hello and welcome to GP bullhound technology predictions 2023 webinar which marks the release of our annual technology predictions report in its 16th year our report has established itself as an industry reading analysis of the trends and Innovations shaping the global technology sector my name is Maria lazareva I'm with two people hounds insights team and I am one of the co-authors of the report I'll be hosting today's presentation where we dive into the tech predictions shaping the upcoming year and look back at what we got right in 2022 from the JP Bull Hound team we are joined by Partners Alec daffron Eric Crowley and Calum and pop director Alan kogan and vice president Oaken and altai who will walk us through the key findings of this year's report to download the report please visit gpbulhound.com forward slash insights or simply follow us on Twitter or LinkedIn to get the latest news on our upcoming activities and releases if you have any questions please drop them in the Q a box at the bottom of your screen with that I'm delighted to hand over to Alec dafener to kick us off with an introduction to GP bull hound and a review of how we fared with our 2022 predictions Alec over to you thanks Maria um welcome everybody um I'm Alec daffer I head up the San Francisco office for GP Bull Hound for those of you who aren't familiar with the firm we thought we'd give you a little bit of a brief overview as you can see on Slide Five uh it provides a brief snapshot of the firm which was founded in 1999 we've completed over 640 transactions over that time period delivering almost 40 billion dollars in transaction value for our clients we currently have over 180 professionals including both our advisory and asset management teams and our team is spread across 12 offices in both the U.S and Europe our investment funds currently have over a billion dollars in assets under management and if you flip to the next slide you can see our core sector focus is on the technology sector broadly within that we focus on software digital media digital Commerce fintech and digital services are core Main sub-sectors all right seven highlights some of our completed transactions in 2022 this includes both our advisory business and our investments I won't go through all of them but thought I'd highlight a few that are most relevant to our Tech trends in the ESG space we've seen a lot of investor interest in Q2 we advised ecobaris on a 500 billion dollar raise it was the largest tech private placement in France and the largest private placement in the ESG sector in Europe this year uh GP built also invested in the company in a Top-Up round shortly after that in social media and social commerce we advise Pixley on their cell to ACC and spring on their sale to a main software and in digital marketing we advise mechanism on their sale to plus company and CVC we also advise new Craft on their sale to wpp in the enterprise software sector we advised unblue on their sale to Swiss post we also advised echobot and Lead feeder on their merger backed by great Hill partners and connects one we we raised a hundred million dollars uh we also invested in that round uh as well as advised slide eight just shows the the team that we have that authored the report and what I would say is it's truly a global effort uh we canvas our entire team for feedback and input on the latest and greatest Trends uh gather those iterate and uh and produce the report that we were authoring today so really pleased to uh to put this together uh before we dig into the tech trends for 2023 though we wanted to provide a brief recap of 2022. and this is really our annual scorecard and how our predictions from the previous year panned out uh we try to be honest in our assessment of how we fared uh you can also see our scorecard which goes back 10 years in the appendix of the report so with that uh maybe we'll just switch to the uh the recap and so our first prediction for 2022 was the creator economy we got this one correct as today's influencers are ushering in a new Creator economy where they can create and monetize their own content the number of creators globally has grown from 165 million in the past two years to over 300 million a day and the current Creator economy market is estimated to be more than 100 billion dollars globally Trend two the rise of decentralized Finance or what we call defy uh we got this one correct uh there's no doubt that the collapse of some of the centralized Finance platforms and exchanges like FTX and Celsius are setbacks for the industry but D5 Protocols are still functioning smoothly and this year we saw major financial institutions like JP Morgan execute their first D5 transactions on public blockchains Trend three technology is supercharging Supply chains we uh we also got this one correct from disruptions due to the pandemic to the war in Ukraine the supply chain crisis continues to force businesses and governments worldwide to look at technology for Solutions Trends four was the arms race uh the development and Adoption of armed chips has steadily grown which confirmed our prediction uh in q1 of this year armed partnership over 7 billion arm-based chips that's up nearly 10 year on year and apple is also doubling down on its m-series chip foreign five the new virtual playground uh we got this one correct even though there have been mixed reviews of the metaverse particularly in recent months um Apple has hinted through job listings that they're building a metaverse for their VR headsets and meta recently rolled out a new metaverse ID system Trend six technology is driving diversity equity and inclusion or Dei we're definitely seeing more and more companies seeking technology alternatives