What’s Hot (and Not) in Early Stage Tech [Chart]
Using big data to discover what aspiring entrepreneurs are thinking
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
There are many ways to get a pulse on the startup scene to see what is trending. For example, one could look at the sub-sectors getting the most money from venture capitalists. The more deals and money hitting a sub-sector, the more it could be on its way up the ladder.
However, perhaps there is another angle that can tell us something, even if it’s simply confirming an already-held suspicion about trends in early stage tech. What are the entrepreneurs in the trenches doing? What are they focusing on, and how is that a change from previous time periods?
Big Data from Y Combinator
Y Combinator, arguably the most prominent startup accelerator on the planet, has indulged us on this hunch. Using the thousands of applications they get each year from aspiring entrepreneurs, they’ve had the foresight to methodically break them down by keyword to potentially show us trends within the pitches by startup founders.
For a wonderful post that breaks this all down, go to the company’s The Macro blog, which discusses many of these trends over the course of years in great detail.
That said, we decided to piggyback onto this interesting data set with a slightly different approach.
Method to the Madness
While the results of the keyword analysis of Y Combinator applications included many meaningful keywords, it also was cluttered with less meaningful pieces of noise. As an example, between 2015 and 2016 applications, there was a 204% increase in the use of the word “firms”. This doesn’t seem to tell us anything significant about the startup world, especially since it only went from 0.3% to 0.8% in actual usage within the scope of all applications.
To combat noise, we took the more subjective approach by identifying keywords that were more concretely associated with sub-sectors or trends. The mention of the term “IoT” in an application, for example, is more telling and suggests that an entrepreneur is pitching a startup idea related to the Internet of Things to the accelerator. More mentions of “IoT” in pitches means that ideas on the “IoT” are top of mind for aspiring entrepreneurs.
What’s Hot in Early Stage Tech?
Using the above subjective methodology, here are the increases and decreases over the last year that stood out the most to us:
The word “Slack” was used 850% more often in 2016 applications, clearly related to the popular workplace collaboration tool of the same name. Slack’s explosive growth has rippled through to the startup world, likely inspiring an army of potential competitors and collaborators in the wake of their success.
Other emerging trends that picked up steam in recent applications: virtual reality (“VR”), artificial intelligence (“AI”), internet of things (“IoT”), and “drones”. The 119% increase in the usage of the word “bills” also points to the recent attention on the fintech space.
The mention of “SaaS” (Software as a Service) also increased 52%, as it has become a preferred business model by venture capitalists.
The largest decrease of all terms used was that of “Bitcoin”, which dropped 62% from one year to the next. The cryptocurrency has been a popular developer target for years, but the rush to take it mainstream may now be losing steam. The world’s top performing currency in 2015 has been called dead many times before, so it is certainly no stranger to adversity.
The word “nonprofit” was also used 29% less, which may point to the recent pressure for startups to offer a more foreseeable potential return on investment for investors. The ecosystem isn’t as frothy as it once was, and nonprofit ideas may have taken a temporary tumble as a result.
“Crowdfunding” has also dropped more off the radar, receiving 25% less mentions.
A Visual History of the Largest Companies by Market Cap (1999-Today)
See how the world’s largest companies have changed over time, and how this helps tell a broader story about what the market is thinking.
A Visual History of the Largest Companies by Market Cap
The macro narrative that underlies the market is constantly under revision.
While this is partially a function of shifts in investor sentiment, it’s also driven by game-changing events as well as much more structural market forces.
For example, how does the macro narrative change after a commodity price crash? What about when the unprecedented scale of technology is truly understood by the market?
An Evolving Narrative
In this week’s chart, we look at how the big picture narrative has changed over time by using a very simple approach.
We have visualized the market capitalizations of the 10 largest public companies in the world over five-year intervals from 1999 until today, and it gives us a series of snapshots of what the market was “thinking” during these specific periods.
Not only is it evident as certain industries rise to prominence, but there are also some interesting individual stories to follow. We can see iconic companies – such as Apple – ascend into the public consciousness, while others fall off the radar completely.
|Year||Description||Top Company||Who Dominates Top 10?|
|1999||Dotcom Bubble||Microsoft ($583B)||Five tech companies in the mix|
|2004||Post-Bubble||GE ($319B)||Diverse mix of companies by industry|
|2009||Financial Crisis||PetroChina ($367B)||Six non-U.S. companies make list|
|2014||$100 Oil||Apple ($560B)||Last year for oil companies, tech starts ascending|
|2019||Big Tech Era||Microsoft ($1,050B)||Seven companies are tech|
The composition of the top 10 changes in each of the snapshots above, and this simple approach helps capture the market narrative for each timeframe.
