As we bring the year to a close, I thought it’d be interesting to flag a few themes that might be exciting to watch in the new year. I use “themes” in a broad sense, both for specific markets as well as broader societal changes in the seed ecosystem.In the spirit of optimizing for 21st-century attention span, I’ve split this post into a few parts which I’ll be releasing over the next few days.
1. The Law of Advertiser Atrophy
Ad companies are governed by a rule as durable as gravity: they must make their products worse over time. Corporations must produce profit, and the fastest path to increase revenue is at the cost of user experience. Amazon and Google used to feel powerful and sleek. Now they’re like Costco on Black Friday. Noisy, tacky and ad-riddled. And more profitable! (For now.)
This increase in revenue comes at the cost of long-term customer satisfaction, but nobody knows how to really measure that, so investors don’t care. Now Instagram has too many ads and finding a genuine phone charger on Amazon requires a degree in investigative journalism.
As this chewing gum loses flavor in the coming year, there might be an opportunity for startups to traverse previously impassable peaks and attack an incumbent head-on. A new search engine. A new social network. It’s been a while since we had a new consumer startup, and it might just happen next year.
2. Enterprise search is the new meme
Enterprise search is shaping up to be in 2020 what RPA ("Robotic Process Automation") was in 2019. A startup idea that hits the seed ecosystem like a fashion fad, with a surprising number of founders suddenly all wearing the same ripped jeans. I've seen about a dozen teams and companies working on next-generation enterprise search in the past few weeks. They're all attempting to build the same thing: a search/feed/discovery product that helps you find things amongst Slack, Gmail and Salesforce clouds.
I've yet to see anyone properly tackle the more rudimentary, "boring" and lucrative approach: an on-prem search appliance, similar to GSE, that indexes internal intranet, wikis as well as email. On-prem software is annoying to build, something many founders shy away from.
3. The Privacy Headfake
There’s lots of excitement around building a better Google. DuckDuckGo is small, but it’s growing 50% year-over-year. If the growth rate were to double, DDG would surpass Google in 6 years. That’s at least mildly interesting. Cliqz has been gaining traction amongst a more technical crowd. The Brave browser has been growing (though with interestingly poor retention) and Privacy.com has been doing well.
This excitement aside, it's not clear to me that privacy is an actual value proposition to customers. Privacy might be the digital spinach: something you know that's good for you, nice to have, but not a primary driver for anyone but the most extreme health consumers. I suspect we’ll see a lot of startups pitch privacy, but I’m not certain of the adoption they’ll get.
While consumer privacy might be overrated, enterprise ephemerality is underrated. In an era of constant breaches and hacks, retaining all of your corporate (and personal) information might be seen as a bug rather than a feature. What opportunities does this open up?
4. UAI (Useful AI)
We talk about machine learning a lot, but few (if any) successful startups have managed to apply it in a non-incremental, breakthrough product. That’s beginning to change. Klarity is a digital paralegal, turning contracts into forms and annotating legal documents. Rossum is a software filing cabinet, using deep learning to structure and organize contracts. OpenAI’s GPT-2 model is approaching the point where it can replace Demand Media.
More is on the cusp. Live, auto-generated closed captioning works now. Given free transcription and the drive of remote work to video conferencing, we’re about to witness a Cambrian explosion of cataloged meeting information. What was previously oral knowledge will be automatically documented by machines. We’ll see many opportunities come out of this.
Finally, while one might think value at the lower layers of the stack would accrue to incumbents, challenger startups continue to show promise, both at the API (AssemblyAI, cheaper and better speech API) and silicon layers (Cerebras, GraphCore, Groq).
Autonomy, 5G and other factors have created a relaxed regulatory environment for radar, which is seeping over to other industries. Startups like Zendar, Arbe, Vayyar and Leo Labs are all examples of radar-first companies in the aerospace and autonomy market.
It might expand beyond that too: Apple has its Ultra Wideband Technology. Amazon's Sidewalk uses radar to build a location-based mesh network. Google's Project Soli uses radar to turn hand gestures into keyboard input. (Interestingly, regulators have taken note -- the Pixel 4 is banned in India due to the spectrum this radar uses.)
There are a few other areas I’m optimistic about: developer tools, carbon capture, remote work, and plenty of hidden opportunities in enterprise software that people just aren’t exposed to. More on those soon. And if you're curious to work on any of these markets and themes, you should check out Pioneer. Pioneer gives you support, funding, mentorship and guidance to turn the thread of an idea into a company.