2020 Predictions 🔮January 24, 2020
So, why make predictions? Eisenhower said, “Plans are worthless, but planning is indispensable.” The same is true for predictions — they matter for the strategy and data behind them. Predictions are useless, but scenario planning is invaluable.
Review of 2019 Predictions
Snapchat is the walking dead and will be cut in half … again
Snap has essentially become the R&D department for Facebook, so I thought Snap was going to be roadkill because of Instagram. But 2019 brought increased awareness of the performative aspect of the gram — it’s communication from one to many, while Snap is one to one. Teens love the authenticity and lack of pressure on Snap, so the stock has doubled. I’m now rooting for Snap, since I like Snap board member Joanna Coles and think Facebook is a threat to democracy.
Tesla comes undone
Tesla’s stock has hit an all-time high, with a market cap over $100 billion. The company is valued at 4x revenue while other auto makers are valued at fractions of their revenue. The markets assign Tesla $280,000 in market cap per car produced vs. $6,000 in market cap per car produced by both Ford and GM. Scary how wrong I got this.
A mentor of mine from when I lived in San Francisco, Paul Stephens, summarized my error: “Never bet against a company that has a great product.” He’s right, it’s a great product. I love my Tesla, and not going to the gas station is gangster, though I prefer the throttle of an internal combustion engine. The stock is dramatically overvalued.
Sheryl Sandberg resigns, and stock is up $50 billion within 10 days of her departure
Sheryl Sandberg wins the silver medal, second to Zuck, for making the most money while doing the most damage to the world. Facebook’s gross negligence has resulted in an illegitimate president who is adding members to the Supreme Court who seek to erode a woman’s right to choose. Despite writing books about women’s empowerment in the workplace, Sheryl Sandberg will be remembered for damaging the commonwealth, especially women. Katie Couric was right to question Sandberg’s legacy. I spoke about this last week. Lately Sandberg is MIA from public exposure, being erased from Facebook like Trotsky from photos.
AT&T will write down Time Warner and spin it
AT&T purchased Time Warner in the hopes that phone service and content would yield a peanut butter and chocolate combination. Instead, AT&T is junking up Time Warner’s luxury product, HBO, and turning it into HBO Max. This is the equivalent of Hermès selling JanSport alongside Birkin bags.
Amazon spins AWS and becomes one of the most valuable firms in the world
If you assign Salesforce’s multiple to AWS, it’s worth more than Amazon right now. If and when they spin it, it will go up in value. Antitrust isn’t punishment, it’s oxygenation of the market. For the first time, we witnessed analysts and media begin to ruminate on the idea of a spin.
The consumer world begins to distill to a small number of mega-brands or networks (rundles)
People don’t want more choices — they want to be more confident in the choices they make. Retailers are consolidating, as the market has seen few winners: Amazon, Walmart, Lululemon, Restoration Hardware, and Warby Parker. Most overs have shed value. Specialty retailers aim to find a life raft in the form of recurring revenue, but the value proposition doesn’t go anywhere near the value proposition offered by Amazon or Restoration Hardware. Disney+ and Apple TV+ are the missing pieces at the center of the best rundles (recurring revenue bundles) of 2019.
WeWork will be in the news for all the wrong reasons
$47 billion in long-term lease obligations with $3 billion projected revenue, scaling losses faster than revenue, yogababble, cult-like leadership, drunk investors, and an $8 billion face-saving rescue package. We’ve never seen someone register a $2.5 billion commission for losing $17 billion of other people’s money. The notion that Adam Neumann was fired? He got on the last helicopter out of Saigon. The bailout just kicked the can down the road. The company has real value that can only be recognized under the cloud cover of a restructuring (bankruptcy), which will happen in 2021. More spectacle than historic as the markets, after getting burned by Uber, did their job and shut the fire door pre-IPO.
