I believe that technology and democratization goes hand-in-hand. If you examine the now-commoditized products listed in this article (PC, software, TV, trading commissions, camera, cell phone plan), you can also follow how such technologies became much more widespread and accessible to the masses as prices dropped.
The subtitle of the article boldly proclaims, “behold the power of American progress”! And it’s interesting to me that the author (Aki Ito) states:
For anyone bearish on the progress made by the U.S. economy, consider this: Computers are now one-1,100th of their price 35 years ago.
On the contrary, I believe that much of this price deflation actually comes from international manufacturers (read: China, India, etc.) who are able to produce virtually the same item at a fraction of the cost.
With those two factors in mind, tech advancements and cost-efficient copycats, here are few things that I believe will face the same deflationary pressures over the next decade:
- Mobile phones: This is a no-brainer and has already happened with the likes of cheaper Android handsets, courtesy of Xiaomi.
- Automobiles and trucks: Asian manufacturers, such as Hyundai, are innovating quickly and will be able to rival Western brands soon in terms of quality. Furthermore, if Uber’s expansion continues world wide, demand for cheaper and more efficient cars will rise as drivers proliferate and riders opt to forgo car ownership.
- Education: With the current status of rising student debt, something’s gotta give. Disruptive Education Technology startups, such as General Assembly, Codecademy, and Coursera will begin to offer non-accredited alternatives to higher education. For profit education companies, like Minerva Project, will offer degrees at a fraction of what it costs today.
- Food: I have high hopes for companies like Beyond Meat, who are looking to product petri dish-grown meat in a more cost-effective and environmentally sustainable way. Before that becomes mainstream, however, farmers will continue to lobby for government subsidies which hopefully will be passed through to consumers.
On the other hand, there are a couple of things I wish would drop in prices, but I think unfortunately will continue to rise:
- Healthcare:Healthcare is notoriously a laggard vertical when it comes to tech adoption, and the burden of outdated IT/infrastructure is eventually passed through to the consumer. An aging population, the impending shortage of doctors/nurses, and America’s sedentary lifestyle will all pose to be challenging to the current healthcare system. Without the right incentives for health systems and individual consumers to change their behavior, healthcare looks like it will only increase in the years to come.
- Housing: While this is a particularly stressful topic for those of us living in the Bay Area, I think it’s a pain point that all young adults will face sooner or later. Given high student debt and low employment, young adults will find it much more challenging to become home owners than the generation before did.
What do you think will become cheaper or more expensive over the next decade?
Six Things Technology Has Made Insanely Cheap
I wrote an article on VC investing in the marijuana industry… a fun topic given how big and common weed is in the valley. Also an interesting topic to consider for all investors, in light of Neumann’s most recent blog post, where he claims,
the only thing VCs can control that will improve their outcomes is having enough guts to bet on markets that don’t yet exist. Everything else is noise.
Is 2015 The Year Legal Weed Changes The Future Of The American Economy?
Seen by its makers “more R2D2 than RoboCop,” the autonomous policing robot Knightscope K5 promises to patrol geo-fenced beats in hopes of reducing crime by 50 percent.
As a late-stage investor, I’m often waiting on the edge of my seat for technologies to mature to a point when IVP would typically get involved. For me, robotics is one of those exciting areas where I have to unfortunately sit on the sidelines, for now.
Some quick thoughts on how robotics will develop over the next couple of years:
- Forget the consumer angle (see: the Jetsons), as with other next-gen devices such as Google Glass, robotics will first find their plateau of productivity in the enterprise. (see: AMZN / Kiva Systems)
- The future is friendly – robots should be made to look as innocuous as possible. (see: Eve from Wall-E)
- Robots will not only replace human functions, but enhance them too. In the example of Knightscope, the robot can analyze data, such as hundreds of license plates, in a way much faster than a human can. In other words, go for a revenue-generating sales pitch, not just a cost-saving one.
I have to admit that my understanding of robotics is still elementary Any suggested readings for me?
