Startup Whisperer 2009 Prediction Results

Its that time to reflect on the past year and to think about the future.  Last year I posted some predictions.  I'll run through them and give my own personal view of how well I did.  Please comment if you disagree with my self-grade.  I'll be grading myself with a bucolic rating system of: "nailed it", "borderline"", and "whiffed it.".  Here we go:

Video Finally Takes Off

Prediction:  Overall consumption of video increases significantly on Web.  I think they'll grow from their current market share of videos watched from 37% to 45%.

Result:  Comscore reported that there are over 14.4 billion videos played meaning that nearly 75% of all online video users watched a video.  Google kept is dominant online video share at ~41%.

Grade: "Nailed It"

More ad networks versus less
Prediction:  Contrary to a number of predictions, there will be more ad networks versus less.  With 80% of the ad supply being sold thru indirect channels there will be more than less ad 
networks.  There will be better control over supply by publishers and everyone on this Comscore list (View this photo ) will be there by the end of 2009.  Anyone who is building 
unique IP will have a chance at an acquisition.  Yield technology in advertising is going to be a big theme in 2009 since all other forms of targeting are basically commodities.

Result:  Yep, no one dropped off the list.  The death of the ad network has not happened.  In fact, one of the smaller ad networks actually went public.  Interclick (ICLK) went public in November 2009.

Grade: "Nailed it"

Everything is simpler and smaller
Prediction:  We don't have the IT budgets that we once did.  Smaller and simpler devices will take off.  For example, industry sources say more than 11 million netbooks worldwide were sold  in 2008, up from just around a million in 2007.  Netbook sales will easily double in the new year.  Also, the majority of all phones next year will be smart phones (over 50%).

Result:  Netbook shipments have grown by 103 percent year-on-year in 2009 according to a latest DisplaySearch report. Netbooks were 19.6 percent of total portable PC shipments and sales were 10.4 percent of the total.

Grade: "Nailed it

The giant sucking sound

Prediction:  There are going to be tons and tons of consolidations in the technology space.  Big guys will buy big guys.  Small guys will merge with small guys.   Small guys will get bought 
by big guys.  There will be a lot of great deals out there for companies with capital.

Result:  As much as I was optimistic about 2009 and with the recent flurry of M&A activity (e.g, EA buys Playfish for $400M, Google buying AdMob for $750M, HP acquiring 3com for $2.7B, etc) the M&A market was relatively weak versus 2008.  VentureSource's last report had 71 venture-backed M&A deals for a total value of $2.25 billion. That compares to 84 deals at 5.2 billion for the same period last year. It is taking longer for an exit, too (a median of 6.1 years).

Grade: "Whiffed It"

It’s cooler to start a business than a rock band
Prediction:  There are massive layoffs and the economy is bad.  Per the above, when consolidation happens, unemployment increases.  People are only an hour away from registering online for a new business.  That combined with free SaaS (Software As A Service) software and easily registering for a domain name — you've got the makings of a business.  There is an estimated 27.2 million small businesses in the United States and they employ 40% of high tech workers.  New small business registrations will grow by one or two points in 2009.

Result:  We are in the midst of one of the worst recessions in our lifetimes.  There was a lot of government packages and assistance starting to be passed by Congress towards the back half of the year.  Too little and too late in my opinion.  We didn't see 2 points of growth.  In fact, unemployment is not getting much better — we need jobs for the economy to recover.

Grade:  "Whiffed It"

The future is cloudy
Prediciton:  2009 will be the year of cloud computing.  The companies that benefit are:  Amazon, Hewlett-Packard,  Sun Microsystems, IBM, and Microsoft. In addition, SaaS takes off even more.  With the worldwide economy in trouble, lots of layoffs, and pockets that are bare, SaaS  will take off more than ever as measured by overall consumer adoption of the Internet business population.

Result:  Although Larry Ellison was famous for his cloud computing rant this year, Larry can't deny that every major player in the space from Amazon to Google is betting in cloud computing in a big way.  I personally saw the advantages of using services like Amazon's EC2 at Mpire — we basically wired an ad optimization into our infrastructure over night.  A startup could not have afforded the horsepower (not to mention the fast mover immediacy of the cloud) several years ago.  Powerful stuff.

Grade:  "Nailed It"

Windows gets its mojo back
Prediction:  Windows 7 will ship on-time (not in 2009 for an SP1 but it will be solid enough to get their mojo back).   Vista will feel like a bad hangover.  Windows 7 will be faster, more usable, and introduce some cool virtualization features.  Google will start to OEM an OS to PC manufacturers but Windows 7 and Microsoft's business juggernaut will successfully relegate it to a minor initiative.

Result: A lot of my friends chided my on this predictions. Windows 7 hit a July release-to-manufacturing date of July 2009 and a full release to retail on October 2009.  Microsoft did a bunch in 2009 to revive its mojo.

Grade: "Nailed It"

Microsoft buys Facebook
Prediction:  Facebook realizes that it needs a revenue stream.  Microsoft needs a platform to grow search share.  Facebook and Microsoft do a deal to change the search marketplace by integrating better social search.  The valuation gets a major haircut from their $15 billion valuation (crazy 100x sales valuation).  The deal gets done at big (crazy?) multiple at 20-25x or around $10 billion.  Microsoft can buy 100 more little companies to try to grow search share or do a big deal.  Plus, Microsoft shouldn’t let Google hook their FriendConnect initiative around such a large social hub like Facebook.  They ditch buying the Yahoo search business and look to change the search game on the social side.

Result:  A big "Whiffed It".

Microsoft buys Yahoo search
…And then they buy Yahoo's search business.  Deal is done in May of 2009.

Result:  We all know the news on this one.  MSFT and Yahoo cut a huge search deal during the middle of this year.  They didn't close on a full acquisition…so my grade is "Borderline"

Seattle company acquisitions

Prediction:  The following Seattle-based companies will be acquired in 2009:  BuddyTV, Visible Technologies, EvoLanding,  and Urban Spoon.  M&A in 2009?  Heck, it can happen and these companies have gotten scale and have relatively low invested capital.

Result:  Hey, one out of four ain't bad.  Urban Spoon was bought by IAC in April of 2009. 

Grade:   Borderline

So, I nailed 5, whiffed 3, and 1 was borderline on 2.  2010 predictions coming soon.