Opportunity waves for 2022.
For startup founders, it’s an extraordinary time right now. Grab a wave and ride it.
For most of most of my career in Silicon Valley there was one big opportunity wave at time. First there was the semiconductor wave, then there was the personal computer wave, then the internet wave, then mobile/social. Each of those lasted 10–15 years and spawned many successful startups that grew into successful IPO’s. And then we were on to the next wave. What makes 2022 different from any other time in history is that today we have several big (trillion dollar) waves going on at once. I’ve never seen so much market opportunity for entrepreneurs and innovators.
We’re only halfway through the first month of the new year, but here’s a brief rundown of the salient waves for 2022:
Web3 is the big one that everyone is talking about. As Chris Dixon from a16z has written, you can broadly describe “web eras” as follows: web1 (1990–2005) was about decentralized protocols that were community-governed. web2 (2005–2020) was about centralized services run by large corporations (Google, Facebook, Amazon). web3 supposedly “combines the decentralized, community-governed ethos of web1 with the advanced, modern functionality of web2”. The crypto people think that web3 will be all about people earning tokens and spending tokens; the privacy people think that web3 will break the data stranglehold that Google and Facebook have on us; the creator economy people think web3 will be Etsy heaven; and the gamers think web3 will be MMO nirvana. My take is that most of the hype about web3 is really backlash against today’s tech giants — people hate Facebook and they think that web3 will deliver more egalitarian new world order. Color me skeptical. But meanwhile, if you want a really geeky dive into web3 and distributed apps I highly recommend this piece by Moxie.
The holy grail in business software has always been to finally get to the point where enterprise software was so good that non-techies could create custom software applications. There are some pretty good examples out there of this being a reality today, including Zapier (my favorite). Even Shopify can be thought of as a low-code platform (it wasn’t that long ago that running an e-commerce store required a coding crew; today, it doesn’t). The opportunities here are huge, because every sector wants it. If I was founding a startup today, this is an area I would seriously look at.
Personal Mobility (I still don’t have my flying car).
Right now, all eyes are on Tesla and the rest of the auto industry is trying to catch up. Tesla’s market capitalization is crazy (larger than the entire rest of the US auto market) and by all accounts Apple will be announcing something soon. The fact that Porsche has sold more of its new EV in 2021 than it did 911’s is a pretty good indicator of where consumer demand is. Cars have gone from being complex machines with simple software to simple machines with complex software — and there’s all sorts of entrepreneurial opportunity. I’m glad I’m not a legacy auto company — I’d rather have a startup developing software plug-ins for the next generation of EV’s. Meanwhile, true autonomous driving looks more likely to be become common in commercial applications, not consumer ones (check out this autonomous tractor from John Deere).
Media and Journalism.
Earlier this month, The Athletic was bought for $550M by the NYT. This appears to be a hopeful sign for the journalism community. Good quality journalism has suffered during the web era (clickbait! clickbait! clickbait!), and last year’s excitement over Substack doesn’t really seem to have been sustained. The Athletic was launched 6 years ago in San Francisco as a subscription-based publication (no ads) that hired real journalists and delivered high-quality writing to those willing to pay for it. Despite all the doubters who said it would never work, they raised $139M over five rounds and how have a reasonably nice exit. The Information (also in SF) is using the same model with a more niche market and by all appearances is doing very well. I’m a fan of high-quality long-form journalism so I hope that 2022 brings new economic opportunities for quality journalism everywhere.
I am a crypto-skeptic. I’m very happy with my USD. But the volume of VC money flowing into this sector right now is astonishing. Clearly people much smarter than me see tremendous opportunities ahead. In 2022 some of these crypto startups will need to start monetizing at levels that suggest they can live up to their sky-high valuations. Maybe. Meanwhile, it’s abundantly clear that the underlying technologies of the crypto world (Blockchain, NFT, smart contracts, distributed authority) have lots of real-world applications from supply chain traceability to event ticketing. To me, this is more imminent and more interesting.
The Sharing Economy
When Airbnb launched, the big risk was whether people would be comfortable sharing their homes. When Uber launched the big risk was whether people would get into strangers’ cars. Both companies worked hard to develop trust mechanisms to overcome these objections and now we don’t think twice about taking an Uber to our Airbnb. I think we’ll start to see new startups bringing asset sharing to other use cases. Turo appears to be doing well as “Airbnb for car rentals” and now that the sharing model has been established I think we’ll see it appearing in many other verticals in 2022.
Trying to predict social media is a fool’s errand (especially at my age). In 2021 we saw Clubhouse go from raising $110M as “the next big thing” to being a forgotten blip. The lesson with Clubhouse (I think) is that it’s much easier for existing social media platforms to add audio features than it is for a new entrant to develop the user scale required to compete. Many people today will tell you that the future of social is the “Metaverse”, but it’s not really clear what that is, exactly. Remember a few years ago when the marketers referred to the internet as “Cyberspace”? That’s the way Metaverse is used today — it’s just a fancy word for the internet future that includes audio, visual, AR, VR, and more. As to the specifics of what social media will look like five years from now…….I dunno. ¯\_(ツ)_/¯
One thing that is absolutely true is that there has never been a better time to be one-person business. You can make money driving for Uber, or renting your car on Turo, freelancing on Fiverr, or being a TikTok star. I run a small company today and my marketing department is HubSpot, my accounting department is Quickbooks, my scheduling assistant is Calendly, my photographer is Unsplash and my webmaster is WP Engine. The micropreneur is one of the most salient trends of the 21st century, and there will continue to be more and more opportunities in being one and/or creating tools for them.
Every aspect of capital markets is being changed dramatically. Much of my personal money today is being managed by robots at Wealthfront and Betterment. I can make startup investments on Republic and I can loan money on Prosper and make a good return. Traditional banks and other financial services firms are being disrupted all over the world — it’s one of the most signifiant trends in economic history. And, since I’m writing this post for entrepreneurs and innovators, it’s worth noting that seed-stage startup funding is exploding right now. There’s more money available to seed-stage startups than at any time in history, with more sources and structures than ever. See my recent Medium piece on this topic and/or join this livestream discussion.
There are many other trends in 2022, of course; these are just a few that I’m paying attention to. It’s wild right now. It’s a great time to be alive, especially for entrepreneurs and innovators. Here’s to a great year ahead for us all.
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