to enhance their Dei recruiting initiatives and we're seeing consolidation in the sector as a result Jeep people have an advised intelo earlier this year on their sale to Silk Road Technologies Trend seven wearables powered by artificial intelligence this was another correct prediction having passed the hype stage wearables have entered what we call the plateau of productivity era and we're seeing many new AI Integrations and multiple verticals like healthcare iot wellness and psychology the global semiconductor shortage uh Trend date with demand for civic inductors remaining High and a little capacity build out this will remain an issue for the foreseeable future particularly since government initiatives to build out domestic capacity will take years Trend nine artificial intelligence is automating Healthcare this one we picked partially correct uh while progress has been made it's been slower than expected many Legacy Healthcare systems and Healthcare institutions struggle to effectively integrate and deploy AI technology and last but not least for 2022 was the future of payments this was another partially correct prediction while there has been continued demand for pot by now pay later models High inflation and increasing interest rates have had a negative impact this year so that concludes our recap for the 2022 predictions now I'd like to pass it over to ocon in alte a vice president in our San Francisco office to kick off the 2023 trends thanks alike our first prediction is on natural language processing and artificial intelligence natural language processing or NLP allows software to fragment and process language like a human would and today it's much more widespread than you might realize it runs on the back end of tools and applications we use daily from automated customer service to Smart speakers and voice assistants there is an increasing focus on customer experience Automation and high demand for big data and analytics resulting in NLP adoption across all business verticals players in the artificial intelligence space have been working to raise capital in order to fuel their NLP development for example Jasper raised 125 million dollars at a 1.5 billion dollar
valuation led by inside partners and grammarly raised 200 million dollars at a 13 billion dollar valuation led by belly Gifford over the past couple of years there has been a trend between Tech Giants racing to create a system with high levels of accuracy 2022 has been another transformational year with Google releasing their Pathways language model or poem which has 540 billion parameters placing it above Microsoft and nvidia's Megatron which has only 530 billion parameters we also realized that more parameters do not necessarily imply a more reliable or better performing model is Google's Palm as female fever parameters compared to their older generalist language model which had 1.2 trillion parameters but Palms still outperformed it in 28 of the 29 most standard mostly used NLP tasks in English looking toward the future an area awaiting an LP can be disruptive is in government powerful NLP can allow governments to extract and categorize data faster improve Regulatory Compliance bolster National Security and analyze public feedback our second trend is on Tick Tock and its effects on the industry over the past two years Tick Tock has taken the World by storm is one of the largest Platforms in the world it has more than one billion users representing nearly 20 of all internet users tick tock's ability to supply endless and fast playing content attracts consumers while its reels are matching perfectly with the preferences of gen Z demographic in particular early on tick tock's creators realize that interests and buying behaviors aren't the same even amongst the closest friends so unlike other social media platforms which are more connections based Tick Tock focused on curating content recommendations based on user interest and activity this allows users of tick tock to discover relevant accounts more quickly and the creators to Target specific hashtags songs or captions to increase their chances of going viral based on tick tock's unique algorithm it's able to test a particle in videos virility allowing the platform to continue to scale Tick Tock is changing the game for advertisers by allowing Brands to gain actionable insights it is slowly becoming the most attractive platform for advertising dollars Tick Tock benefits from the fact that many users spend nearly about an hour on the platform daily and Brands often insert themselves into viral Tick-Tock Trends to convert attention into dollars as tick tock's engine becomes even more precise we believe that advertisers will increase their advertising budget allocations to Tick-Tock and Tick Tock will become a leader for many direct to Consumer brands in the digital advertising space with that I'd like to pass it over to my san francisco-based partner Kellerman pop to take us through the next three predictions in our report over to you Kellerman thank you thanks for joining us today the first prediction I'd like to to talk about is the expansion of advertising streams now with the streaming Wars playing out over the past few years it's no surprise that that ad budgets are increasingly moving to CTV both Disney and Netflix have announced plans to deliver an ad supported offering and they've been backed by Major DSP Partners in the trade desk and Xander respectively there are two major drivers towards CTV one is that data is uh more readily available on CTV than in linear if you watch a program on your CTV and you then go to the advertiser's website or even go into the advertiser's store physically they can track that and even your your