Bob Peck’s Top 10 Disruptive Themes for 2014
- Joshua M Brown
- December 23rd, 2013
My fave internet analyst, Bob Peck of SunTrust Robinson Humphrey, is out with a note on the themes he thinks will be the biggest for web investors next year. Bob and his team at STRH have been spot-on about a lot of the big trends this year and he nailed Twitter’s eventual valuation way before the stock came public. In today’s note, Peck lists his Top 10 Disruptive Theme predictions for internet investors (all standard disclaimers apply)…
TOP 10 DISRUPTIVE THEMES FOR 2014
1 – Transportation Transforming: Within the disruption taking place in the Transportation industry, we think there are several themes
that will be more pronounced for investors in 2014:
a) Delivery – one-day and same-day shipping is becoming more prominent with the USPS now delivering on Sundays and both
Amazon & eBay testing same day delivery. Further, subsectors (like groceries) are also seeing more penetration, through initiatives
like Amazon Fresh.
b) Transportation on demand – through services like Uber, on demand continues to disrupt staid parts of this industry.
c) Automated delivery – (of humans through Google cars or packages through drone deliveries) will continue to make progress,
d) Electric vehicles – are also gaining more traction among the mass consumers and we think provide unique offerings.
2 – Local Commerce Personalization: We think the local commerce experience is just beginning its transformation with low powered
Bluetooth technologies that will allow deeper customer knowledge and personalization (think Minority Report scene). Stores will now be
able to offer personalized service, deals, incentives, and more targeted advertising as you enter or pass by their store.
3 – Payments & Money: Payments has been evolving for years from PayPal to more recent developments like Square. However, we think
that there are a proliferation of services like LevelUp, Clinkle, Google Wallet, Amazon Payments, and potentially the iPhone fingerprint
sensor that could expand. We also point out that Bitcoin, which was once thought of as laughable, has gained credence as potentially an
alternative form of money going forward (Andreessen Horowitz just invested $25m in Coinbase).
4 – Sensor Networks & Wearables: We have been playing with Google Glass now for ~6 months, and while we think the current form
factor and functionality are rudimentary, we think the market will begin to understand where this technology can develop to over the coming
years. We believe that wearables (Fuel bands, Fitbits, visual wearables (like Glass or Oculus Rift) have a big future for consumers, based
on their utility. Furthermore, we think the wide disbursement of these devices could create unique sensor networks and intelligence for
companies, advertisers, and governments going forward.
5 – Cloud Adoption Accelerating: We think the adoption of the cloud is only going to accelerate as we transition more towards services,
productivity tools, and utility from its early beginnings of storage. Further, we think thin client devices can proliferate further as Amazon
pushes on initiatives already pioneered by Citrix, VMware, and Microsoft.
6 – Non-Human Communication (Internet of things): We think we will see more progress in machines talking directly to machines in
2014, without the interaction of humans. On a basic level, programmatic advertising or the Nest thermometer are emblematic. However,
we think more progress will be made on appliances, cars, and entertainment automatically communicating. Big Data and services like
AWS will be major facilitators. Services like “search without search” will become more prominent.
7 – Advertising Metamorphosis: The online advertising industry is going through a dramatic change at the moment and we think that will
only accelerate next year. From the programmatic tsunami, to the birth of Native Ads, we think advertising is undergoing a seismic shift.
Further, measurability is becoming more important as advertisers look to track the ad from impression to the Life Time Value of a new
customer. Google’s unique Ad ID and the fate of the computer cookie will also be keys trends to watch. We also think ads will become
more like content, as advertisers search for engagement. Lastly, we think that cross device delivery of the right media format (text, video,
pictures, audio) will be a key theme.
8 – Video = Emotion: The power of video is that it can evoke emotion in consumers. We are seeing the disruption of the creation and
distribution of video through services like Amazon and Netflix already, but we think that video advertising is just beginning. This lets the
Internet potentially tap into a ~$80b TV ad market in the US alone. This could present a tremendous opportunity for companies and
services like: AOL, Google, Facebook, Vine, Instagram and Twitter (and many others).
9 – Sharing Economy Grows: Many studies have indicated that Millennials (or those that have grown up digital) are less inclined to own
vs. rent, helping contribute to the “sharing economy.” This spans not only homes, but also cars (i.e., Zip car), books (i.e., Chegg), and other
costly items. This can lead to blossoming new industries and potentially side businesses for incumbent industries, if they adapt.
10 – The Blossoming of the Ephemeral Graph: With the emergence of Snapchat, the “ephemeral graph” was established. We think this
meme extends well beyond media stereotypes of “the destruction of questionable content” and into the temporal economy. For example,
many pictures one receives, they may actually want to see. However, once they’ve seen it, sometimes they don’t really need/want to save
it. They appreciated the picture, but now the moment has passed. Further, they don’t need to waste resources on storing or processing
the content later. So the Ephemeral Graph could lead to a temporal economy that monetizes the concept of “disappearing content.” The
expectation that Facebook and Google were willing to spend billions of dollars on Snapchat underscores the potential of the temporal
Josh here – Great stuff as always although I’ll take the under on “the ephemeral graph, LOL. Make sure to follow Bob on Twitter @bpeck
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.