Thursday, March 1, 2012

Key Digital Investment Themes in 2012

A local private equity firm recently asked me to summarize my thoughts on what I saw as the key investment themes they could consider in building their digitally-focused portfolio.  Below is what I told them, in no particular order:

A. Social-Local-Mobile will evolve to Hypersocial-Hyperlocal-Hypermobile as more and more interesting applications get developed.
B. More and more services, technology and human, will get distributed and fulfilled through "the cloud" and "crowds"
C. SaaS will continue to replace installed software, as a more cost-effective alternative
D. e-Commerce will become more "automated" (shopping bots) and "in aisle" (via mobile apps)
E. Machine learning driven recommendation engines will proliferate across more and more verticals--beyond Amazon, Netflix, etc.
F. TV and Web will merge into one experience--video will become default ad unit, and SMBs will enter space in force. Cool interactive TV technologies and the rise of social TV.
G. Industries will continue to experiment with new ways to engage an audience (e.g., gamification around job search)
H. CMOs will need better, centralized, multi-channel tracking tools: direct reponse plus brand building, web + social + mobile + email + CRM systems merged.
I. Online producers will start owning/building their content than using third party content (e.g., sites like Netflix will evolve into "HBO")
J. Offline publishers will demand better conversion tools for digital formats across multiple platforms (e.g., iPhone, iPad, Kindle), including easily making static content more interactive
K. Deals/coupons/store cards will all get merged into centralized fulfillment platforms centrally loaded/tracked by your credit card or mobile app
L. Social sharing could replace buying (e.g., ride my car, borrow my drill)
M. Pinterest and collaborative publishing could be the next Facebook or Twitter, seeing meteoric growth. Check them out www.pinterest.com.
N. US ecommerce leaders will start to see a lot of competition from overseas competitors (e.g., Vente Privee from France competes with Gilt in U.S.)
O. Someone will finally crack the nut on figuring out how to monetize video games (e.g., same audience as TV, but only 1% of ad revenues . . . today!)
P. Hyper fragramented niches will consolidate (e.g., numerous services around digital video; numerous services around social media marketing)
Q. Tablets could ultimately replace the need for desktop PCs, and all content will be distributed digitally (bad news for printing and shipping)
R. People will get more comfortable with sharing private information, if it means improving their user experience. Think "Big Brother" on steroids.
S.  Big data filtering/analytics tools and machine learning will proliferate.
T.  Education will finally start to see improvements from online tools that increase quality and lower costs.
U.  Healthcare will start to ride a technology driven wave, including predictive diagnostics, telemedicine, integrated health care records, efficiency systems and beyond. 

So, if you are entrepreneur considering which avenues to pursue, following one of the above themes could prove fruitful for you.  And, if you feel that I am missing any, please add them to the comments field below.

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2 comments:

Drake Pruitt said...

George,

Insightful list. I'd add two: Search and discovery will rely more on the 'graph' as web media and applications proliferate.

Investors will look back and realize that reprises of web 1.0 (kozmo.com anybody?)ideas weren't any better this time around.

Chris Maloney said...

Great list, strongly agree that social TV could be huge.

Here's another one I would add:

"Rise of Competitive Social Leagues on Facebook"

Nobody has created mass appeal social content like Fantasy Football on Facebook yet. And there’s a glaring opportunity – you have a billion users interacting with each other, but for the most part, they’re sharing low-end personal content that has limited appeal.

Facebook members are just waiting to be engaged with great content that creates a fun and socially connected experience. Something that goes way beyond Draw Something, Words With Friends and SongPop.

But, it won't be long before a Zynga, a Disney, a Mark Burnett or some unknown comes up with a great idea. And it will probably be something simple, something that we all enjoy.