Predictions for 2017: Driverless Car, Housing-as-a-service, and more
In 1917, the Model T was doing so well that Ford decided to stop all advertising. For the next 6 years, they didn’t do a dime of marketing and didn’t need to: over half of all cars in the world were Fords.
100 years later, the next major automotive technology seems ready for prime time: the driverless car. As do some others innovations, like new housing models. Those, and more predictions, below:
- The driverless car product of Tesla, Uber, Apple, and traditional car manufacturers will hit the roads, and not just in a test capacity. They will start to get licensed by state and federal governments, and countries around the world will jockey to make their roads more welcoming so they can get the technology sooner. New business models will come up around car ownership, such as time-share like models for driverless cars. Insurance companies will fight to claim ownership of this market, as well as figure out exactly who is liable in the result of an accident (the car owner, the software, the hardware, the licensing authority, or someone else). Even property prices will start increasing in suburbs again, as people envision a more productive commute thanks to the driverless car.
- As uncertainty in the stability of the west grows, Africa’s rise will accelerate. More companies will get funded in Nigeria, Kenya, and other markets like Tanzania, Rwanda, Uganda, and South Africa will see more startup activity and funding than ever before. Asia will continue to be hot, as China & India continue to see tremendous funding. The exceptions will be Indonesia (where the Christian governor of Jakarta was recently charged with blasphemy) and the Philippines (where the new President has encouraged vigilante justice), where government turmoil will take time to resolve and slow investment.
- The notion of housing-as-a-service will become real, thanks to companies like StayAwhile, Common, Roam, and WeWork. As millennials strive for mobility and flexibility, having a monthly subscription with the ability to live anywhere, instead of locking into 12 month leases, will start becoming a trend. The ultimate question will be, “where do I keep my stuff?”
The Year of the Monkey
“You can tell the people of the need to struggle, but when the powerless start to see that they really can make a difference, nothing can quench the fire.” – Leymah Gbowee
What a curious year. Tomorrow, I’ll give my predictions for 2017, but for now, I’ll reminisce on my lowlights and highlights, with their applicable learnings.
2016 Lowlights
- The passing of NEA General Partner Harry Weller. He was one of my first mentors when I joined NEA in 2012, and his advice on venture capital (and life) is one of my guiding principles: “The goal in our business isn’t to be liked, it’s to be respected.” To him, that meant prioritizing, and making, hard decisions, even though they may not be easy to swallow.
- The questioning of our values. The questioning of what makes America, America. I thought we were a place whose fundament tenet can be summed up by “treat thy neighbor as thyself”. A place where justice, equality, and liberty prevail. But in a political season marked by brutality and disparagement, those ideals may not be as sacred as I had hoped. And, unfortunately, this message seemed to have resonated globally.
2016 Highlights
- President Obama’s historic Cuba trip, the first by a sitting US President since 1928, and being a part of the delegation. Since then, direct flights have now started on most commercial airlines between Houston, Newark, Miami, and other cities to Havana and elsewhere in Cuba. It isn’t a felony to spend US dollars, joint medical research partnership are beginning, bank accounts can be opened by certain Americans, Fidel Castro is dead, and we can now import Cuban cigars freely. And to think that just 9 months ago, none of this had happened. Change came, and it came quickly.
- Visiting Georgia, Sri Lanka and Vietnam to help promote job creation and innovation policy. Each country faces a radically different challenge: Russian influence and aggression (Georgia), IMF bailout and recently coming out of a civil war (Sri Lanka), and a communist government (Vietnam). But each country is thriving and is eager to be a beacon for entrepreneurship, with the priority coming from the top. It will be the difference between their future livelihood and descending into chaos, and I am optimistic on all three.
- Getting to sit for 15 minutes with Leymah Gbowee, a Liberian peace activist who led movements that helped end the Second Liberian Civil War. She’s rambunctious, motherly, and fiercely brilliant. And although she has 10 kids of her own, she somehow adopted me as her 11th in those 15 minutes. Auntie Leymah is the embodiment of a modern Gandhi, and in the depths of darkness she was able to prevail.
Looking back on 2016, I’m disheartened, invigorated, and inspired–all at the same time. And looking forward to 2017, I’m ready to crow. Bring on the rooster.