During the Dotcom Bubble, you can see that half of the list was dominated by tech companies. This was short-lived, and the years 2004, 2009, and 2014 have much more diverse lists.
You can also see the impact of the financial crisis on U.S. company valuations. In 2009, there is an equal distribution of Chinese and American companies. Royal Dutch Shell (UK/Netherlands) and Petrobras (Brazil) help round out the top 10.
Finally, over the last five years, you can see the impact of lower oil prices and the growing scale of tech. Back in 2014, Exxon Mobil was the second largest company in the world by a solid margin, but today it’s been displaced by companies like Facebook, Amazon, Tencent, and Alibaba.
The Big Tech Era
Here is the current top 10 list of the world’s largest companies by market cap:
|#1||🇺🇸 Microsoft||Tech||$1,050 billion|
|#2||🇺🇸 Amazon||Tech||$943 billion|
|#3||🇺🇸 Apple||Tech||$920 billion|
|#4||🇺🇸 Alphabet||Tech||$778 billion|
|#6||🇺🇸 Berkshire Hathaway||Diversified||$507 billion|
|#7||🇨🇳 Alibaba||Tech||$435 billion|
|#8||🇨🇳 Tencent||Tech||$431 billion|
|#9||🇺🇸 Visa||Financial||$379 billion|
|#10||🇺🇸 Johnson & Johnson||Consumer Goods||$376 billion|
In total, the five biggest tech giants brought in a combined $801.5 billion in revenue last year, and $139 billion in net income.
The Staying Power of Microsoft
With a valuation today of just over $1 trillion, Microsoft is again the world’s largest company by market capitalization.
In this way, the above lists come full circle, since Microsoft was also the biggest company in 1999.
While the software giant experienced short periods where it did drop out of favor, Microsoft was the only company to make the list in our five snapshots above.
The 10 Breakthrough Technologies That Will Define 2019
Which innovations will dominate headlines in 2019? According to Bill Gates, watch for these 10 breakthrough technologies to change the world.
The 10 Breakthrough Technologies That Will Define 2019
Gone are the days of turning stones into spears. With the advent of new technologies, we’ve learned to develop tools that not only make living faster and easier every day, but also improve the future of humanity as a whole.
Today’s Chart of the Week draws from the MIT Technology Review, which features Bill Gates’ predictions for the top 10 breakthrough inventions that will capture headlines in 2019.
Top 10 Breakthrough Technologies
1. Gut Probe in a Pill
These swallowable devices can detect and potentially prevent diseases that cause malnutrition and stunted growth in millions of children worldwide.
2. Custom Cancer Vaccines
Personalized cancer vaccines, targeting only the cancerous cells and leave healthy cells alone, could help ensure faster recovery times and pose fewer risks to patients.
3. Meat-free Burgers
Plant-based and lab-grown food products will ideally alleviate the environmental impact of the livestock industry.
4. Smooth-talking AI assistants
The AI assistants of the future will have even more human-like conversations to personally engage customers. Companies would see measurable benefits, with just one breakthrough here garnering a 5% jump in productivity.
5. Sanitation without sewers
Improperly drained sewage causes death in one out of every nine children. Sanitation that doesn’t require sewers would not only prevent exposure diseases but also help turn waste into useful products like fertilizer.
6. ECG on your wrist
While most medical ECGS have up to 12 nodes to detect abnormalities, today’s wearables typically have only one. An ECG on the wrist would help reduce the risk of heart disease by monitoring changes and patterns in daily life.
7. Robot Dexterity
Advancements in robotics will enable the natural dexterity required to complete a greater range of tasks, such as helping an ailing loved one out of bed, doing the laundry, or building toys.
8. Predicting Preemies
Premature births are the leading cause of death for children under five years old. Tests to detect the possibility of a premature birth could be available in doctors’ offices in as little as five years.
9. Carbon Dioxide Catcher
Carbon dioxide catchers filter out CO₂ from the air and capture it for other uses. These include synthetic fuel creation, CO₂ for soft drinks, and plant growth in greenhouses.
10. New-wave Nuclear Power
Traditional nuclear reactors produce ~1,000 megawatts (MW), while these proposed mini-reactors would produce tens of megawatts ─ making them safer, more stable, and more financially viable for potential users.
A Vision for a Better Future
The biggest takeaway?
Seven of the 10 breakthrough technologies stem from the healthtech sector.
While several inventions on this list are years away from becoming a reality, they continue to embody the vision and passion that humans share to create and explore.
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