
End of Cycle? - akharris
http://blog.eladgil.com/2016/07/end-of-cycle.html
======
Animats
On the cycle front, we've hit the end of ad-supported startups. Google and
Facebook now get most ad revenue. I mentioned previously that only two of YC's
current crop are ad-supported.

Incidentally, we passed "peak Twitter" some time ago. Look at TWTR stock. We
may have passed "peak social".

We've hit the end of "apps". There's an app for everything, and most of them
are losing money now.

We ought to be hitting the end of "online retail is 'tech' and deserving of
high multiples".

So what's next?

There's a lot of stuff in the pipeline that's promising, but hard to do. AI.
Robots. Automatic driving. Automatic driving is close, unless someone screws
up big-time. AI is going to chew up a lot of desk jobs over the next decade.

Robots are still hard, but we're now hearing about larger robot deployments
than ever before. Amazon has 30,000 robots. Foxconn is installing 60,000.
We've never seen single customer numbers like that before in robotics.

Vision processing will be big. Lots of semi-intelligent systems will be
looking at video and making decisions. From store inventory to crime
detection, there's a role for intelligent video processing.

VR? Probably not. VR looks to be the next 3D TV. It's just too much of a
hassle to go mainstream.

~~~
Alex3917
> We may have passed "peak social".

Every time a social startup becomes too successful, it creates the need for
more social startups. E.g. there would have been no reason for snapchat to
exist if not as a reaction against the success of Facebook. It seems unlikely
that social will ever reach a steady state, and so I doubt we'll have have a
ten year period without a new 100B+ social startup.

Social is an evergreen human need, but the exact flavor that resonates with
the zeitgeist at any given time will likely change faster than any given
company can adapt.

~~~
prostoalex
And Secret was the reaction against the mandatory real name policy of
Facebook. And Ello was the reaction against the overloaded UI of Facebook. And
Pair was the reaction against perceived lack of privacy for person-to-person
communications.

Snapchat benefits from survivor bias, and until its financials are out in the
open, we won't know whether it's a legitimate cash-flowing operation or yet
another project sustained by large liquidity injections until the music stops.

------
Animats
The section under "People move from bits to atoms without realizing the change
in underlying fundamentals" is important. He writes (condensed):

 _" Many tech investors are shifting from investing in bits-driven business
(software) into atoms driven businesses (anything you need to manufacture).
... investors are applying tech multiples expectations to these radically
different types of businesses. This is unlikely to end well. ...

_"If you are merely using software but the business fundamentals have not
shifted - than the startup ... will not merit tech multiples. A software-
enabled, network connected, crowd funded, smart toaster is, when all is said
and done, still just a toaster."*

Birchbox. Soylent. Maybe Uber. You can think of others.

(Uber may be a bubble. They've raised and spent a huge amount of money
underselling competitors. It's rumored that only in SF is Uber profitable.)

(Amazon succeeded because they figured out how to do online retail really
well. Remember "one click ordering"? (The key to that is not the one-click
ordering. It's that the user can easily cancel for a short period after
ordering. That makes one-click ordering safe for the user. Most retailers
still don't get this.) Then they developed new distribution technology. Amazon
has 30,000 Kiva robots and their order pick time is down to 15 minutes at some
distribution centers. They're now in the same business Webvan had 15 years
ago, but their costs are low enough that it works.)

~~~
colechristensen
>They're now in the same business Webvan had 15 years ago, but their costs are
low enough that it works.

People frequently mistake Amazon's business. They're not a store or a delivery
service, Amazon is a logistics company.

What they do at the frontend is important, but their value as a business is
everything in between... warehouses, picking systems, delivery logistics,
AWS... doing as much of that stack themselves as possible and doing it very
efficiently is their core.

Just try to buy AAA batteries to convince yourself that being a store isn't
Amazon's core competence. (the review system, the recommendation engine, the
product organization, it's all mediocre at best)

~~~
neilk
> Amazon is a logistics company

We hear this said of Amazon, and that's also Uber's ambition.

But isn't Walmart also a logistics company?

Isn't every big company that makes or moves around physical items?

~~~
colechristensen
Not as much.

Amazon sells it's fulfillment services directly. AWS should be obvious, but
they also sell fulfillment services. Not just whitelabel spam products from
/r/Entrepreneur either.

Amazon can do the entire logistics chain from accepting products shipped from
your manufacturer to processing the payment in your own web store. [1]

[1] [https://services.amazon.com/fulfillment-by-
amazon/benefits.h...](https://services.amazon.com/fulfillment-by-
amazon/benefits.htm)

~~~
dredmorbius
Trying to understand: WalMart _is_ logistics, but their logistics customer is
_WalMart_ , and the only way in is to sell _in a WalMart store_.