A 2 month wrap
The past two months have been special. Each experience could be the subject of a post, but I’ll attempt to capture my learnings (or lack of) succinctly from the 3 highlights:
- I spent a week in Israel and then a day in the West Bank meeting entrepreneurs. Never before have I heard two sides of an argument and felt so equally compelled by emotion, logic, and passion. Tel Aviv and Jerusalem are stunning, and Ramallah could not be more different despite being so close. The longer I stayed, the more I realized how little I knew about one of the most complex issues globally. Religion has extraordinary power to unite. It also has extraordinary power to divide.
- I left Cuba deeply honored to be part of such a historic trip, but with a heavy heart. The hospitality, warmth, and drive of the Cuban people made me fall in love with our neighbors. The locals, for the most part, embrace America. But entrenched interests (i.e. the Communist Party) don’t. The country is behind (there are only a handful of wifi hotspots in the whole country, doctors make less than a $1/day…), but the people are looking forward. I hope change is coming.
- I sat at the dinner table of President Jimmy Carter last night at the We Are Family Foundation Gala, my first time ever dining at the same table as an American President. We talked about his health, the issue he is most passionate about (eradicating Guinea worm – he is close), and his mentee (and my hero) Mattie Stepanek. He didn’t just inspire me with his words, but also his energy. At 91, he has a vibrancy for life and a zest for change that is invigorating. His legacy will live on far longer than him.
“We must adjust to changing times and still hold to unchanging principles.” – President Jimmy Carter
The Forgotten Neighbor
It is perhaps the greatest honor of my professional career to be embarking on my current trip. Less than 2 weeks ago, I was invited by the White House to attend a series of events in Cuba. It is the first trip by a sitting US President since Calvin Coolidge in 1928.
I will be leading a roundtable Monday with Cuban entrepreneurs, all of whom are hungry to access investments from a country that has blocked them off since the embargo signed by JFK. They have asked me to speak on accessing capital and the importance of entrepreneurship for Cuba, but I’m pretty sure they already know that the companies they create will have an impact not just on the future of their families, but on the future of their country.
With every passing day as a venture capitalist, my awe, respect, and appreciation for entrepreneurs grows. Often everything is against them: incumbents, families, capital, employees and, in some cases, governments. In fact, Snapdeal, the first investment of my VC career, was founded by entrepreneurs who wanted to stay in America but we denied them a visa. Those who proceed, perspire, and ultimately prevail should be celebrated. What they create can, in some cases, touch more lives than any government.
Thanks to my partners at New Enterprise Associates who come to work every day trying to fight the status quo to make the world just a little bit better. And most importantly, thanks to all the entrepreneurs I get the privilege of working with for teaching me far more about failure, courage, and tenacity than they will ever know.
I’ll try and impart some of their collective teachings in Havana, but what will likely happen is what always happens: I will learn far more from the Cubans than they will from me.
The Makings of a VC
In Silicon Valley, there is a constant debate about whether venture capitalists should have previously been entrepreneurs. While it can certainly be helpful, history shows us that some of the very best VCs took completely different career paths: Mike Moritz was a journalist, John Doerr was a salesperson at Intel, and Arthur Rock was an army veteran who then did corporate finance. Some argue that there are actually more failed entrepreneurs-turned-VCs than non-entrepreneur VCs, but in general the asset class is one where failure is so prevalent that the numbers are likely a wash.
Although I haven’t founded a company (beyond the candy store in my 3rd grade desk, or my nonprofit), my time at Skybox Imaging, which was later acquired by Google, taught me a lot as it relates to building a business: selling a product, scaling an organization, and raising money from the other side of the table. But as a venture capitalist, it gave me something that I’m not sure I could have gotten any other way:
Empathy.
The longer I’ve been in venture capital, the more I admire entrepreneurs. Everything is against them: incumbents, families, lack of capital, and even the government in some cases. Those who succeed are truly remarkable, and often lucky. But nobody gets it right all the time, and even successful businesses go through ups and downs.
Entrepreneurs don’t usually need VCs when things are going well; in fact, sometimes the best thing that we can do is get out of the way. But when things aren’t going well, that’s when the truly best VCs truly show their character.
When choosing a VC, I recommend that all entrepreneurs ask VCs for references not just from their companies that did well, but from their companies that failed or went through tough times. It’s where you will find out the VC’s true colors.
Are they scared, or empathic? Do they resort to drastic measures, or are they more measured? Have they seen ups-and-downs before, or do they believe that everything should always go well? Do they fire immediately, or are they more deliberate?
Lessons from Lagos
“I’m in Lagos, Nigeria. Pulsating energy, chaotic beauty…this country will be the best growth story of the next 20 years.” – my tweet from a few weeks ago.
