2011 Outlook
If 2009 was the year of hope, bail outs, 'fixing' our economy, saving your dollar, tax rebates, shrinking private equity market and being politically correct, 2010 brought us the grim realization that US is no longer a super-power, political shakeout between the republican and democratic primaries, lame duck congress sessions, the healthcare debate, the iPad, Chevy Volt, 1 in 7 Americans living in poverty, our burgeoning debt with China, increasing corruption scandals, over 10% unemployment - and angry birds!My intention is to be a realist. Most start-ups I have seen fail over the past decade was because of 'experienced' staff running a new venture like the big blue and trying to do what they have always done without paying heed to new and emerging ideas. This philosophy has almost never worked in any sector. Now imagine running a country like a failed start-up. What would you do differently if you could not jump ship? (or will you?). Today - China and India produce more PhD engineers, scientists and inventors than US and increasingly revolutionary tech and medical devices come from R&D in these 2 countries.
Pick 10 successful ventures who exited over the past decade in any sector in the valley or in Boston. The ones who typically succeeded were the ones with the least experienced founders who completely rethought traditional boundaries and concepts of doing business and who focused on the small picture. They all seemed to have a product that people wanted or created markets by creating a gap that did not exist before. This includes the healthcare space - which many argue does not fall into a traditional venture category due to serious adoption issues, convoluted regulatory landscape and a severely fragmented revenue structure.
I believe 2011 will be a strange year for many reasons. I am no statesman but it seems like we're constantly debating a pseudo-socialist model in most our public interest sectors of healthcare, social security, taxation, banking and manufacturing. Think how many large private companies are now government controlled compared to 2008. The issues that faced us in Bush era are the same today and in some cases, 10x bigger and devastating to you and me. I also think our political correctness compared to any other country in the world has gone completely amok prompting strange behaviour across the country (how come I can't say Merry Christmas anymore, why do I need permission to hang the American Flag, why do we give kids in school the option to "opt-in" to sing the pledge of the legion - why can't I call a spade a spade?). These have become more than annoyances and thus groups like the tea party.
All of the above factors (and a lot more) make US seem like a poor region to start any business or attract foreign capital in 2011. But the picture is not that grim. I think US is at a critical juncture where it can take the high road and continue to flaunt its artificial influence over the world economy or we can get down to the basics and make sure we roll-up our sleeves and build stuff the rest of the world wants and get out of debt - period! Just like we used to back in the day.
The following is my A-list of where and what I think will be some of the most attractive markets/products for the next 12-18 months both from job creation as well as new ventures perspective:
- Search <> Text: Yes, this space is still hot. We're always asking questions, hopefully more intelligent ones. We're constantly seeking things, looking to compare, find, track, manage and connect with others trying to do the same. Search feeds our ego - it gives us a greater sense of control and power over things. And search is no longer restricted to text. :)
- Visual Displays = New Applications: I am already seeing big dollars put into display technologies like 3D-Televisions, transparent LCD screens and super hi-resolution medical displays. This will bring a plethora of new applications across industries as a technology as a platform is now an enabler of interactive content.
- Content Management @ Home: Media creation is cheap, storage is cheap, collaboration is cheap - managing content is neither cheap nor do today's technology solutions do it as well as they should. I want to wirelessly share my pictures from my computer to my TV without spending hundreds of dollars and hours trying to make yet another console work. Don't have that option today.
- Content Creation: Rich content + traffic is what people still pay for just like 1999. If you can produce unique content that draws a large number of repetitive traffic to your app/site - you're in business. There are many market segments that are still off-line or if on-line, do not have the necessary tools to expand their business in line with today's communication modalities. It does not need to make sense you know - Angry Birds did not make sense - until they became a phenom! (I hear they even have a movie coming out).
- Power: All these gadgets, electric cars and not enough power. Power requirements have been very slow to keep up with improvements in interactive heavy media content and will be the #1 issue with any retail products. Especially when oil prices are going up as is your electric bill.
- Healthcare: This is a big one! And I am not talking about enabling our physicians with EMR's. There needs to be services that generate greater patient ownership of their health, provide incentives to lead a healthier lifestyle (as strange as this sounds - 70% of us are considered obese) and enable the physicians with alternative revenue channels (capitated model for primary care kicking in 2011 thus producing widgets no longer makes money). However, I think the clinical content will still be controlled by the hospital systems (a.k.a. physicians) and overall HIT adoption will still lag behind claims. The US private medical insurance billing and charge capture is one of the most unnecessarily complicated and medically irrelevant needs that physicians have to comply with. And unfortunately, this market is controlled via the large EMR / Billing system vendors.
- 300 medical record companies in US alone . . . come on! This is an M&A gold mine waiting to happen.
- Traditional concierge care (or flavours of it) as a product line offering in large medical centers. The baby boomer generation is unhealthy, needy, rich and getting old fast and most importantly - are willing to spend.
- Enterprise IT Security: Still tops #1 IT capital spend (and has shown-up in operating budgets by virtue of cloud services and virtualized storage). Increasing federal and regulatory mandates will require brute force efforts for crowd control and audit. Can't live with it - can't live without it. This is going to get worse!
- Retail Micro-Finance: Worsening economy, longer job-loss-to-job-find cycles and life-style support needs will prompt ideas that will give people the opportunity to finance anywhere from a few hundred dollars to a few thousand.
- Telecommuting: is any IT managers nightmare. But this is unavoidable given companies are now giving options to their staff to work-from-home as a benefit to save expensive real-estate space. That means remote device management, connectivity, remote activity audit and control will become a part of any IT security budget and an important one.
- Apple's inroad into enterprise computing: has always been debated. However, Mr. Jobs has a long way before Apple can claim its spot in the server rooms, especially with connectivity, security and cross-compatibility with microsoft applications. Apple is not "already there" in my opinion and poses gapping holes in network device manageability.
- Venture Capital: is always be around but I still see more and more funds out of comission and teams shrinking in size and scope. This just means the larger corporate venture funds will hopefully gain momentum.
- Mobile Application Convergence: In today's telecom world, he who controls content controls the network. The CLEC's like the old Bell South and AT&T have increasing revenue dependance on content acrather than connectivity. Android's open-source rize claims to canibalize Apple's walled-garden market share in many ways. But one cannot expect to choose a side at all times. This is a great opportunity for application developers to make enable content that is able to reside on multiple device platforms as well be cross compatible. My applications should be device agnostic - not device dependant. This is a bold statement and I beliebe late 2011 will be the early signs of developers realizing this.
These are what I consider market needs. I am sure there are folks thinking about some of these ideas already. I encourage you to think outside the box, knock down the barriers of titles and see what you can do to put America back in the game.
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posted by Janak Joshi @ 12/28/2010 02:44:00 PM
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