Tech Founders Predict the Next Wave of Startup Growth
Today’s tech founders have unique insights into the evolving arena of innovation and are keenly aware of why some companies succeed more than others. Many have worked with multiple startups and have gone on to invest in successful tech unicorns.
This week’s chart comes from First Round’s State of Startups 2018 survey, in which 529 founders shared their predictions on the tech startups best poised for growth and spin-off success.
Tech Startup Valuations
Stripe, the payments startup darling, has already grown from $1.8 billion in valuation in 2013 to over $22 billion today. According to the tech founders surveyed, 19% see Stripe continuing on this path in the years to come.
Q: Which U.S.-based tech startup’s value will increase the most in the next 10 years?
|Rank||Startup||% of respondents|
It’s worth noting that this list includes some startups that have already IPO’d since the survey was released in December 2018.
In fact, in the first half of 2019, we’ve already seen Pinterest, Lyft, Uber, and Slack hit the market. Slack’s public offering was the most notable, as they chose to go the direct listing route. The share price still jumped 48.5% less than 24 hours after they went public.
The Next PayPal Mafia?
The PayPal Mafia is a legendary group of billionaire investor-entrepreneurs that have had far-reaching influence in the tech world since they parted ways with PayPal.
Not only did members of this group go on to start many major unicorns, including YouTube, SpaceX, LinkedIn, and Palantir, but some members have invested in over 100 startups each. This “giving back” has had a monumental impact on the Silicon Valley ecosystem, planting the seeds that would emerge as many of today’s star companies.
Q: Which U.S.-based company is most likely to spin out the next generation of notable founders over the next five years?
|Rank||Startup||% of respondents|
Current tech founders predict that the companies listed in this survey will be perfect launching points for many of the world’s future tech founders.
Of all U.S.-based tech startups, Uber is predicted to be a top contender for producing the next generation of startup talent by 2023.
Other Survey Findings
Interestingly, over 60% of founders believe that the world is in a technology bubble, with evenly split reviews on whether it’s either nowhere close or very close to popping.
While 57% of founders believe the U.S. will continue to dominate the tech world, 39% predict China’s growth will become the world’s hub for tech innovation by 2028.
Only time will tell, as tensions between the U.S. and China continue to heat up, and the global recruitment of tech talent becomes increasingly competitive.
Visualizing the Biggest Risks to the Global Economy in 2020
The Global Risk Report 2020 paints an unprecedented risk landscape for 2020—one dominated by climate change and other environmental concerns.
Top Risks in 2020: Dominated by Environmental Factors
Environmental concerns are a frequent talking point drawn upon by politicians and scientists alike, and for good reason. Irrespective of economic or social status, climate change has the potential to affect us all.
While public urgency surrounding climate action has been growing, it can be difficult to comprehend the potential extent of economic disruption that environmental risks pose.
Front and Center
Today’s chart uses data from the World Economic Forum’s annual Global Risks Report, which surveyed 800 leaders from business, government, and non-profits to showcase the most prominent economic risks the world faces.
According to the data in the report, here are the top five risks to the global economy, in terms of their likelihood and potential impact:
|Top Global Risks (by "Likelihood")||Top Global Risks (by "Impact")|
|#1||Extreme weather||#1||Climate action failure|
|#2||Climate action failure||#2||Weapons of mass destruction|
|#3||Natural disasters||#3||Biodiversity loss|
|#4||Biodiversity loss||#4||Extreme weather|
|#5||Humanmade environmental disasters||#5||Water crises|
With more emphasis being placed on environmental risks, how much do we need to worry?
According to the World Economic Forum, more than we can imagine. The report asserts that, among many other things, natural disasters are becoming more intense and more frequent.
While it can be difficult to extrapolate precisely how environmental risks could cascade into trouble for the global economy and financial system, here are some interesting examples of how they are already affecting institutional investors and the insurance industry.
The Stranded Assets Dilemma
If the world is to stick to its 2°C global warming threshold, as outlined in the Paris Agreement, a significant amount of oil, gas, and coal reserves would need to be left untouched. These assets would become “stranded”, forfeiting roughly $1-4 trillion from the world economy.
Growing awareness of this risk has led to a change in sentiment. Many institutional investors have become wary of their portfolio exposures, and in some cases, have begun divesting from the sector entirely.
The financial case for fossil fuel divestment is strong. Fossil fuel companies once led the economy and world stock markets. They now lag.
– Institute for Energy Economics and Financial Analysis
The last couple of years have been a game-changer for the industry’s future prospects. For example, 2018 was a milestone year in fossil fuel divestment:
- Nearly 1,000 institutional investors representing $6.24 trillion in assets have pledged to divest from fossil fuels, up from just $52 billion four years ago;
- Ireland became the first country to commit to fossil fuel divestment. At the time of announcement, its sovereign development fund had $10.4 billion in assets;
- New York City became the largest (but not the first) city to commit to fossil fuel divestment. Its pension funds, totaling $189 billion at the time of announcement, aim to divest over a 5-year period.
