Monday, January 3, 2011

6 Startup & Tech Trend Predictions for 2011

These are my predictions in terms for 6 big tech trends for 2011 (see also, "Companies That Will Buy Companies in 2011").

Let me know in the comments what you think the most exciting trends/markets/technologies will be in 2011! :)

1. Mobile photos is sooooo 2010; 2011 is the year of mobile communication apps (VoIP, contacts, SMS)
  • One of the big themes of 2010 was the launch of multiple mobile photo apps that each grew to hundreds of thousands to millions of users (e.g., picplz, picbounce,, path).  It looks like is the early winner in the mobile photo wars within the hipster set, while picbounce has seen strong growth in other areas.  Competition will continue amongst photo apps in 2011.
  • Just as 2010 saw the launch of multiple photo apps, 2011 will see the evolution of mobile communications (e.g. SMS, VoIP, video chat etc.).  Kik, Viber, and Tango are all examples of apps that grew to >1 million users fast.  In 2011, I think we will see some additional apps launch and a winner in this area start to emerge (keep an eye out for new startups like Camino Real)

2. Beyond checkins: cool new types of location apps 
  • 2010 was the year of the "geolocation wars", with a lot of hype and user growth for apps like Foursquare and Gowalla and checkin style behavior added to Facebook, Yelp, and Loopt.
  • 2011 will see the rise to prominence of a new set of location enabled apps, that don't depend on "location broadcast to your friends" as their primary drivers.  Apps like likealittle and Qrank are already innovating in interesting and cool ways in these areas.

3. Big data and object classification will be a big meme
  • 2010 saw the funding of a number of companies setting out to classify and aggregate structured data about the world (ThingdFactual), sites that let you collect and name items (Pinterest, Thefancy), as well as companies that provide hosted services to store and crunch large amounts of data (MongoDBAster DataRiptano).
  • In 2011 the interest in big data and classification companies will increase (especially in the press) and continue to grow as a meme.  I am guessing at least one of these will be acquired for an unnaturally high valuation by the end of 2011 / early 2012.   

Three Massive, Fundamental Market Shifts
I think user behavior, or key aspects of the following three markets have shifted fundamentally, creating big opportunities for entrepreneurs.

4. MEGATREND: eCommerce renaissance
  • In 2010 a new suite of ecommerce companies emerged, while category leads of the new old school were acquired (e.g. Zappos, while new ones were funded (BirchBox, ModClothBaubleBar, etc.)  In parallel, recent online retailers (Gilt, ShoeDazzle, RueLaLa etc.) have ramped revenue very fast, proving that building an ecommerce company fast is now possible.
  • What has changed?:  Buying behavior has fundamentally changed - there is a massive pool of consumers finally truly comfortable with buying goods online, and with free returns, cheap shipping, and fast delivery people are voting for ecommerce with their wallets.  In addition, new models of eCommerce (flash sales, subscriptions, etc.) have been adopted rapidly, providing users with additional incentives to shop online.
  • In 2011 the pace of innovation and funding in ecommerce will accelerate dramatically, with craploads of companies getting funded.
  • New models will continue to be pioneered in ecommerce, for example subscription based bundles for monthly goods (see e.g. ShoeDazzle, BirchBox, and Foodzie).
  • I am personally super excited about this area

    5. MEGATREND: Huge mobile user bases
    • Smartphones have hit critical mass with >300,000 android activated a day (this is equivalent to 100,000,000 a year!).  By the end of 2011,  low hundreds of millions of users will have highly functional mobile devices.  This means services can now explode on mobile like never before.  
    • Prediction: At least 5 new, non-gaming, mobile applications launched in 2011 will reach a multi-million person user base before the end of the year.
    • In parallel, desktop web services will also see the fastest growth ever as new apps have the potential to come out of nowhere and grow to a massive user base or revenue run rate like never before (see e.g. GroupOn).

    6. MEGATREND: The Shift of The Enterprise to the Cloud Will Continue
    • In a recent talk, Don Valentine (founder of Sequoia Capital) mentioned that in the 1980s, he knew the computer revolution was happening so Sequoia Capital invested in a dozen or so companies (with great success) to capitalize on it.  Right now, a similar trend is happening in that big components of IT services are all shifting to become cloud based services (e.g. Workday for HR management, ZenDesk for customer support, PagerDuty for IT operations, etc.)
    • This massive trend will continue and multiple companies worth hundreds of millions, or billions of dollars, will emerge.

    Basically, 2011 will see a massive wave of innovation.  eCommerce, mobile, and SaaS are 3 areas where fundmental market shifts are happening.   Some exciting companies will emerge and scale fast, while new location services will wow users in unexpected ways.  "Big data" will continue to be a meme, and companies in this category will likely get high valuations.

    Any areas I did not mention that you think will take off?  Add them in the comments section.

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