A/Prof Jeffrey Funk Division of Engineering and Technology Management National University of Singapore For information on related issues and specific technologies, see http://www.slideshare.net/Funk98/presentations
A/Prof Jeffrey Funk
Division of Engineering and Technology Management
National University of Singapore
For information on related issues and specific technologies, see http://www.slideshare.net/Funk98/presentations
Recent Startups ◦ with valuations over $1 Billion◦ and are still private (no IPO yet)◦ sometimes called Unicorns
97 firms as of June 2015◦ With 19 other firms in list, that exited in recent years due
to IPOs, acquisitions or decreasing value
High valuations mean investors believe these firms are offering something valuable, unique, and hard to copy
Some of them will◦ lead to creative destruction◦ have $100 Billion plus market capitalizations in the future,
like the strongest hi-tech startups: Apple, Google, Amazon, and Microsoft
Some new technologies destroy an existing economic system and create a new one (Schumpeter, 1942)
These technologies ◦ provide significantly higher economic value to users than do
the old ones◦ enable dramatic improvements in economic productivity and
thus living standards (e.g., Solow (1957)◦ create winners and losers at the individual, firm, and
country level◦ have a large impact on our ecological and social
environment (both negative and positive)
Over the last 20 years, Apple, Google, Amazon, and Microsoft have enabled creative destruction
Some members of the Billion Dollar Club will do the same
Understanding the sources of these opportunities can help us understand ◦ sources of creative destruction
◦ where entrepreneurs should search for opportunities
◦ how universities can help students
search for opportunities
and solve problems
These slides focus on technological changes: Which technologies enabled these opportunities to emerge?
What do these technologies tell us about technology change and what might come next?
The Top 27 Firms as of May, 2015
Company Latest Valuation Total Equity Funding Last Valuation
Xiaomi $46.0 billion $1.4 billion December 2014
Uber $41.2 billion $4.6 billion December 2014
Palantir $15.0 billion $1.0 billion September 2014
Snapchat $15.0 billion $815 million March 2015
Flipkart $15.0 billion $3.0 billion April 2015
SpaceX $12.0 billion $1.1 billion January 2015
Pinterest $11.0 billion $1.3 billion February 2015
Airbnb $10.0 billion $800 million April 2014
Dropbox $10.0 billion $607 million January 2014
Lufax $9.6 billion $488 million March 2015
Theranos $9.0 billion $400 million June 2014
Didi Dache-Kuaidi Dache $8.8 billion $828 million April 2015
Spotify $8.4 billion $921 million May 2015
DJI $8.0 billion $105 million May 2015
Meituan $7.0 billion $1.1 billion January 2015
Square $6.0 billion $495 million August 2014
WeWork $5.0 billion $569 million December 2014
Zenefits $4.5 billion $584 million May 2015
Cloudera $4.1 billion $670 million March 2014
Dianping $4.0 billion $1.4 billion March 2015
Stripe $3.5 billion $190 million December 2014
Jawbone $3.3 billion $531 million February 2014
http://fortune.com/2015/01/22/the-age-of-unicorns/
Founding Date and Valuation: Many of the Newest Ones are the most Valuable (Jan 2015)
https://www.cbinsights.com/blog/unicorn-conversion-rate/
It takes a few years to achieve large valuations and do IPO
Thus, larger Percentageof firms foundedin 2009 achieved$1B valuation than more recent firms
http://qz.com/398090/groupon-still-the-fastest-company-to-reach-a-unicorn-billion-dollar-valuation/
Speed is Good, but not everything (Web Van wentbankrupt in 2001 and Twitter’s star is falling)
https://hbr.org/2014/04/how-old-are-silicon-valleys-top-founders-heres-the-data/
(August, 2014)
Founders areoften young
Countries with the most $1 Billion Startups (as of February 2015)
http://graphic.valualize.com/v3/full/107/
Source: https://www.cbinsights.com/blog/billion-dollar-startup-venture-capital/
Moving to Technological Change….The Billion Dollar Startup Club by Category
Software, Big Data, Cloud Computing (33)
e-commerce (25)
Consumer internet (22)
Financial services (11)
Hardware: phones, wearable computing (10)
Healthcare (5)
Energy (3)
Entertainment and Games (2)
Aerospace and defense (1)
Real Estate (1), Education (1)
Note: this includesfirms that exitedfor total of 114 firms
Which Technologies Enabled the Opportunities?
