This is a two-part report summarizing some of the biggest trends during 2020 and the beginning of 2021. For the first part, check the geopolitical trends.
The second part of this report shares a brief analysis of some of the most prominent technology trends that have been either developing or evolving during last year and into 2021.
Proptech maturity
One of the industries that suffered and evolved the most was Real Estate. For decades it’s been resisting digitalization one way or another. The pandemic has supercharged it, and many second-generation proptech startups are rising to the top.
Digitalization isn’t just replacing brick and mortar processes; it’s also spreading horizontally, making many current operations obsolete. Once everything is connected, new services are unlocked. That’s what 2020 was all about. Look out for this space because its growth has been meteoric. It’s also accelerating IoT trends and Perception AI’s deployment (more on this in a future report).
Consolidation of food delivery
This one is fairly obvious. As more regions experience intermittent physical lockdowns, disruptions in the food chain have increased. Many restaurants are closing for good, while many others are struggling to offer delivery options. Once a business adds a delivery option, it rarely goes away, so expect many surviving companies to become hybrid. A bigger question is if the current status quo will accelerate the already growing pre-pandemic trend of “takeaway.”
The growth of ghost or cloud kitchens has accelerated, as well as the crop of startups (and funding) providing automation for them. Time will say how many of them will survive a post-vaccination era or if the quality of the “automated” food is a match for the old school.
However, the disruption has propagated down the supply chain. It is inviting new investment to several foodtech segments like synthetic food (NextGen, Cellular Agriculture, etc.) or agrotech (vertical farming, automated machinery, precision agriculture, etc.).
Curiosity: The largest European plant-based food company Barcelona-based Heura Foods, tripled its turnover last year; From 2,5 million euros in 2019 to 8 million euros in 2020).
Energy race towards fusion
Energy independence has been a strategic goal for many countries. Through 2020, though, I’ve perceived an increase in energy-related startups’ activity and intensity, especially in the fusion field.
It reminds me of the initial spike I registered around Quantum Computing when I started The Aleph in late 2017. It’s by no means a “trend,” but it’s worth checking from time to time. Our energetic needs keep increasing (exponential computational needs, electrification, agrotech needs, etc.). A functional fusion reactor could unlock incredible strategic value for any nation.
It seems several startups, including US and UK ones, are on the verge (3-5 years) to have a functional reactor. If this becomes real, it could have dramatic geopolitical consequences for the middle east.
Shopify vs. Amazon
Another big story of the year has been the meteoric growth of Shopify. From e-commerce platform to alleged Amazon contender. And while Shopify is still far from Amazon’s volume, it already accounts for nearly 6% of the US e-commerce market share.
The differences between both companies are stark, but it seems Shopify is reluctantly moving towards Amazon’s turf (and vice versa). Shopify expanded into fulfillment, integrating the lower part of the value chain. This move is very representative of their current strategy. They want to become the operative system (OS) for e-commerce, and owning the fulfillment piece is critical.
However, as merchants increase (last estimates mention 1-1.2 million) within Shopify, so does the competition. This struggle is highlighting the lack of marketing mechanisms in the platform. To counteract this, they’re tiptoeing into marketing via their new app Shop, which integrates order tracking and the seed for a merchant search engine.
This 2021 might be an exciting inflection point for the company, probably struggling to get the right balance between being merchant-driven vs. providing better tools to channel customer traffic.
The truth is that, despite Shopify’s rapid growth, the default shopping search behavior happens in Amazon. Only well-known brands can pull it off on Shopify, but that might change this year. If they manage to create a fair marketplace with well-aligned incentives, they could erode Amazon’s current marketplace status quo.
mRNA revolution
The rush towards an efficient Covid-19 vaccine has propelled the use of mRNA technology to the forefront. Such acceleration has significant implications for the biotech industry. Its use for the first global vaccines (Pfizer-BioNTech and Moderna) has given the technology unprecedented scale. Such rapid and global use has accelerated, by a significant factor, the technology’s readiness and acceptance.
New data from Israel shows the incredible effectiveness and capacity of the new vaccines. These reassuring numbers will increase its respectability within regulators, potentially fast-forwarding mRNA use in other treatments like cancer, flu, autoimmune diseases, or even Alzheimer’s.
Logistic nightmares
As more people turn to home delivery for everything, the already strained postal service is getting worse—delays, mistakes, increased taxes, etc.
The pandemic has accelerated a change that was already going on. An increasing number of companies are redesigning their logistic operations to achieve deliveries within the magic 42h window (thanks Amazon). Part of the equation is the retrofitting of the current “dumb” warehouses. This year I expect an increasing number of experts helping create Smart Warehouses. Many of them are deploying semiautonomous vehicles to automate several tasks. However, before that, warehouses require essential data infrastructures and a digitalization plan to achieve operational improvements.
This acceleration is also forcing the deployment of new startups in the last mile delivery space. On the one hand, there is an explosion of companies providing “Fulfilment as a Service.“ On the other, some are adventuring and pushing for autonomous last-mile vehicles (especially in Asia). While consumer Autonomous Vehicles (AV) startups have been shutting down, their smaller cousins find profitable niches to specialize in the logistic supply chain.
SpaceX menace
Many friends know I’m a bit of a Space freak. As I mentioned before, during the pandemic, I gave a couple of workshops around spacetech.
