Five Top VCs Pick The Ten Biggest Tech Trends Of The Next Five Years

Baked into the venture capital model is an assumption that any individual venture capitalist is going to be wrong way more than he or she is going to be right.  But if you get five of them together, with a couple hundred spectators as a crowdsourced backstop, you can come up with some pretty accurate guesses about the future.

That’s the idea behind the Churchill Club’s annual Top 10 Tech Trends dinner. Each year, five prominent VCs are asked to present two predictions apiece that are not yet overwhelmingly obvious but will have massive impact within the next three to five years. Then they vote on each other’s predictions, and the audience weighs in, too.

That timeframe is crucial, explained FORBES publisher Rich Karlgaard, who co-moderated this year’s discussion (along with our technology editor, Bruce Upbin), which took place Thursday night in Santa Clara, CA. It’s easy to see where things are headed in the next year or two, and hard to remember what anyone predicted 10 or 20 years later. Three to five years falls into the awkward in-between — and is coincidentally the period in which venture investments are expected to start to prove out.

Last night’s prognosticators were: Ping Li, general partner, Accel Partners; Rebecca Lynn, general partner, Canvas; Mike Maples, managing partner, Floodgate; Bryan Roberts, partner, Venrock; and James Slavet, partner, Greylock. Here are their predictions, with selected snippets of the discussion. Read all the way down to see which one got the most votes.

1. The business applications we use today will be reinvented by Ping Li. Enterprise software today is terrible because the people who buy it aren’t the end users. “We’ve been suffering with these applications for decades now,” said Li. But that can’t last. The same forces that produced Facebook, Uber and Twitter will soon yield enterprise apps that are, if not quite as addictive, at least not such a chore. Li: “It’s going to feel a lot more like the consumer applications we use and love outside the office.”

2. Digital disintermediation of banks, by Rebecca Lynn. With Bitcoin, Robinhood, Lending Club and other fintech startups attacking the financial services sector, banks can’t survive, said Lynn. “They’re too big to fail, and frankly, they’re just too big to compete.” While they won’t go away entirely, “what I see banks becoming is just a completely commoditized product. They’re at the end of the value chain.

Maples: “I don’t think they’ll go away, but they’ll be around the way mainframes are today — they’ll be important, but not that important.”

3. Smart home networks, by Mike Maples. “I think in the next five years there will be hundreds of millions of smart new home networks,” Maples said. It will start with smarter wifi networks, an area ripe for disruption: “Right now, I think Linksys and Netgear basically just call China up and say, ‘Can you make the box in my color so I can sell it?’”

James Slavet: “Right now the smart home is definitely a B-to-G [ie. business-to-geek] phenomemon. The question is what will make it mainstream.”

4. The health insurance industry mimics Kodak and goes “poof!” by Bryan Roberts. “Insurance companies as we know it go away,” predicted Roberts. “Nobody likes them, nobody trusts them. They send you like 45 pieces of paper once a month in the mail.” Instead, companies with more than 500 employees will contract with healthcare providers directly, while the government will pick up much of the slack.

Lynn: “I voted yes because I just want to believe so badly, but it seems like everything in healthcare is so dysfunctional.”

Li: “It feels like it needs to happen, but it seems like an industry that won’t turn over in three to five years.”

5. The last-second economy, by James Slavet. Mobile on-demand services will become popular well beyond taxis and food delivery, extending to areas like knowledge work and healthcare. “The core concept is that with smartphones, we’re all transacting with compressed planning cycles and addictive ease,” Slavet said. “If you get sick at 2 a.m., rather than going down to urgent care, you’ll be able to pull up your phone and have a consult with a doctor on demand.”

Li, in strong agreement: “The marketplace effects are really powerful. These things are not taking years to happen. They’re taking months.”

6. Cyber attacks targeted at the home, by Ping Li. As Maples’ prediction about the ubiquity of smart home networks comes true, it will make homes an inviting target for cybercrooks and terrorists. “Imagination does not need to run too far before you see the scale and the scariness of the attacks we’ll be facing,” Li said.

Roberts, semi-agreeing: “The question becomes whether or not with one terrorist attck you can hit a million homes. If it becomes that fluid, sure. But no one cares about my home. It’s too small a unit of destruction.”

Maples, agreeing: “I think the average hacker is much less idealistic than they are capitalistic. They just want to get easy money. It feels to me like a good hacker could own a ton of houses if they’re patient about it.”

7. The future of healthcare begins with data (from your gut), by Rebecca Lynn. Big data, informed by a fast-growing understanding of the genome and the human microbiome, will radically improve the efficacy of medical treatments, said Lynn: “I think we’ll see more true breakthroughs in healthcare in the next three to five years than we’ve seen in the last 20.”

Dissenters:

Slavet: “The question I have is that a lot of the information is still pen and paper and in filing cabinets…I think it will happen. I just don’t know that it will happen at scale in the next three to five years.”

Robert: “I think the issue is our understanding of biology. I think we know like a single-digit percentage of biology. That’s the long pole of the tent here.”

Maples: “Unfortunately I believe our healthcare system is screwed up in the same way our education system is screwed up…There are all kinds of reasons common sense stuff doesn’t happen.”

8. A female founder creates a company with a $50 billion exit, by Mike Maples. “We’ll see a woman start a company that succeeds on the scale of a Google, Facebook or Twitter,” Maples said. “I tend to come at this question not from an affirmative action point of view. The world will change when somebody wins. Just win, baby. The core to my argument is the conditions exist now in a way they haven’t before.”

Roberts, dissenting, pointed out there just aren’t enough $50 billion companies created to be confident one will come along within five years. “If you lowered it to $5 billion or something, I’d agree in a heartbeat.”

 9. Spot pricing for healthcare procedures, by Bryan Roberts. Dynamic, demand-adjusted pricing, already in use by airlines and now by peer-to-peer taxi services like Uber, will next come to healthcare. “Why on earth wouldn’t you get a cheaper price if you’re willing to go in at 8 o’clock on Friday night rather than lunchtime on a Wednesday?” Roberts asked.

Lynn, semi-agreeing: “I think there’s a whole business around just utilizing MRI machines outside the 9-to-4:30 [window]…Going to the doctor might be more like getting your hair done” — ie. patients will go to providers they know and trust, regardless of cost or convenience.

Maples: “I just sort of reject the premise that they’re trying to find market-clearing prices and be more efficient, because otherwise I wouldn’t have to wait with my daughter in the emergency room for three hours to have somebody look at her for five minutes and say ‘You’re OK.’”

10. Credit cards are the new app platform, by James Slavet. Credit cards are “ubiquitous but pretty dumb,” Slavet said. Soon they’ll be able to connect directly to the cloud. “The big opportunity for disruption is right in front of us. It’s in our wallets.”

Lynn, dissenting: “In fintech, consumers are really lazy. I don’t think you’re going to move the needle by adding new features to credit cards unless it’s about the rate.”

*******

Those were the ten predictions. Two of them, smart home networks and the last-second economy, got unanimous votes of approval from the panelists. Those were also the two predictions most popular with audience members, who voted with their phones by using Poll Everywhere. Both received an 87.2% “yes” vote, but Slavet’s last-second economy was the winner by 1/100th of a percentage point — earning him top honors and the hat to go with it.

Source: http://www.forbes.com/sites/jeffbercovici/2014/05/30/five-top-vcs-pick-the-ten-biggest-tech-trends-of-the-next-five-years/