purchase Behavior that's very powerful information for the advertiser the second is just the following of eyeballs with ratings falling year in year out it's becoming increasingly difficult to justify spend on linear as one advertising executive recently put it in a conversation I had with him the math is literally crumbling the other topic that that we saw within advertising streams is an increased focus on interactivity now with younger Generations having decreased attention spans for advertising interactivity has become very uh important to the the adverts themselves we've seen popular methods of of engaging users through through polls through games and other interactive adverts the flip side of this is that there's also a very strong push into programmatic and so any ads that are delivered should should be made programmatic accessible and we think that there's going to be a lot of innovation around that Trend to continue forward the next Trend I'd like to talk about is talent management this this follows the flow of the dislocation that that covet had over uh the employer employee relationship today today's employers are having to meet employees where they are and and what this means is flexible work Solutions some employees want to be in an office engaging with their peers on a daily basis other employees want full work remote Solutions and then there's everything in between the today's employers if they want to attract top talent are are being forced to offer flexible solutions that can accommodate all of those needs moreover we are seeing more and more HR Solutions that are trying to put the employee at the center of their software there's been a core Focus around improving engagement and communication between the employer and the employee these software Solutions have have shifted from recruiting Centric capabilities to retention-centric capabilities moreover we're seeing an increased focus on software that allows the employee to focus on Career Development and job specific training net net we anticipate going forward that you will see an increased Focus around solutions that offer the the employee better satisfaction within their their job the next Trend that I'd like to talk about today is cyber security and specifically zero trust zero trust is more of a philosophy than a technological trend xerotrust is the basic principle that no user or access point can be trusted this this philosophy was dramatically exacerbated over covid with employees moving outside of the office and to the home the employers had networks essentially became swiss cheese they had to to protect vastly more access points vastly more devices and that that became an extremely difficult problem for for these Enterprises they're combating this problem through constant monitoring of the network and dynamic permissioning and rights the a there's been developments in AI ml technology that will play an important role in proactively identifying these threats and quarantining unusual activity now the flip side to that is that the industry is currently wrestling with is that you're increasingly generating false positives which can be costly and time consuming for the Enterprise as as some some activity on the network may appear to be malicious it's actually in some cases very common and and should not be uh uh the the employer employee should not be frozen or locked out of their account we we anticipate going forward that the trends in cyber will continue to focus on protecting these uh additional access points that that cause vulnerability in their networks to prevent extremely harmful um uh break-ins going forward with that I'd like to turn it over to my colleague Alan kogan thank you gentlemen welcome everybody our next tech trend is driven by a current events issue in 2022 which is seriously affecting Europe and Eastern Europe the energy crisis the cost of energy usage is materially impacting consumer pocketbooks with November 2022 research indicating natural gas prices having increased over 100 percent in many European cities and electricity prices by nearly 70 percent the cost of energy along with inflationary impacts on many goods and services worldwide are likely among the top five causes of the worldwide macroeconomic slowdown in 2022. consequently GP bullhound's next tech Trend prediction for 2023 is we expect a broader rollout of energy management applications to help consumers and businesses manage and optimize energy consumption additionally we predict additional investment and development in new battery technologies such as solid-state batteries to facilitate clean energy capture and to support the rapid deployment of electric vehicles the growing demand for energy efficient devices is driven by consumers aiming to reduce energy output and secure cheaper gas and electrical bills to some extent this trend is not new to Consumers as products like the nest thermostat more than a decade ago popularized Energy Efficiency through integrated sensors mobile devices and machine learning wrapped in a beautiful consumer product interface more recently companies such as Tesla have also deployed their home energy capture and solar battery Solutions with an attractive mobile app experience such energy management systems collect measure and analyze usage providing optimized energy schedules that improve efficiency for homes and businesses Research indicates that the market size for Global home Energy Management Systems will increase to six billion dollars by 2027. one player in this space that we've highlighted in the 2023 technology predictions report is Greenlee a provider of multiple Smart Energy Saving Solutions including in-house consumption and electric vehicle charging