Welcome to SoundBytes II and Predictions for 2014

For many years, while on Wall Street, I published my newsletter SoundBytes. Although blogs did not formally exist, it was written like a blog post with lots of personal references and comments on society in addition to analysis of technology trends and stock opinions. Looking back, we had numerous calls that have proven prescient and a few (most of which I won’t mention) that were not as strong. A few examples of posts that appeared in the mid- to late-1990s, include:

  • Predicting that music, photography, software and books would move from physical distribution to bytes (sold and downloaded through the web);
  • Predicting that the killer apps for hand held devices (then PDAs) would be email and music;
  • Telling people that true quality bagels should not be toasted! and
  • Suggesting that someone should acquire Seagate as its ownership of Veritas stock was about equal in value to the company’s market cap.

Of these, all happened but unfortunately I couldn’t slow the trend of toasting bagels, even if they were fresh. I have been highly motivated to recreate what was then a newsletter, as a blog. Since this is the first issue, it seemed appropriate to start the new year with my predicted Top Ten Trends for 2014 (created the first week in January). Before I get to that, a quick biographical update of life post-Wall Street. As many of you know Paul Ferris, Cameron Lester, Paul Weinstein and I left Credit Suisse to form a venture capital firm, Azure, in 2000. The four of us have managed to persevere and still all remain General Partners in Azure. I’m still happily married to my college sweetheart, Michelle but we now live in the San Francisco Bay area rather than on the east coast. But after 15 years here, I still retain my New York heritage – including my accent and sense of humor. I promised brevity so that’s it for now.

We need to slightly change the URL name as I did not forecast the substantial increase in value of the Soundbytes.com URL and therefore let my ownership lapse. Fortunately, we were able to acquire Soundbytes2.com and this will be the URL for my blog. Dan Park, an Azure VP, will be helping edit my posts and will also occasionally do his own guest posts.

You’ll find my predictions below but wanted to provide one comment on the first prediction regarding the continued success of Tesla in 2014. This was written prior to the company pre-announcing a very successful Q4 where they stated that they would beat the Street numbers by 20%. I had met with a prominent member of the press just before the announcement but it was released before he could quote my prediction. Of course, the prediction is for 2014 and I still stand by it despite the larger sales the prior year. Finally, both Tesla and Facebook success was part of my 2013 predictions and I did buy both stocks at $45 and $23 respectively well after the press covered the predictions. I still own them but have written covered calls against all of the Tesla position and part of the Facebook position. Although I’m not on Wall Street, I won’t ever buy stocks that I talk about in a blog until at least one week after the post.

Without any further introduction, my top 10 predictions for 2014 are as follows:

  1. Tesla will continue to emerge as the first all-electric vehicle supplier targeting a wide range of very usable cars. In 2014 we expect:
  • the high end sedan (Model S) to increase sales by over 100% over 2013;
  • the launch of its first SUV (Model X); and
  • increasing publicity regarding the 2015 launch of a much lower cost vehicle
  1. Social TV will continue to emerge as popular TV shows attempt to convert viewers from using Facebook and Twitter during broadcasts to providing feedback through apps. By having their own social apps the shows will get viewer engagement during the show and be able to display results in realtime. By 2015, at least one TV show will offer multiple endings and choose to broadcast the one chosen by their viewers through such apps.
  2. There will be a shift from full-time employees to temporary workers. Many corporations will respond to the extra cost burden of Obamacare and other government initiatives by reducing their fulltime workforce and using contractors and part-time workers instead. By doing this, they will create increased efficiency as the cost of health care insurance, vacation pay, etc. will be eliminated.
  3. A new content streaming service focused on a much wider range of content than music will be launched by a major technology company.
  4. Philanthropists will subsidize one or more magazines, newspapers and/or bookstores in an attempt to prevent their continued march towards extinction. In each of these arenas profitability is disappearing and there are those that will take the position that like opera, symphonies, regional theaters and ballet they are an important part of culture and should be preserved.
  5. Robotics will make further inroads with products that provide real value. One example is the telepresence robot which is already being used for next generation video conferencing. Such devices and will gain further adoption as it creates a more “live” interaction then traditional videoconferencing.
  6. Drones will not emerge in 2014 as a viable, cost effective delivery mechanism despite considerable publicity from players like Amazon and Google. The technology is still too costly and not yet sufficiently reliable for a mass market approach.
  7. Curated commerce will continue to emerge.  The web offers everything that exists but makes it difficult if the customer doesn’t know, in advance, what he or she wants. Curated commerce means that the e-tailer has buyers that “curate” what is offered so that the inventory they choose to carry is selected to match what their customers might want. If done well, it greatly enhances the shopping experience. If done exceptionally well, offerings are actually matched to specific customers.
  8. Brick & Mortar stores will drive more online sales as they reduce in-store availability and provide improved online ordering for in-store customers. By doing this, physical stores can consolidate larger portions of inventory in warehouse locations, thereby decreasing obsolescence and write-downs. At the same time, they can increase available sizes and colors without adding inventory risk as consolidation will increase predictability.
  9. Facebook will more directly enter the mobile gaming market (sort of). The cost of customer acquisition for mobile games, now, in aggregate, exceeds the lifetime value of the average customer! Facebook will offer 100,000 or more “free users” to a number of gaming companies in exchange for a portion of the lifetime revenue of those games for all customers.

 

 

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