By Keith Teare • Issue #290 • View online
A new year always triggers reflection on the past 12 months and speculation on the next 12 months. Let’s do it.
We all have Andrew Keen to thank for this week’s newsletter. I wasn’t planning to do one, but he strongly suggested I do and even suggested, after a conversation, that we do predictions for 2022. I didn’t have the heart to say no. So here it is.
I am not by nature a person that tries to make accurate predictions about specific events or their timing. But I do think that the near future is fascinating, always. Mainly because it is so unpredictable. For me the near future is measured in months, 18 at the most. Beyond that, it is the future and needs no modifier such as “near”.
So what I am about to do is really about the near future. And as That Was The Week has focused on several key themes in 2021, I will restrict myself to those same themes.
My 2022 Predictions are as follows:
- Venture Capital will continue to evolve towards a more structured asset class and encompassing three very distinct business models — seed-stage investing, venture investing and growth investing. The gains to be made by the growth in the rate at which unicorns are produced will once again draw record amounts of capital into the venture ecosystem. Only two of the three asset classes will benefit — the seed stage and the growth stage. As has been the trend in 2021, the death rate of seed-stage companies will stay high, but those that graduate to Series A and B rounds of financing will increasingly take more capital onto their balance sheets than ever before. And more of it will come from growth investors. This will force venture funds to continue to seek business models enabling them to compete with growth investors and we will see the venture model evolve with more funds choosing to form “top companies” sitting above their funds and possibly choosing a public listing as a means of staying relevant. The best seed funds will benefit enormously from the opportunities to build large companies fast. But they will be challenged to maintain their ownership in those companies as the capital requirements accelerate to scales not previously seen.
- The Creator Economy will produce the first individuals who attract investment in return for sharing in their revenue. We have already seen Sam Lessin of Slow Ventures articulate this investment thesis, and deploy the first cash. But 2022 will see well-known names accept investments. Just as in music artists are selling the rights to the proceeds of their catalog, so too will other creators in the podcasting, video blogging, live audio, art, entertainment, and news spaces. NFTs will thrive in this environment and extend beyond art to other digital artifacts.
- Web3 will continue to attract talent, especially from engineers and product designers. The promise of fully decentralized infrastructure will dominate but the first decacorns built on top of Web 3 will be minted, probably in the fintech space. The UK will become a major center for Web 3 projects that are fintech-centered. Bitcoin will reach $100k at some point in the year. But there will be no “killer app” pulling regular consumers into the Web 3 world. Consumers will continue to use Amazon, Uber, Facebook, Twitter, and other centralized Web2 infrastructures.
- The Metaverse will not become mainstream and there will be no compelling AR experiences that are embraced by consumers. Mark Zuckerberg will continue to make most of his money by selling adverts on Facebook feeds. But the word metaverse will be used more and more to describe the internet as PR forms earn fees from associating everything with it.
- AI will be neither artificial nor intelligent, and no general AI will be launched. GPT3 will continue to impress against lesser goals.
- No DAO will provide living income to more than a few hundred people as developers fail to build products that replace mass-market brands with better versions. But the promise of DAO’s will continue to attract developers seeking such breakthroughs.
- SPACs will not recover from their collapse in 2021. Most will close down having failed to find a target at a value the public markets welcome.
- Big Tech will not be regulated by Lina Khan or any of the other agencies seeking to do so. The political will and intellectual depth to construct a better technology ecosystem will simply not materialize. Web 3 will continue to be the best hope of an improved future and in the short term, Apple’s desire to protect privacy will be the single biggest brake on the advertising-led attention economy.
- Globalization will not slow down. Trans-National and Cross-Border issues will proliferate. The distinction between trans-national (technology-led) infrastructures like bitcoin, and stable coins, and cross-border (product and marketing led) technologies like money-transfers and challenger banking will become more obvious.
- China will become self-sufficient in chips for many tasks. Chinese EVs from companies like Nio, Xpeng, and Li will start to be sold in Europe ahead of a 2023 appearance in the USA.
In short, venture capital, startups, creators, web3 developers, and big tech will impress in 2022. Spac sponsors, regulators, nationalists, and politicians will disappoint.
There are many other opinions in the curated articles below. Enjoy.
Happy New Year.
