom’s stopping over to visit!!”, “Dinner Party”, or “Family Game Night”.
“We Gonna IPO Like It’s 1999”
There will be a race to IPO this year to beat the ever-looming stock market correction in 2016 and global economic malaise predicted for 2015 via slowdowns in China, Russia, and other critical regions of the globe. Until then though, it’s going to be Champaign and caviar year for investment bankers and a new generation of freshly minted entrepreneur millionaires and billionaires.
The most interesting part about this year’s IPO explosion is that an increasingly greater percentage of them are not in The Valley. As Steve Case likes to say, the “rise of the rest” is impossible to ignore now. Here are a tiny handful of the rumored IPOs this year:
Actifio (Boston), Airbnb, Auction.com (Los Angeles), AppDynamics, Applause (Massachusetts), AppNexus (New York), Automattic, Bit9 (Massachusetts), Box, Cloudera, CloudFlare, CreditKarma, DataStax, DataXu (Boston), Deem, DocuSign, DropBox, Eventbrite, Evernote, Fanatics (Jacksonville), Gilt (New York), Good Technology, Host Analytics, Houzz, InsideSales.com (Utah), Jasper, Kabam, Kaltura (New York), Lithium, Lookout, MapR, MindBody, MongoDB (New York), MuleSoft, Nutanix, Ping Indentity (Denver), Pinterest, Practice Fusion, Pure Storage, Qualtrics (Utah), Razer (San Diego), Slack, SnapChat (Los Angeles), SolarEdge (Israel), SpaceX, Spotify (Stockholm), Square, Stripe, SurveyMonkey, Tango, Uber, Veracode (Massachusetts), Vice (New York), Xero (New Zealand), Yext (New York), Zuora.
*Important note: As much as it seems like this year is stacking up for dozens of tech IPOs, there is an 800lb gorilla sitting in the room. The alleged venture capital valuation bubble might favor many of these companies to stay private and keep raising additional rounds at higher valuations in the private market in 2015. Eventually, investor pressure will drive them toward a liquidity moment, but that might not be until 2016, especially with the interesting trend among founders taking cash off the table in these gigantic private rounds. *Though some argue it’s massive public funds and corporations muscling up these valuations, not the VC’s.
Big Data is Dead. Long Live Better Data.
Luckily since Big Data hype reached its peak in 2012-2014, the focus can permanently shift toward better and smarter data in 2015. The conversations inside Fortune 500 boardrooms and startups alike, will center around topics such as, “What are we actually doing with all this data? How is it making the company healthier and how are we accurately measuring that? Do we even know if we are asking the right questions? …. Who talked us into this expensive Big Data strategy again?!??”
1.) This year represents the fundamental shift toward getting meaningful insights from large quantities of data. The days of gathering as much data as possible, chucking it into noSQL databases, and hoping magic & profit comes out the other end. Now managers and directors, at all levels — all across the organization, want to know how they can easily these collected data points to: gain unknown insights, manage their teams better, develop new products, measure and track outcomes, and in general raise their quality of their daily life.
2.) Enter the next big phase of Big Data: true self-service and AI powered insights. There will be a future where any decision maker, at any level of the food chain, will be able to quickly and accurately spin up Big Data based intelligence with the same level of convenience they spin up a cup of coffee. We are not there yet. Additionally, these new tools will be intuitive and far cheaper than the existing options. The consumerization of big data is well on it’s way. There have been plenty of startups already looking here for years, but 2015 will be the Cambrian explosion for this space. Look for significant seed and Series A funding rounds this year all over this sector.
3.) Big Data portability and agility will have a big year as well. The Big Data movement has resulted in thousands upon thousands of expensive contracts being signed with vendors like IBM, Cloudera, HortonWorks, Oracle, and Splunk (just to name a few). Enough time has gone by that many of these contracts are coming up for renewal or review and many companies aren’t happy with the results so far. They want to switch, only to discover, it’s not as if you can simply “drag & drop” your data/reports/charts/settings/workflows from one to the other. This to me represents a beautiful opportunity for startups and consultancies that can make this transition smooth. Plus countless exit opportunities for these startups to be acquired by the very companies they are bridging.
