With a bit of reluctance, I share this forthcoming “Predictions For 2020” post with you. Initially, I wasn’t going to write one because I figured it is hard to know what will happen even with lots of thought applied, and that it may not be valuable to you as a reader — despite the fact my Predictions for 2019 post was pretty spot-on (but 2018 was not!). But then I talked to a mentor who reminded me this blog usually was and should still be a medium for me to think out loud, and that this act of constantly thinking should be valuable to at least me. So, with that caveat, here we go…
As 2020 is nearly around the corner, what’s on my mind? What am I preparing for in my little world of technology, startups, and venture capital?
The Venture Capital Ecosystem: The public markets are soaring. Private markets are bigger than ever. There is so much dry powder alone in the Bay Area (well over $50B contractually committed to funds), it’s hard to see that just drying up overnight. In my role as an early-stage investor, I can’t worry about what will happen in public markets, and there is so much capital in the private markets, it means that 2020 is setup to just be a continuation of what 2019 was — and that means a bifurcation of seed rounds, with some seed rounds being very competitive pre-product Series A rounds, and other rounds being smaller, more on the fringe, perhaps out of the Bay Area. The entire seed market is wholly different from when I sent the first Haystack wire in March 2013, and with every fund comes a new game to learn to play.
The Technology Economy: Technology is proliferating into new sectors, new geographies. End-user markets are truly global and can support multiple $10B+ companies. But, consumer investing is getting harder because the cost of acquiring, engaging, and retaining those users has tipped over to a point of no immediate return. I operate as if this trend will simply continue until “the next thing” comes along after the web and mobile. I do not see that happening in 2020. Perhaps the first taste we’ll get of that is in a few years with Apple’s AR glasses, but who knows. I do see newer generations of founders focusing on larger problems with their startups — healthcare, climate, and the like. I see fewer folks coming through on crypto, so while that sector has cooled, there are real dedicated VC funds that focus exclusively in this area, which is great for LPs and founders alike. I appreciate the vision and the ambition and I do sincerely hope these efforts pan out, so I eagerly await to see what will come of these in the years to come.
The Political Economy: I actually believe the current President will be convicted by the Senate and removed from office. I have been following the proceedings and evidence, and the corroboration is overwhelming. My hunch is The Speaker Of The House will hold articles long enough to ensure the 2020 State Of The Union address is not delivered before a trial can be concluded. I also believe more information will come out that will force the current Senate majority to break ranks. No matter the outcome here, I believe the Republican Party will be in a strong position to win the November 2020 general election given the electoral college map, the tech-fueled economy, the Republican Party’s methods, media, and organizational tactics , and the numerous, incongruous, warring factions within the Democratic Party.
Predictions For Me, On The Personal Side: Well, this is more of a “resolutions” section of what I hope will happen in 2020. This is the first year where Haystack funds have so much dry powder ahead of them, I can focus my work time entirely on selecting and helping portfolio companies. It’s been a nearly 10-year slog since I moved back to the Bay Area in 2011 and meandered my way into the world of venture capital. That period of life was extremely frustrating in those early days, and it was incredibly hard to earn the trust of institutional LPs to eventually build a VC fund. Along the way, that hard work and patience was met with incredible luck. I sometimes worry if I tapped the “well of luck” too early. Now, the fund is a real steward of capital and needs to play a slower and longer-term game. The first phases of this video game have been about luck, survival, being nimble, moving quickly — now as 2020 is around the corner, I feel rested enough to vigorously apply the lessons of investing and fund management I’ve picked up in the last decade, to welcome risk in the companies we invest in, but also to move a bit more slowly in terms of capital deployment, reserves, and opening new funds. I also hope to get back to my roots and write more here, as I did when I started this new career — and I hope you’ll stick around to read what I have to say. Happy New Year to you and yours!