A Tough Road Ahead
In a recent survey, actuaries ranked climate change as their top risk for 2019, ahead of damages from cyberattacks, financial instability, and terrorism—drawing strong parallels with the results of this year’s Global Risk Report.
These growing concerns are well-founded. 2017 was the costliest year on record for natural disasters, with $344 billion in global economic losses. This daunting figure translated to a record year for insured losses, totalling $140 billion.
Although insured losses over 2019 have fallen back in line with the average over the past 10 years, Munich RE believes that long-term environmental effects are already being felt:
- Recent studies have shown that over the long term, the environmental conditions for bushfires in Australia have become more favorable;
- Despite a decrease in U.S. wildfire losses compared to previous years, there is a rising long-term trend for forest area burned in the U.S.;
- An increase in hailstorms, as a result of climate change, has been shown to contribute to growing losses across the globe.
The Ball Is In Our Court
It’s clear that the environmental issues we face are beginning to have a larger real impact. Despite growing awareness and preliminary actions such as fossil fuel divestment, the Global Risk Report stresses that there is much more work to be done to mitigate risks.
How companies and governments choose to respond over the next decade will be a focal point of many discussions to come.
The Sum of Its Parts: The Smartphone Multiplier Market
Every day, 3.3 billion people rely on their smartphones to stay connected. The products and services enabling this—the smartphone multiplier market—is now worth $459 billion.
The Sum of Its Parts: The Smartphone Multiplier Market
There’s a 60% chance you’re reading this article on a smartphone right now—a testament to how ubiquitous these devices have truly become in our lives.
We rely on smartphones every waking minute to stay connected. However, the various products and services—also known as the smartphone multiplier market—that allow us to use these devices in the first place can often be an afterthought.
Today’s chart uses data from Deloitte Insights to show just how sizable this ecosystem is becoming, and why it’s heating up as a battleground for big technology companies such as Apple, Alphabet, and Amazon.
The Smartphone Plateau
There are over 3.3 billion smartphone users in the world today.
The smartphone economy—estimated to pull in $944 billion in total revenue in 2020—is so massive that it rivals the GDP of countries like Indonesia and the Netherlands.
At the moment, the smartphones themselves contribute over half the market value. Despite the continued hype surrounding the release of new models, global unit shipments of smartphone devices appears to have reached a saturation point:
There are two theories as to why shipments are leveling off. First, product innovation is more iterative today than in the past, which means there are fewer groundbreaking features to entice consumers into purchasing new devices. A second factor is that people are simply holding onto their devices for longer than in the past.
As device sales plateau, tech giants are diversifying efforts to find new ways to lure customers back in—and another related market is growing more lucrative as a result.
What is a “Smartphone Multiplier”?
When people think of the smartphone market, hardware likely springs to mind first, but an equally important part of the equation is the plethora of apps, services, accessories, and complementary devices that help us connect with the digital world.
The ecosystem of these products and services are known as smartphone multipliers. According to Deloitte, this ecosystem will drive $459 billion of revenues in 2020, an impressive 15% increase from the prior year.
The market can be broken down into three main categories:
|Category||Market Value (2020e)||Sub-categories|
(68% of total)
|$176B: Mobile ads
(24% of total)
$9B: Smart speakers
(8% of total)
Largely driven by mobile advertising and app sales, content is by far the largest subcategory, accounting for 68% of revenues:
- Mobile advertising surpassed TV as the largest advertising channel in 2019, partially thanks to the relentless growth of online video and social media, making ads virtually unavoidable on a smartphone.
- Gaming apps are benefiting from the immense processing power of today’s smartphones—and will bring in over two-thirds of total app revenue in 2020. Apple’s app store brought in approximately $1.8 billion in sales between Christmas Eve and New Year’s Day alone.
If you’ve ever owned a pair of headphones or a powerbank, it’s easy to understand why accessories are the third-largest subcategory in the smartphone multiplier market. With more people ditching the cable for wireless headphones, this subcategory is also set to grow even more.
The Next $1T Economy?
In the U.S., 73% of adults go online several times a day or almost constantly, which makes it clear that they aren’t going to give up their smartphones anytime soon.
As a result, smartphone multipliers will continue to evolve and flourish, presenting a unique opportunity for investors and businesses.
Altogether, it’s expected that the smartphone multiplier market will grow between 5 and 10% annually through 2023, likely propelling the entire smartphone economy past the $1 trillion benchmark in the coming years.
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