The Startup Opportunity: Self-service Big Data analytics startups will be sprouting up like weeds. Additionally, you will see a growing class of new startups emerging that represent the beginnings of true AI powered insights delivered to decision makers, that are platform agnostic and intuitive out-of-the-box.
More Target Size Data Breaches Leading to Talk of Federal Regulations
Expect the black market for stolen data to become more refined, efficient, and lucrative in 2015, leading to even bigger and bolder breaches like 2014’s Target, Home Depot, and Staples hacks. Like any other industry, when huge payday moments like Target happen, it shifts the landscape for the players involved. In this case the players happen to be criminals and nation states, but the same dynamics apply.
The actors involved have now had plenty of time to figure out how best to monetize these massive stolen info sets, how to properly manage these massive heists (millions of records at a time…), and how to maximize their payday before the stolen data quickly becomes disseminated and loses value. 2014 made hackers smarter, quicker, and in the end, will make them bolder this year.
1.) Personal security awareness and pro-active protection will be a top five issue this year. The average person has watched news report after report about stolen data, sometimes right at the point-of-sale, and just as many have received a letter or email informing them that their own personal info has most likely been stolen. *Side note: I received four letters / emails in 2014 alone, notifying me that my credit card was potentially compromised (Target, Staples, and two online retailers.).
2.) “That can’t happen to us…. right?” The phrase uttered in every Fortune 500 boardroom in the U.S. after the Sony hack. A fun report by the Ponemon Institute in Dec. 2014 found that a whopping 71% of corporate employees said they had access to information they should not be able to see. A part of the reason internal corporate security is so lax, is because for the most part, there was no mass public humiliation associated with it. A breach would occur, management would find out, it would be swept under the rug, and worst case scenario is that it a mention would be buried in one sentence in the quarterly 10-k. Polarizing companies like Exxon, Altria, Halliburton, etc… expect and prepare for hacker groups to work tirelessly at penetrating their systems and attempting to humiliate them. Now even the most benign Fortune 500 co’s like a Wegmans or Kimpton Hotels or Hasbro have to start thinking, “Are we actually safe?” No, you are not.
3.) The human element. This is why information security sucks. It’s us, not the database, the server’s OS, the firewall, etc… We are what makes 100% information security impossible. The masterpiece example is Stuxnet. Not even a secure LAN sitting behind an air-gap is safe. Why? Because your employees are careless enough to grab random USB drives at conferences and stick them into high priority work computers. The U.S. and Israel executed a perfect hack that counted on human error.
The Startup Opportunity: On the personal front, the most obvious hot spaces will be: mobile security (example… better processes than the current password management options and ones that are truly seamless between mobile and desktop). Also, the proliferation of secure digital wallets (Google Wallet and Apple Pay leading the way). The less obvious ones, will be a whole hotbed of services around: 1. Delinking accounts (When is the last time you took an inventory of how many logins your Facebook and Google are linked to?). 2. Simple and seamless experience around spinning up fake accounts and profiles. 3. Continuation of the massive opportunity for complete identity management (online and offline) that will become only more and more critical each year.
On the corporate front, the opportunities for startups will be highly lucrative. Whether it’s managing the ever-increasing security problem/opportunity around BYOD or securing cloud assets, 2015 will be a record year for investments into B2B security startups. Some more fun ones areas of corporate security: AI powered security that profiles every employee’s typical behavior patterns and spot leaks before they even happen, better & faster & seamless user authentication across all devices, and much more secure encryption methods (…since it appears that we can no longer blindly rely upon the security of SSL).