Software (33)
e-commerce (25)
Consumer internet (22)
Financial services (11)
Hardware: phones,
wearable computing (10)
Healthcare (5)
Energy (3)
Entertainment and Games (2)
Aerospace and defense (1)
Real Estate (1)
Education (1)
Mostly the Internet (103), with some exceptions
Moore’s Law (and the Internet) (10)
Some science (9)
Only 5 healthcare firms and only 1 firm is bio-tech◦ Theranos – blood test service
◦ Moderna – bio-tech, therapeutics
◦ Intarcia – implanted pump for diabetes
◦ Oscar – health insurance
◦ Proteus Digital Health – smart pill
Only 3 energy firms of which none are solar cell or wind turbine manufacturers◦ Bloom Energy – fuel cell manufacturer
◦ Sunrun – leasing of solar cells to consumers
◦ Fisker Automotive – electric vehicles
Only 1 Aerospace and Defense◦ SpaceX – consumer space service
No nano-technology, display, lighting, integrated circuit, MEMS, human-computer interface startups (types of technologies emphasized by engineering schools)
Growing use of Internet, from desk-top,
laptop, tablet, and smart phone (all over
world)
Increasing speed and bandwidth and falling
cost of Internet (including more free WiFi)
Increasing performance and falling cost of
desk-top, laptop, tablet, and smart phones
Above three drive increases in Internet usage
Above four enable better content and services
including greater diversity of content and
services
Part of this is driven by Moore’s Law
Also driven by cheaper and better displays,
magnetic storage, lasers, photo-sensors,
optical fiber
Most of these technologies are experiencing
>30% annual improvements
These improvements drive
◦ Increasing speed and bandwidth and falling cost of
Internet (including more free WiFi)
◦ Increasing performance and falling cost of desk-top,
laptop, tablet, and smart phones
Software (33)
◦ Cloud computing, big data, online ads, security, database, integration platforms, many types of tools
e-commerce (25)
◦ Mostly mobile sites including specialty sites for fashion, clothing, interior design
Consumer internet (22)
◦ Taxi apps, social networking, food delivery, music, hotels, discount coupons
Financial services (11)
◦ P2P lending, mobile payment, micro-financing
Hardware (10)
◦ Phones, drones, wearable computing, rugged cameras, vision-based driver assistance, thermostats
Other (13)
Cloud Computing: Dropbox, Pure Storage (also hardware),
Nutanix, Jasper Technologies (IoT), AppDynamics, Box
Big Data: Palantir, InsideSales.com, Deem, New Relic
Open Source: Cloudera, Automatic, Hortonworks
Online Ads: InMobi, AppNexus, IronSource
Security: Tanium, Good Technology, Lookout
Database: MongoDB, MarkLogic
Integration Platforms: MuleSoft, SimpliVity
Tools (for individual and enterprise): Zenefits, DocuSign,
Slack, Sprinklr, Actifo, Qualtrics, Shopify, Cloud Flare,
Evernote
Many focus on fashion: better web experience through improvements in Internet and access devices Clothing, accessories: Fanatics, VANACL, Trendy Group, Gilt
Groupe, Mogujie, JustFab, Fab, LaShou, Zalando
Furniture, interior design: Home24, Honest Co, Beibei, FarFetch, Wayfair
Other: Meituan, Warby Parker (eyeglasses)
Many from Asia: growth in Internet in Asia India: Flipkart, Snapdeal, Auiker (mobile classified)
China: Koudai, JD.com
Korea: Coupang,
SE Asia: Lazada Group
Others: Coupons.com, ContextLogic (optimizes adspacefor ecommerce sites)
Greater Specialization: Many E-commerce startups have attacked Portions of Craigs List, one of the first Internet classified ad sites
Taxi apps: Uber, Didi Dache-Kuaidi Dache, Ola Cabs,
Lyft, Grabtaxi
Social Networking: Houzz (interior design), NextDoor
(neighborhoods), Eventbrite (event management),
Yello Mobile (mobile shopping), Lamabang (babies)
Food delivery/restaurants: Delivery Hero, NextDoor,
Zomato
Music, photos, video: Spotify, Shazam, Pinterest,
Snapchat
Other: Tango (video, voice calling), Rocket Internet
(builds online startups), Airbnb (hotels), Dianpping
(discount coupons)
P2P lending: Lufax, Prosper Marketplace, Social Finance, Funding Circle, Lending Club
Mobile payment: Stripe, One97 Communications, Adven
Micro-financing: Hanhua Financial
Other: Powa (solutions for online commerce), Credit Karma (credit info for consumers)
Wearable computing: Jawbone, Magic Leap
Phones: Xiaomi Drones: DJI Rugged cameras: GoPro Game hardware: Razer Vision-based driver assistance: Mobileye Audio products: Beats Electronics Thermostats: Nest Labs Enterprise storage: Infinidat
http://techcrunch.com/2014/11/17/lean-hardware-breeding-hardware-unicorns/
Longer List of Hardware Startup (Nov, 2014)
Let’s think about technology change
Which technological changes enabled the opportunities that these firmsexploited?
And what do these changes tell us about the future?
More than half depend heavily on smart phone (consumer internet, financial services) and other mobile devices such as tablets
Most reflect improvements in Internet and web experience
Many reflect greater specialization in software (open innovation and vertical disintegration*)
Some reflect growth of Internet in new countries: China, India
Some are mostly from Moore’s Law (hardware) and related technological changes
But almost all of these opportunities are indirectly enabled by improvements in electronic components
* Funk, J 2012. The Unrecognized Connection between Vertical Disintegration and Entrepreneurial Opportunities, Long Range Planning 45(1): 41-59, 2012.