Web 3 Thoughts
Over the last month, there has been a ton of debate and conversation about web2 vs web3 with many leading voices raising doubts about web3. Debate and doubt are healthy. And web3 enthusiasts, particularly on Twitter, remind me of missionaries trying to recruit the unwashed to their belief system. Frankly, it is all too much for me.
However, the debate is important, the pushback is healthy, and ultimately web3 will have to deliver on its promise which means teams building things that provide new unique value to society. If that doesn’t happen, then web3 will turn out to be the snake oil that some are suggesting it is. I am confident that won’t happen, but it is important to understand that the proof is in the pudding and talk is cheap.
With that backdrop, I want to point everyone to a post my partner Albert wrote yesterday that explains why we at USV believe that web3 will allow teams to build new things that provide unique value to society.
It all comes down to the database that sits behind an application. If that database is controlled by a single entity (think company, think big tech), then enormous market power accrues to the owner/administrator of that database.
If, on the other hand, the database is an open public database that is not controlled and administered by a single company, but instead is a truly open system available to all, then that kind of market power cannot be built up around a data asset. As Albert says in his post:
Continuations by Albert Wenger : Web3/Crypto: Why Bother?
One thing that keeps surprising me is how quite a few people see absolutely nothing redeeming in web3 (née crypto). Maybe this is their genuine belief. Maybe it is a reaction to the extreme boosterism of some proponents who present web3 as bringing about a libertarian nirvana. From early on I have tried to provide a more rounded perspective, pointing to both the good and the bad that can come from it as in my talks at the Blockstack Summits.
Today, however, I want to attempt to provide a cogent explanation for why bothering about web3 makes sense. This requires telling a bit of a story and also understanding the nature of disruptive innovation. The late Clayton Christensen characterized this type of innovation as being worse at everything except for one dimension, but where that dimension really winds up mattering a lot (and then over time everything else gets better also as the innovation is widely adopted).
The canonical example here is the personal computer (PC). The first PCs were worse computers than every existing machine. They had less memory, less storage, slower CPUs, less software, couldn’t multitask, etc. But they were better at one dimension: they were cheap. And for those people who didn’t have a computer at all that mattered a great deal. It is exactly this odd combination that made existing computer manufacturers (making mainframes down to mini computers) ignore the PC. They only focused on all the bad parts and ignored the one positive dimension or to the extent that they understood it they tried to compete by making their own product cheaper. Other than IBM, they never embraced the PC and went out of business or were absorbed by other companies.
A blockchain is a worse database. It is slower, requires way more storage and compute, doesn’t have customer support, etc. And yet it has one dimension along which it is radically different. No single entity or small group of entities controls it — something people try to convey, albeit poorly, by saying it is “decentralized.”
Ok, so how is this remotely the same as PCs being cheaper? Well because to some people this matters a great deal. Why? Because much of the power held by large companies (and by governments) comes from the fact that they operate and control databases. Facebook alone gets to decide who can read and write from their database and what parts of it anyone can see. They alone can make changes to this database. This turns out to be the source of Facebook’s power in the world. Many people rightly see this power as a problem, but fail to see how the structure of the original web technology directly contributed to this extreme centralization.
2022 Predictions by @ttunguz
Every year I make a list of predictions and score last year’s predictions. 2021 marked the second year of COVID and like other crises, the pandemic accelerated change, especially in technology pushing many technologies like SaaS, video conferencing, crypto/web3 deeper into the Perez deployment cycle . Here are my predictions for 2022:
- Web3 consumer products go fully mainstream with more than 35% of Americans, about 100m people, engaging with them by 2023. Metamask counts 10m MAU and Phantom is at 1.5m MAU growing quickly. This trend is only increasing. Wallets are the gateway to crypto and have funneled millions into consumer apps that have driven web3 adoption. These throngs stress systems and demand infrastructure advances. Improved infrastructure enables new applications, which attract more users. This oscillation between apps and infrastructure continues forever as a pendulum. Meanwhile, once there are enough infrastructure and consumer companies to serve, software businesses pop up, in this case to serve DAOs.
- Data companies continue to achieve astronomical growth. Software engineering best practices have begun to infuse data: data observability, specialization of different ETL layers, data exploration, and data security all thrived in 2021 and will continue as users stuff more data into databases and data lakehouses. Large software companies accelerated growth this year, despite their scale reinforcing the notion that users write data into systems but rarely delete it.