Standing Desks Get Their Moment in the Sun
As someone who uses a standing desk for two years now, I am bias. However, I was just as against them as many of you reading this article. My thoughts were that it was a passing fad, that the office furniture industry desperately needed a new product they could charge a fortune for, and that there was no way I could work while standing all day. What a silly silly trend I thought…
Then, at the invitation of friend, I tried it for a month. Day one, I remember scoffing at the sight of it and thinking, “this is going to be awful…” The results? Not only did my energy sustain throughout the day, but I started to lose weight. I also noticed my back wasn’t nearly as tight, my legs felt stronger after 30 days, my balance felt more astute, and I was no longer getting random dull pains in my calves & knees throughout the work day.
My reaction was that my results must be a one-off experience and not typical. Then I started to dive into the research and user interviews and was shocked to see how universal this experience was. That was two years ago and I was convinced standing desks were about to become a national craze. They didn’t. However, I believe this is finally the tipping point year.
1.) The cost is coming down dramatically. When I say dramatically, it’s not like a couple hundred bucks, but more like from $3000 down to $300. Thanks to successful Kickstarters and the maker movement, the affordable options are plenty now. Also, with Ikea entering the space, expect every major furniture maker to follow (…as the always do) and prices to plummet even more.
2.) The research is starting to pour in concerning the health costs of sitting. As any new trend arises, it grabs the attention of researchers, dollars are raised, experiments conducted, and you start to see the first big wave of results coming out. We are in that phase right now and it looks pretty awful for sitting down. We have known for decades that sitting for extended periods can be dangerous to your health, but apparently it’s worse than we thought.
3.) We need to move more period. The push toward standing desks is really a symptom of a much larger crisis: humans aren’t meant to sit still for endless hours at a time and our in-general sedentary lifestyle is killing us. The U.S. isn’t just the fattest country in the world because of what we eat (…it’s a huge contributing factor of course), but also due to our lack of activity. The sad truth is, as healthcare costs continue to skyrocket, there is a tipping point in the future where it is potentially no longer financially feasible to be obese and not take care of oneself.
The Startup Opportunity: Invent new types and styles of standing desks obviously… It goes beyond that though. The opportunities extend into anything that involves taking a stationary office worker and allowing them to be healthier during the workday. Apps and devices to remind them to move and incentivize via challenging friends & family, rewards, and even insurance discount incentives. Ways to adapt old office furniture or devices to simply make you move more. These are the tip of the iceberg for the multi-billion dollar market around office activity & health.
Additional Trends to Look Out For:
AI Sneaks Its Way Into Surprising New Places
As the tools to build AI powered products and enable machine learning become both more powerful and simpler to use, you will see a proliferation of AI into spaces where previously the financial costs of development outweighed the potential upside revenue of the tech. Two fun examples: The Grid, which is an AI powered website builder that takes any content you send it and assembles a website on the fly. Amy (x.AI) which is your digital personal assistant that communicates with your associates for you via email on your behalf (As a user myself, it’s creepily good at what it does…).
Enterprise Seeks More Efficiency via Emerging SaaS Software
There is roughly $2 trillion in cash on balance sheets of the Fortune 500. In particular, industries like Insurance and “Big Pharma” have tremendous cash reserves. Big chunks have been used for stock buybacks (…the laziest possible exercise for it, so of course the most common). Additionally, the mentality that “nobody ever got fired for buying IBM” is now passé. Industries like cloud storage & computing have brought a whole list of names to the table (like Cloudera and HortonWorks) that are just beginning to hit their stride and beginning to eat the lunches of the IBM and SAPs of the world. In 2015, the F500 will significantly increase investing in new software, external R&D, and buying up startups in swaths to crush internal problems. Translation, it’s an amazing moment in history for enterprise SaaS startups. Expect to see eye-popping valuations and dozens of nine-figure investment rounds this year in B2B SaaS.
Internet-of-Everything Becomes the Next “Please stop!!!” Buzzword
Always look toward the conference speaking circuit, “thought leaders”, and PR firms for the next buzzword they will want to cram down our throats. Since Internet-of-Things is becoming crowded in SEO results and social media, expect it to be quickly usurped by Internet-of-Everything because of the belief that its all-encompassing nature gives it a longer lifeline and broader usage.
