Fast Five from the Valley in review: Top 5 trends 2017
“Fast 5 from the Valley” is the Detecon Innovation Institute’s weekly summary of everything that’s going on in the Valley – keeping you up to date with the SV buzz. Breaking news, exclusive events, long-term trends and developments that you wouldn’t believe possible, we bring them all together in this publication for you.
2017: A tremendous growth year for blockchain
2017 was a year of tremendous growth for blockchain. Very few expected the unprecedented growth in the market capitalization of cryptocurrencies or the related ICO boom. Bitcoin has increased by more than 1,500% and startups have raised over $3.5 billion in ICOs since the beginning of the year.
Blockchain technology has the potential to revolutionize all industries, as well as our social and economic infrastructure. Companies like Goldman Sachs Group are now considering creating new trading teams dedicated to trading ICOs and other digital currencies. Deon Digital has partnered with Mercedes Benz to develop a new operating system that will help break down silos in the mobility space. Skycell is using IoT and blockchain to open up the pharmaceutical supply chain to embrace payments, invoicing and insurance. TEND is rethinking investment management by creating a Sharing Economy 2.0 for high-value assets.
However, there is still a long way to go before it reaches its full potential. Regulators across the world, including the U.S, Singapore, and the UK have warned companies conducting ICOs that they may be violating securities laws. China and South Korea have banned the cryptocurrency completely.
Despite this, we are seeing a trend towards a new age of ICOs based on a growing number of new cryptocurrencies. Here, we need to mention that the ICO boom is not only significant because of the amounts raised, but because we are seeing the beginnings of the democratization of venture capital.
The Artificial Intelligence Year 2017
The AI technology market is booming. It is estimated that AI will improve labor productivity across the globe by 40% and double world economic growth by 2025. Already this year, we have experienced an increase of 300% in investment in AI!
This development was also reflected in our “Fast5 from the Valley”, where we saw that AI touches all industries in one way or another. Google has made its TensorFlow machine learning system free of charge for anyone who wants to use it and has launched a new project to investigate how people interact with AI systems. Spotify has acquired MightyTV, a startup that uses AI for content recommendations. Facebook helps blind people see photos by generating a description for each photo using AI. Lego has integrated AI into his toys to better entertain and teach children. In the gaming industry, we have seen how AI systems beat top video players such as in Dota 2.
AI systems also contribute to major advances in the transport industry. Uber is using about $1bn of its investment on autonomous driving and other machine learning endeavors and Volvo has agreed to supply the company with 24k self-driving taxis beginning in 2019. Lyft has already offered self-driving car rides in Boston. Waymo, Alphabet’s self-driving division, has conducted a 100 self-driving car trial in Arizona. In addition, Deutsche Post is preparing itself to put an autonomous delivery fleet on the road next year. Detecon has recognized the importance of AI and has established the AI partner program in Silicon Valley to help its clients to implement AI in their processes.
Nevertheless, besides all of these advancements, AI systems have also caused concerns among some people. A driverless shuttle crashed less than 2 hours after being unveiled at a self-driving conference in LA. Additionally, Stephen Hawking and Elon Musk have said that AI needs to be more regulated and monitored.
While this year has delivered financial success for a number of firms in the tech industry (a significant number of the tech giants delivered returns which exceeded expectations), the reputation of the industry as a whole has been damaged by concerns about consolidation of power.
- In September, we arrived at Peak App, where 51% of all smartphone users in the US did not download any new apps from May to July 2017 and 80% of the most used apps were owned by either Facebook or Google.
- The legality of the gig-economy business models is now under examination by the courts in the US as GrubHub, a meal delivery startup, is being challenged by some of its drivers to classify them as employees rather than contractors, which if successful will increase labor costs (GrubHub employees will be entitled to benefits eg health insurance)
- The advances of new AI use cases came under scrutiny with Mattel pushing it too far by developing an AI parenting gadget for children which was quickly questioned by parent’s groups
- Tech companies face the challenge of maintaining freedom of speech while also satisfying the government’s requests and the requirements of companies purchasing adds on their platform – they don’t always align. Facebook has become involved in a national debate that began with fake news and has developed into an investigation into how the Russian government used social networks to influence the 2016 presidential election
- There is a rising trend of “Data Localism” where countries are considering establishing rules that require companies to store data on servers inside their borders and the trend is growing and is likely to combine with the current efforts by the US to remove net neutrality
Our favorite startup squeeze story – Juicero goes under
Create a hype, raise a solid $120m funding from top investors and release an overpriced-underwhelming product – triple check for Juicero. Juicero sold a machine which squeezed packets of pre-squeezed juice and went under in September, declaring bankruptcy after reportedly having sold over a million juice packs in 16 months.
Yes, there was pressed juice before (as there were taxies before Uber and messaging before WhatsApp), but Juicero really seems to be the poster child for doing it wrong. First, they priced their squeezing machine at an exorbitant $700, only dropping the price to $400 after the WSJ covered that packs could be squeezed by hand without the machine. Couple this with terrible PR and a CEO who was out partying in a popular startup retreat in the middle desert while the startup went under. No wonder it got squeezed out of business.