2015 Technology Year in Review: Top Trends, People and Deals

future-technology

Technology, today, is the leading source of productivity gains and sustained competitive advantage for every company and organization in every single industry globally. It also has the potential to level the playing field across educational and socioeconomic disparity. Through cross-pollination, technology can and is being used to solve long-standing problems in a fundamentally different way. Asking which sectors technology will disrupt is like asking which sectors plastics would disrupt back in the 1950s – all of them!.

Therefore, this technology year in review covers the leaders, the trends and the deals that not only most impacted tech, but also that permeated the global business, political and social landscape in 2015.

2015 Top Tech Business People

Fortune’s BusinessPeople of the Year list, which is not supposed to be tech-focused, is a great way to see how tech cross-pollination leads to success. In 2013, 4 out of the top 20 leaders on the list were in tech or were using tech to achieve competitive differentiation. In 2014, it was 9. This year it was 16 out of the top 20 including all 8 of the top 8. And the companies they lead were some of the most innovative in 2015. Here are a few highlights:

  • Mark Parker, CEO Nike, #1 rank: Parker has doubled revenues and profits since 2006 and raised Nike’s stock price six-fold, while openly increasing the company’s commitment to technology, whether in design, manufacturing, marketing, or retailing.
  • Mark Zuckerberg, CEO Facebook, #2 rank: Facebook dominates social media with 1.5 billion monthly users, accounting for 1 of every 5 minutes Americans spend on mobile phones. Zuckerberg has finally also made it highly profitable with 25% operating margins and roughly $4 billion in earnings expected in 2015.
  • Tim Cook, CEO Apple, #4 rank: Cook has transitioned one of the most successful tech companies of all time through a “Steve Jobs era” to an era of operational excellence. Profits in 2015 soared to $53 billion while innovation continues in brand new products like the Apple Watch.
  • Ajay Banga, CEO Mastercard, #5 rank: Banga has doubled profits and revenue in five years and has turned Mastercard from a credit card systems vendor to a full technology company to maintain competitive edge in order to expand into mobile, virtual and digital payments, advanced biometrics and facial-recognition.
  • Lei Jun, CEO Xiaomi, #7 rank: Jun has led the Chinese smartphone company to be, at one point in 2015, the most valuable “startup” in the world with a $46 billion market cap. Jun has also expanded the company into smart air purifiers, GoPro-like video cameras, and hi-fi headphones.
  • Travis Kalanick, CEO Uber, #8 rank: Some wonder about its ~$70 billion valuation but few doubt the massive disruption this tech-driven “transportation” company has had in creating the sharing economy. While the company’s lack of profits and reported annual burn rate of $750 million is not sustainable, Kalanick himself is one of tech’s currently most iconic (and controversial) execs.
  • Larry Paige, CEO Alphabet (Google), #11 rank: while Paige’s rank fell from #1 last year, he still runs the Internet’s most profitable business. He is extending the internet to wearables, homes and cars and is upending medicine with things like glucose-monitoring contact lenses and ingestible nanoparticles all while producing 100% returns for shareholders over the last 5 years.

2015 Top Tech “Trends”

Data is the phenomenon of our time. It is the world’s new natural resource …Cybercrime, by definition, is the greatest threat to every profession, every industry, every company in the world” –Ginni Rometti, CEO IBM

In fact, it was data-related Cybersecurity issues that dominated the news this year with the some of the biggest data breaches on record, especially in U.S. healthcare providers like Anthem, Premera, UCLA Medical and Carefirst, as well as an increase in state-sponsored cyberattacks, most notably by China. The research firm Gartner estimates worldwide security spending reached $75.4 billion 2015, increasingly driven by the need to protect and manage digital business, “particularly cloud, mobile computing, and … the Internet of Things.”

This year, people also realized that 100% security is a myth and more nuanced risk assessment and mitigation strategies started to come into play. Security will start moving away from perimeter defense to more security aware application design, dynamic and static application security testing, and runtime application self-protection.

The general theme of “Data”, and what to do with it permeated the rest of the sector, as well. The rapidly accelerating ways technology can be used to store, manage, analyze and act on data was the underlying catalyst for disruption in every single field, not just Cybersecurity.

