Churchill Club – 10th Annual Top Ten Tech Trends
I attended my third Churchill Club tech trends debate this evening. Overall I have to say the quality of ideas and quality of debate were significantly less impressive than previous years. I also felt that a lot of what they were saying were rehashes of previous years comments, though that is not surprising because the assumed pace of change doesn’t always meet expectations.
The panel was a little different this year, subtract John Doerr and add Vinod Khosla and Josh Kopelman (not bad for a freshman effort).
As always, I’ll summarize what I heard with some of my own comments.
- Demographics are destiny, creating opportunity (Steve Jurvetson). Jurvetson believes that the Baby Boomer market is huge and that the electronic marketplace serving this segment will exceed the market for physical goods. He said that the boomers are 3x as active on the internet, most have college degrees and they make up 1/2 of the US workforce (75M). “The US will look like Florida” in short order :-) Granular outsourcing enabled by new technologies, with boomers as the workforce. When you’re over 35, your rate of cognitive decline is the same as when you are 80 years old. (Wasn’t that impressed with this point. Jurvetson made a similar point last year and highlighted the same company, Posit Science, regarding how to exercise your brain. I believe him that we’ll say we can’t believe we didn’t do mental exercise in today’s era, 5-10 years in the future, but I’m not convinced that the Boomer market is that easy to capitalize. Vinod Khosla also expressed skepticism.)
- Device that used to be a phone (Vinod Khosla). Khosla talked about how the phone becomes the PC and you will do e-mail, have a projection screen, high speed data, credit card functionality, ePassports, etc. (This sounds like the obvious. Similar to the Labs vision around service platforms but not as well developed.) Roger Mcnamee did say “we’re becoming a third world country because our business are busy harvesting instead of investing”. It’s a compelling tagline but not sure if he substantiated it.
- Rise of implicit internet (Josh Kopelman). Kopleman posited that the web right now is about explicit user interactions and that there will be a big shift to mining implicit data. (couldn’t agree more, content bank baby!) He had a good analogy of how your grade school teachers would tell you that something would end up on your “permanent record” except no such thing existed in the pre-internet days. Now, you really do have a permanent record because you don’t really control all the different companies and places that have information about you. Kopelman felt that the opportunity is around how to traverse the silos of data and then create services of value. (I think he’s absolutely right and this is a key area to invest in) Khosla followed on with a good quote “that data reduction is one of the key needs going forward”.
- Mobile device industry migration from feature phone to smartphone with produce . . . (Roger Mcnamee). Mcnamee talked about the disruption caused by smartphones and how this is like the PC going from command line to GUI. He seemed to forget windows mobile in his categorization of the marketplace initially but felt that Motorola is definitely getting pushed out and other players will face the same fate (like IBM with the PC). Mcnamee said he didn’t think you could create a great consumer experience with an unbundled OS, a la microsoft and windows mobile. (I tend to agree. WinMo is not half as friendly to use as the iPhone interface, though I still with WinMo right now because the rich set of third party applications and corporate Exchange support. Companies like HTC try so hard to put a nice veneer on top of Windows Mobile and it’s just that, a veneer.) Khosla recommended reading a book called The Black Swan to underline a point that he felt Mcnamee’s projection was too conservative.
- Water will replace global warming as a global priority (Joe Schoendorf). Joe made a very eloquent point around the lack of access to useable water and the fact that we’re running out. He said that he feels that lack of water will kill millions more in our own lifetimes than global warming. He felt that this century might be defined by “water wars” and used the Darfur conflict as an example. He stated that Darfur started as a tribal conflict over water between farmers and herders because of a drought. Never heard this before, but it’s quite interesting. He also gave an example of getting mothers with HIV in Africa not to breastfeed (to avoid transmission of HIV), however infant mortality went up because the dirty water used with formula was so bad. He also cited a California example saying there was a drought in 1987 that lasted for 6 years, but there was a drought in the 12th century that lasted for 60 years. What would that do the california economy? Schoendorf said that 70% of the world’s water is used for agriculture, and it’s close to 90% rate in the developing world. Desalinization is more important than anything else. Khosla agreed but disagreed and said that global warming is still the top issue. Khosla said that the himalayan glaciers melting is much more critical because that water supply feeds India. He also said that China is building a canal from the Himalayan range to Beijing (which evidently will use 1% of the world’s concrete output?!) but it’s pointless because the water may not be there in 25 years. (There was virtually no disagreement on this one, other than the is it more important than global warming. Schoendorf very effectively made his point that water is not being addressed, and there are some venture investments but not enough. Also Jurvetson said there are not enough inventors or entrepreneurs in this area)
- Evolution trumps design (Steve Jurvetson). Jurvetson made this same point last year so check out my post from last year’s debate. He’s a strong proponent of evolution algorithms, of complex systems and gives many examples of actual use. He said one company in his portfolio (Genomatica?) created 4x improvements in microbial design using humans as the innovators, and 20x improvements using evolutionary algorithmic techniques. Khosla disagreed only to the extend that he felt evolutionary design was just one tool or technique and there are many others that are just as important such as synthetic biology, combinatorial science and mimicing nature. He talked about how the vortex is the most efficient way to drain fluid, but that principle has not been applied in fluid systems per se (not sure I believe him on this one). (Interesting points from Jurvetson but I’m not sure I believe that it will impact in the next 12-24 months)
- Fossilizing fossil energy (Vinod Khosla). Khosla said he believes that non-crop biofuels are just around the corner and they will be made with higher efficiency than gasoline. He cited an example of not using the past to project the future: McKinsey evidently did a study for AT&T in 1980 saying that the US market for cell phones in the year 2000 would be 1 million phones. IN reality it was 109M phones. McKinsey couldn’t predict the massive changes in phone tech that would take it from a suitcase installed in a car, to a device the size of a deck of cards in your pocket. LIkewise, Khosla believes there are a lot of innovations coming in fuel generation. Khosla is quite famous for being the lead green tech / clean tech venture investor in the Silicon Valley. He also said he had more detail on his web site which I
will have to analyze. Schoendorf asked if the water impact would go down. It takes 1 gal of H20 to make 1gal of gas. It takes 8 gallons of H20 to make 1 gallon of corn-based biofuel. Khosla made a claim that it will take less than half a gallon for new non-crop biofuels in the very near future, and little land as well. (This all sounded too good to be true. I certainly hope that Khosla is right because this would be a sea change in our energy consumption. See my previous blog post about energy and solar).
- Venture Capital 2.0 (Josh Kopelman). Kopelman tried to say that venture firms were going to go through a big shakeout, but he was roundly disavowed. The best point made by Mcnamee was that Venture is now considered an asset class by big investors (I’ve heard this from others as well) and that some percentage of portfolio allocation will go into VC funds. The question may be that SW/IT funding goes down and that clean tech / green tech goes up, but no one forsaw a big sudden downward spiral. Schoendorf also emphatically said that this was the most innovative he’s every seen, and believes there are more opportunities than ever. He said that he met with the leader of the Chinese sovreign fund and that that individual had $200B to invest. (A wholly ridiculous and large amount!)
- Within 5 years everything that matters to you will be on a device (Roger Mcnamee). Nothing new to say here, yes, big shift to more mobile devices, that # of transactions will largely be driven by smaller devices potentially those worn on your hip
- 80% of world population will have a mobile internet device (Joe Schoendorf). Again no disagreement that mobile devices will penetrate like crazy, just a question of what percentage.