Thinking About Thinking

What’s Next In Tech? (probably part I)

Posted in Technology, Venture Capital by larrycheng on May 14, 2009

In preparation for the What’s Next In Tech conference, I thought I’d submit my thoughts on What Next?  Rather than submit a laundry list of ideas, I thought I’d focus on one of my favorites and give it a little more due.  One thesis that I’ve had is that information will lead to step-function improvements in business (and consumer) applications.  I think there will be fewer breakthroughs in raw application functionality, but the great breakthroughs will be the type of information consumed, processed, and delivered by these applications.

First, let’s look at what we at Fidelity Ventures like to call the train tracks.  The analogy we use is that the train tracks have to be laid, before the trains can run.  You can have the most beautiful trains on the planet, but if there are no tracks to run on, there’s no point.  So, here are just some of the tracks being laid for the continued explosion of available information:

  • Cost per MB of storage has come way down.
    • 1956: $10,000
    • 1984: $87.86
    • 1994: $0.95
    • 2004: $.001
  • Breakneck growth of web pages
    • 1998 Google index: 26 million web pages
    • 2000 Google index: 1 billion web pages
    • 2008 Google index: 1 trillion web pages
  • Continuation of Moore’s law (# of transistors/IC) impacts processing speed, memory capacity, etc.
    • 1971: 2,300
    • 1990: 1,000,000
    • 2000: ~50,000,000
    • 2008: ~1,000,000,000
  • Growth in Internet connection bandwidth
    • Dial-up: 56 kbit/s
    • T1: 1.544 Mbit/s
    • Ethernet: 10 Mbit/s
    • 802.11g: 54 Mbit/s
    • Gigabit Ethernet: 1000 Mbit/s
  • Other data points that I couldn’t quickly find information on:
    • Growth in amount of information in corporate databases
    • Projected broadband and fiber penetration growth (it’s growing)
    • Growth in digital video, audio, and images

So, the tracks are laid for information to be stored, assimilated, processed, structured, extrapolated, and delivered.  The question is what kinds of problems will information revolutionize?  I’ll toss out some ideas but you can basically pick any business or consumer vertical, and I think it will be materially impacted by information.

  • Manufacturing. As manufacturers spec products, their bill of materials will be dynamically priced based on real-time global pricing information delivered to their CAD systems as they manipulate their CAD drawings.
  • Retail. Pricing on products of all kinds will become more dynamic based on real-time feeds of pricing data coming from local and global data sources and non-linear info like real-time weather.  Coupons will also be dynamic based on real-time in-store sales information.
  • Insurance. The way risk for any given type of insurance will be driven by the triangulation of non-linear information which to date hasn’t been possible.  For example, a great predictor of a bad driver is having bad credit.
  • Credit Information. Revolutions take down old stodgy incumbents.  Say goodbye to Fair Isaac’s FICO score – completely dated.  A new credit bureau will emerge to challenge the Big 3 and a new business info company will challenge Dun & Bradstreet.
  • Human Resources. Hiring will entail more mathematical processing.  Models will be created around a myriad of different jobs and be used to predict success (such as Unicru).  HR will embrace math, like….
  • Sports. It’s already started.  30 year-old quant jocks will run sports.  In 5–10 years?  20 year-old quant jocks will take over.
  • Fashion. The idea of merchandisers and designers going on shopping trips and runway shows for inspiration will be antiquated.  Doing physical idea boards will go by the wayside.  It’s already started.
  • Trading. Information enables trading of just about anything and everything.
  • Automation.  Whether it’s robotic vacuums, unmanned aerial vehicles, automation of the warehouse, etc.  Information will lead to automation in all sorts of applications.
  • Many, many, others…

So, that’s one or many ideas on What’s Next In Tech.  Hopefully I’ll see you at the conference June 25th in Boston.  If you know any great companies along these lines, don’t hesitate to drop me a note – larry (@) or @larryvc on twitter.