Venture Link Luau: Converging Trends & Investment Philosophy
Three years ago, Fred Wilson spoke at Le Web about how the future will look in 10 years. No, he admits, he doesn’t have a crystal ball! In this fascinating talk in which he described three trends matrixed with four sectors, Fred was actually describing the investment criteria or mindset at his venture capital firm Union Square Ventures. Here’s the cliffnotes version:
Trend #1: A transition from bureaucratic hierarchies to technology-driven networks.
From the radio and entertainment to hotel and learning industry, Fred observes that institutions that controlled content are no longer the status quo. Instead of watching ABC News as my one source of political information, I can stay updated because of a crowdfunded network like Twitter. Instead of spending hours in a classroom located at a school, I can learn to code from companies like Codecademy and General Assembly.
Trend #2: Unbundling of how services are packaged and taken to market
This time, Fred points out how we pay, on what we pay, and for what we pay for as a major trend that’s changing. For example, I do not have to go to a bank for collecting money, my loan, and using the safe. I can now use peer to peer (P2P) platforms like Lending Club or Kickstarter to raise money for a project. I do not have to pay Comcast a monthly TV bill because I can personalize my viewing on Netflix, Youtube, Hulu, etc. The price points and diversity of options are dramatically changing, and technology networks are changing the old ways of business.
Trend #3: Mobile phone allowing you to be a node on the network
No brainer here, mobile phones are changing my accessibility and the accessibility of 2.6 billion smartphone users. At the most remote parts of the world, you’ll find the young and the old with a smart phone. And you see the usual suspects like Facebook, Google, and Youtube who are capitalizing on the data and accessibility so each of us can be a node on the network.
Money, health and wellness, data leakage, and trust & identity.
These are the four sectors that Fred thinks are at the brink of dramatic change, a change he argues will look dramatically different in 10 years. From digital currencies like BitCoin and Ethereum to 3-D images of my DNA sequences, each one of these sectors are a dramatic departure from the old operating models. Technology networks explain each of the changes.
Fred’s matrix of trends and sectors made me think about the opportunity for Cash on the House. Real estate has been experiencing a dramatic shift for the last ten years. Yes, new investors with spare cash are coming to the table, and sometimes they make risky bets that, at the aggregate level, can put a developed economy at risk. But the service side of real estate is still dominated by the property manager and a handful of service companies. Cash and checks are the primary money “technology” that is costly, inefficient, and inconvenient. At the end of the day, information about service operators, outcomes, and feedback are changing the hierarchical real estate industry today. Our technology network could change it.
Fred’s matrix of trends and sectors made me think about the opportunity for Cash on the House. Real estate has been experiencing a dramatic shift for the last ten years. Yes, new investors with spare cash are coming to the table, and sometimes they make risky bets that, at the aggregate level, can put a developed economy at risk. But the service side of real estate is still dominated by the property manager and a handful of service companies. Cash and checks are the primary money “technology” that is costly, inefficient, and inconvenient. At the end of the day, information about service operators, outcomes, and feedback are changing the hierarchical real estate industry today. Our technology network could change it.
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