- GPT-3 and BERT infuse software massively reducing repetitive work and unlocking huge productivity gains. GTP-3 and BERT are massive machine learning systems called neural nets. Their neuron count is only one or two orders of magnitude less than a human brain, and parity isn’t far off. The result of all a supremely rational artificial cerebrum: type in a few key sentences into a GPT-3 powered app, click a button, and a blog post pops out. (Not this one; I enjoy writing too much to automate it). Or a personalized email to a sales prospect. Or a tweet. Toil will be automated by these robots, leaving us to garnish the vanilla cake output with a layer of digital frosting. Marketing, customer success, and sales software will be upended. Engineers’ productivity will skyrocket as AI pair programming increases code authoring speed and reduces errors simultaneously.
- The ML stack folds into the classic data stack. This idea is more controversial. The vast majority of ML users prefer simplicity and speed to customization and control. Consequently, data innovators will continue to push AutoML and SQL to query ML models to the technically analytical. Much of what’s built in the ML stack is a re-implementation of the modern data stack. ML specific data applications aren’t much different than classical data applications. ML specific feature stores can be managed through data lakehouse technologies like Nessie and Parquet, just as regular data ought to be. These stacks will begin a convergence. Within Google, Facebook, and other data leaders bespoke systems remain de rigeur as a core strategic advantage.
- The spirit of Silicon Valley continues a spread outward. The valley remains an important locus on innovation but its monopoly recedes as new geographies rise in importance and remote work, plus the return of in-person travel, creates a new way of working for many. Silicon Valley falls to below 20% in all venture financing.
Kellblog Predictions for 2022
Well it’s time for my annual predictions post, a series now in its eighth year. Before diving in, let me remind readers that I do these predictions in the spirit of fun, they are not business or investment advice, and that all of my usual disclaimers and terms apply. I’m starting to believe that the value of this series is more about the chosen topics than the predictions themselves because my formula for creating these posts is to select interesting topics that I want to ponder, research them, and figure out a prediction for each topic along the way.
22 predictions for the consumer internet in 2022
And just like that, Platformer’s 2021 is coming to a close. I’ve spent the past few days asking you all about the future over email, Discord, and Twitter. Today I’ll share a few of my own thoughts about what’s in store in 2022, followed by my favorite of your guesses.
Before we get to that: thank you for an incredible first full year of Platformer. When this year began, the newsletter was just 13 weeks old; today the possibilities seem almost limitless. Thanks for supporting everything I do.
I. My predictions
Here are five things I think we might expect to see in 2022.
Europe cements its position as the most important tech regulator in the world. With Congressional dithering entering its sixth year, Americans shouldn’t expect any of the Big Tech bills about competition, antitrust, or online content to become law. Instead, they should keep their eye on the United Kingdom and Europe, which appear poised to do the regulation for us. Specifically, the Digital Markets Act and Digital Services Act, which would address some of the same concerns, appear headed toward passage. Whatever changes platforms make in response will surely affect us here in the United States.
Meanwhile, the UK’s Competition and Markets Authority has proven to be a skeptical eye on any acquisitions. It’s attempting to scuttle Meta’s acquisition of Giphy and Microsoft’s purchase of Nuance; I’d expect a difficult road ahead for even minor-seeming acquisitions for the big platforms next year.
Authoritarian shakedowns of platforms and their employees will accelerate. This year saw India send police to raid Twitter’s offices over a labeled tweet, and Russia physically intimidate Googlers over a voting app that the company hadn’t yet removed from its app store. Just this week, a court in the country ruled that Google should face fines that double every day it doesn’t restore the YouTube account of an ally of Vladimir Putin.
With right-wing authoritarianism spreading around the world, and platforms finding that they’ll get minimal diplomatic support from the US government, expect more situations like these more, and more often. A central question for next year is whether or when platforms will push back, what leverage they can realistically exert, and whether any of these countries will cross a line that makes a tech company reconsider its position in the country altogether.
Drama Twitter is back. Those of us who came up as tech reporters in the early 2010s remember well the perpetual chaos of the Twitter board room. Each day brought a fresh calamity, and you never knew when the C-suite would be completely reshuffled, seemingly for no reason. But after a period of eerie stability and rapid product releases at Twitter, Jack Dorsey is out again as CEO — and this time, he’s no longer able to plot his return from a board seat. Will Parag Agrawal be able to hold off activist shareholders and make the case for Twitter’s independence? Will the whole thing be sold off to Salesforce by this time next year? And what will the company manage to ship in the meantime? Whatever the answer is, I expect things to get messier before they stabilize.