capabilities the company helps homes save up to 25 in electrical costs another Innovative player shipshape.ai offers a broad home energy Analytics and maintenance service platform like a check engine light for your home by pairing home iot monitoring for HVAC hot water heaters sump pumps and other appliances along with a home service provider Marketplace which can proactively be notified of upcoming Home Maintenance product problems consumers will save time energy and money as the current energy crisis unfolds these type of comprehensive Energy Management Solutions will roll out more broadly in 2023 our next technology prediction is related to a topic that has been generating news headlines consistently for the last 20 years climate change while there has been some scientific and certainly political debate regarding the causes of climate change it is safe to say that we have all experienced material shifts in and specifically more extreme weather it is hopeful to see a recognition of these patterns at Global conferences such as the very recent United Nations climate change cop 27 and a growing multinational political movement to support our planet naturally this issue has tremendous impact on the business landscape worldwide as weather events such as flooding or heat waves severely disrupt productivity and or destroy critical infrastructure and assets yet between or Beyond political actions GP bullhound also sees a movement in the business Community from entire Industries down to individual companies to one self-regulate climate impacting operations to be transparent about these issues three help offset carbon Footprints and four innovate with a new hardware and software technology to create safer more sustainable products Solutions and services so our technology prediction for 2023 in this area is that the worldwide business Community will significantly ramp its utilization and continue funding a variety of technologies that employ environmentally friendly practices to improve sustainability we've seen this trend starting already as climate Tech funding represented more than a quarter of every Venture Capital dollar invested in 2022 making it quite a landmark year according to the recent PWC state of climate tech report the Technologies and solutions stemming from these Venture businesses will roll out more broadly in 2023 we expect to see this start with software technologies that help businesses with the self-regulation and transparency around climate impacting operations specifically around measurement and benchmarking for example Big Data software analysis tools through the use of machine learning and AI can help manage Supply chains optimize energy usage and monitor political emissions pollution to emissions other another example of business sustainability ratings um which help industries Benchmark their performance against peers and drive improvements over the last decade uh we've seen some tech Giants such as Apple create their own rating systems for the products from their products and transparently present those targets and results to the public however TP bullhound also believes this benchmarking Trend will extend beyond just products but also the ratings related to operations across critical factors such as environmental impact labor human rights ethics and sustainable procurement practices the importance of transparent supply chain assessments driven by real-time software reporting can be seen in our current events even such as those at the Foxconn factories which produce Apple devices where workers are protesting and delaying production due to salary payment delays and working conditions especially in the ecosystems that rely on Offshore Manufacturing or remote worker operations business sustainability software will roll out in 2023 to help companies assess select and monitor their potential partners shifting gears here a bit uh our our rapid developments in the robotics Arena which is one of the most exciting Trends we anticipated for 2023 over the next decade the market will grow tremendously for robots that augment or take over professional or consumer services tasks such as agricultural applications construction cleaning or meal delivery however in 2023 we predict the most significant robotics deployment acceleration in the commercial sector for industrial and Manufacturing automation there has been over 50 billion dollars in VC funds invested in robotics over the last five years to build out various components of the engineering stack and to go over to hit the go to market evangelism the vision and value proposition of Robotics revolves around better productivity and lower costs for businesses as well as better safety for humans one of the best examples thus far of Robotics deployments is in the warehouse and Manufacturing automation such as inside Amazon warehouses here stationary robots help workers effortlessly lift extremely heavy items and packages onto mobile robots that then carry e-commerce items across the warehouse robotics innovators have recently developed collaborative robots or cobots which are robots that are smaller less expensive and easier to program historically the penetration of cobots was hampered by a lack of sufficient accuracy configurability and safety to operate an industrial and service environments collaboratively with humans today's cobots are not yet replacing jobs but they are enabling workers to do their jobs more efficiently and they are generating significant interest in robotic startups in 2023 we expect increased M A activity followed focused on companies that have successfully scaled their commercial deployments as well as with innovators that have advanced Edge controller components efficient machine