Lagos is hot, dusty, crowded, chaotic, and corrupt. The black market currency rate for the Nigerian Naira fell from 280:1 to 305:1 in the 5 days I was there (the “official” rate is artificially pegged to the US dollar at 200:1). Petroleum export revenues account for over 90% of total exports, so the fall in oil prices has hurt the country badly.
Nigeria reminds me of India 15 years ago, and likely what China was like 25-30 years ago. The new President, a former militant, is focused on two rampant problems: corruption & Boko Haram. By all accounts, he is succeeding on both fronts. The state governments are trying to diversify the country’s economy, particularly through technology and agriculture. In other words, there is no better time to be an entrepreneur or investor in Africa’s largest country.
Here are my lessons learned from Lagos:
- Corruption is complex. A number of billionaires have private planes not just for convenience, but also because it’s a great way to smuggle money in and out of the country. After all, customs officials just check luggage, not planes.
- Overstating imports is common. Nigeria officially imports more toothpicks than all of Europe. It imports incense sticks equivalent to half of India. Why? It’s impossible for government officials to count the actual number of toothpicks or sticks, so they are deliberately overstated to convert “black money” into white, or to exchange Naira into dollars.
- Starting up a company is expensive. Most office spaces require 2 years rent up front. Broadband costs somewhere between 10-50x as much as America, depending on the speed you want.
- President Buhari is incorruptible, but his wife may be his downfall. She likes shiny objects, the high life, and could be his Achilles heel.
- State education is a joke. One of the Andela fellows received a masters in Computer Science from a Lagos university. And yet, she hadn’t written a single line of code on a computer before becoming an Andela fellow.
I can’t wait to go again. Nigeria will become the 5th largest country in the world by 2030 with an exploding young middle class. In chaos, there is often much opportunity.
4 Predictions for 2016: an impeachment, tech v law, and more
2015 started as the year of the unicorn, and ended as the year of the unicorpse. Emerging markets, the rule of law, the off-demand economy, and the education bubble finally getting popped…here’s what we can expect in 2016:
- Emerging Markets will be in vogue again (except India) as US interest rates rise. Brazil’s currency will stabilize, reforms will be pushed through, President Dilma Rousseff will get impeached, and investors will start flocking back to the 5th largest country in the world for more than just the Olympics. Andela will be just the first of many Nigerian startups to get major US funding as President Buhari makes Africa’s largest country, which will overtake the USA in population by 2050, a safer haven for both tourists and investors. On the other hand, India’s bloated valuations for unicorns like Ola, Flipkart, Oyo, and others will begin to abate as investors realize Indian customers are more price-sensitive and less brand-loyal than they were hoping.
- Court cases will wield direct impact on startups more than in any other year in recent memory. Madden v Midland may cap the interest rates that companies like Kabbage, LendingClub, SoFi, OnDeck, and others charge in certain US states thanks to usury laws. O’Conner v Uber could classify 1099 workers as full-time employees, especially for companies in which contractors are working near full-time hours. Tyler v FanDuel & Draftkings may declare fantasy sports businesses violations of the Unlawful Internet Gambling Enforcement Act of 2006. And as the driverless car begins to hit the road under the guise of autopilot, there is bound to be a case on liability in the event of a crash or hack. The central question will be, who is at fault: the software provider, the car manufacturer, the owner, or some combination? Many questions remain unanswered.
- The On Demand Economy, particularly in food, will face headwinds, consolidations, and shutdowns. The hot-in-15-minutes, cook-at-home, heat-at-home, order-from-restaurants, pick-up-from-restaurants, and 30+ other on-demand food delivery startups will start to run out of money as investors realize their unit economics may never work. Most will get acqui-hired or shut down. But one company will likely emerge that could take on GrubHub…and it won’t be Uber’s UberEATS. All other categories will become Uber[FILLINHERE].
- Education startups will begin to displace struggling traditional institutions. More students will choose to take classes on Coursera or Khan Academy for free instead of amass colossal debt at for-profit educators like the University of Phoenix. Entry-level job seekers will flock to companies like LearnUp instead of attending expensive vocational schools. Primary school applications to schools like Altschool and Think Global School will skyrocket. Students, especially those in emerging markets like Kenya, will begin to receive fully accredited college degrees on their mobile phones thanks to One University Network. New funding, from both private and public sectors, will pour into education startups as people start realizing that our educational system is broken and far too expensive.
