8 Areas of Internet & Digital Media I Will Pay Closer Attention to in 2014

(1) Vertical integration in retail. I refer to the process of brands cutting out the intermediaries and selling own products directly to their end consumers, primarily via the web. The intermediary share of the value normally created along the value chain gets split between the end customers and the brands, as higher customer satisfaction (higher quality at lower price) also results in higher gross margins. The enablers have been the web channel at the front end, which allows for effective and scalable direct to consumer distribution without the need to add more brick & mortar stores, and the emergence of rapid designing, prototyping and manufacturing technologies at the back end, which have shortened production cycles significantly. Despite what Oliver Samwer thinks, I believe the offline channel will still play an important role, not necessarily as a sales channel though but more as part of a multi-channel approach to retail. Services such as Appear Here will provide online brands the ability to access the high street “on demand”, at the right time and location. I will watch particularly closely for businesses embracing scalable manufacturing technologies, such as 3D printing, in their processes and leveraging flexible offline presence at the front end.
Examples: Makie Lab, Align Tech, Shoesofprey, Rapha, Walker & Company, Harry’sBonobos, Warby Parker, Shapeways, Intelligent Beauty.
(2) Mobile as the main delivery platform. As obvious as it sounds in 2014, any business not putting mobile at its core is soon going to be obsolete. I believe in 2-3 years the large majority of our digital interactions will occur via mobile or tablets, including commerce (mobile commerce is still only 25% of ecommerce). Some of this shift will be just desktop-replacement, but a large portion will be incremental as mobile makes us all ubiquitously connected, always a click away from another purchase or booking. Some services are also just better delivered via the mobile (think Hailo, Uber, Instagram, Snapchat, Citymapper, Yplan etc). Marketplaces are an example of a business model that mobile has enhanced, since it makes it “vastly quicker and cheaper than ever before to ‘wire up’ both sides” as Matt Cohler noted recently. Opportunities will be plenty for businesses delivering beautifully simple mobile experiences.
Examples: Hailo*, Uber, Depop, Bizzby, Hotel Tonight, Citymapper, yplan, Osom.
(3) Image-led ecommerce: the trend of commerce and content converging has been in the headlines for a long time already, with publishers getting closer and closer to the transaction (e.g. Mail Online, Conde Naste) and online retailers investing heavily in curation and content (e.g. Asos, Farfetch, Net-a-Porter etc). I expect more companies attempting to bridge the gap between rich media (photos/videos) and commerce as users attention span gets lower and lower (as Biz Stone, co-founder of Twitter and Jelly puts it: “In a world where 140 characters is considered a maximum length, a picture really is worth a thousand words”) and mobile and tablets, with their constrained screen real estate, made the economic model of traditional advertising inefficient.
Examples: Houzz, Osom, Asap54Pinterest, Fancy, WireWAX, Olapic.
(4) C2C economies: it is about the emergence of online (often mobile-only) vertical marketplaces that allow any individual with excess capacity of an asset (e.g. skills, know-how, money, time, car, taxi, couch, bed, room, house etc) to efficiently monetise it. An interesting trend that has emerged from the resulting over-fragmentation (and thus expansion) of supply is that hard ownership has become redundant for certain asset classes that can be now available on demand: it’s happening to transportation, apparel, music and even server space. Watch this happen to other verticals.
Examples: Airbnbuber, lyft, blablacarboatboundStylebee, Vestiare Collective, Lending Club, Zopa*.
(5) Offline to online shift in large and ripe industries: while most industries and product/service categories have already transitioned online, there are still a few large industries that are resilient to moving online, but inevitably doomed to (e.g. commercial real estate, healthcare, education, law, financial services, automotive).
Examples: Zesty, zocdocAppear Here*, nutmeg, covestor, Shake, LawPivot, LawpalWealthFront, Carwow.
(6) Twitter ecosystem. I am long Twitter as an interest-based advertising AND ecommerce platform in the making. To the extent that “interest” is more strongly correlated to purchase intent than just “friendship”, I believe Twitter has the potential to become an effective platform for commerce, where Facebook effectively failed. I believe the userbase gap with Facebook will slim significantly in the next few years.
Examples: socialbro, Driftrock*, Buffer, Hootsuite.
(7) Online education. I think in 2014 we will start to see the pace of investing and consolidation accelerating in the space as the new learning/teaching formats become increasingly accepted and incumbents realise they have missed the boat and decide to up their digital exposure. Opportunities remain as an enormous industry is changing fast and new value chains become clearer. I continue to believe the value captured by the online educational content producer will diminish as competition intensifies (there are countless sites already where I can learn the basics of coding for example) and therefore businesses building tools and services that sit on top the content providers to create better online learning environments (ultimately improving outcomes) will thrive.
Examples: Clever, Blikbook*, TopHat, Piazza.
(8) Pervasive computing. I include in this area the entire ecosystem created around the ability of any device, from wearables to connected home appliances and drones, to capture, analyse and act upon data. The technology is now available for this to happen. As this is a new area for me, I will aim to learn as much as possible about it in 2014.
Examples: Cyberhawk, SkycatchStrava, Alert Me, 3D Robotics.
* Forward’s investments

2 Comments on “8 Areas of Internet & Digital Media I Will Pay Closer Attention to in 2014”

  1. Heath says:

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