Software: cloud computing,
big data, online ads, security,
database, tools
e-commerce: specialty
sites, both product and
location
Consumer internet: Taxi,
social networking, food,
music, hotels, discount
coupons
Financial services: P2P
lending, mobile payment,
micro-financing
Hardware: Phones, drones,
wearable computing
Greater use of smart phones, other mobile devices
Improvements in online experience
Greater specialization in software
Growth of Internet in new countries: China, India
Moore’s Law and related technological changes
Greater use of mobile devices◦ Not just mobile phones
◦ But also wearable computing
◦ New software, e-commerce, consumer Internet, financial services needed for mobile phones, wearable computing
Improvements in online experience◦ Will expand number of product types; fashion will
continue to expand
Greater specialization◦ Cloud computing will grow in importance
◦ Firms and E-commerce sites will outsource software and other activities to specialty sites on cloud
◦ Differential rates of improvement cause some parts of Internet to become a bottleneck and thus drive changes in architecture
Growth of Internet in new countries◦ Growth will continue fueled by falling prices
◦ New e-commerce, consumer Internet, and financial services will be needed in these countries
Moore’s Law◦ These improvements, impacting directly on hardware
and smart phone related services and content
◦ These improvements will enable faster services, more bandwidth and more mobile, wearable, health care, and Internet of Things related devices
More social networking ◦ More e-commerce and financial services will
probably be done on social networking sites
Wearable Computing and Health Care◦ Better and cheaper bio-sensors, ICs, MEMS and
displays are enabling more health care related wearable computing
◦ Big Data services and software will also emerge and will likely provide most of the opportunities
Internet of Things◦ Better and cheaper ICs, MEMS, transceivers (WiFi,
Bluetooth), and energy harvesters are enabling all mechanical products to be connected to Internet
◦ Which products can benefit the most from being attached to Internet?
◦ Big Data services and software will also emerge and they will probably become the biggest opportunities
◦ Who will provide these services and software?
For more info, see: http://www.slideshare.net/Funk98/presentations
The next step in computing – after smart phones and tablets
One big market for wearables will be health care – monitoring various parts of your bodyFor more info, see: http://www.slideshare.net/Funk98/presentations
Let’s Connect Everything tothe Internet
For more info, see: http://www.slideshare.net/Funk98/presentations
Which forms of wearable computing will succeed?◦ Which parts of the body provide easy to understand
information?
◦ Or yield the most useful health data?
◦ What services can provide useful data?
Which types of Internet of Things will succeed?◦ Which mechanical products or systems will benefit
most from connecting to the Internet?
◦ What services can provide useful data?
How might improvements in electronic technologies change the answers? For more info, see:
http://www.slideshare.net/Funk98/presentations
What does this analysis of billion dollar startups tell us about opportunities?
Opportunities are emerging in a small number of technologies◦ software, ecommerce, consumer Internet, financial
services, electronic hardware
Entrepreneurs should recognize this fact ◦ and probably focus their efforts in these areas
But they also need to understand ◦ underlying changes that have enabled these
opportunities◦ use knowledge of them to think about the future
and how the opportunities are changing
Help students understand technological change and how they enable opportunities
Although traditional engineering courses cover important aspects of science and math,◦ few opportunities involve new forms of physical science◦ more involve computer than physical sciences◦ but even the computer science involved with the new
opportunities probably doesn’t require a PhD, patents, or qualify as “advance in science”
◦ maybe this is why non-graduates like Steve Jobs and Bill Gates have become leaders
Wearable computing and Internet of Things are big opportunities for engineering schools (and students)◦ Can they help students understand the opportunities? ◦ Or will they teach these subjects just in terms of science and
math?
Example of emphasizing engineering science and math too much can be found in◦ MIT Technology Review’s predictions about
“breakthrough technologies” **◦ All of its predictions involve esoteric science, no
mention of smart phones, Big Data, cloud computing
None of its 40 predicted breakthrough technologies in early 2000s (2001-2005) ◦ Has produced $1Billion valuation
Even market sales in 2013 are small◦ 1 had sales >$10 Billion (smart grid)◦ 2 had sales between $5 and $10 billion◦ 11 had sales between $1 and $5 billion◦ 26 had sales less than $1 billion or were too vague to
analyze ** See “Predicting Breakthrough Technologies”http://www.slideshare.net/Funk98/presentations/2
Business schools probably do an even worse job of helping students understand technological change
The leading entrepreneurship books (and thus courses) provide little insights into technology change
“Opportunities are everywhere,” is widely written and spoken
Moore’s Law and other common knowledge in Silicon Valley is ignored
Instead, books emphasize dominant designs, S-curves, and other general concepts that provide little help
Understanding technological change is essential for finding opportunities
Universities need to do a better of job of teaching technology change