Photo by Linus Nylund on Unsplash

Salient Trends for 2023

Here are the big trends that entrepreneurs and innovators should be paying attention to right now.

(adapted from my end-of-the-year podcast episode).

This is the time of year when all the pundits issue their predictions for the new year. So I’ll give you mine, with a twist. The twist is that the list I’m going to give you isn’t really a set of predictions for 2023, per se.

Instead, the list I’ll give you is ten big trends that I think are worth paying attention to. Some of these will play out in 2023, and some of them play out over the next several years. But all of them are salient vectors today that entrepreneurs and innovators should be paying attention to.

OK, so here are the top 10 trends, as I see them:

1. The end of the American Internet. For the past two decades, the power on the global internet has been held by US companies — notably Google, Facebook, Instagram, WhatsApp, PayPal, Apple, Twitter. Those seven companies are all located within a few miles of each other in Silicon Valley, it’s pretty remarkable, having that kind of concentration of global power in one small valley. But things are quite different in the new era we are now entering. The largest streaming music company, Spotify, is in Sweden. The largest fintechs today include NuBank in Brazil, Revolut in the UK, Wise, founded by Estonians in London, N26 in Germany, and Klarna in Stockholm. The next generation of the internet won’t be invented by and dominated by American companies in the way that previous internet eras have been.
2. Crypto will be back. Eventually. We’re definitely in a “crytpo winter” right now, as last month the collapse of FTX caused $32 billion in value to evaporate overnight. So far I haven’t been much of a believer in cryptocurrency, per se, but the underlying technologies will see all sorts of use cases that will power the next wave in global transaction systems. So things like blockchain, distributed ledgers, unique identifiers like NFT’s, all of these will power the next generation of decentralized systems on the internet. I’m still not sure about cryptocurrency itself, and there will be a whole new wave of regulations in the wake of the FTX collapse, but we’ll see all kinds of successful uses of the underlying technologies from the crypto world.
3. In the race for clean energy, Hydrogen is coming on strong.
   There are billion dollar opportunities for next-generation energy sources — cleaner, more sustainable ways to transport us and power our lives. The big news last week was from Lawrence Livermore Lab and achievements with nuclear fusion, but that’s a long way away from practical viability. Meanwhile, there’s a lot of inertia right now behind clean Hydrogen as a zero emissions fuel. The US Department of Energy has committed as much as $7 billion to help companies develop new methodologies that will reduce the cost of clean hydrogen to $1 per 1 kilogram in 1 decade — the “1–1–1” program. And India has unveiled new policies to promote its own green-hydrogen industry. All of this will unlock new markets for hydrogen as a clean fuel with zero emissions. Just last week Embraer, announced a concept view of a whole new generation of hydrogen-powered airplanes, with a goal of net zero carbon emissions by 2050. This is a huge new opportunity, and while we’ve seen false-positives before in the clean energy sector, hydrogen looks very promising right now.
4. Peak China?
   With regard to the global economy, one of the salient drivers of the past 20 years has been the emergence of China as an economic powerhouse. China has grown to become the world’s second-largest economy, with a growth rate that appeared to put it on track to surpass the United States. But that now looks unlikely to happen, and in the current issue of the Economist magazine, the editors suggest that the Chinese economy may be peaking. China’s global influence is declining and their demographics are shifting in profound ways. The population of working-age people in China actually peaked a decade ago and their overall population is now poised to decline. This coming year India will become the country with the largest population in the world, surpassing China. By 2050 the median age in China will be 51, and in that same timespan most of the the increase in the planet’s working-age population will come from India. We’ll see exactly how all this will play out, but it’s clear that the global economy’s balance of power will be different in the next decade.
5. Argi-Tech will feed the world.
   Last week, according to the United Nations, the earth’s population passed 8 billion people. And we can’t feed them all properly. The World Food Programme estimates that the number of people facing acute food insecurity has grown to 345m and as many as 50m people will begin 2023 on the brink of famine. This is a humanitarian crisis. But we’re also on the verge of huge advancements in our ability to produce food. There is tremendous opportunity right now for entrepreneurs and innovators to create new methods and technologies for agriculture production. Here’s the thing: most of the world’s food is still grown by smallholder farmers and AgriTech innovations in coming years will give them the ability to dramatically improve their yields in new, sustainable ways. Last year over $11B in venture capital went into Agri-Tech businesses, and this sector will keep growing. I’d like to give a quick shout-out to my friends at Thought for Food, in Switzerland, a terrific organization supporting new entrepreneurs developing innovations in sustainable food and agriculture.
6. Web3. Whatever that is.
   If you ask four people what web3 is exactly, you’ll get six or seven different answers. Mark Zuckerberg tells us it’s “The Metaverse”, the crypto people say it’s all about cryptocurrency, the maker people say it’s all about “the creator economy”, and the privacy people say it’s about new paradigms in identity management. And it’s probably some mix of those things, and a maybe hundred others. The fact is that we’re clearly on the verge of a whole new era on the internet. The username/password method of authentication, which we’ve been using for 30 years will finally disappear and be replaced by passkeys. AR and VR will get incorporated into basic web technologies to create new mixed reality experiences. After a decade of centralization on the internet, the next generation of web technologies will be about decentralization. Web and mobile will continue to merge into one thing. Any way you slice it, we’re very clearly on the verge of a whole new era on the internet and that new era, call it web3 if you want to, is likely to be at least as powerfully disruptive as the previous two.
7. Reconfiguring of Supply Chains.
   In the late 20th century, global success was all about efficient supply chains. Tim Cook, the current CEO of Apple, was originally hired by Steve Jobs in 1998 for one reason — he was a supply chain expert at IBM. It was all about driving out costs by moving labor and assembly to geographies like China and Taiwan, and creating global supply chains around minimizing inventory costs and shifting process risk onto remote vendors. For a decade or two, this approach drove incredible growth and success. But when the Covid pandemic hit, weaknesses in supply chains were exposed. Now global companies everywhere are in the process of reconfiguring supply chains, integrating smart technologies and new methods of optimization. One of the new buzzwords is “friendshoring”, meaning that companies are looking for ways to reduce the risk of geopolitical political chaos by having offshore operations in “friendly” countries that are less likely to be disrupted by war, pandemics, and trade embargoes. The big macro point is that supply chains are being re-configured, re-optimized, and new technologies are being implemented to make supply chains more resilient, more sustainable, and more reliable in the coming decades.
8. Biotechnology changes us.
   One of the most profound trends in the history of mankind is the 21st century intersection of biology and technology. Health outcomes all over the world have been dramatically improved by biotechnology innovation and the pace of innovation is now accelerating even faster. We’ve seen CRISPR technology — the ability to actually do gene editing. And there have been some incredible recent advances in bioprinting — basically a 3-d printer that uses live cells to create body parts such as a heart valve or a piece of skin. This is profound stuff, and by some accounts, the global market for biotechnology will exceed $20 trillion by 2030, and the impact on human lives will be enormous.
9. New modes of work.
   The way we work has been slowly changing over the past decade, but the pandemic was a forcing function that suddenly accelerated the shift. And because of the forcing function that Covid delivered, we now have a better idea of how remote work can be optimized. We’ve found that some professional interactions work just fine on Zoom, while others don’t, and many companies today are implementing hybrid work models. We will continue see changes to the ways that companies operate their work forces, and the ways that families achieve lifestyle balance. The big macro trend here is that we’re entering what I call a “place agnostic” era — meaning that the place you are in the world matters less than it ever has. This has implications in small ways (employees can choose to work from home for the day or work from the beach) and in large ways — an entrepreneur in Berlin can raise capital from a venture capitalist on Sand Hill Road, something that never would have happened ten years ago. We’re entering a place-agnostic era where personal geography matters less than ever before and this has huge implications.
10. Climate Resilience.
    All over the planet we are seeing the effects of climate change. This is an existential threat for the planet, but it also creates opportunities for entrepreneurs and innovators. Regardless of how successful we are at limiting the root causes of our warming planet, society is facing significant impacts — from more frequent and severe weather, ocean warming and acidification, extended periods of drought and extreme temperatures, and other potentially catastrophic effects of climate change. The ability to prepare for, recover from, and adapt to these impacts is being called “climate resilience.” In just the third quarter of this year, venture capitalists put over $10B into climate tech businesses. Climate is the biggest challenge ever faced by humanity, but it will also be a huge vector of opportunity for entrepreneurs and innovators in the coming decade.