(PS. Speaking of Wall-E, this cruise ship is just missing those personal hovercrafts…)
Robotics: the inevitable future
Researchers at the American Institute for Economic Research found that Asian tech workers on average made $8,146 less each year than white workers in 2012, $3,656 less than Black employees, and $6,907 less than those who identified as “other.” Women, as a group on average, earn $6,358 less than men each year.
The article points to the fact that many H1-B workers are Asian, which contributes to depressing the average salary across the tech industry. As an ethnically Chinese person on the H1-B, I think the stat actually demonstrates that Asians are culturally and systematically discouraged from being demanding or confrontational.
As an Asian woman, I don’t always feel comfortable in negotiating what I want and promoting myself to an employer – a shortcoming that I learned the hard way when interviewing for an investment banking position alongside other white male candidates. The real action point from this data is that Asians need to better learn how to negotiate their salaries (and not let “karma” take care of it, à la Satya Nadella.)
New Numbers Reveal Asian Wage Gap in Tech – NBC News
Khazan: What about people who say that there is a paralysis of choice—that online dating makes us non-committal because we can always go on a date with somebody else?
Yagan: I think that means you end up in a better relationship. When you decide to stop going on OkCupid dates, it means you’re happy with the date you have. I think one reason we have high divorce rates is because people have had limited pools. You only had the pool of people who lived in your town or who you went to college with or who go to your gym.
Relationships that start online are much more heterogeneous than those that start offline by the simple nature of the fact that the people near you are more similar to you than the people who span a broader geography. So I think it gives you much better selection, not just more selection..
My friend, an Econ PhD candidate at Berkeley, and I have often debated the merits of online dating. (Fun fact: we actually met on OkCupid.) Our conclusion is that online dating is best for folks with edge preferences, as it offers better filtering and wider top-of-the-funnel.
I like Yagan’s answer on the paradox of choice because it proposes marital satisfaction in America as a “smile” or J curve. Social media and online dating has decreased friction for unhappy relationships/marriages to end and for folks to start new relationships. At first, this could contribute to an uptick in divorce rates, but over time, the hope is that more data and wider top-of-the-funnel will result in happier couples.
Marriage Success Rate as a J Curve?
If there is one thing I learned while living on the Upper East Side many years ago, it’s that York Avenue is quite a hike from the subway (at least as far as hikes from subways in Manhattan go). That fact can sometimes help keep housing prices down, at least until the 2nd Avenue Line comes in.
Found: The Manhattan Apartment that’s the Farthest from any Subway
I wrote a post this week and Alex published it as a guest post on his blog. Go check it out!
Jordan Kong is an Associate at Institutional Venture Partners, a late-stage venture fund in Menlo Park. She previously studied at Columbia University, interned at several NYC tech startups, and did a two-year stint on Wall Street. Jordan blogs regularly, tweets frequently, and takes photos
Hardware as Software and the Business Model Revolution
I’ve just posted some office hours on Ohours and hope to make it a regular thing. Feel free to forward along to anybody who may find it helpful!
Public “Office Hours” for anyone looking for a sounding board
When it comes to consumer electronics/hardware, Kickstarter isn’t really a financing platform as much as it’s a market research platform. Over a thousand people were willing to part with around $115 for a router that didn’t even exist when they agreed to buy it online. That’s a pretty powerful signal (a) that a product is properly conceived and (b) that the marketing messaging has been worked out. I love seeing entrepreneurial teams using Kickstarter to validate a concept and demonstrate early real traction.
Yankee Sabra Limey: Two lessons from Skydog’s “Kickstarted” home router
Recently, before starting at DFJ Esprit, I had some time to think about which investment themes interest me most as I look for investment across Europe. Of course, to be honest, this is just what I think I’m looking for…until the right entrepreneur shows me something new and amazing I had no idea…
As a junior VC, I find that looking at investment themes is one of the easiest way to start thinking about what opportunities make sense for my firm’s portfolio and which opportunities are exciting for society, in general. At IVP, we already plays in several of these verticals (Cloud infrastructure, online finance, mobility, digital society, to name a few).
The areas that I’m looking forward to exploring are sustainability and pervasive computing – not surprisingly, these two themes also have the highest potential to improve consumers’ standard of living.
Yankee Sabra Limey: So what am I looking for? Thinking about VC investment themes