Top Tech Trends In 2016 Will Take Aim At The Heart Of The Economy
Technology has put powerful new tools in the hands of individuals looking to exert more control over their lives and to collaborate with others who have shared affinities. It has been an evolutionary process as young tech companies work to discover the most effective models to channel that power and for users to adopt them, but several trends are really beginning to resonate. As a result, 2016 is shaping up to be an inflection point for personal and community empowerment in areas at the very core of the U.S. economy.
Earlier this year I wrote about how the Millennial generation, frustrated by an unresponsive political class, is applying technology to address the issues that are important to them (Eschewing Politics Millenials View Technology As The Agent Of Change). 2016 is an election year and it remains to be seen whether there will be an issue or candidate to rally around that turns young voters into active participants. The smart money says that the majority of Millennials will sit on the sidelines and leave the voting to the over 65 crowd. But that doesn’t mean they won’t actively address the issues that are important to them. They’ll just do it on their own terms, using apps on their phone instead of letters to their congressman.
The On-Demand Economy
There is no better example of this phenomenon than the On-Demand Economy. It is a rapidly growing movement that both tech start-ups and workers are seizing with gusto and it is poised to fundamentally alter how people work and services are provided. Most everyone has heard of Uber but there are hundreds of companies that have come on the scene; Lyft, Saucy, Instacart, Doggybnb, Dolly, Washio, TaskRabbit. Well, you get the picture.
16.6 million workers say they now earn 10 percent or more of their income through the collaborative economy. That’s up from 9 million people who said the same last year. What’s interesting is their reasons. Yes, it is hard to find jobs, especially for young graduates, and most people need to earn money. But the most important reason cited by on-demand workers is exerting control over their lives. They say they want to determine their own schedule, be their own boss and do things they love.
There are now so many service providers seeking workers and workers looking for gigs that a colleague of mine started what is essentially a matching service called Crowded. The company recruits independent workers at scale and aggregates gigs from hundreds of on-demand platforms.
The on-demand economy is no longer just a U.S. phenomenon. Earlier this year I advised a Korean company called Globee. In Asia, over $102 billion is spent annually on private education and one of the most sought after services is English instruction by a native speaker. Globee matches English speaking foreigners looking for a job with locals seeking a language tutor.
The music industry was among the first to experience systemic disruption due to the shift from analog to digital. And while the impact was profound, worldwide sales for music were less than $30 billion at their peak. The financial industry, in contrast, is measured in the trillions of dollars. According to The Economist, “…a new generation of startups is taking aim at the heart of the [financial] industry – and a pot of revenues that Goldman Sachs estimates is worth $4.7 trillion.”
In the last five years we have seen emergence of crowd finance in a variety of forms. Many people are familiar with the pioneer, Kickstarter, which offers individuals the ability to donate to the development of interesting inventions or projects in exchange for receiving a finished product when it is completed. Lending Club was formed to match investors with individuals seeking loans and has grown into a public company on the NYSE with a multibillion dollar transaction volume.
Just as specialization has occurred in the on-demand economy, crowd finance is developing in dozens of verticals from community fundraising to business lending. I am a director and investor in two such companies. Schools are often budget constrained which means that youth sports teams end up running car washes and bake sales to cover their costs. Piggbackr is an online fundraising platform that enables communities to rally around a fundraising goal for a team or project. Small to medium businesses borrow 600 billion dollars annually but have had trouble getting access to capital since the downturn of 2008. Funding Wonder matches small businesses seeking loans with investors who want to support the growth of neighborhood businesses.
Recently the SEC gave Crowd Finance a shot in the arm. First it passed Regulation A which provides an exemption to the registration requirements mandated by the Securities Act for small public offerings. Recently Title III of the JOBS Act became the law of the land and it is expected to be in full force by May 2016. These new rules allow public solicitation of private investment offerings to non-accredited investors; essentially the general public.
Personal and community empowerment will drive the top tech trends in 2016 and they aren’t just nibbling around the edges. The on-demand economy and crowd finance are big ideas that take aim at the heart of the economy.
Written by Alan McGlade, Managing Director DEV