Boule de cristal 2014

Photo: Mark Skipper

As an observer of the local and international technology start-up scene, I have the opportunity to be quickly exposed to emerging trends. In this post, I’d like to share with you ten areas that I think are particularly promising in the coming year. And whenever possible, I’ve also identified Montreal startups already operating in the space. Without further ado, here’s what I see in my crystal ball for 2014.

1)  Local vertical marketplaces.

Players like Airbnb (hotels) or Uber (taxis) have shown in recent years that you could create next-generation local marketplaces by addressing a very specific vertical. These players are generally characterized by content depth, better consumer decision-making tools and/or complete vertical integration up to the final transaction. Knowing that there are 4,000 vertical categories in business directories, we are still in my opinion in the infancy of these next-gen vertical sites.

2) Software-as-a-Service (SaaS) tools for SMBs

2013 saw the emergence of companies offering a variety of SaaS software for SMBs (small & medium-sized businesses), especially in customer relationship management, accounting and marketing. I believe we will see other small enterprise software tools launching in 2014 particularly in the offline-to-online space, to optimize sales when a potential customer physically visits a retail store.

3) Small hardware + software products

Following Google’s acquisition of Nest for $3.2 billion last week, this is the sector that will be the most active in the next few months. The democratization of hardware development in recent years is mainly due to the emergence of tools enabling rapid deployment (whether in prototyping or crowdfunding). Top projects usually include a user-friendly, well-designed software layer and are made by the best industrial design talents. With its smart watch, Montreal-based Neptune is a good example of this trend.

4) Digital currency platforms

In 2013, everyone was talking about Bitcoin, the emerging electronic currency, but very few people know that there are now dozens of other so-called cryptocurrencies. Most news articles focus on the increasing value of Bitcoin, the speculative side, but what’s really interesting with electronic money is the emergence of distributed currency/transaction platforms (and the potential around micro-transactions). If the topic interests you, do read Marc Andreessen’s take in the New York Times. Montreal startups Bylls and BitCredits operate in this vertical.

5) Cable companies ready for disruption

I think disruptive innovations will soon threaten CableCo monopolies especially around television broadcasting. Netflix’s strength, the “cord-cutting” trend, the availability of legal streaming content, forced bundles that consumers don’t want are all elements that support this trend. In my opinion, there are dozens of interesting opportunities linked to this trend.

6) Artificial Intelligence and ambient technologies

In 2013, my biggest revelation was Google Now, the almost magical mobile application that analyzes my data exhaust (geo-location, Gmail inbox content, etc.) to provide me with useful real-time alerts such as travel time, weather, flight itinerary, package tracking, etc. We talked a lot about “Big Data” in 2012 and 2013 but 2014 will be the year where we try to proactively make these large data sets useful to users. There are dozens of interesting opportunities here also.

7 ) Security and privacy

Revelations of massive spying by the NSA and targeted advertising abuse by large Internet companies is leading to the rise of new products enabling users to better protect their privacy. Montreal-based Syme is building a software solution that allows you to share content and messages in a private environment. Multiple opportunities exist in this area too.

8) Health

2012 and 2013 saw the emergence of the “quantified self” movement and the launch of multiple applications related to physical health improvement (sleep better, eat better, etc.). This sector stays red hot in 2014 with new applications that can help improve your mental health (relaxation, yoga, stress, etc.).  Montreal startups OMSignal  and Hexoskin operate in this sector.

9) Food

New food technologies in either infrastructure (better distribution, traceability, etc.) or next-generation food products (nutraceuticals, organic and local food, new types of food, etc.) will be top of mind in 2014. Lufa and Provender are proud Quebec representatives in this technology sector.

10) Robotics

Directly linked to trends # 3 and # 6, and the rise of the drone market and Google’s acquisition of Boston Dynamics a few weeks ago , I predict a great future for this area in the coming years .

This article originally appeared in French in my Journal de Montreal blog.

Update:  Boris Silver, Co-Founder and President of FundersClub, just blogged about 10 things the broader tech venture capital community is paying close attention to:

  1. Drones
  2. Bitcoin
  3. Wearables
  4. Big Data
  5. Crowdfunding
  6. Quantified Self
  7. 3D Printing
  8. The Internet of Things
  9. Mobile
  10. Virtual Reality

Definitely some overlap with the things I’m watching. Always interesting to compare.

