To build a successful startup, you need 3T’s: TAM, Team, and Timing. This newsletter is about Timing – more specifically, the B2B tech trends (because I’m not a B2C person) that I’m predicting are ripe for startups in 2019. It’s never a good idea to try to predict the future – but I’m going to do it anyway.
I’m betting on 3 trends that have been on the rise and will continue to be hot this year, and another 3 that are going to have to wait for the future.
1. Data Up, AI Down
Machine learning is in everything these days – so much so that on its own, it’s rarely a differentiation. In 2017, Brandon Allgood, CTO at Numerate wrote a great Forbes article predicting the decline of AI as a competitive differentiation as the rise of AI-as-a-Service continues. Few startups seem to have caught on though. It feels like every business model I see still talks about how AI will power the engine when the company hasn’t yet collected any meaningful data.
The interesting startups are the data-first ones – startups like Densitas. Densitas began by building partnerships with organizations with large data stores. This gave them the data to harness and train their AI platform for breast cancer screening.
2. The Gig-Economy in B2B
Uber, Lyft, Amazon, Upwork, TaskRabbit and others have already established the gig economy for servicing consumers. 2019 should see more B2B companies leveraging the Gig Economy, building a network of on-demand resources to provide services to other businesses.
YardClub started out doing this by getting construction companies to share their equipment, but quickly got acquired by Caterpillar. Other entrants include Cargomatic (on demand truck availability for shippers), WeGoLook (insurance and other professionals for corporate services), and Share My Office (perhaps trying to disaggregate WeWork by letting people share empty offices or desk space). What would be even more interesting is a startup that helped companies through the fear factor they (and their lawyers) inevitably have about sharing their resources.
3. Customer Experience
It used to be all about automation. Now it is all about the experience. There’s so much competition today that the great startups have already figured out that their main differentiation has to include a good customer experience.
Today, that means something other than asking your customer to complete a survey after a transaction. It means knowing when and how to connect your user to a human being in real time, not a bot or a contact form. It means crowd-sourcing the effectiveness of your product design. It means having your customer-facing people armed with all the information you have in all your systems about a customer as they are communicating with them. UserTesting, PingPilot, and Squelch are just a few of the many companies in the customer experience space powering a differentiated experience for brands.
1. BaaS – Blockchain as a Service
Beyond cryptocurrencies and fintech, blockchain holds the promise of helping us decentralize the colossal data hubs amassed by companies like Google, Facebook and Amazon. Blockchain can decentralize everything from identity management to supply chain management to software development.
But initial coin offerings have thrown blockchain businesses into a spiral of funding uncertainty, and there’s more to come as the economy, IMHO, continues its jittery fall throughout 2019. So while I’m a huge blockchain fan, it’s going to take a bit longer before this segment hits mainstream.
2. Smart Machines
I wrote a lot about smart machines last year and I continue to be excited about them – but they’re not coming to the masses in 2019. Here I’m talking everything from remote-controlled Robots (check out Taiga Robotics), to smart portable farms (find a storage shed and call Freight Farms), to flying cars (super cool startup NFT).
Yes, Nest and Alexa pioneered smart home devices for consumers, but large scale B2B smart machines are just starting to take root more broadly. Companies in this space have big opportunities – in the next few years.
There’s a lot of excitement about quantum computing because of the promise of super-fast processing speeds using the quantum principle of “superpositioning”. Being Canadian, what’s particularly exciting is the number of Canadian startups with a strong presence in this segment, with D-Wave Systems being one of the largest, but also including 1QBit, Xanadu, Qindom, and Bleximo Corp, a Berkeley-based startup, who raised $1.5 million in seed funding late last year.
So the field is already crowded, but the market is still nascent.
Show Me the Money!
Whether you’re poised to scale this year or riding a new trend that’s going to take off next year, make sure you’re considering the economy in your scaling strategy.
When you combine the high valuations over the past year, with the massive private and public debt that has accumulated in the United States and worldwide, and the upcoming U.S. election, it starts feeling like we’re going to bottom out again later this year or early next.
So if you’re looking for funding, do it early and try to get enough to get through the trough and to your next valuation high point. If you haven’t heard me talk about valuation high points, you can check out this webinar.