Virtual Reality Starts to Expand Beyond the Bleeding Edge
Regardless of what the fanboys want you to think, 2015 will still be a very early adopter year for VR technology anywhere outside of the bleeding edge of gaming, healthcare, and wealthy techies. Yes, there are now several viable VR “DIY” kits for cheap and yes Google led the $542 million investment into augmented reality firm, Magic Leap. Regardless, VR investments and technology advances will explode this year and by 2025, hundreds of millions of us will encounter VR on a regular basis during our day. However, that does not mean these technologies are ready for mass adoption or affordable high-quality in 2015.
Interacting with Apps Stops Being Completely Native
This wonderful post from 2014 is a fun example of what the implications of how a “cards” concept that would replace notifications from individual apps, and creating an interactive stream instead. Beyond that, with more apps opening up functionality in their API’s and what appears to be Apple’s commitment via iOS8 onward to more interoperability, a whole new swath of startups will emerge in 2015. Many of them will promise a “single destination experience”. This is great news, because it will force all the existing native apps (…the likes of Twitter, Facebook, SnapChat, etc…) to improve their user experience, develop new functionalities, and other incentives to continue to use their native app. *Otherwise, I never intend on opening certain apps again if I’m not forced to.
We Reach “Peak” On-Demand (Get Bought, Merge, or Die)
2015 will be the year where we reach “ridiculousness” in the on-demand space. If you thought “Push for Pizza” was the peak, you have no idea what 2015 has in store for you. *As of writing this I know of seven new startups (either launched or launching shortly) for on-demand liquor delivery in Chicago. Those are just the local ones and just the ones I am aware of. Don’t get me wrong, on-demand is sexy. It hits on two of the most core characteristics of Americans: lack of patience and desire for convenience at all costs. (Also the universal human tendency to not plan ahead.) However, even if there are more venture capital dollars to go around than ever, there are too many startups in the same exact space, doing the same exact thing, and all trying to own 100% the market to be able to reach profitability. Expect to see a lot of doors shuttered, quiet mergers, and plenty of acqui-hires in this space in 2015.
The Smartwatch Category will Explode, Led by Apple.
This is probably too obvious to put on a list like this, but here it is anyway. Yes, it’s going to be a banner year for smartwatches. Every major consumer technology company will come out with one or announce they are looking into building one in 2015. Also, expect to see a lot of legacy watch brands (even the ultra luxury ($5000+) brands) partner with tech startups to launch new lines to attract millennials to their aging brands.
Drones Leave the Bleeding Edge at Last
In 2014, even though drones received an amount of media attention that you would typically reserve for presidential election, they were still mostly in the hands of the military, hobbyists, videographers, and assorted commercial uses. 2015 is the first real consumer year for drones as the prices, size, weight, and hazard level all quickly decrease and the availability, power, flexibility, and uses cases rapidly increase. Everything from wrist mounted selfie drones to home security systems with roof-mounted drones for monitoring. It’s all coming.
Direct-Sales Specialty Fashion Finally Hits Its Stride (Especially for Menswear)
There have been hundreds of small independent fashion brands around the world for decades now. Bonobos was one of the first to master direct sales online of their high-end clothing, but now there are hundreds of new players in the space. Many have sprouted out of successful Etsy stores, while others are disgruntled fashion executives who knew they could do it better. Some like Stock Mfg Co. have the angle of 100% Made in America, while others like Combatant Gentleman claim to raise their own Merino wool sheep. Regardless, in 2015 expect to consistently discover new, mostly eco-friendly and “artisanal” brands popping up regularly. I also expect to see some eight-figure funding rounds in this space, like the insane year of coffee funding that happened in 2013.
Yes, This Will be a Tremendous Year
Hopefully that gives you an idea of what I am so excited about. Do you agree with this list? Find out anything new you hadn’t heard? Did I miss something obvious? Did I get something terribly wrong? Please let me know at @SethKravitz