Friends and colleagues who’ve known me for a long time know that I love to regularly polish and gaze into my crystal ball to try to forecast trends and predict the future of technology. It’s a game I really love to play. With a well curated Twitter feed, I’m able to “listen” to opinion leaders and early adopters throughout the year, day in, day out, and instinctively identify what technology trends seem to be important today. In addition, the end of the calendar year is also a great opportunity to digest and compare notes with other people via “2013 trends”-style blog posts. As you’ll see in the list below, those trends go much further than local & social (my blog’s theme since 2006), probably reflecting my personal interest list as well  (or maybe everything is social and local now, and we don’t need to mention it anymore!)

Without further ado, here are a series of technology topics that I think are important right now (in no particular order):

Screen and usage fragmentation

  • Internet usage is fragmenting and this has a tremendous impact on product design and features.
  • Size of screen and in-home/out of home use impacts design and usage patterns.
  • Without a doubt, today you should design services with smaller screens in mind (streamlined, fast loading, bigger-sized fonts, etc.).
  • I still believe product prototyping (or beta versions) can be done on the Web before working on native mobile apps.
  • If you launch mobile apps, launch iPhone & Android versions at the same time. Currently intrigued by the potential of Windows 8 and the Blackberry 10.

“Native” ads

  • The flavor of the month in content advertising: ads and content become interchangeable. This is not new (sponsorships and advertorials have existed for a long time in traditional media) but we see many experiments these days. By the way, I hate the name (same with “transmedia” but I digress).
  • Rebirth is probably related to the failure of display ads/banner advertising to deliver solid value/ROI. On a related note, the New York Times is trying to “save” the banner ad.
  • But beware! The Atlantic Monthly showed us that the format can be problematic (and The Onion had good laugh…)
  • Related: brands are now also becoming content producers, hiring journalists and creating new content.

Social media

  • Social media has matured. It’s now present across the organization, not just in one department.
  • We’re slowly seeing the disappearance of social media experts (being integrated in marketing-communication departments) and we will eventually see the disappearance of community managers (integrated in customer care).
  • Social media advertising is still unproven and, as executed today, is not exciting, very far from the original conversational marketing promise.

Big data

  • Important concept but there is a bubble. This will probably be part of every technology infrastructure and we will stop calling it that way.
  • Alex Howard (O’Reilly Radar) thinks that data will be more liquid, “ flowing across sectors previously stuck in silos”.

Enterprise products and services

  • Enterprise is hot again, as it generates faster (and more) revenue than consumers products.
  • It’s cyclical. We’ve seen that cycle before, circa 2002-2004.

Dark social

  • Dark social (defined by Eric Wheeler in Fast Company) is a form of word of mouth that happens in email and instant messaging. These still need to be leveraged and mined. Social media didn’t kill these methods of communication and they’re more alive than ever.

The sharing economy

  • We’re seeing more and more peer-to-peer marketplaces (often called Collaborative Consumption).
  • It leverages underutilized physical goods or resources (like time)
  • Examples include Taskrabbit, Uber, etc.

Marketplaces

  • We’re seeing the emergence of vertical marketplaces (players like Uber, Airbnb, etc.) that are completely integrated along the customer purchase decision process (from research/pre-shopping to merchant comparison to merchant selection to transaction to post-purchase, in one environment). I believe this is where the future of local search lies. Look at the top 100 Yellow Pages categories. They will each have a category killer in the next 10 years.
  • Related in part to the sharing economy.

Open Government

  • We’re seeing a push by citizens for a more transparent government, asking for open data and more accountability. Governments are slowly opening up. It’s still early but this is a huge democracy game changer. It obviously has tremendous impact in our local lives.
  • You can read about open governments in this Aeon Magazine article.

Privacy

  • Privacy will be top of mind for the next 3 to 5 years. It can now be an important feature of new services. For example, SnapChat allows you to share pictures with your friends and those pictures are available for up to 10 seconds only.
  • People worry that what they’re sharing can be used against them and I believe that a better social networking solution will come along in the next 5-10 years and change the game via “privacy” (and it’s probably not Path).
  • This trend leads us directly into “personal data ownership” where we own our data and we can transport it anywhere we want. We can also give permission to use it for marketing/targeting purpose, etc.

