Churchill Club Event – Annual Top 10 Tech Trends

Speakers:
Steve Jurvetson, Managing Director, Draper Fisher Jurvetson
Vinod Khosla, Founder, Khosla Ventures
Joe Schoendorf, Partner, Accel Partners
Ram Shriram, Managing Partner, Sherpalo Ventures, LLC
Ann Winblad, Partner, Hummer Winblad Venture Partners

Moderators:
Tony Perkins, Founder, AlwaysOn
Jason Pontin, former Editor, Red Herring Magazine; Editor in Chief, Publisher, Technology Review

I attended the Churchill Club meeting  featuring the “Annual Top 10 Tech Trends” as proposed and voted on by a distinguished set of VC panelists. It was an extremely provocative and entertaining evening and for the most part (as you can see below) the panelists, moderators and audience (who also got to vote) agreed or disagreed with the trends in unison. The following is a table that summarizes how the votes went for each trend proposed. Crowd sourced means that it came from analysis that Jason performed based on keyword mentions in the popular press, funding etc. What follows are more detailed comments and notes for each trend by the panelists and moderators. As ever, please leave me a comment if I misunderstood or more importantly if you are one of the panelists and I incorrectly classified your vote, my apologies, I will correct it immediately 🙂 

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
1. Everything is changing, rapidly. Due to the Millennials driving the greatest wave of disruption ever witnessed.	Disagree	Disagree	Agree	Agree	Proposer	Agree	Agree	Agree	Agree  6-4
2. Advanced batteries will be most popular alternative investment in 09/10, providing the best returns. (Crowd Proposed)	Neutral	Agree	Agree	Agree	Neutral	Neutral	Neutral	Neutral	Agree 3-0
3. The unstructured data deluge creates the next great information leaders. Every msg, tweet, data amassed at exponential rates.	Agree	Disagree	Proposer	Agree	Agree	Agree	Agree	Agree	Agree  7-1
4. Wireless broadband will be one of the only IT sectors to see increased funding this year. Demand for faster, better networking. (Crowd Proposed)	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree 8-0
5.“Maintech” not “Cleantech”. Capitalism based increase in carbon efficiency of global GDP. Innovation in lighting, plastics, cement etc.	Proposer	Agree	Agree	Neutral	Agree	Agree	Agree	Agree	Agree 7-0
6. Power & efficiency management services will see a flowering of investments and innovation. We cannot have alt. energy future without smarter infrastructure. (Crowd proposed)	Agree	Agree	Agree	Agree	Agree	Agree	Agree	Agree	Agree  8-0
7. Triumph of the distributed web. Innovation advances at the edge not the warm center. Aggregate power of widely distributed human activity will trump centralized content.	Agree	Proposer	Agree	Agree	Agree	Agree	Agree	Agree	Agree  8-0
8.Healthcare administration will be the fastest growing sector of 2009/2010. (Crowd proposed)	Skipped	Skipped	Skipped	Skipped	Skipped	Skipped	Skipped	Skipped	Skipped
9. Consumption of digital goods on mobile devices is THE growth story of the coming decade. A new business model in the form of applications is emerging.	Agree	Agree	Disagree	Proposer	Agree	Agree	Agree	Agree	Agree  7-1
10. Electronic displays will prove to be  the hottest investment in hardware this year and the next. (Crowd Proposed)	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree 8-0
11. Washington DC will prove to be a poor VC. Venture backed companies will continue to be largest contributors to job and wealth.	Agree	Agree	Agree	Agree	Agree	Proposer	Agree	Agree	Agree  8-0
12. Rumors of the demise of the reporter have been exaggerated.	Agree	Agree	Agree	Agree	Agree	Agree	Proposer	Agree	Agree  8-0

Detailed discussion on each trend:

Again apologies if I missed or incorrectly interpreted anything.

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
1. Everything is changing, rapidly. Due to the Millennials driving the greatest wave of disruption ever witnessed.	Disagree	Disagree	Agree	Agree	Proposer	Agree	Agree	Agree	Agree  6-4

Joe Schloendorf (proposer):  This month will be the first college graduation class whose members do not recall life offline. For openers, they do not read newspapers. This group will drive the greatest wave of disruption ever witnessed.

Firstly things are not as bad now as they were. In 1974 Intel had just quite the RAM business. People were asking if Silicon Valley was the next Detroit. Andy Grove asked Craig Barret to help as Intel was going to invent integrated circuits. In 1974, there was double digit inflation, interest rates and the Dow was 50% off its peak at 700. Time magazine had a cover that said “The Death of Stocks” and Newsweek “The End of Equities”.

For those graduating who were born in 1988, it is the first generation that cannot remember being alive and not being online. This has a profound affect on who we employ, and also who we sell to. Eric Schmidt in a recent presentation compared generations as “we had phone booths, you have cellphones; we drank tang, you drink red bull; we had pong, you have Wii.”
“YouTube today is bigger that the entire Internet was back in 2000. “A look at the median age of the word’s population is 26 to 27.