As such, my view of the other top tech trends of 2015 are also based on this theme, one which will likely dominate tech headlines again in 2016:

  1. Clouds and Computing Everywhere: “Mobile,” including smart-phones, wearables and the Internet of Things, finally became the computing paradigms of focus and their use cases continued to evolve. Flexible cloud infrastructures that centrally coordinated applications and devices scaled even more rapidly and flexibly. Eventually, this will lead to computing everywhere, connecting everything we care about to the Internet and causing an even more rapid creation of data.
  2. Advanced and Pervasive Analytics: The focus of “big data” in 2015 really moved from managing and storing the data to understanding how to use the increasing amount, volume and variety of data to learn something we did not know before. We moved beyond asking a question and getting a slightly better answer to learning, through advanced analytics, what questions should even be asked in the first place, In the future, every application will have embedded analytics and will need to deliver insights and recommendations, not just processing data faster.
  3. Artificial Intelligence / Smart Machines: Analytics and context started to pave the way for smart machines that can learn for themselves and act accordingly. The pace of advancement in AI actually sped up in 2015 and machine “helpers” started to simplify and automate many processes and to really “open their eyes.”. Thanks to embedded intelligence and analytics, these systems will become more alert and responsive to their surroundings and will become more anticipatory vs merely reactive.
  4. 3D Printing: 3D printing started to hit more affordable price points this year that will enable scale and growth in industrial uses as well as penetrate consumer use cases. Quality will continue to improve over the next few years with expansion likely be biggest in industrial and biomedical applications, helping companies reduce prototyping and building costs, as well as enabling new types of design and speed to development.

2015 Top Tech Deals

“Bigger, private tech companies” was the key theme when it came to deals this year. 2015 saw the largest technology M&A deal of all time and the largest leveraged buyout / “take-private” (a practice which is seldom seen in technology) ever in any industry. In October, Dell (which itself was taken private in 2013 in a deal valued over $24 billion) announced an agreement to acquire publicly traded EMC and, with it, control of another public company VMware, in a deal valued in total at $67 billion.

Also dominating tech deal news, was the rise and apparent decline of so-called tech “unicorns,” private tech companies valued at $1 billion or more. Today, there are 144 unicorns valued at $505 billion between them, about five times as many as three years ago. Most are unprofitable. Venture capitalists funded a significant portion of this, but a huge amount of the capital is coming from non-traditional investors in private tech companies like mutual funds (eg. Fidelity, T.Rowe Price) and hedge funds who normally invest in public markets but are desperately searching for growth.

The chart below shows the dramatic acceleration of the number of these companies in 2015:

overcrowded-unicorns

Source: CB Insights

There are signs of a pricing slowdown including the inability to maintain public valuations after an IPO as well as mutual fund write-offs on unicorn investments. A mild correction might actually be good for the technology ecosystem – except of course, from those who invested at sky-high valuations in the past 18 months!

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The Real Reason You Can’t Focus at Work

Productivity

(This post first appeared on Fortune.com here)

As the co-founder of Centerview Capital, a new growth capital firm, being productive at work for me means to be productive at life, especially since my personal and professional activities feed off of each other. Following these four principles will help you optimize life productivity and maximize creative output:

 
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Are You Really Ready to Change Careers?

Career Change

(This post first appeared on Fortune.com here )

Many people will have the urge to change jobs or careers at some point in their professional life. And I believe the most common reason for change is dissatisfaction–not enough money, growth, or work-life balance. While these are all valid reasons to make a move, I think that a proactive approach to career change will result in more success than a reactive one. Specifically, think about your profession strategically opposed to tactically. This will help you identify where you see yourself in the future, allowing you to actively seek opportunities on an ongoing basis that could advance your objectives, well before you are dissatisfied with your current job.
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3 Ways to Get More Women into Tech Venture Capital

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The Ellen Pao case has shined renewed light on gender disparity in the financing machine that fuels Silicon Valley’s innovation economy. Many say that the case itself will pave the way to get more women into tech venture capital and private equity. Programs like Andreessen Horowitz’ bootcamp to train women to be effective board members is another worthy initiative with the same goal.

In my mind, though, these event-driven initiatives must be coupled with “general training” to develop the traits required to be a great investor. So, the following are some tips for not just breaking into the profession, but excelling at it. They are what I aspire to daily as Co-founding Partner of Centerview Capital and are based on my “learning” from over 15 years of working with some of the truly best tech investors of all time.
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My Best Career Mistake: Not Asking For Help

Wiley Coyote

(This post first appeared on Fortune.com here)

Albert Einstein once said: “A person who never made a mistake never tried anything new.”

However, in my view, there are good mistakes and bad mistakes. Good mistakes can be choices that seem wrong initially, but in fact lead to new innovations or lessons learned.

Being a big fan of trying new things, I seem to constantly be making what others initially view as mistakes:

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2015 Technology Predictions: Empires Strike Back

Foodtech

When I first started talking about technology  cross-pollination in January 2014, I described it as “the biggest trend in technology.” I now see it not as a trend or a disruption but simply, the future.

Cross-pollination is the transformation of traditional industries by the convergence and application of technology to produce real, actionable solutions to customer problems. It is the use of technology to solve long standing problems in a fundamentally different way.

Technology has historically flourished as an industry by creating continuous substitutes for human processes and, lately, even for itself. Increasing compute power, storage and bandwidth, and the Internet itself, have helped us automate, accelerate and connect ever faster. One example of this is the evolution of communications, where phones and email eliminated in person meetings and letters, then they were disrupted by mobile, video conferencing and mobile messaging. Another example from Retail was the displacement of bricks-n-mortar stores by ecommerce sites like Amazon and eBay.
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How to Get Acquired

Merge

“What’s the best way for a tech company to get acquired?”

