Venture capital at a crossroads : Change or be forgotten

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Railway crossroads serve as a reminder that trains are not the premier form of transportation they once were. The same could happen to venture capital.

Heading into the COVID crisis, Silicon Valley had reached a consensus that venture capital was going to get hit hard. In March, as the market crashed with alarming speed, new investments came to a grinding halt, and the IPO market froze completely, it seemed the most dire predictions were coming true. Today, after navigating months of uncharted waters, it is clear these doomsday expectations could not have been more wrong. However, if the industry doesn’t tread carefully, its short-term gains could pave the way to long-term self-destruction.

Venture capital in 2020 has not slowed down, it has accelerated. Whether you look at median valuation, deal count, early stage rounds, late stage mega-rounds, or IPOs, third quarter metrics across the board have raced back to historic highs. The rebound has been fueled by continued favorable macro conditions, such as tech’s outperformance in the public markets, low interest rates, regulatory tailwinds, and the fact that entrepreneurship historically outperforms in economic recessions.

The real momentum, however, stems from the much-needed structural innovation that thrives in disruption. For an industry that claims to invest in the future, it has been a long time since VC funds have been forced to innovate. Whether it is AngelList’s rolling funds, the rise of YC-style accelerators for new fund managers, or the booming popularity of direct listings and SPACs, COVID has proven to be a platform shift not only for technology, but for venture capital itself.

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We are approaching the fastest, deepest, most consequential technological disruption in history

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We are approaching the fastest, deepest, most consequential technological disruption in history

 In the next 10 years, key technologies will converge to completely disrupt the five foundational sectors—information, energy, food, transportation, and materials—that underpin our global economy. We need to make sure the disruption benefits everyone.

Suppose we told you that solutions to the world’s most intractable problems are possible in the next decade. Poverty. Inequality. Climate change. You’d probably say impossible, preposterous, unthinkable. We’ve heard that about our predictions before. But we have been proven right.

Now, we are predicting the fastest, deepest, most consequential technological disruption in history and with it, a moment civilization has never encountered before. In the next 10 years, key technologies will converge to completely disrupt the five foundational sectors—information, energy, food, transportation, and materials—that underpin our global economy, and with them every major industry in the world today. Costs will fall by 10 times or more, while production processes become an order of magnitude (10x) more efficient, using 90% fewer natural resources and producing 10 times to 100 times less waste.

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10 tech predictions that could mean huge changes ahead

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CCS Insights published 100 tech predictions for the next few years, and the COVID-19 pandemic lurks behind many of them.

An ongoing health crisis and a global recession: even for the most attuned of analysts, the past months have brought in a load of unexpected events that have made the coming years especially difficult to envision.

Yet research firm CCS Insights has taken up the challenge and delivered a set of 100 tech predictions for the years 2021 and beyond. The exercise is an annual one for the company, which last year anticipated, among many other things, that the next decade could see the rise of deep fake detection technology, or the adoption of domestic robots in some households.

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The Event Industry is being confronted by its Napster moment

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All types of business events are in danger of their revenue streams of tickets, sponsorships, memberships, and other types of fees being eroded. This is happening as the world gets used to digital formats and alternatives emerge to physical networking, matchmaking, and other tasks we get out of these events. The threat sounds familiar?

 

I won’t bury the headline: the vast, global events industry is going through its Napster moment through this pandemic, and is in denial on what this will do to it.

Everything about the underlying economics of this sprawling, diverse, chaotic and highly profitable sector is being undercut by the move to virtual, and 2019 may be the year where the industry’s revenues peaked. This year could be the event industry’s 2000 moment à la what happened to the music industry.

I was there during the music industry’s Napster moment in late ’90s, a cub reporter covering the vast promise of early internet, and wrote hundreds of stories about what happened to labels and the economic structure of music industry and music acts. I wrote about the atomization of the album into singles and the download boom with rise of Apple’s iTunes, and then the start of the streaming boom that led to Spotify and others since.

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Reimagining industrial supply chains

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For organizations that understand the vulnerabilities in industrial supply chains, there is an opportunity to prepare for future shocks and build resilience without hurting efficiency.

In recent months, structural supply-chain fragility has been catapulted to the top of the news cycle as the ongoing repercussions of the COVID-19 pandemic echo around the world. Government-imposed orders to stay at home, international and domestic travel restrictions, and the need for physical distancing have stretched supply chains and laid bare the key bottlenecks in products’ value chains. Shortages have occurred in areas ranging from basic grocery items to electronic components.

The current pandemic is the type of event that is only likely to occur once in a lifetime. In recent years, however, supply-chain risk management has become more of a pressing issue for CEOs across industries. Vulnerabilities have been exposed by trade tensions, natural disasters, and other geo-economic disruptions.