Facebook’s median user age is 27. (Ed Note: Accel is an investor in Facebook. Also Joe mentioned he used www.wolframalpha.com to get the world’s median age info). My daughter is a electrical engineer studying at Princeton, and back then when Facebook was only for academics, I saw pictures on there that I didn’t like and I counselled her on what people might think and how it would affect her career. She said “Dad, I’m not going to work for anyone like you”.

Steve Jurvitson (Disagree): This is not a new trend. New generations always drive all meaningful change. In 20 years it will be even more disruptive. Agree that it is occurring but it is just misplaced causality.

Ann Winblad (Agree):There is something else swimming under the surface of all of this. This is a generation that has come upon a time that they don’t have to think of cost of computers. When I was a 23 yr old, I spent $30k to buy a computer with 256k computer. So much friction has been taken out. The millennials are the lucky ones. They are driving their parents to get onto facebook. This age group and moment in time is a trend.

Tony Perkins (Agree): Is there a generational break in behavior? Like with Apple and Steve Jobs getting a computer on every desk?

Vinod Khosla (Disagree):I do believe that there is a different mindset. The rate of change is accelerating. Similar to when Bob Pitman (head of MTV) in the 1980’s pointed out that the number of multiple channels was increasing at the same rate as pay tv channels. After 35 you get locked into certain ways. But this is a narrow slice of life. There is massive disruption coming that will be much broader.

Ram Shriram (Agree): Every morning I wake up and rather than reading newspapers at breakfast I am able to have 4 relevant stories delivered to my iPhone. My daughter can edit books on her iPhone. This is huge change and a whole new set of apps are coming.

Tony Perkins (Agree):As VC’s are your prejudiced towards younger people and ideas? I know Vinod started Sun when he was 27 🙂

Joe Schloendorf (proposer):  Certainly when Mark Zuckerberg came to us with Facebook at 19 we welcomed him with open arms

Ann Winblad (Agree): I would say that this is a “step function” and “some people are being left behind” Just like in the early 70’s people didn’t get it when the world was moving forward.

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
2. Advanced batteries will be most popular alternative investment in 09/10, providing the best returns. (Crowd Proposed)	Neutral	Agree	Agree	Agree	Neutral	Neutral	Neutral	Neutral	Agree 3-0

Jason Pontin (Neutral): Although VC funding is down 1Q the investment in companies actually rose from $50M to $69M. The most prominent of which is the investment in A123 by GE.

Vinod Khosla (Neutral): Batteries and storage are more important to wind and solar companies than wind and solar! It is critical for capacity management. The use cases for storage and capacity vary. Contrasting Ski lift surges with other more steady consumption. “10 years from now, Lithium Ion batteries will not be relevant”

Steve Jurvitson (Agree): I agree with Vinod. Technologies like Smart Grid are important and as the pace of innovation increases. I drove here in a car with 6831 battery cells (Tesla)

Joe Schloendorf (Neutral):  In 10 years we will all commute in electric cars. However this is not a VC play because it won’t come soon enough for ROI. Batteries are the opposite of Moore’s law in that it only improves capacity in single digits. Also it is unwise to shift to another resource that we do not own “the majority of the world’s Lithium comes from Bolivia”

Vinod Khosla (Neutral):I disagree that the electric car will dominate. In India the Honda Hybrid has been overtaken by the Tata Nano in popularity. These cars will be expensive, it is an issue of economics, people will gravitate to what they can pay/afford. ” Of the over 1 Billion cars in the next 15 years, less than 10% will be electric”

Joe Schloendorf (Neutral):  I talked to auto execs and most of them say they can’t get to 35 mpg without hybrid or electric

Vinod Khosla (Neutral):When have auto execs ever been on the forefront of innovation? There are hundreds of entrepreneurs working on significant improvements like hydraulic hybrids that will make a significant difference. Additionally you can’t base a trend on what happens here and in Germany “5% of Californians will do anything!”

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
3. The unstructured data deluge creates the next great information leaders. Every msg, tweet, data amassed at exponential rates.	Agree	Disagree	Proposer	Agree	Agree	Agree	Agree	Agree	Agree  7-1

Ann Winblad (Proposer):Gartner predicts enterprise data growth of 650% in 5 years and 80% of the data will be unstructured. “Privacy and security of unstructured data is a serious challenge.” It is being said that Blogging is dead. Everything is real-time. Unstructured data is the “dark matter of the enterprise”. IBM recently announced the formation of a group of 4000 specifically to examine business analytics on unstructured data. The app server and RDBMS are not able to deal with this. It is/will reshape the computer industry.

Steve Jurvitson (Disgree): To be a top 10 trend, it has to be new. 17 years ago IBM raised this issue. In 1998 Merrill Lynch published on this topic, same with Gartner 1995. True companies are taking advantage of this like one of our portfolio companies H5  but it isn’t a new trend.