Let the games begin.
Quotes on liberty, Moore’s law, and fitness
Quotes I’ve heard over the last few months that have made me pause and reflect:
- “Rights aren’t granted by the government. They are guaranteed by the government.”
- “With liberty comes vulnerability. That isn’t what makes us weak, it’s what makes us strong.”
- “Rights of the minority can never be voted away by the majority.”
– Edward Snowden via Google Hangout at Summit at Sea
- “Moore’s law is creating Moore’s outlaws”
-Marc Goodman, founder of the Future Crimes Institute, in reference to the proliferation of technology for everyone
- “Nobody can buy fitness. It is the one thing that requires perseverance and dedication.”
-David Petraeus
- “Success breeds complacency. You must keep intellectual humility and act like every deal is your first deal.”
- “Perseverance is genius in disguise.”
-Barry Sternlicht, former CEO of Starwood Hotels
- “Hospitality is when you feel they are on your side.”
-Danny Meyer, CEO Union Square Hospitality Group (Shake Shack, etc)
LearnUp: Using Technology to Solve the Skills Gap
This post was originally published on NEA’s website:
Marley Barazon was 16 when she immigrated to the United States from the Philippines. For months, while handling the rigor of senior year of high school, she looked for a job to support her family as they attempted to make it in a new country. Application after application, she kept receiving rejections. After three months, Marley finally came across a Craigslist posting for a position at Old Navy, and the link redirected her to LearnUp. After completing the scenario-based LearnUp training, she applied for the job, and received her first interview in America. Then, the good news came—Old Navy wanted to hire her, as a “Sellebrity”, or retail salesperson, at a nearby branch.
It is an economic irony that in every country around the world, there are thousands of unfilled jobs and yet simultaneously a high unemployment rate. In America, we have a ~5% official unemployment rate, but in certain cities that rate is three to four times as high—and is even higher amongst minorities, youth, and low income folks. If you add those who are underemployed, the number is even higher. LearnUp is trying to solve this “skills gap”, starting with entry-level jobs, by working directly with employers to put online the necessary content an applicant needs to know to be a successful employee. Applicants then complete targeted training at zero cost to them before applying for the corresponding job, which increases their chances of getting hired by 300%. We believe this could not only help the people desperately in need of work to get jobs, but could also revolutionize vocational education over time.
Whether you are a young immigrant looking for your first job, a veteran who fought on the battlefield in Afghanistan who now wants to succeed in civilian society, or a single mother trying to find her next gig, LearnUp is your platform. But at the end of the day, LearnUp isn’t just a job-training platform. It is a platform for hope.
At NEA, we are excited to announce our co-lead Series A investment with our friends at Shasta Ventures to support Alexis, Kenny, and the rest of the LearnUp team on their quest to retrain America.
Andela
“Brilliance is universal. Opportunity is not.” – Jeremy Johnson, CEO of Andela and co-founder of 2U (NASDAQ: TWOU)
When Jeremy Johnson and I sat down for coffee in mid-2014, he posed a set of questions for me:
1) Do we believe that there is genius-level talent equally distributed around the world?
2) Do we believe that much of this talent doesn’t have access to the opportunities we have?
3) Do we believe that this talent can be unleashed for the good of their families, communities, and global economy, irrespective of race, religion, gender, or socioeconomic status?
Yes. To all.
And thus, Andela was born.
Andela is based on a powerful and profoundly simple idea: paying students to learn. What if, instead of students paying tuition, we paid students to learn? What if we started in a massive and complex country like Nigeria—a country with 70% youth unemployment, the ISIS affiliate Boko Haram in the northeast, and rapid population growth that will make it the third most populated country in the world by 2100? And, what if we started with next generation computer science skills—Angular, MongoDB, Node.js—for which there are 3 unfilled jobs for every qualified developer globally?
As a board member, I’ve had a front row seat to what the deeply passionate team (Christina, E, Adam, Ian, etc) has accomplished thus far. We are about to begin training the 11th class of fellows, who each sign up for a 4 year educational roller coaster. We have a <1% admissions rate, making Andela the most selective educational institution in Africa. We recently conducted an all-female bootcamp, expanded to Kenya, have had companies like Microsoft hire fellows, and just closed our Series A financing from Spark Capital. And so much more.
This is just the beginning on our quest to train 100,000 fellows in Africa over the next ten years.
#TIA
This is Andela.
Innovations & Inspirations 