Amazon effectively thinks outside the Big Box, and will let anyone sell
anything within the Amazon marketplace. I'm not sure if third-party websites
w/ Amazon back-end and fulfillment are a thing, but that's a possibility.

In which case, Amazon effectively sells a marketplace, ordering, and delivery
logistics system to its merchandise suppliers.

Maybe. I'm not entirely sure I'm a fan of the "Company X isn't in Market Y,
they're actually in Market Z" meme, but it's got utility.

The problems I'm seeing with Amazon now are on two fronts. One is that the
actual product review/selection process stinks -- too little control over
quality and relevance of what's presented. If I go to a third party, one
specialising _only_ in the products of interest to me, I can get a far more
_appropriate_ selection of items, and I value that.

The other is morality. Bezos is an asshole and screws people over -- techies,
noncompetes, warehouse workers, competitors, and more. I've got a problem with
that. I may be in the minority, but that is something which ultimately
matters. Perhaps it's the only thing which ultimately matters.

------
jsprogrammer
It seems like whenever I hear of cycles, no example past "the last" (~2000) is
given. What evidence is there that these are regularly recurring cycles?

~~~
tostitos1979
If you are a student of history, you start seeing these things. I was in tech
in 1995, and at the start of the Internet boom it was not obvious to everyone
what was happening. You should read Bill Gate's "The road ahead". He (and many
others) predicted things like Netflix and the information super highway but
they got the delivery mechanism dead wrong - people were convinced it was
going to be over cable TV networks.

I've heard similar things about the boom/bust days of Commodore in the
mid-80s.

I agree with the general thesis that (a) people are searching for the next big
thing, and (b) we'll likely get it wrong a few times.

~~~
amyjess
> He (and many others) predicted things like Netflix and the information super
> highway but they got the delivery mechanism dead wrong - people were
> convinced it was going to be over cable TV networks.

Oh yes, I remember how around 1994 people were predicting the rise of
"interactive TV" that would take over the world in 1997. The descriptions of
what "interactive TV" would do were very similar to the web.

~~~
VLM
The immediate predecessor of that was the multimedia CDROM. Its all the same
idea and same skills of course. The course curricula for a BSCS with a
specialization in multimedia in 1993 is identical to webdev in 2016 except for
obvious language syntax differences. Graphic arts/design classes from the art
school, marketing classes from the biz school, a couple programming classes,
etc.

~~~
tostitos1979
Ha .. almost forgot that one. Do you remember Encarta? Wikipedia of the old
days :)

------
palakchokshi
With vision processing, augmented reality and the internet of things I think
we are primed to live in a world where devices will be personified in AR.
Personified devices will then be able to tell me what they are capable of and
I will be able to query them to learn about them. I will also be able to find
out what's wrong with them. I think chatbots will be the ideal interface to
talk to IoT devices for most things however AR will be needed for a richer
experience/in depth device instruction.

Envision a world where a google glass like device take see what you are
seeing, identify what it you are looking at, figure out if it is an IoT
device, notify you in AR if it is (via icon hovering over device or
something), allow you to "activate" the device's personified self and talk to
it, question it, assign a task to it or a variety of other interactions
supported by the IoT device.

~~~
rimantas
And what problems will it solve?

~~~
AnimalMuppet
Well, a number of years ago, my wife asked me when a building had been built.
I thought, "Just click on Help/About and look at the copyright date... Oh,
wait. I can't do that on a physical object." But with VR, I could.

Now, I'm not saying that I think that VR is the next big thing. I would pay
approximately $0 for the ability to know when a building was built, and I've
only ever wanted to know (even mildly) once.

~~~
ec109685
Zillow and done.

~~~
AnimalMuppet
On a commercial building?

------
emilong
> The period of 2004 to the 20-teens will be viewed as the era of... the lean
> startup.

Does this mean that the success of lean approaches will not extend to next
cycle? I.e. that they're only applicable to the current "bits-based"
businesses?

~~~
Swizec
I know a few people who run IoT startups. When creating a new version of your
piece of hardware involves shipping the designs off to China, getting the
hardware back, checking that it's correct (repeat until actually correct), and
then pulling "Yes, mass produce" ... before you even have anything consumer
facing.

Basically, each "iterate" takes a few months and many thousands of dollars.
Lean kind of stops being all that lean.

Lean is easy in software. Thinking before doing is important in hardware.

------
um_ya
Cryptocurrencies are the next cycle.