So these are the ten trends that I think are worth paying attention to as we enter 2023.

And, because great entrepreneurs know how to deliver a little extra, I’m going to give you an 11th trend. It’s an obvious one — artificial intelligence. As we sit here in January of 2023, everyone I know is playing around with MidJourney and DALL-E, two ai-driven image generation engines, and ChatGPT, an ai-driven dialog engine. AI and machine learning, which have been buzzwords for a long time, are finally starting to become a commercial reality. What’s new is that from this point forward, it will simply be expected that any software product will be “smart”, and able to learn things from us as it is used. That now becomes standard. As I’m fond of saying, the past 30 years have been about us learning to work with computers, and the next 30 will be about computers learning to work with us.

So there you are, ten big trends with an eleventh one tossed in for good measure. The fact is that the 4th industrial revolution is a time of profound opportunity, all over the planet.

Here’s the thought I’d like to leave you with: In my 40-year Silicon Valley career there was one opportunity wave at a time. First there was the semiconductor wave, then the personal computer wave, then the internet wave, then mobile/social. Each one of those would last 8,10,12 years and then we’d be on to the next wave of opportunity. But what makes this particular moment, now, today, so incredible is that we have several huge waves of opportunity going on at the same time. I’ve never seen so much opportunity for entrepreneurs and innovators.

2023 is gonna be awesome.

You can join the livestream of Demo Day in the 4thly Startup Accelerator. Find out more.