The best thing you’ll be able to say about the metaverse is that it’s still under construction. Meta is still doing a sneaky good job of consolidating talent in the virtual reality space, and its Oculus headsets are selling well enough to give it a solid position as competitors emerge. But we won’t really be able to assess the competitive landscape until (unless?) Apple releases its planned mixed-reality headset at some point late in 2022. It would be great if the device were iPhone-level good, single-handedly reinventing the category with version 1.0. But I suspect it will be more like the first version of the Apple Watch — a series of difficult compromises that, despite its shortcomings, points its way toward the actual future. (Something else I’ll be looking for in this regard next year: the extent to which big tech platforms become more interoperable with one another — a key first step toward the metaverse as they describe it.)
Pro- and anti-crypto factions harden into place, setting up a long-term religious war over the potential and perils of the blockchain. So much money is now invested in what enthusiasts call “Web3” that its runway now lasts well into the latter half of the decade. Nevertheless, smart skeptics continually draw attention to the blockchains’s terrible interface, user experience, performance, cost, utility, scams, and environmental impact — to say nothing of the risks of speculative token purchases.
At the same time, so much time, money, and talent is working on these projects that it seems inevitable they will leave behind something useful. This year we saw video games that pay you to play them, attempts to disintermediate big record labels, and a flurry of experiments in governance that led to a nearly successful attempt to buy the Constitution, among other things.
Next year I expect to see lots more uses of NFTs that go beyond art speculation — think NFTs that give you access to virtual and physical spaces; think POAPs. I also think we’ll see more viral DAOs that start out as jokes and then do extremely weird and hopefully cool things.
The Information’s 2022 Predictions
Many of this year’s biggest tech developments caught everyone by surprise. Who would have predicted Didi Global would go public and months later have to delist? Zillow abruptly abandoned its home-buying business. Instacart and DoorDash held merger talks. And Facebook changed its name. What will 2022 bring?
Our reporters talked to their sources to deliver 20 predictions on the biggest companies and themes in tech. We forecast that YouTube will launch a non-fungible token marketplace. We also suggest the company Snowflake might buy and who might succeed Bobby Kotick as CEO of Activision Blizzard. See here for a recent story on how we did on our 2021 predictions
www.theinformation.com • Share
2021: Best year ever for £26bn UK tech sector with larger VC inflows, 116 unicorns, record London listings, more jobs and new futurecorns — City A.M.
The UK tech sector looks back on its best year ever, raking in £26bn in venture capital, record London listings, more jobs and the number of British unicorns climbing to 116.
Success feeds cities outside London as Cambridge has become the leading regional tech city in the UK thanks to its combination of high levels of VC funding, venture capital rounds, advertised tech salaries, number of unicorns (tech companies worth more than $1 billion) and futurecorns.
Manchester was only narrowly beaten by Cambridge to the number two position, and Edinburgh, Cardiff and Belfast are also in the top ten for capital raised, showing how the tech sector has spread across all regions and countries in the UK, according to recent research for the government’s Digital Economy Council by Dealroom and job search engine Adzuna.
The number of jobs in Manchester increased by 164 per cent in 2021 and the highest advertised average salaries outside London were in Edinburgh — £58,405.
With more money than ever flowing into UK tech — £26bn this year, up 2.3x from last year’s figures of £11.5bn — almost £9bn of all VC invested went into startups and scaleups outside London and the South East and the regions are home to nine of the 29 unicorns formed this year.
Regional growth took place against the backdrop of an incredible year for the UK tech industry. Tech investment grew 2.3x this year, the highest growth since 2013 to 2014 when it grew from $2bn (£1.5bn) to $4.6bn (£3.5bn). City A.M.
Startup of the Week
AngelList just closed a $25M fund to back startups based on hiring velocity — TechCrunch
Over the past year, AngelList has grown from a platform that connects angel investors with startups to an end-to-end suite of tools, working on everything from fund operations to founder cap table management. Throughout this growth, the company has quietly amassed millions of data points that show appetite, both from investors and regular employees, for […]
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#292: Diving into tbDEX with Mike Brock