“Build a great business.”

That’s what my Partner, Ned Hooper, used to say to startups when he was Chief Strategy Officer and Head of M&A for Cisco. Cisco basically wrote the playbook on how to grow a large technology company through acquisitions, acquiring over 75 companies between the period of 2002 and 2010, a period when Cisco grew revenue by almost 10% annually.

Ned is, of course, right that most of a CEO’s focus should be on building a sustainable business, which I, and many others, have written about. But given that the vast majority of exits in technology are, in fact, acquisitions (over 96% in 2013), and IPOs bring their own set of challenges, this post focuses on what it actually takes to attract acquirers. While technology companies tend to get bought, not sold, acquisitions also don’t “just happen.” So, “showing a little ankle” in the right way will help get you noticed by the right potential acquirers without you ever having to “sell.”

Regardless of whether you are thinking about exits right now, you cannot ignore the market. When the large strategic technology acquirers decide that a market is interesting from an M&A perspective, it can be tough to be the only company left standing when your top competitors have been bought by bigger players.
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Who’s In Control? The Rise of the Empowered Consumer

BuyersSellers

In recent articles, I postulate that there is a fundamental shift occurring away from manufacturing and service economies towards Creative Economies, in which companies that embrace information, innovation and the “cross-pollination” of technology will thrive. But it is not just companies that can benefit. Individuals that embrace, leverage and integrate new forms of technology to solve problems will be able to think differently and more creatively to address both personal and professional issues. And their actions will, Indirectly or directly, affect the economy and business landscape. Thus enterprises should take heed.

The emergence of what I call the Empowered Consumer is a major instantiation of this trend. The Empowered Consumer is a new type of buyer that now exists across almost every industry. This consumer has been shaped by the convergence of the Mobile, Social, Cloud and Big Data mega trends and is driving serious amounts of personal as well as business spend. She has used technology and information to shift the balance of power towards herself and away from sellers, giving her unprecedented price and choice control. This goes beyond the consumerization of IT which is defined as the propensity for users’ experiences with consumer technology to impact their technology usage and expectations at work. Rather, it is a behavioral shift of individuals concerning their expectations of their interactions with their suppliers and partners. The choices and competitive dynamics that it creates are a fundamental change all organizations must deal with in the movement to Creative Economies.
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Tech Bubble? Or Can Software Eat Bubbles Too?


village mobile
Cell phones bring empowerment to Nepalese women – bubble or breakthrough?
Source: Khabar South Asia

Summary: Valuations of public and private technology companies have been quite high in recent months, and many have asked whether we are in a tech bubble. Certainly, general optimism about the promise of tech has driven up prices for many undeserving companies. But while we must all think critically about valuations and have financial discipline, let’s not mistake uncertainty about how to price fundamentally new products and business models – and the accompanying volatility – with speculative excess. 

 

“For how much?

This is a common question in the tech world these days. Even those of us that lived and worked through 1999, who know the key role that technology plays in the economy and in people’s lives, have been raising our eyebrows at recent  valuations in both the private and public sphere:

  • Funding rounds of private companies like Dropbox, AirBnB, and Uber (rumored) that valued those companies at $10 billion each
  • Facebook recent acquisitions of WhatsApp for $19 billion and Oculus for $2 billion, both companies with very little to no revenue
  • Twitter’s $13 billion, and FireEye’s and Tablueau’s ~$2 billion IPO valuations which all jumped 70%+ higher in their first trading day, even though none of these companies was or still is profitable

So, are we in a tech bubble?

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Online vs In-Store: The Cross-Pollination of Retail

Online vs Store

The Retail industry is no stranger to “creative destruction,” the economic process, coined by Joseph Shumpeter,  of “industrial mutation” which “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Many have heralded eCommerce as the next disruptive force that will recreate Retail by obliterating bricks-and-mortar stores. Indeed, for the last 15 years, the online onslaught of “store-less” titans like Amazon and Netflix have in fact decimated neighborhood icons like the bookstore, the record store and the DVD rental.

However, as I have argued before, the new “trend” in technology does not have to be simply destroy and replace. Rather, when innovative leaders can cross-pollinate disruptive technologies into traditional industries, there can be evolution and not just revolution. This is precisely what is happening in Retail today. While the industry is certainly undergoing massive disruption, the transformation will not lead to just a pure virtual commerce existence. Rather, the strong benefits of online, which come mainly from digitization, will be married with the very human need for physical and local experiences to create a more efficient and more wonderful shopping experience. This is a win for the consumer, and for the new breed of retailers that will digitize all aspects of their business but use this to understand and be where consumers shop. They will be able to better meet and exceed customer expectations and create a differentiating value proposition that leads to an overall better brand experience and longer term sustainable profitability.

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