The complexity of global industrial supply chains exponentially increases their risk. On average, an auto manufacturer has around 250 tier-one suppliers, but the number proliferates to 18,000 across the full value chain. Aerospace manufacturers have an average of 200 tier-one suppliers and 12,000 across all tiers. Finally, technology companies have an average of 125 suppliers in their tier-one group and more than 7,000 across all tiers.

Companies that cannot successfully manage those complex and, at times, opaque supply chains are at high risk, especially if they cannot mitigate the risk of increasing disruptions. Even a short disruption of 30 days or fewer can put 3 to 5 percent of EBITDA margin at stake. Recent research from the McKinsey Global Institute (MGI) has found that as much as 45 percent of one year’s EBITDA1 can be lost each decade because of disruptions.

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AI is coming for white-collar workers

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While robots upend blue-collar factory work and trucking in the middle of the country, AI and machine learning are poised to deeply alter white-collar jobs in superstar coastal cities.

Why it matters: No one is immune to the shockwave of automation in the workplace.

“AI will be as central to the white-collar office environment as robotics has been to the production economy,” said Mark Muro, senior fellow and policy director of the Metropolitan Policy Program at the Brookings Institution. “They’ll fundamentally change what work is and what humans do. And no one gets a free pass.”

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Special report: Driverless cars are the new dot-com bubble

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We simply don’t know what sort of jobs will be available in the future. After all, imagine yourself in the year 1900 peering into the future. How could you know then that the proportion of people employed in agriculture in the USA would fall to a twentieth of what it was then?

Or that there would now be more people employed as mental health nurses in the NHS than there are sailors serving in the Royal Navy? Or that large numbers of people would pay good money to personal trainers to put them through their paces and ensure that they suffered the requisite amount of agony?

History is full of people who have made long-term predictions and who have been proved utterly wrong. Among economists one of my favourites is the great William Stanley Jevons, one of the most distinguished economists of the nineteenth century. In 1865 he predicted that industrial expansion would soon come to a halt due to a shortage of coal. Poor old Jevons.

So we must tread warily. Having said that, and having dosed ourselves with lashings of humility, and drunk deep from the well of scepticism, there is a lot that we can say about the future of employment in the new robot- and AI-dominated future.

One of the most widely talked about categories of jobs supposedly at risk is drivers: bus drivers, truck drivers, taxi drivers, chauffeurs, delivery drivers, and many more. A 2017 trucking industry report predicted that by 2030, out of 6.4m trucking jobs in America and Europe, about 4.4m of them could have disappeared as “robots” do the driving.

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Ideas are a dime a dozen. Here are twelve problems that could lead to a billion-dollar startup

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Next generation technology in the home for an aging population.

Startup founders can often find themselves working on an idea that sounds plausible, but does not provide a solution to a problem people care about in a meaningful way. Y Combinator founder and investor Paul Graham says that often, these startups are born from individuals who are simply “trying to think of startup ideas” and not looking for problems. Graham calls these ideas “made-up” or “sitcom” startup ideas, as they sound like something a writer for a television sitcom would come up with when creating a script for a character that had a business idea. The idea seems possible, even though in reality it is bad and no one would use or buy it.

Take a look around at the products and services you are currently using and surrounded by. Why are they there? Well, it’s because they are solving a problem or filling a need you would otherwise be experiencing. This is how all great inventions and startup businesses are born, from a problem or need. From electricity, to the telephone, to the Internet, and more recently to Uber and AirBnb, great businesses are built on big problems.

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How Artificial Intelligence is already disrupting financial services

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Digital technologies drive business disruption. Today, artificial intelligence (AI) is at the forefront of financial industry disruption, allowing these firms to look differently at operations, staffing, processes, and the way work is done in a human-machine partnership. In PwC’s 2019 AI survey of US executives, financial services executives said they expect their AI efforts to result in increased revenue and profits (50%), better customer experiences (48%), and innovative new products (42%).

AI encompasses an array of technologies, from fully automated or autonomous intelligence to assisted or augmented intelligence. Financial firms are already deploying some relatively simple AI tools, such as intelligent process automation (IPA), which handles non-routine tasks and processes that require judgment and problem-solving to free employees to work on more valuable jobs. Banks have been using AI to redesign their fraud detection and anti-money laundering efforts for a while, and investment firms are starting to use AI to execute trades, manage portfolios, and provide personalized service to their clients. Insurance organizations, in turn, have been turning to AI—and especially machine learning (ML)—to enhance products, pricing, and underwriting; strengthen the claims process; predict and prevent fraud; and improve customer service and billing.

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The War on Tesla, Musk, and the fight for the future

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Upfront: If you think that anything is justified against a person simply because that person is wealthy, this is not an article for you. If you think it’s okay to lie, mislead, or otherwise attack a person simply because of their financial status, consequences be damned, then you should probably look elsewhere. You won’t have far to look.

We, Model 3 owners and people on the waiting list, have noticed a strange, disturbing, but all too explicable trend whenever the topic of Tesla comes up with people who don’t follow the company in detail.

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