The technology decade that went by – Hardik Tiwari
Few things that have progressed exponentially and defined the past decade.
Marc Benioff first made the bold claim in 2011 article. Software has since transformed music, logistics, retail, automotive and most industries that we can think of. Technology companies have created substantially more value than other industries over the last decade.
Access to cheap computing infra, ease of building apps and billions of people coming online for the first time created a vast opportunity for entrepreneurs to create new consumption models and disrupt industries. The digital first disruptors leveraged technology to improve experience and reduce the cost to customer. Incumbents were slow to respond and barely survived, in some cases.
Dollar Shave Club took on Gillette by offering subscription-based access to razors at a better cost and service. Uber improved the utilisation rates of taxis, reducing cost of a single ride. Netflix eliminated cost of retails stores and enabled access to thousands of titles with 1 single subscription and a single click.
2. China’s Tech Dominance
The first wave of Chinese internet startups(Alibaba + Baidu) inspired a generation of ambitious Chinese founders to form companies that defined China in the last decade. Alibaba was funded by Silicon Valley investors, and they made a lot of money on that. The same thing with Baidu.That was the first generation. Last decade we saw a whole new group of newcomers coming up, such as Toutiao, Meituan, DiDi Xiaomi and SenseTime.
Most importantly, these Chinese companies started looking outwards of China for growth, and they achieved a lot of success in India and some success in US. India with its billion + population and similar usage behavior as Chinese users emerged showed huge appetite for China based consumer apps
Some large China tech firms have expanded to US. Tencent has 7000 employees across its SV offices. Tencent has investments in Redditt, Epic games, Tesla, Snap, Glu, Activision Blizzard. Over 11 years, Tencent has amassed a portfolio of 700 companies around the globe, 63 of which have gone public.
More recently, TikTok has emerged as the flagbearer of global consumer products out of China. Even in relatively conservative market like Japan, Tik Tok managed to grab the top position of free app ranking within 3 months. In half a year, 24 out of 100 Japanese high school girls downloaded Tik Tok on their phones. In India, number of downloads soared from 1.3 million in 2017 December to 32 million in 2018 December, indicating its expeditious expansion around the world. Even US has got on the bandwagon. 26.5 out of the 500 million monthly active users are from the USA .
3. Money changed
The last decade saw the emergence of multiple consumer finance apps. Technology shook up banking. In Asia, payment apps became the default way of life for over 1bn users. In the West mobile banking is reaching critical mass — 49% of Americans bank on their phones — and tech giants are muscling in. The startups attacked opportunities that were created because of poor customer service (Neobanks), high fees (Betterment, Wealthfront), lack of options for the new internet businesses (Stripe/Square) or just new and better business models (Lemonade). The impact has been reflective in the prodigious growth in investment: from $2 billion in 2010 to over $50 billion in venture capital in 2018.
Broadly the category of consumer finance products that emerged aimed at unbundling the consumer finance space. However, it emerged that there were multiple market segments with a unique approach to market:
NeoBanks: Largely opened up in Latam(Nubank, Uala, Neon)and Europe(Monzo, N26, Revolut). They differentiated themselves by offering a digital only experience, lower fees and better products like easier international remittances (Revolut enables consumers to hold, exchange, and transfer up to 25 currencies)
P2P payments: Peer to peer payments were costly and non digital before p2p platforms arrived. Venmo and Paytm emerged as the largest, dominant platforms in their markets. By rendering payments between friends nearly invisible — no cash changes hands, no checks are written — platforms theoretically made these relationships less obviously transactional. Paytm also benefitted from demonetisation in India.During the time, Paytm wallet was the simplest answer and people flocked to it. It went from 125 million wallet customers before demonetization to 185 million three months later, and it continued to grow, hitting 280 million users by end of 2017.
Lending: In India and China, there already existed an informal lending ecosystem with high, exploitative interest rates. Tech startups emerged to meet the demand. In January 2016, there were 3,383 platforms in business in China with combined monthly transactions reaching 130 billion RMB. Howe ver, most platforms struggled with high default rates and the national rectification campaign in China shut down most of the lending platforms.