CRM/Marketing automation

  • Related to big data, these tools are arriving to provide marketers with a better understanding of customers and a better targeting of advertisers.

“Lead with design”

  • When markets are crowded, design becomes a strong differentiator.
  • This is the mantra right now in Silicon Valley.

Pricing management

  • Merchants/brands are being equipped with dynamic pricing/yield management tools to optimize pricing and maximize revenues.
  • Consumers will be equipped with solutions to help them time their purchase to get products/services at the lowest price.
  • It’s an arms race and is related to the big data trend.

Coupons

  • Now with less papers, more digital, more mobile (ex: Passbook on the iPhone)

Hardware

  • We’re finally seeing the return of hardware. Easier and cheaper to manufacture than before.
  • Expect many new hardware projects piggy-backing Arduino (open source electronics platform) or Raspberry pi or Beagle Bone.
  • 3D printing is probably part of that trend.
  • Hardware needs to marry perfectly with software. Both skills are needed now for new projects. Design is key.
  • New hardware solutions (like Fitbit) are enabling the capture of the “physical graph”.
  • Related to the “Internet of things” trend
  • Of note, if you have children, you should buy them toys that will prepare them for this new life. Pamela Fox recently wrote a great blog post about “Getting Kids into Programming

Local manufacturing/ Insourcing

  • Local manufacturing is back.
  • It’s better for local economies, for the environment, and companies can charge more today for “local” products.
  • You can outsource elements of production to Asia (take a look at Alibaba.com) but products are often designed and assembled in North America/Europe.

Crowdfunding

  • The great funding democracy movement. More money available for more projects.
  • Some growing pains: i) projects that are not delivered and ii) without a network (or help from traditional media’s amplification), it’s still difficult to raise big money.

Humans are data/bits

  • Rise of health startups (DNA analysis, life optimization, weight loss, etc.)

Smart Cars

  • Self-driving cars are being tested (Google, Audi).
  • Emergence of an in-car apps ecosystem.
  • Volvo’s Vision 2020: “By 2020, nobody shall be seriously injured or killed in a new Volvo”
  • Will we still need a driver’s licence in 20 years?

Ambient

  • Symbolized by products like Google Glass or Memoto.
  • Things are happening around us and data is collected without friction.

Products/services that have seemingly magical properties or give consumers pretend super powers

  • Related to the design-first and hardware trends.
  • Heavy lifting done by hardware and software, not the human.

Time as a currency

  • I first wrote about the Temporal Web in 2010. Still a very important trend.
  • Trendwatching thinks that “in 2013, consumers will look to their mobile devices to maximize absolutely every moment. Hectic, urban lifestyles mean that no amount of (micro) time will be too fleeting, or activity too absorbing, to cram in more content, connection, consumption or simply more fun.”

As I get prepared for two exciting days at London’s sold-out Local Social Summit 2011 this week, BIA/Kelsey just released an early taste of their latest U.S. Local Media Annual Forecast.

Highlights:

  • Total local advertising revenues for 2011 will be $135.9 billion, down from the $136.2 billion it forecast earlier this year
  • Traditional media segments such as Yellow Pages and newspapers are experiencing the largest downward revisions
  • U.S. local online/digital advertising revenues will rise to $23.3 billion in 2011, compared with $22.3 billion predicted earlier this year
  • Local online/ digital advertising revenues will be 17.2 percent of total local advertising revenues in 2011, up from the earlier forecast of 16.4 percent. By 2015 that share will increase to 25.4 percent, up from the 24.7 percent originally predicted
  • The overall local media market will grow slowly over the next five years, at a compound annual growth rate of 1.7 percent, reaching $149.4 billion by 2015

The rest/details of the forecast will be revealed at their next conference ILM West 2011, in downtown San Francisco, December 12 to 14. I will be attending the conference. BTW, I just reserved my hotel using Hotwire and I found a 4-star hotel within walking distance for $109/night. See you there!

As some of you, I’m coming back from a great vacation in the south of France. I was mostly offline for the duration of the vacation but still regularly picked-up French newspapers while I was there, most notably Le Monde (for national and international news) and La Provence (for local news). I kept a few articles that I think were blog-worthy and I’m going to share those with you in the coming days.