learning Technologies and AI for autonomous activities I'd like to now pass the mic to another partner in our San Francisco office Eric Crowley who will take you through our final two Tech Trend predictions for 23. Eric hi everyone and thanks thanks for joining uh Trend nine um is going to be sound familiar but we're pretty excited about it which is the expansion of of social e-commerce and continue it's going to continue to steal market share from traditional retail or Legacy e-commerce and what's what's going to push this trend in 2023 is the melding of three Tailwinds first brands are increa are trying to increase their direct to Consumer sales away from Amazon and compete with low-cost International Brands like shine and Zara two social media platforms like Facebook and Instagram are trying to find ways to monetize outside of pure advertising and the third one of the most important one is consumers are increasingly spending their time engaging with social media and reducing their time spent with traditional TV magazines or God forbid even a book so however unlike e-commerce social eCommerce is going to look very different across geographies and demographics so in the Western World live shopping historically has been associated with TV for my primarily keep use QVC however digital live shopping has exploded in China and India so for example last year on Singles day in China a streamer sold over two billion dollars in lipstick in one day and they're clear leaders in the live streaming space led by Alibaba and jenny.com each doing billions in gmv
annually so Western Brands and companies are rapidly trying to jump on the live streaming platform and that's led by Instagram and Amazon however they're not truly dominant players yet so the market is very much fragmented open from entrance and we're excited to see new players like Amaze live Shopper Network and whatnot enter that market so one of our trends for 2023 is we're going to see increased M A in the social eCommerce space is consolidation of both talent and Technology as well as marketplaces for the user starts to occur so on on to our last and final Trend which is Trend 10 which is the continued uh acceleration of the semiconductor space so let's flip to slide 10 prediction number 10. okay um so the semis has been an extremely volatile over the last three years so in 2020 the world learned that extended Supply chains can easily be disrupted and production slowed as a semiconductor slowed as the world plunge into a short and brief recession however as in 2021 as the world reopened uh inventory of chips plummeted and demand skyrocketed as production remain very weak due to decoded disruptions consequently pricing soar and the stock price is the major chip manufacturers startled right along with them however so in 2022 stocks for those major chip manufacturers class is except's capacity hit the market we're starting to look into a recession potentially in 2023 and expenses to production including this primarily labor expanded and investors started to question the valuation however long term in 2023 and Beyond um we're going to see this as a really exciting our sector here with some Supply chains are going to continue to struggle to reset with coven and China's lockdowns and reopenings continue to be a hamper on the sector so however countries especially in the US are starting to invest heavily in capex and tax subsidies to promote domestic manufacturing to protect their existing Industries second more and more devices including Ai and gaming services are requiring high performance chips and then finally chips are now is quickly being realized has become an asset in global politics with major Powers actively promoting or protecting Industries perfect example this is what you see what's happening with the U.S chip act you've got Taiwan and Germany China actively increasing subsidies they're domestic Champions and additional players like Japan are are rapidly considering new subsidies for their manufacturers as well so with that I think that wraps up our trends for 2023 thank you very much Eric and thank you so much to all of our speakers today we've received a few questions already so we'll dive into those the first question is you mentioned the connected TV space as an area of M A consolidation within the digital advertising space what do you think is driving this Alec do you want to take that one yeah happy to happy to dive in here um so I think streaming TV advertising prevents uh presents really the The Best of Both Worlds for advertisers on the one hand you get the impact and effectiveness of video advertising so think about your you know 15 to 30 second video spot on linear TV combined with the measurement and attribution characteristics that you find in digital advertising so you know we've seen massive growth in streaming TV consumption as a result of uh a broad range of new streaming services uh that have been launched over the past you know two to three years uh in addition you know many of those Services uh received kind of big pandemic consumption bumps uh which which many have continued um and you know the the pure subscription-based streaming services have introduced advice models so it's interesting Netflix has had always been one player that you know kind of vowed that they would never introduce an ad based uh you know pricing model and they they've done that just in the last few months so um you know we've been active in the in this space from a you know consolidation and investment standpoint we bullhound advised uh Bliss Point media on their sales annuity last year we saw significant uh amount of competitive interest in that process we also advised a company called Channel Factory on