RoboInvesting : Before Betterment, Wealthfront, Investing advisory didnt exist for an average investor. Traditional Investment advisors would typically charge anywhere from 1% to 3% of the value of portfolio. As John Oliver pointed out on his show Last Week Tonight while covering retirement plans, these fees are like termites — they are “tiny, barely noticeable, and can eat away your future”. In addition, banks will often recommend that their clients invest in funds run by their asset-management subsidiaries, creating a potential conflict of interest and undermining their clients’ trust. Access to information and advice also came at a steep price. Many traditional advisors have hefty account minimum balance requirements that can reach $200,000 before they’ll even consider working with consumers. The new class of Roboadvisors leveraged technology to create much broader access and offer investment management services t o consumers at a fraction of the price.
4. The big Bitcoin disruption/bubble
Bitcoin in late 2010’s seemed much like internet in 90’s- cult like following, huge potential to change the (financial) world and stteply increaing value(that eventually fell). During the dot-com bubble, tech suddenly became the target of wild speculation, where everybody and their mother would buy stocks of companies that related to the Internet. These were people that never traded before. Bitcoin followed the same trajectory- people quit jobs to trade full time, talked about Bitcoin investing on christmas dinners.
People, that I know, are quitting jobs to become full time #cryptotraders. This has been a bull market so far. Not sure how many will survive as it moves towards bearish sentiments. #BTC #Crypto
— HT (@hardiktiw) January 22, 2018
As the decade draws to a close, news about new digital currency projects have begun to emerge — from vast multi-national corporations like Facebook, to some of the world’s biggest economies. It is the pseudo cryptocurrencies being developed by countries and companies that could see the most mainstream success over the coming decade. They will not be decentralised and will likely be tools to track users rather than provide privacy, but they may solve two of the biggest problems: trust and stability.
5. Gaming — Closer to Reality
Gaming as a segment made 3 large strides — 1. Emergence of Mobile as the gaming platforms (expanding the addressable gaming market to all mobile users), 2. eSports and game streaming created a new user engagement and monetisation stream for the gaming industry, 3. Games expanded to be the entertainment platforms
Emergence of Mobile : The global gaming market is estimated to be worth $152 billion, with 45% of that, $68.5 billion, coming directly from mobile games. Mobile games account for 33% of all app downloads, 74% of consumer spend and 10% of all time spent in-app.
Mobile gaming has unlocked India and China users for the gaming firms where consoles had lower penetration. PubG mobile has over $1 billion in revenues across mobile devices and had over200 million downloads and 30 million daily active users(end of 2018) within eight months since its launch.
eSports and game streaming created a new user engagement and monetisation stream for the gaming industry : Twitch, launched in 2011 and has since grown to 15 Million DAU, created a business around watching video games. More than one million viewers watch Twitch at any given moment and over three million unique broadcasters go live every month. There is huge monetisation opportunity not just through selling games but also engaging viewers of games.
With live streaming, interest in esports has risen far and wide. Newzoo anticipates that in just two years it’ll grow to a $1.65 billion industry. Fortnite has particularly played a key role in widening the esports base, especially newer generation of users. Fortnite World Cup Finals pulled in a live-streaming audience of more than 2 million concurrent viewers in 2019.If that is not a big number, The 2018 League of Legends Finals attracted 200 million viewers, more than the Super Bowl and the NCAA Final Four combined
eSports are critical investment areas for large game publishers. They not only help to increase the audience of games through “free” marketing on OTT video platforms , but it can also drive player engagement, manifested through in-game purchases
Tencent led two outsized investments in Chinese online video platforms Douyu and Huya of $630mn and $461mn, respectively in 2018.
Games expanded to be entertainment platforms : Gaming is far more than just a game now— it is a new media format, it is the new social platform. Players use massively multiplayer games to chat, hangout and casually interact in the virtual worlds, much like how early facebook users used to hang out on FB. Fortnite,Roblox, PubG are not just games, they are the new hangout spot for the next generation.
Early in the year, Fortnite hosted a live in-game concert with Marshmello, which was estimatedly attended by 10 Mn+ users live and 30+ Mn users through streams on YouTube/Twitch. The NFL partnered with Fortnite to offer in-game skins (customizable outfits worn by every player during the game) with all 32 teams. PubG has often partnered with other games /movies like Angry Birds to create in game content.
These ingame engagements enhance the user experience and create avenues to be on the platform even when one is not actively. We seem to have accomplished step 1 of moving towards a ubiquitous virtual reality like the one depicted at Ready Player One.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —These ideas are aggregation of ideas that have influenced me and my own reflection of how I have seen the world over last decade.
Published at Thu, 26 Dec 2019 06:32:55 +0000
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