The 2008 prediction for where the smart investment $$$ is going – and why

I love this time of year because it is only during this season that the heat is turned down in business – just a bit. During “the season”, the capitalistic oven that normally burns at high heat at every successful, growing tech company, now feels warming rather than scorching. So it is at this time of year I can luxuriously imagine what’s next? How will technology fare in the coming year?  

With those questions in mind, I seemed to all of a sudden notice how much media coverage there is about lots of new technologies being launched. The news is not different – “CEO Mr. Bright had an idea which got funding” but the sheer numbers of these news-bytes has gone up recently – way up. And these new ventures are playing with “stuff” involving digital sharing, web 2.0 (like virtual worlds), virtual commerce and more. It seems like we are “virtually” swimming in a sea of interesting ideas. That point was driven home recently when a VC buddy of mine hunting for ventures he could invest in called to ask whether any interesting ventures had crossed my path recently. That hadn’t happened since 2002.

There is now a new vitality and diversity of ideas I haven’t seen since 1998. In those days, I was at Lucent, working within the Bell Labs New Venture Group as Marketing Director where I helped evaluate technologies for commercial potential. I got to see all sorts of “technology stuff” – AT&T stuff, Bell Labs stuff, other people’s stuff. Stuff that evoked more “gee whizzes” than I thought was possible. Then, there was a sense of optimism and I sense that optimism is here again. Then, there was a feeling that there was always investment money to be had if you had a good idea. Now, the optimism is tempered with a new sense of maturity reflecting this new breed of entrepreneurs who know they better have a damn good revenue engine at the end of that damn good idea.  Gone are the days when ventures were launched with almost no profitable revenue in sight in the foreseeable future.

 

The sheer volume of news surrounding venture launches are indicative of the work that has been quietly going on behind the scenes for the last 6 years at the smart and growing technology companies. These companies have been building an impressive patent portfolio by, among other things, buying smaller technology companies that were the casualties of the last bust. Next, these companies are integrating these portfolios in new and very very interesting ways involving better ways to digitally communicate, play, and share – you guessed it – “stuff”. Then, in the final stroke of cyber luck, just when these companies needed new development tools to get this interesting “stuff” out there, we see a flurry of innovation in development technologies. Coming on line now are new pools of qualified labor using an explosion of new application development tools. Ruby on Rails is a prime example of a development platform that is open source (a.k.a. free) and which lets developers quickly add new capabilities to existing software reliably and without too much fuss.

 

So mix it all up – and you have it – the ingredients for a boom. This is the moment smart investors and smart technology companies have been waiting for.

 

The next logical question then one might ask is where to focus your investment attention? For fun, I decided to join the legions of people making New Year’s predictions and offer my predictions for where the smart money will and won’t go in 2008 …(use with caution J)  

 

Money will go into …  

  • Companies and platforms that can create social marketing campaigns with a similar organized approach that now dominates the execution of traditional advertising campaigns.
  • Companies that promote more integrated ways of communicating and sharing – across platforms (e.g. IM, mobile etc etc) and digital media types.
  • Companies that enable better online play experiences across platform migrating from a PC to a cell phone seamlessly. e.g poker that can be played on a PC and an iPhone.  
  • Companies that deliver online authentication, security and online trust –  especially involving authenticating digital transactions, identities and even content.
  • Companies that deliver wireless, proximity based marketing programs. 

Money will avoid …

  • Community sites that have their business model solely dependent on advertising because there just won’t be enough advertising dollars to go around to all the community sites being launched now
  • Mobile marketing companies that rely on next generation wireless phones
  • The next best “version” of a YouTube or Facebook. Sorry folks, but these guys created new distribution channels not to be easily repeated in this space. If want to succeed in this space, the difference had be better humongous – not just incremental.

There you have it. My predictions for 2008. Lots of promise with lots of risks wrapped up in the classic high risk high reward situation.

 

Let the boom games begin.

 

Happy New Year

Judy Shapiro

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One Response

  1. HAPPY NEW YEAR 2008

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