an investment by star Mountain capital and Channel Factory focuses primarily on YouTube the majority of which is actually consumed by uh over connected TVs and they've seen tremendous growth over the past couple years as advertisers seek to uh Reach This audience really in a brand Safe Way great thank you very much Alex our next question is about Tick Tock do you think Tick Tock will become one of the main advertising channels for Direct to Consumer advertising in the next year okay what's your take on that thanks Maria um yeah that's that's actually a very good question about kind of how soon we can expect to see advertising dollars um shifting from other social media platforms into Tick Tock um Tick Tock landscape is an ever-changing many businesses are still trying to figure out and understand how best to kind of effectively advertise on Tick Tock um Tick Tock also has a compounding effect on businesses that have traditionally not been staffed properly quickly seized upon Trends however uh you know in our observation we've been noticing that businesses have already been tailoring their approach is to kind of react to tick tock's billion users on their platform and the fact that these users are spanning nearly about an hour on the platform every day with all that being said we expect to see Tick Tock to begin to rival Facebook and Google in the next two to three years as we expect Brands to shift ad spending to where the end consumers are really are thank you very much Oaken uh moving on to the next question which is about robotics uh what do you say to someone who believes cobots will threaten the working-class job opportunities for real people Alan would you like to take that one sure um I think it's a fair question a good question um you know by the very name they are collaborative robots um that that are helping humans um these cobots are very efficient um they can help with ergonomics and really lifting the most the heaviest of items so um my view is that these these robots will help with Automation and speed up productivity which for businesses is critical it will improve uh Revenue um it might decrease costs a bit but really these are these are robots that are meant to make things more efficient um so with that you know I think they they won't necessarily threaten jobs in in the near term um or even long term but they might actually expand the market opportunity and and business in general uh for for workers as well great thank you very much Alan uh next question will the emergence of zero trust philosophy and architecture be enough to completely prevent breaches or cyber attacks Kellerman what's your take on that one you know look in short the answer is no uh cyber is a is a never-ending arms race Bad actors in their their methodologies are constantly evolving think of it as a game of whack-a-mole um so they'll continue to develop ways around zero trust and other um cyber security uh capabilities this this makes cyber security actually a very compelling investment area uh as it requires substantial r d to stay one step ahead of those those Bad actors um that said I do think that zero trust uh is a large step forward as a uh proactive comprehensive mechanism for deterrence and and resolution great thank you very much Kellen moving on to our next question will the global redistribution of semiconductor expertise and production capacity create opportunities and previously overlooked markets and geographies Eric would you like to take that one yeah happy to take it Maria yeah my opinion is is no chip manufacturing is extremely hard to do it's it's very capex intensive and talent dependent so it's hard for new countries to enter the race without an absolute enormous investment so for example you know to produce chips you need highly processed raw materials uh that includes high-end silicon that's very hard to do without uh a really good and robust supply chain second and it might be more importantly you need very highly specialized workers these these will both design and produce the chips that talent's very expensive and it's hard to train without existing workers to serve as an example so what I think you'll see is duplication of Supply chains among the major players U.S Taiwan China um but I don't think you'll see a bunch of new countries or geographies enter enter the space thank you Eric our last question uh for today is about talent management will employers begin to lower salaries for employees if they introduce better work-life balance opportunities Calamine what's your take on that yeah again I'm going to say no I look it's it's it's no longer an either or conversation where the employees must sacrifice work-life balance for for higher pay or vice versa there's been a real paradigm shift in the industry where both higher pay and better work-life balance come hand in hand I think that employers are are increasingly focused on on obtaining and retaining the top talent and they'll do that through a combination of of both compensation and you know non-uh um non-compensation related uh benefits so going forward I think that we'll continue to see you know both both salaries increase but also you know employers making a a meaningful effort to to provide their their top employees with the best work-life balance that they can provide thank you Kellerman this brings us to the end of today's session thank you very much to all of our speakers and thank you for joining us today for any questions relating through the predictions that we've spoken about today please feel free to reach out to anyone on the duty bullhound team and we look forward to sharing more of our insights with you soon thank you and have a lovely rest of the day thank you
2022-12-09