Below are some interesting markets and themes for the year. I use “themes” in a broad sense, both for specific markets as well as broader societal changes in the seed ecosystem.
There are 11 of these.
Ad companies are governed by a rule as durable as gravity: they must make their products worse over time. Corporations must produce profit, and the fastest path to increase revenue is at the cost of user experience. Amazon and Google used to feel powerful and sleek. Now they’re like Costco on Black Friday. Noisy, tacky and ad-riddled. And more profitable! (For now.)
This increase in revenue comes at the cost of long-term customer satisfaction, but nobody knows how to really measure that, so investors don’t care. Now Instagram has too many ads and finding a genuine phone charger on Amazon requires a degree in investigative journalism.
As this chewing gum loses flavor in the coming year, there might be an opportunity for startups to traverse previously impassable peaks and attack an incumbent head-on. A new search engine. A new social network. It’s been a while since we had a new consumer startup, and it might just happen next year.
Who’s left holding the bag? Timing is the ultimate catalyst for a short trade, and it would be unwise to bet against Amazon today. But one wonders if and when this will change. If the incumbent will manage to maintain relevance while the Great Man, the one responsible for overriding the short-termism of the free market, is off building rockets or at Burning Man.
NoCode startups were the defining theme of 2019. The idea behind NoCode is to make a new abstraction for software engineering. Just like Javascript made programming more accessible to a broader audience. If that were possible, new enterprise software could be constructed at a fraction of current costs. Who needs a Stanford graduate if you can build your widget with a few clicks? There are dozens of teams and seed-stage companies working on variants of this now. The market segments into two:
RPA (“Robotic Process Automation”). The idea is to automate mundane, repeated actions that information workers are doing by observing their actions and then mimicking them, like a human would do. UIPath is the darling of this world, with many small startups in its wake.
Lego Software. Instead of “watching” a human and “automating” their needs, lego software companies make it possible to compose a symphony by clicking and dragging. What previously took three Stanford undergrads can be done with a mouse. Zapier allows builders to move data between different services with a few clicks. Airtable and Notion enable advanced storage and manipulation of data through a simple interface. Glide super-charges those databases by enabling builders to turn them into mobile apps, a skill previously relegated to an elite few. Retool offers related “assembly” functionality for the desktop. See more in our 2019 Themes Post.
Who’s left holding the bag? Many of these companies are eating away at the fringe of software consultancy giants like Accenture and Deloitte. It’ll be interesting to see if any of the darling startups eat up material share of these giants.
“Enterprise search” is shaping up to be in 2020 what RPA was in 2019. A startup idea that hits the seed ecosystem like a fashion fad, with a surprising number of founders suddenly all wearing the same ripped jeans. I’ve seen about a dozen teams and companies working on next-generation enterprise search in the past few weeks. They’re all attempting to build the same thing: a search/feed/discovery product that helps you find things amongst Slack, Gmail and Salesforce clouds.
I’ve yet to see anyone properly tackle the more rudimentary, “boring” and lucrative approach: an on-prem search appliance, similar to GSE, that indexes internal intranet, wikis as well as email. On-prem software is annoying to build, something many founders shy away from.
Either way, this category will be one to watch. Just like photo-sharing apps were in 2011, the Californian startup optimism moves in fixed fashion fads, and this one is about to become Trending.
I find Lark very interesting. Lark is a mobile-first clone of Microsoft Office and Slack that quietly launched this year. Here’s the twist: it’s made by Bytedance, the Chinese company that created TikTok.
While far from perfect, Lark is surprisingly well built. What happens when it gets popular in the America? Will Microsoft / Google petition to ban it, the beginning of the Great American Firewall? Alternatively, how would success in China affect Microsoft Office revenue?
The market has priced in the trade war in atoms, but not in bits. A digital trade war is yet to come. TikTok has already been banned by the US Military. Will it be in the US App Store by years end?