What are YOUR tech, VC and future of work predictions for the year ahead?
Its that time of year. Not just for holiday shopping, expensive, crowded flights, and hopefully the creation of happy memories surrounded by loved ones. Its also that time when futurists ranging from academics and journalists to VCs like me get asked to contemplate all the ways in which budding trends will accelerate to a point that they begin to change the way we live, work and play. As an investor who focuses largely on the future of work, I spend a lot of time assessing how technological advances and economic and social change coalesce to impact the workforces of today and decades to come. So, here are my predictions for the year and decade about to begin.
Prediction 1: Direct listings will become the norm, not the exception. However, this is such a major change that it wont happen overnight. In 2019 we saw Pinterest and Slack both successfully direct list. In 2020 not only will more consumer brands direct list, but so will additional enterprise companies inspired by Slacks example. Slowly but surely over the next few years direct listings will emerge as the new best practice to capture value for founders, employees and investors. Wall Street will find new ways to extract value from this changing tide.
Prediction 2: Silicon Valley will fall a bit further from its perch at the pinnacle of tech innovation. Im not a Silicon Valley doomsayer. I believe that the nucleus of the worlds most mature tech ecosystem will continue to cultivate and nurture numerous innovative, game-changing startups to come. But I also believe that talent exists everywhere, and increasingly so does opportunity, so smaller tech hubs are giving Silicon Valley the fiercest competition of its existence. Outside of the US, Im excited about the continued growth of Indias vibrant tech ecosystem. Within the US, Im particularly bullish about the Pacific Northwest, which I believe will continue to gain ground on its larger, southern cousin as the third generation of spinoffs from Amazon and Microsoft and then newly minted unicorns like Auth0 and Outreach create a new tidal storm of B2B innovation.
Prediction 3: A significantly greater share of the professional workforce will shift from full-time to gig employees. Companies are always seeking to reduce costs and liabilities, but during a recession these efforts reach a fever pitch. Today many people think of Uber and Lyft drivers, Instacart and Postmates delivery workers and hair stylists when they think of gig employees, but the reality is that the gig economy is already far more wide-reaching. According to Deloitte, more than 40% of workers are currently employed in alternative work arrangements, such as gig and contract work. Over the next decade, that number will increase dramatically.
Prediction 4: The workforce will become dramatically more geographically distributed. Most experts agree that a recession is coming. The question isnt really about whether itll happen but when. When it does arrive, the recession will accelerate a number of trends already unrolling, the first of which is the rapid distribution of the enterprise workforce. Today geographically distributed teams are the exception. Within the next few years, theyll become the norm. Expect companies with 1 or 2 main offices to split into 4 or 5 smaller ones, and I expect a greater share of employees to work remotely several days a week or even permanently.
Prediction 5: The talent wars will remain fierce-- even during the recession. Even in a weak economy, businesses must hire and retain exceptional talent. This isnt to say that compensation and benefits will hold steady--they wont, but sought-after skills will remain in high-demand. To retain and develop employees while keeping their costs in check, enterprises will look to talent management tools that are both efficient and scalable. Expect to see more AI-based tools and fewer high-priced, in-person consultants.
Prediction 6: Any high-growth, low-margin company will face public scrutiny. In fact, we dont have to wait for 2020 for this to occur. The market pendulum is swinging away from growth at all costs towards efficiency and profitability-- especially among consumer goods firms where many of the unit economics are currently upside down. As my colleague Patricia Nakache told the New York Times, A lot of these highly valued companies have run into the buzz saw of Wall Streetreminding us that profitability matters.
Prediction 7: New KPIs will emerge as each companys north star. As SaaS becomes more ubiquitous and touches every industry vertical, net revenue retention, sales and marketing efficiency (for enterprise) and unit economics (for consumer) will become the north star metrics towards which all management teams and boards will manage and optimize.
Prediction 8: The next generation of VCs will finally assume the service role theyre paid to do. Venture capital still flows like water for especially talented entrepreneurs and promising startups. While for years VCs could rest on their wallets, the new guard of investors--the more service-oriented, extension-of-your-team sort--will overtake the old guard due to their willingness to serve their environment rather than assuming that everyone will adapt to them simply because they always have. As part of this transformation, the brands of VC firms will increasingly take a backseat to the brands of the individual partners who will come to be known among entrepreneurs not just for their savvy bets, but, equally importantly, for their service and value-add to entrepreneurs. The VCs who win will have the people skills to authentically connect with and win over founders, the go-to-market skills to help founding teams scale their businesses, and the work ethic to be known as a partner who doesnt just pick winners, but actually helps nurture and grow them.
Prediction 9: The fight to own the developer heart, mind and wallet will continue unabated. More than a decade ago, Steve Ballmer famously brought his developer-centric business strategy into the Internet mainstream with his classic, albeit cringe-worthy, developers, developers, developers chant. In proof that sometimes the best strategies have the most staying power, his mantra is still true today, even if the technologies the developers are building upon have long since evolved. In 2020, well see even more companies fight for the hearts and minds of developers--not just the major platform plays like Microsoft, Google, Apple, Oracle and Salesforce, but also a newer generation of tech giants like Zoom and Slack hoping to bring much-needed agility into the workplace. Developers should expect a lot of appreciation--and even more free t-shirts--to come their way.
Prediction 10: Software will continue to eat every vertical at a faster pace than ever before. It has been almost a decade since Marc Andreessen famously wrote in the Wall Street Journal that software is eating the world. His prediction proved to be sage because its just as true today as its ever been and will remain so in the decade to come. Even non-technology companies like WeWork pitched themselves as software companies in order to increase their value. Over the next decade, well see software devour the few remaining legacy verticals that have managed thus far to avoid digital transformation.
What do you think? What are YOUR tech, VC and future of work predictions for the year ahead? Share them with me on Twitter @kmehandru #FOWpredictions2020.
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