One of the most important developments I’ve been tracking for a while is SpaceX’s Starlink network’s deployment. During the last few months, they’ve been testing its operation with beta testers all around. The feedback has been impressive so far. I can’t stress how disruptive Starlink is. Telco companies should be terrified as it will eventually provide affordable internet access with a global footprint. Worse of all (for incumbents) is that the competitive moat is massive. It will take a long time for the competitors to develop something even remotely similar.
Another angle of Starlink is the potential capacity to circumvent local or statewide Internet censorship (i.e., China, Hong Kong, India, Iran, etc.). Will nations develop satellite jammers to prevent this from happening? Will state opposition start using such networks to coordinate and communicate without barriers? It’s still early to say, but the current geopolitical turmoil makes it a very enticing option.
Blockchain and crypto speculation
Too many people are bored. The combination of lockdowns, limited or restricted outdoor entertainment, and accessible trading tools have created the perfect speculative storm for trading floors and the crypto markets. I have no doubt it will end with a bang for many.
However, speculators aside, blockchain technology is having a moment as a tool to deploy transparent and trustworthy pandemic related apps (not without problems though). From contact tracing to vaccination or health passports, the need to provide “proof” of something in a distributed and secure fashion (i.e., different countries) is where blockchain might excel.
I expect that many of the cross-border apps coming up this year will be powered by blockchain technology. The increasing use of specific blockchains will also drive the price of individual virtual tokens, so don’t expect speculation to end anytime soon.
Education disruption
Another industry that has been deeply affected by the pandemic is the education space. Many institutions have been forced to create hybrid curriculum and retrain their professors. With attention rates dangerously low, and unequal access to remote learning tools, it’s easier said than done. Online education lowers the friction of attendance, but it also makes it very easy to zoom out if the professor or the topic isn’t engaging, creating “Zoom fatigue“.
On top of this, and as we’ve seen with the explosion of videoconferencing tools, the need for better online education tools is patent. Effective online education requires more than a simple videoconferencing tool. As we move forward into the year, I’m guessing we will experience a specialization of several of these new online education services.
Another side of this disruption is the sudden demand for digital transformation experts. By this, I don’t mean consultants, but people with the expertise to redesign and adapt physical processes to digital environments and win. Opening a website or e-commerce isn’t enough. We need to redesign, optimize, and automate all kinds of operations. These changes require not just tools but industry-specific know-how, data science, and data management skills.
The reality is that the pre-pandemic demand already exceeded the supply. Now it’s even worse. Education ventures are already moving in that direction, but there is plenty of opportunities to train people in vertical digital transformation tracks (i.e., Restaurant digital transformation expert). This year will be one for new (and weird) job descriptions.
Artificial Intelligence, data, ethics, and bias
Finally, Artificial Intelligence (AI) has been at the center of several discussions during the last year. If there has been a vertical that has thrived during the pandemic, that has been AI-powered startups. Intelligent automation and optimization of processes are essential to survive the economic downturn.
Simultaneously, the rage to digitalize previously analog channels is creating even more data for our AI algorithms. They can now ingest, analyze, and use new data points for modeling and prediction. It’s also worth noting that the pandemic is also generating serious data gaps (data drift) which will have consequences moving forward.
However, such systems’ deployment exacerbates the need for AI ethics and powerful new methods for explainability (XAI). We’re still in the early days of mass AI systems, and we’re already falling dramatically. It’s not an easy problem, as ethics and morals are mostly subjective. Nonetheless, there is increasing attention to meta-ethics and the development of core moral structures that undergird new systems.
Big tech companies like Facebook, Google, Amazon, or even Chinese ones, are rising contempt and animosity, not just from their users but also from their employees. Employees are worried that their projects will have a dual-use (civilian and military), while users are afraid the AIs are manipulating them. Activists are fearful that AIs can silence them; governments are nervous that AI companies have more sway with the population.
The ethics of such systems will most definitely be a hot topic this year. I’m not sure it will change much, but the pressure to forbid or regulate certain aspects is growing.
And deeply tied with the last point is the expansion of algorithmic bias, or let’s say, the amplification of human bias through AI. While many western societies don’t see bias as an issue, the truth is that adding exponential scale to it through AI will only increase the current erosion of the social fabric. This acceleration is a big challenge, one that isn’t easy to fix either. The ongoing debacle (which has even trickled to the US Congress) with Timnit Gebru, former head of Google AI Ethics, underscores how far we are from fixing it. She was allegedly fired because of her latest research paper on the dangers of creeping bias on some of the world’s largest AI models (BERT, the engine for the Google search, or OpenAI’s GPT-3 language generator).
I will be unpacking these issues and others like China’s AI capabilities in future reports.
Final words
2020 has been a rocky year for many reasons, and there are no reasons to believe 2021 won’t be as disruptive. And while some fields of tech have benefited dramatically, others have been hit hard.
We’re entering a very volatile year, and it’s more important than ever to plan for high uncertainty scenarios. The world will keep spinning, but many of the rules of engagement are changing fast.
I hope you enjoyed this global perspective of trends. During the next weeks, I’ll go deeper into exploring further repercussions and suggest different strategies. Until the following report, stay safe!
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