Thursday, May 15, 2008

The Top 10 Tech Trends

At The Churchill Club: The Top 10 Tech Trends
Posted by Eric Savitz

I’m at the Fairmont Hotel in San Jose tonight, for the Churchill Club’s annual Top 10 Tech Trends Dinner. This is the club’s 10th annual tech trend panel. Making the picks:

* Steve Jurvetson, Draper Fisher Jurvetson.
* Vinod Khosla, Khosla Ventures.
* Josh Kopelman, First Round Capital.
* Roger McNamee, Elevation Partners.
* Joe Schoendorf, Accel Partners.
* Tony Perkins, of Always On, is the moderator.

Perkins, McNamee, Jurvetson and Schoendorf have done this before. Kopelman and Khosla are the panel newbies.

Apparently, you can watch this live at

Or you can read along. Here’s the pundits’ list of trends, with some responses from their fellow panelists (It’s going to be a l-o-o-n-g post):

* 1. From Steve Jurvetson: “Demographics are destiny, creating opportunity.” Baby boomers are an opportunity, including an “eBay for information” that exceeds the market for physical goods. This is a U.S./Canada/U.K. trend. Baby boomers as the first Internet savvy seniors. Smart, active, group, entering AARP age. 75 million of them, half the U.S. workforce. In 2025, the entire country will look like Florida does today. Nothing will change that. Demographics are destiny. Over have of businesses and franchises are started by people in this group. At home, educated and Internet savvy. Services online will exceed market for goods online. Another market: the mental exercise market. If you are 35 or older, cognitive decline is at the same pace as 80 year olds. Khosla said he agrees on demographic trend, but not the opportunity; he doesn’t think it deserves to be in the top 10. McNamee says it could be an opportunity if you can package it. Schoendorf notes that people may be in retirement as long as they worked. He says it will create opportunities.
* 2. From Vinod Knosla: The mobile phone will be a mainstream personal computer. With built in projector. Authentication. Credit cards on SIM cards. ID cards, passports, drivers licenses. Any information you need. Khosla says he keeps pictures of his passport electronically on his phone. He says people will be less likely to carry their laptops. Come near a computer, and physical hard drive will be yours, including half-sent email message you left at home. Lose the phone, and all the information is on the network. Imagine what you want to do, and it should be available anytime. Projectors in cell phones in next two years. More than one camera per cell phone; high priority for Texas Instruments. Critical ingredient is high speed networks, which we will have in next 2-3 years. Jurvetson says the trends are already playing out, other than the projector piece, particularly in Europe, where cell phones are 8% of credit card payments. McNamee says Asia is where most of that functionality is already embedded; he says the carriers and the government puts this projection further out in North America. Schoendorf says he believes the trend; he says a good way to lose money is to bet against Vinod. “I’ve learned to listen when Vinod says something might change,” Schoendorf says.
* 3. From Josh Kopelman: The rise of the “implicit” Internet. Today your permanent record exists; you create a trail of data exhaust, digital bread crumbs. Implicit data that exists in silence. Movie rentals, restaurant reservations, books purchased, Web sites visited, etc. All of this data existed in silence. No easy way until now to benefit from the data; but the silos are coming down. Google, Yahoo, Facebook, Mozilla collecting data. Trend is that big wave will come to companies that are able to novel and new ways to deliver information by crossing these silos, with implicit data on the Internet. Use social networking data to improve search. Conversion of data exhaust will create value in new and interesting ways. All of the panelists seem to agree that this is a key trend. McNamee says he hopes Kopelman is not right, given the privacy concerns that are involved. The issue is providing implied consent to follow the bread crumbs, McNamee says. Schoendorf says this is an under 25 issue. McNamee notes that the trouble is that not only does Facebook know what I’m doing, but the Chinese government also knows. Khosla says it is an opportunity, not a problem. “Privacy is a red herring,” Khosla says. “There are rules and laws and ways to address the privacy issue.” Data reduction is an important need, Khosla says. He has a secretary to do it. Khosla says it is a critical need and huge opportunity.
* 4. From Roger McNamee: Betting on smart phones: The mobile device migration to smart phones from features phones will produce even greater disruption than PC industry moving from character mode to graphical interface. Used to be just Palm and Research in Motion. (Note that McNamee’s firm is a large investor in Palm.) What you are really doing, is put in real software environments, with applications layer that separates network from physical device. Phones far more pervasive than PCs. Will take out Motorola. One of LG, Samsung or Sony Ericsson as well. Will be intensely disruptive. And it will hurt Microsoft. You can not make a great consumer product with unbundled operating system. It will be incredibly disrupted. In five years, half of what we think of as phones will do something far more profound than what we think of a phone as doing. Design centers will fragment. An Amazon Kindle is a smartphone, with 3G network behind it. A life changer for people who use it. Will turn billion unit a year industry on its head. Assume Nokia, Apple, RIMM will do really well. (And Palm will do great, he says.)
