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Three Big Tech Predictions for 2017

Predictions about private high-growth technology markets are hard. In fact, it’s likely we’ll be wrong just as often as we’re right. The beauty of venture businesses however, is that you don’t have to be right all the time, you just have to be right about something BIG occasionally. In 2017, here are the top three predictions I’m thinking about going into the new year:

Serverless = ‘The’ Cloud Infrastructure Paradigm

As container lifespans become more and more ephemeral and microservice architectures continue to gain popularity – we expect the next generation of serverless cloud infrastructure to thrive. Towards the end of 2016 we saw infrastructure providers such as Amazon paving the way to the serverless revolution with increased focus on products like Lambda that abstract away the complexity of managing servers. Why? In an effort to enable developers to focus more time on writing application code vs deploying it. We believe serverless as a paradigm will facilitate the transition from monolithic applications to microservices, from virtual servers and containers, to “Functions-as-a-Service” (FaaS) where users pay-by-the-millisecond used. Instead of maintaining hardware or virtual machines that sit idle when not being used, FaaS code executes only when prompted by an external event or on a regular interval, ultimately saving time and money for operations and development teams. As a result, it will be increasingly cheaper to make use of serverless architectures. Overall, serverless looks to be a discontinuous technological innovation that is happening now. There are entire new classes of opportunities for disruptive business models (e.g. pay per function execution) and emergent market needs (e.g. serverless function monitoring, a complete rethinking of security, etc.). Moreover, it looks like IoT use cases will lead the way for a bottoms up reinvention of applications with serverless and the transition is going to massively impact the way organizations are structured around devops.

Machine Learning = “No Longer a Nice to Have”

2016 reaffirmed the volume and complexity of the big data the world is swimming in. It’s simply unmanageable. In turn, the potential for machine learning for every person and organization has moved from a nice to have to a must have to win in today’s competitive environment. Companies are taking this problem on in various ways, some with proprietary technologies and closed ecosystems, others with open-source approach to learn from data without relying on rules-based programming. With the commoditization of the full ML technology stack, from infrastructure to application, the focus has shifted from experimenting with core machine learning technologies to building the best models in production. Moreover, this requires gathering vast amount of data and domain experts to create and train the models; both of which young startups will struggle to procure against large incumbent businesses. Overall, we believe 2017 will be ripe with entrepreneurs taking on new and novel problems, and reinventing new solutions to old ones with machine learning.

VR & AR Fails To Get Daily Users

As both high end and low end VR & AR units pour into the market the applications will continue to proliferate and stun viewers with new technological experiences that “wow.” That said, the enthusiasm is unlikely to be met with a use case that brings users back daily in the masses. Application frontiers such as education, sports, tourism, visual design, real estate, and healthcare will begin to show the inklings of recurrent usage but most will only see incremental (vs exponential) user growth. With increasing mobility, compressing costs, and continued progress to get units into market for trial, we can expect increased usage, but consider 2017 a year to build out tooling and infrastructure that helps establish the market for future growth. My guess is that AR for commerce (i.e. “virtual try-on”) is the first place everyone will begin to use the technology daily.

Many more honorable mentions we’re thinking about, like blockchain, the digital supply chain, and marketplaces to name a few, but those are for another post as we meet more exceptional entrepreneurs in those spaces across 2017. In fact, it’s one of the great privileges of our job as VCs to think forward alongside the incredible entrepreneurs we meet (and occasionally invest behind).

As with every year, and new innovations, it’s exceptional entrepreneurs that tackle this uncertainty and create clarity while others were wondering what might happen. It’s often exactly these unique insights born from experience that create market defining companies.

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