The first article titled “Rebond du marché publicitaire français en 2010″ (Advertising spending in France bounces back in 2010) was published on October 1st in Le Monde (paid link). The article discusses ad spending in France in the first semester of 2010 by various media vehicles. Data comes from Institut de recherches et études publicitaires (IREP) and data can be found here (.pdf).

I found the following interesting data points:

  • Television is the number one media in terms of ad spending (by far) with 1.7 billion euros and a growth of 12.8% over the same period last year
  • “Internet”, it seems, only takes into account display advertising (i.e. banners)
  • “Internet” gets 264 million euros in spending, a growth of only 9% vs. same period last year. Outdoor advertising growth is almost as much with 7.3%.

What it means: a couple of observations. First, television still rules in terms of ad spending. That media hasn’t (yet!) been hit hard by the Web and still benefits from huge ad budgets. The atomization of TV programs (think on-demand online streaming) is still in its infancy and will not impact TV’s numbers drastically for at least 3-5 more years. Second, I’m not surprised display ads are not growing as fast as we would expect the Web to grow. Even though it is still the preferred method for online advertising, I’m not a big believer in its future. Third, I’m surprised IREP doesn’t do a better job at tracking online advertising in general. PagesJaunes Groupe, the French Yellow Pages, saw their online revenues grow by 6.7% just in the second quarter of 2010 (see press release in .pdf) for a total of 263.9 million euros. That’s an equal amount to what’s recorded by IREP for “display ads”!

Four years ago, around this time of year, Praized Media’s co-founders got together for the first time to discuss the possibility of launching a startup. We were very excited about the blogosphere and the quantity of local content being created in this new space. We thought there was an interesting business to build at the intersection of local search and local conversations happening in blogs. The first products we released (two years ago, almost to this date) were local directory and editorial tools that can be integrated within WordPress and MovableType, two leading blogging platforms. We also launched a Facebook application. All of those tools enabled structuring and aggregating of local conversations around merchant profile pages.

Turns out we were right about conversations but wrong about where and how the bulk of them would take place. We didn’t foresee the rise of the statusphere. In 2006-2007, the place where local “conversations” were happening was definitely blog posts (and associated comments) and consumer reviews in sites like TripAdvisor and Yelp. Fast-forward to 2009-2010, the blogosphere still exists but local conversations are now happening on Twitter and on Facebook, mostly in status updates. Check-ins are also part of the conversation and are being used in Foursquare, Gowalla and other location-based social networks. Social media (Facebook, Twitter, etc.) is now a mass-market. Facebook has close to 500 million monthly active users. Twitter has rocketed to 190 million monthly users, writing 65 million updates PER DAY!

Pew Internet said in October 2009 that 19% of Internet users now say they use social media services to share updates about themselves, or to see updates about others. That’s a huge number! It dwarfs consumer reviews and check-ins by a large factor. And according to a recently published ComScore report quoted by Brian Solis, “23% of Twitter users follow businesses to find special deals, promotions, or sales. Of that, 14% of Twitter users reported taking to the stream to find and share product reviews and opinions.”

Last year, I also discovered local user reviews are not that exciting from a monetization point of view as they happen at the end of the consumer purchase decision process, at post-purchase. The real money is earlier in the process, when consumers realize they have needs and when they start doing the research. I wrote about this in July 2009. And can you guess when business directories are being used most often? When consumers have needs (“I need to order take-out”) or are going through life events (“I’m getting married!”), early in the consumer purchase decision process.

When we built our real-time local activity stream and real-time local search technology last summer, it allowed me to see the enormous quantity of “local” information being publicly shared on Twitter and Facebook. Millions of consumers are now sharing activities and opinions about local businesses using Twitter and/or Facebook. They are also expressing needs such as “I’m hungry”, “My car just broke down” and “Does anyone have a dentist to recommend?”, even in smaller cities. I coined a new name for this: the “Needium” (the “need” medium). Local businesses would definitely benefit from hearing the voice of the consumer and engaging with them but these activities are happening on many sites and can be hard to discover through the noise. In addition, small and medium-sized businesses (SMBs) are extremely busy. Realizing this, we rolled up our sleeves and came up with this new game-changing product:

Introducing Needium.com

Needium.com (http://needium.com) is the social  lead generation and reputation management dashboard for SMBs. Needium monitors social media sources and detects business opportunities based on local user needs and life events. It also listens for merchant name mentions to enable reputation management functionalities. Needium aggregates and structures that information in a Web-based dashboard where merchants can log-in to easily join conversations (and more) without having to monitor all social media sites individually. Based on merchant information in our structured database, a series of pre-configured results are automatically created for them, using their location, categorization and some user social actions collected from publicly available social media activity streams.