* 5. From Joe Schoendorf: Water tech will replace global warming as a global priority. The world is running our of usable water and will kill millions more in our lifetime than global warming. Darfur could go down as the first water war of the 21st century. And with 2 million deaths, might not make the top 10 list. One billion of 6 billion people do not have healthy water. We’re losing close to 1 million people a year under 5 years old due to dirty water. Imagine a 60 year drought in this state. Within 15 years, will be up to 3 billion people with a water problem. 70% of water used for agriculture; 90% for developed countries. If nano technology can work, and can figure out desalinization, can prevent many wars over the next 30 years. Missing the Al Gore for water. Khosla agrees it is important, but not that it is more important than global warming. Global warming is causal, Khosla says. In 25-30 years, will be rarer commodity than oil, and more valuable. Khosla says he is invested in two water companies, and looking for more. Schoendorf notes that T. Boone Pickens is selling oil companies and buying water companies.
* 6. Jurvetson: Evolution trumps design. Many interesting unsolved problems in computer science, nanotech, and synthetic biology require construction of complex systems. Evolutionary algorithms are a powerful alternative to traditional design, blossoming first in neural networks and now in microbial engineering. Near-term trend: year or two, components of microbial engineering products will involve some form of evolution. Design for evolution. Has been used in neural networks. In microbial work, cripple a microbe, so it can do the one thing it does better and better. To make industrial chemicals. Applied to analog circuit design. In the future, artificial intelligence. Most of the panel seem to have no idea what Jurvetson was talking about, really.
* 7. Khosla: Fossilizing fossil energy. Oil and coal will have trouble competing with biofuels. 99% of discussion on the topic is completely irrelevant to the topic. In 4-5 years will have production proof that can sell biofuel at well below $2 a gallon at today’s tax structure and no subsidy. Can’t imagine how big oil can stay in business if that is an alternative. Zero land needed to replace 100% of our gasoline. The other major issue is electrical power generation, which is coal and natural gas. One of his companies signed deal for 175 MW solar plant at costs below natural gas. Cheaper and less subject to commodity pricing. All of the panelists agree on that one.
* 8. Kopelman: Venture Capital 2.0. Venture capital has underwritten most of the transformative software and Internet companies over last 20 years. Changing economics will have dramatic impact on the venture capital industry, in particular for software and IT. Typical $400 million fund, to get 20% return, have to triple, and return $1.5 billion. Hitting point where we are seeing larger fund sizes. What happens: some real changes as the institutions see the returns. Wonder how much of expansion into green tech, nano, is people running to something, not from something. Khosla agrees on software specifically, but not innovation generally. McNamee agrees with the thesis; the issue for software and IT is very real, but does not have anything to do with “venture.” The opportunities - IT is an enterprise thing - not going to make kind of investments in IT that would them to be interesting businesses. VC industry is diversifying away from industry where returns are poor. Schoendorf says “he could not be more wrong.” About 90% of all venture returns made by about 5% of the people; global supply of capital has kept pouring in. Returns come from a very small set. He says we are going to have a renaissance in software, with new billion-dollar companies created. More opportunity for great kinds of business plans.
* 9. McNamee: Within 5 years, everything that matters to you will be available to you on a device that fits on your belt or in your purse. Massive shift in Internet traffic from PCs to smaller devices. You should all get a Kindle, and study this thing, Roger says. Apple has it in the long run, wrong. Won’t be about watching created content, it will be about creating content. Within 10 years, more Internet traffic from your person than all other locations put together. Maybe actually more transaction, as opposed to bits, he corrects, given HD video traffic over the Internet at home. Khosla thinks the trend is already here. He does agree that the device will be transformative. McNamee says he is astonished how surprised people were by the iPhone and the Kindle. “Imagine all the other stuff you aren’t thinking about,” he says.
* 10. Schoendorf: 80% of the world population will carry mobile Internet devices within 5-10 years. Dial-tone is going to be gone. By next year, people will put micro cells in your house. China Mobile has 500 million billable lines. Within 5-10 years will hit 5 billion global wireless phones. Jurvetson thinks 80% is simply too high; he noes that a quarter of the world’s population has no electricity. They will concentrate in the richest nations, Jurvetson says.

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