Vinod Khosla (Agree):It has been discussed, but just because IBM has been thinking about it, doesn’t mean it isn’t a different/new problem. IBM doesn’t hire 19 year olds. We need to invert the pyramid and think of this as a massive opportunity. Rather that you going to get the data, unstructured data should decide what comes to you. It sorts and filters and shows you what you need. Another Larry and Serge will solve this problem. “The next big thing is data reduction”. There is too much information, a reduction in data flow through things like personal agents is what is needed.

Ram Shriram (Agree): There have been services that help sort out unstructured data like music, books. You could say that Junglee for example as a pricing service processed unstructured data for some benefit. “The big opportunity here is to come up with a great user experience.”

Ann Winblad (Proposer):One of our portfolio companies (now public) Omniture wroked on the Walmart Site providing personalization and different views and experiences to different users. It is an integration of social algorithms.

Joe Schloendorf (Agree):  The idea has been around at some level for a while, but things are changing at a rapid rate. Eric Schmidt in the same presentation said that there will eventually be an iPod with 85 years of video running 24 hrs a day.

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
4. Wireless broadband will be one of the only IT sectors to see increased funding this year. Demand for faster, better networking. (Crowd Proposed)	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree	Disagree 8-0

Government subsidies ($7B) will increase.

Joe Schloendorf (Disagree):  This trend is “passe” and has already happened. “On a good day AT&T wireless is horrible. The rest of the time it’s crappy”

Vinod Khosla (Disagree):You’ll never be happy with performance “Word has gotten slower over the last 15 years” 

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
5. “Maintech” not “Cleantech”. Capitalism based increase in carbon efficiency of global GDP. Innovation in lighting, plastics, cement etc.	Proposer	Agree	Agree	Neutral	Agree	Agree	Agree	Agree	Agree 7-0

Vinod Khosla (Proposer):Carbon emissions per $/GDP are driven down by technology. Creating massive new opportunities and disrupting traditional energy infrastructure; innovation in lighting, engines, appliances, water, plastics, cement, glass and steel help fossilize our fossil fuel relevance. Everyone wants this because it is a form of insurance. Car insurance, defence is a form of insurance but it has to be capitalism driven. Cleantech is too small. Subsidry constraint acts just as a hatchery. It is a long term trend.

Ann Winblad (Agree):I’m on the board for the University of St. Thomas and there are many deep science majors. This has to appeal to newly educated. We (Humwin) don’t invest in this area but it’s integrated area with addressable opportunities. Givens better direction than a big bang approach.

Vinod Khosla (Proposer):5 years ago, no one was studying energy at university. Now it is the #1 choice. PHds will invent all of the new stuff.

Ram Shriram (Neutral): I do agree that it is important but is this viable for VC funding in the time horizon. No one has won betting against Vinod 🙂

Vinod Khosla (Proposer):I hide my failures well

Ram Shriram (Neutral): How do you show ROI to investors? Do we spend time on efficiency? Or on alternative fuels?

Joe Schloendorf (Agree):  I agree with Vinod but for once I don’t he has gone far enough. The next generation has to deal with this situation and quickly. We should discuss applied science. An area IBM, HP and others are not producing on anymore.

Vinod Khosla (Proposer):We are reinventing cement, glass, plastics, lighting, air conditioning with our companies. It’s back to basic physics and chemistry. We have Phd’s in the US but not all of them. “I’m one of the few who are insourcing Indian’s into the US”

Steve Jurvitson (Agree): Bottom line, we will see IPOs and “Greentech” means $$ and bottom line as well.

Trend Overview	Vinod	Steve	Ann	Ram	Joe	Tony	Jason	Audience	Tally
6. Power & efficiency management services will see a flowering of investments and innovation. We cannot have alt. energy future without smarter infrastructure. (Crowd proposed)	Agree	Agree	Agree	Agree	Agree	Agree	Agree	Agree	Agree  8-0

Joe Schloendorf (Agree):  I bought and installed a power meter for $2500 but so what? I ran a normal cycle, connected devices to a smart meter but it doesn’t do anything for me. PGE is one step above Post Office in my opinion

Ram Shriram (Agree): It needs to be integrated with home automation for it to be of any value

Steve Jurvitson (Agree): There is “an insane amount of waste”. Data centers are left on all the time. EnerNOC  (DJF portfolio company) has prevented 6 power plants from being built.

Ann Winblad (Agree): The fact that $73M was raised by startups isn’t indicative of these companies “doing well”. This is a hard and interesting problem. Is there a market? Likely, but much of this is lost money.

6 more to go! Please check back later on the other trends ….

Meanwhile you can look at other related posts:

TechCrunch review – http://www.techcrunch.com/2009/05/20/the-churchill-clubs-2009-tech-trends-energy-data-and-more-energy/