2020 Startup Themes (Part 2)

In my previous post I outlined five startup themes for 2020: the increasing dissatisfaction with ad-driven businesses, enterprise search, and others. Here are a few more (hopefully) interesting ideas for the new year:

6. Remote & Collaboration

“So, where are you going to settle your company?”

This used to be a trick question. Investors would penalize founders who answered anything other than “San Francisco”. That’s changed over the past year. Remote is acceptable, even encouraged. This might be due to good video conferencing, Bay Area housing, and perhaps most importantly — GitLab and Zapier’s success, providing proof of “fully distributed unicorns”.

Regardless, remote is in vogue and founders are rushing to build all parts of the distributed startup supply chain: Terminal helps generate remote teams, Tandem and There attempt to create a remote “office”, and Loom helps teams share their work over video.

Fueled by this trend, collaboration products continue to be popular. Notion is increasingly the wiki of choice for teams. Coda and Threads are building new hybrid variants of Google Docs, bringing the best of Slack and documents together. Figma remains an ever-popular multiplayer Photoshop (and a growing home to many lonely emails from investors).

Parts of the stack are owned by incumbents (Slack, Hangouts, Zoom). I’m not certain their position is infinitely stable. Zoom, for example, has a fantastic “molecule moat”: the IP is hard to create. But there’s no tax on switching. It’s just a link you share over Slack. You could imagine a new Zoom getting adopted very quickly if it was better[1].

7. Digital Trade War

I find Lark very interesting. Lark is a mobile-first clone of Microsoft Office and Slack that quietly launched this year. Here’s the twist: it’s made by Bytedance, the Chinese company that created TikTok.

While far from perfect, Lark is surprisingly well built. What happens when it gets popular in the America? Will Microsoft / Google petition to ban it, the beginning of the Great American Firewall? Alternatively, how would success in China affect Microsoft Office revenue?

I think the trade war could very easily spill over from atoms to bits in 2020. Will TikTok be in the US App Store by years end?

8. Developer Tools

Last year GitHub was acquired for $7.5B. Like cracking open a Coke on a hot summer day, Microsoft immediately whetted the appetite of investors for this category. In Q3 2017 the median fundraise for a startup in this category was $1.6M. By Q3 2019 tripled to $5.5M.

While GCP and AWS are great at the “dumb end” (compute, storage), their top-of-the-value-chain solutions are awful[2]. Using GCP or AWS’s console like trying to sprint through molasses. This leaves an opening for youthful startups to build:

Zeit is increasingly a default choice for small team deployment. Repl.it is a hybrid playground for running and experimenting with code. I increasingly see Sidekiq (job queue for Ruby) and Metabase (a dashboard builder) open in founders’ tabs.

AI is eating the software that ate the world, and specialized ML tools are growing with it. Deepnote and Streamlit are working on better versions of Jupyter, a popular open source workbench for ML. Weights and Biases is building a Tableau for data scientists.

[3]

9. The Enterprise Dabblers

Eternal September describes how Internet forums worsened as the web became popular. This effect is also true for ideas. A scene is best when it’s the unknown frontier. In 2018, RPA (“robotic process automation”) was a bit of a secret. Few knew about it. By working on it, a founder self-selected themselves as disagreeable and driven. They were climbing Everest before it was popular. The secret is now out: from Airtable to UIPath to Retool, the new darlings of “NoCode” have caught the attention of young founders who want to build empires. The scene has become popular, and commensurate with that the quality has gone down. As of today (December 2019), we see a half dozen pitches a week for automation software. Most lack deep insights on the market. They just want to join the party.

What used to be a signal of originality is now a signal of conformity.

This trend will continue into the next year. The seed market is as hyperactive as a 10 year-old guzzling Mountain Dew. There’s an infinite number of fresh fund managers who will gladly deploy capital to these enterprise dabblers in the hopes of the team “figuring it out later”. Don’t get me wrong – we’re always happy to take a bet on a team. But once an idea becomes popular, selection becomes harder. We have a strong aversion to lack of crisp, rigorous thinking that seems to be so rampant right now.

10. Carbon & Climate

The climate startup scene has gone from being frigid and lonely to a raging inferno of activity. Consumer-facing companies like Joro and NetZero that are working on nudging consumers to buy sustainable products with point programs. We know branded credit cards cultivate loyalty to Target or American Airlines. Assuredly they can achieve a similar effect for Earth! Get 2X the points if you bring your cup to Starbucks. (I don’t know how much of a planetary impact this will have, but that’s another issue.)

GreenGovernance is creating a drop-in replacement for BlockRock and Vanguard. Hold the same assets, but use shareholder power to entice companies to lower emissions. Carl Icahn, but focused on the planet.

Another theme is geo-engineering, with one popular approach of capturing carbon by using olivine or other means. Bill Gates-backed Carbon Engineering is the startup-incumbent, having recently raised $68M. Prometheus claims it’ll convert carbon into fuel next year(!). Charm Industrial (started by the founders of Segment and Firebase) is working on creating cheap, carbon-neutral hydrogen. Climeworks is making a giant air filter for Earth.

And plenty more pre-launch teams. Feels like we’re just warming up.


Hopefully this list was interesting. I’ll post my final third installment in the next few days.


[1]  What would make a better Zoom merits another post, but proof we can do better is reality. Video conferencing is not as pleasant as meeting in the real world. Why? Lots to consider here.

[2] Tales of Google’s internal infrastructure tools are legendary. Yet GCP’s web console moves slower than a sleepy elephant. Dissecting why this is possible, structurally, is a very interesting question. Organizations are great at promoting agreeable, consensus-seeking individuals. And these people build agreeable, “just OK” products. The disagreeable and driven rarely get sufficient authority to do anything radical. Hence startups.

[3] I have mixed emotions about this category. Despite frenetic activity, one should remember the basic laws of market physics. I use these products daily, but I’m an engineer. One of a lucky few. There aren’t enough of me, and I always wonder how large these markets are.

On the other hand, there’s still so much to be built. Making software is still hard compared to what it should be. Packages never install properly. DNS is a mess. Constant data leaks. Etc.