Take for example, this account for a Holiday Inn hotel in Boston:

The left-hand side column, Opportunities, is where merchants will find the latest business opportunities we have discovered for them. If advertisers feel the opportunity is interesting for their business, they can communicate directly with the consumer using the “reply” button. In that column, they’ll find consumers asking explicitly for their products and services (see screenshot below) or find implicit statements as well. For example, a traveler from a different city saying “I’m going to Boston in 3 weeks” will potentially need a hotel room and might patronize restaurants and museums. In each status, we show the user name, the status update, the time when it was made and the source. We use a combination of verb and noun synonyms, taxonomy and semantics to identify these opportunities.

Hotels in Boston (Needium) - 2

The middle column, Mentions, is where SMBs will find references to their business name. If they feel they need to reply to the comment (to correct an issue or thank a user for their comment), they can communicate directly with the consumer using the “reply” button. Again, we show the user name, the status update, the time when it was made and the source.

Hotels in Boston (Needium) - 3

The third column, History, is where you find the various replied done by the merchant. When you click on “reply”, a light box pops-up (see below). Merchants can then type in their message/reply and hit “send”.

Hotels in Boston (Needium) - 4

Each column comes with its search box, enabling merchants to search for specific opportunities or mentions using particular keywords.

The business model is simple: monthly fixed-fee subscriptions. The product will be available in self-service and in white-label to leverage large sales channels like Yellow Pages, search engine marketing firms, newspaper publishers and other local sales channels. Additional services available are Twitter and Facebook accounts creation and a fully-managed service where we take care of the SMB communications with consumers on Twitter and Facebook (think of it as “community management” in a box).

We believe reputation management is now a commodity, a must-have in social media filtering but that the real big opportunity is in social lead generation. Our Yellow Pages experience and expertise helps us find and surface the real SMBs business opportunities happening in social media. We think the current quantity of leads is just the tip of the iceberg. We are already working on better semantic analysis, social hints as well as a few other techniques to get an even better signal out of the noise. With that improved analysis, with more people signaling their location every day, with usage growth, hundreds of local opportunities per day in most major Yellow Pages categories will be made available. This is the true evolution of word-of-mouth marketing and tremendous value will be created by channeling this “local voice of the Internet”. As we’ve stated before, we believe local conversations on the Web are the great local search disruptor and we will be happy to work with you to empower you to capture these new revenue opportunities. If you’re interested in a test account, please contact me at sprovencher AT praizedmedia.com. You can also follow Needium news on our Needium-specific Twitter account.

This week, TechCrunch published international traffic growth trends for Twitter and they are impressive. The source is Pingdom.

Pingdom took a look at Google Trends for Websites traffic data for Twitter.com to see where the service is experiencing the fastest growth in terms of monthly usage. Again, that means its findings are far more fit for deducing overall trends than they are able to accurately detail Twitter’s user numbers, since a lot of people use desktop and mobile clients for tweeting.

Regions/countries that are growing are:

  • Latin America: Argentina, Brazil, Colombia, Mexico and Venezuela
  • Asia: India, Japan, South Korea, Taiwan, Thailand, the Philippines, Malaysia and Indonesia
  • Europe: Italy, Spain, Russia (Pingdom mentions that most European countries are growing but that these three have experienced extra sharp growth)

Additional pieces of data in the TechCrunch article:

For your information, Twitter COO Dick Costolo at the beginning of this month said they are currently at 190 million users, who are collectively posting some 65 million tweets per day. And last April, Twitter’s lead engineer for its International team, Matt Sanford, said over 60% of registered Twitter accounts were already coming from outside U.S. borders.

