Nothing more than a few thoughts I have going into 2020.
These 8 items are places I’m putting real bets:
Voice Tech Takes Off
Podcasting was the mousetrap. With new tools, its easier for anyone to create voice content – even easier than written content via blogging.
At the end of 2018 there were 70k Alexa Skills. As of October 2019 that figure had grown to 100k.
By the end of 2020, I expect 200k+ Alexa skills to be available as tools like Voiceflow make it easier for non-developers to launch engaging voice experiences and hardware products make it easier to consume voice data including skills.
On the hardware side, expect to see new Airpod sales break 90m units sold in 2020 up from ~65m sold in 2019. Many users wish they could just “leave airpods in my ears all the time”. While we can debate if thats a good thing for society, its a clear indicator that voice has potential to be a more powerful medium than blogging is today.
You’ll see consumers and businesses start to complain internally about how much they spend on subscriptions. On the B2C side it’ll be Disney+, Netflix, and Showtime (I’m a Billions fan. On the B2B side companies are seeing in 2019 close out that total spend on subscriptions per employee is skyrocketing ($10-15k per employee per year a recent CEO shared with me).
So what happens?
Companies that sell software subscriptions to other companies need to price totally and only on real consumption driven data points. Today, many B2B software companies could look at their top 10 paying customers and realize that several of them haven’t even logged on in the last 30 days.
They’ll debate internally whether to reach out to the customer. Then a sales rep who is still collecting commissions will shut the idea down for fear the customer will cancel when they realize they’re paying for something they aren’t using.
Very soon you won’t see seat based, or feature based upselling on pricing pages. It’ll be very simple pricing based off the #1 value metric the company delivers.
For Data Warehousing company Snowflake, pricing is based solely on usage based, per second pricing. (Watch out for a very successful Snowflake IPO in late 2020).
If you could only price around one value metric, what would it be?
Unemployment figures are meaningless
Ray Dalio explains in his “How the Economic Machine Works” youtube video that world economies depend on 3 graphs: Productivity growth, short term debt cycles, and long term debt cycles.
So what if productivity growth is accelerated because less-efficient humans continue to be replaced?
Amazon “Go Stores” eliminate need for the 3.6m cashiers employed worldwide as of 2018.
Elon Musk’s electric trucks reduce need of 3.5m truck drivers currently employed in the US.
You end up in a world where productivity growth is high, but the # of unemployed continues to grow rapidly.
We shouldn’t fight this unless we want productivity to stagnate. Increasing minimum wage will only incentivize employers to replace, now more expensive labor, with automation faster.
I don’t know what the solution to this is. Is Universal basic income the answer? Any YangGang fans here? I don’t know.
What I can tell you is measuring unemployment and bragging about how low it is on cable worked in an industrial environment where more bodies working directly correlated to productivity gains.
That correlation doesn’t exist anymore. Someone invent a new number.
If You’re Not Creating Media as A a Company, You’ll Die
Chris Savage and I discussed this in depth over coffee at Cliff House in maine this past quarter. His story helped solidify my thinking here.
If you aren’t doubling down on what you stand for as a company by creating media around it, you’ll drown in noise.
Wistia has passed $40m in revenue and is now launching its own original shows via its Series page on its website. Shows like Brandwagon and One, Ten, One Hundred are addictively being consumed by its user base.
Mailchimp is buying up indie content related to entrepreneurship and publishing it under Mailchimp Presents.
“Creating this original content came out of a lot of iteration and experimentation,” said Mark DiCristina, the company’s head of brand and Mailchimp Studios. “We can make ads all day long. But creating stories about entrepreneurship is a much different conversation.”
Whether its podcasts like X, events like Y, or original content like Mailchimp Presents, brands that don’t build in house media will continue to spend more and more on noisy, highly competitive channels like traditional ads in 2020.
Creatives Get Paid More Than Developers
Writing code ultimately is about recognizing and developing patterns. Outside of the top 1% of developers, the amount of no code tools and coding courses today make is possible that almost anyone can code.
Whats very difficult to hire for is imagination and creativity.
“Imagination is more important than knowledge,” says Einstein.
Expect salaries for creatives to rise rapidly in the 2020’s as employers realize that big imaginations and bold creative ideas is how they’ll create lasting moats in the marketplace – moats that the likes of Buffet will love.
War For Creatives Wallet: Invision, Figma, Canva
As Creatives become more important, they’ll have more budget and the “designer tool” ecosystem will flourish even more than it is today.
On the quick to use, not enterprise side, you have huge hits like Canva. On the enterprise side, you have serious battles happening between giants like Invision and Figma.
Both make it easy for designers and product thinkers to pass specs, wireframes, and full mockups off to developers.
Look for this battle to continue to heat up.
Professional Services Grow In Popularity
Many investors hate seeing funded companies spend time on professional services. They’ll complain about “low margin services revenue” at board meetings.
If you’re a founder who’s heard this, do this:
Download all your customers and sort them into two categories:
- Those that you’ve spent time doing professional services for
- Those that you’ve don’t no professional services for
You already know this, but you’ll see that the professional services cohort likely has higher activation rates, usage rates, renewal rates, and lifetime values than the cohort you did not professional services on.
Those founders who are shaking their heads “yes” as they read this should double down on it in 2020 onward.
Those founders who continue to listen to their 100x or nothing boards, should ignore their investors advice and start getting customers to pay for services work if it helps you drive activation. Over the long term, it’ll prove valuable.
Founders Can Get Money Cheaper
As older banking institutions start to realize that sticky customers can be modeled and that those customers can mean multi-year revenue streams, you’ll see them offer friendly terms to founders with no physical collateral.
Today, I count about 50 serious firms doing real deals with software founders.
With a standard set of metrics that the industry generally agrees on, you’ll start to see billions more dollars of debt capital flowing into software companies when founders realize they can use this capital without selling equity.
Traditional VC’s need not worry, there will always be companies that can’t raise debt and will need your help to scale fast and more aggressively than what a debt provider could support.