What it means: I wanted to specifically write about Twitter’s international growth following this tweet from my friend Perry Evans. He wrote last week, following a European trip where he probably met many European media companies: “Twitter, you have a major uphill battle in Europe. Everyone I met in media circles this week seem exceedingly skeptical of your prospects”. I wrote back to him on Twitter saying: “They were skeptical of Facebook two years ago as well…”. When I spoke at the EADP conference in 2007, many senior Yellow Pages execs in Europe didn’t think Facebook was relevant. History proved them wrong. Ten years ago, I could have written a blog post titled “Google is not going away”. Most senior execs at media companies didn’t think Google would be a direct threat. Twitter has been growing and will (has?) become an important international media company. To dismiss them is to risk being fooled for a third time.

As a startup entrepreneur for the last three years, I’ve had the chance to observe the online scene both locally (Montreal), nationally (Canada) and internationally (US and Europe mostly). I’ve organized and participated in many unconferences and camps (most recently last week at WebCamp Montreal) and I’ve spoken at conferences in Europe, the US and Canada. I’ve met many entrepreneurs all over the world and I’ve coached aspiring ones. I’ve traveled to Silicon Valley countless times and had the opportunity to breathe the air there, trying to identify the various cogs of that ecosystem. I’ve realized that, if the right conditions are present, tremendous value can be created by building Web products.

My perception of the local online industry (Montreal specifically) is that we’re really good at online marketing / communications / advertising and we use this as the main method to generate value. We do build many online products but they end up being used in specific time-sensitive ad campaigns, ephemeral things, and when these ends, these products become orphans. This perception is obviously influenced by my product management background. I’ve been building Web products for more than 10 years and some of the things I’ve created have influenced whole industries and are generating millions of dollars in revenues.

Montreal has all the ingredients to become a hotbed of Web development and startups (I wrote about that a few months ago). After all, we already did it for the videogame industry. There is a lot of money for interactive projects, especially in large organizations, but we’re trying to replicate the old broadcast/advertising model online. There must be a better way to do things.

To re-think the way we work as an industry, I’d like to inspire myself from ecological terms coined in the last few decades: sustainable development and the waste hierarchy (known commonly as the 3Rs, reduce, reuse and recycle). Environmental science learnings can teach us to create more value with less “material”. Based on my personal experience, here is my manifesto for sustainable Web development, to create a better, more innovative, more valuable Web ecosystem.

  1. Think “product”, not “ad campaign”. Use budgets to create things that will last. Think how you can achieve your communication goals by building stuff instead of buying media placement.
  2. Do not re-invent the wheel, Focus on building value on top of existing material. Re-use existing standards. This is how we’re going to accelerate the pace of innovation.
  3. Use open source software. You’d be amazed to see how many technology components are now available in open source. You get access to whole communities when you use those technologies and you speed up innovation.
  4. Leverage existing APIs. You’d be amazed to see how many content and technology components are now available via public APIs. Use them, again, to speed up your development.
  5. Less talk, more build. We love our social time, drinking beers with industry colleagues and imagining a better world. If you want the world to change, go in action mode. Just do it!
  6. Give back. At the end of a project, if you’re not going to reuse the code, open source it. If it’s not going to be used at all, give it back to the community.
  7. Do not focus on “competitors”. The online market is huge and will be so for the next 20 years. Think about disruptive ideas, think about incremental ideas but focus on your business and the opportunities.
  8. Work with other companies. This is the corollary of the last bullet. Can you participate in common projects that will benefit multiple organizations?
  9. Use locally-produced technologies in your projects (when possible). This rewards risk-taking in the local ecosystem.
  10. Share your best practices with others. Blog, speak, be open, You win on execution, not on ideas.
  11. Mentor others. Make sure other people benefit from your experience. Be generous with your time even though that’s probably the most precious resource you have.
  12. Participate in the ecosystem. Attend events, write blog posts, take position on important topics.
  13. Learn from failure and respect those that failed. Silicon Valley folks believe you can learn from failures. Do the same.
  14. Think out of the box. Don’t be afraid of pathways less traveled. Challenge people.
  15. Launch your own company. If you really believe in your ideas and your current professional environment doesn’t allow you to execute them, start your own company.
  16. Listen to builders, innovators and “crazy” people in the industry. They sometimes sound crazy but listen to them. They see things you don’t see.
  17. Create long-lasting value, not short-term results. ‘Nuff said.

Do you agree or disagree with what I wrote down? Have I missed anything? Feel free to leave a comment. This is the beginning of the conversation…

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