Amazon HQ2 will be in the DC/NYC Metro Areas
When you’re 55 and the wealthiest man in the world, you are the master of no. Add to that that you’re about to be newly single — would you decide to spend 13 hours, much less 13 weeks a year, in Indianapolis? How did I know it was going to be NYC or DC? I have personal insight into midlife crises.
Despite acting spurned, Amazon is building HQ2 in NYC, adding nearly 3,000 jobs in the New York area since they “pulled out.” At this rate Amazon will add more than the dangled 25,000 HQ2 jobs over the next 10 years. So HQ2 is, after all, NYC — minus the tax incentives. Google is bringing 20,000 jobs to NYC and asked for no subsidies. Bezos is the mother of all welfare queens. De Blasio and Cuomo’s legacy is the worst poker players in history.
Big Four valuation will grow by Airbus + Boeing over 6 months after DOJ & FTC announcement
One of the most accretive things that can happen to an industry is antitrust regulation. The sum of the parts is greater than the whole.
Libra is dead on arrival
A stablecoin currency is a great idea, unless it’s from a company no one trusts — Facebook.
Immunities kick in, and we make progress against the threats of technology and kleptocracy
States and nations are beginning to take action and put in place privacy protections and laws to safeguard users, workers, national security, and the tax base.
MacKenzie Bezos marries Sheryl Sandberg, and they legally adopt Evan Spiegel
Do any of us really know if this did or didn’t happen?
Selected Predictions for 2020
“The best way to predict the future is to make it.” — Peter Drucker
2020 is the year of health tech
Amazon experimented internally before going prime time with its most impressive and valuable business, AWS. It’s doing the same thing with healthcare. Amazon is the second-largest employer in the US and is now offering health services to its employees. Healthcare likely costs them between $3 and $4 billion per year, and using employees is Hitler in Spain, fine-tuning his war machine (note: a metaphor, not comparing anybody to Hitler).
Our time on earth is finite, and the most value-accretive firms and offerings in the future will be those that extend or enhance time. They will be time machines.
Amazon will also reduce the staggering amount of time/life being absorbed managing your own, or a loved one’s, healthcare. Caring for a child with diabetes requires an average of 192 minutes per day, which translates to 4 years of time over the next 30 years. Healthcare is ripe for disruption. Amazon will bypass $1 trillion and begin its march toward $2 trillion as the pharma and insurance sectors begin leaking value to Amazon.
War of egos
As nations command fewer resources due to a baby boom generation focused solely on their own financial well-being, individuals with greater agility (the wealth of small nations) and less oversight begin proxy wars against each other. First up: MBS vs. Bezos.
Democratic nominee is Bloomberg or Buttigieg
Democrats are rallying around one thing … who can beat Trump. Two things matter when removing a standing president from office: activate the base and appeal to centrists.
Trump will activate the Democratic base. Dems will realize, per Obama’s admonition, that they need to appeal to the middle. In this economy, a sociopath beats a socialist seven days a week and twice on Sunday. Trump and Bloomberg are running Super Bowl ads. We have a reality TV president, and viewers translate what they see on TV to real life. All of America will see the ad match-up between Trump and Bloomberg. They’ll start believing that’s also a match-up for the ballot box.
The other candidates will beat each other up through Iowa and New Hampshire, with no clear leader, and show up to Super Tuesday with little money, a billionaire having purchased the best seats. It will be Super Billionaire Tuesday.
Cybersecurity firm stocks soar in 2020
The US receives more inbound cyber attacks than any other country. We’ll see a step-up in brazen attacks, especially leading up to the election. Cybersecurity stocks will be up 20-30%.
Apple up 30% on move to rundle
All the pieces in place, more than 90% of the Fortune 500 have a recurring-revenue relationship with Microsoft. Apple will launch a rundle relationship with the 100 million wealthiest people on the planet, who will get their phone, watch, listening device, laptop, music, news, and validation that they are our economy’s apostles: wealthy people who think different (innovators).
- Sonos acquired, most likely by one of the Four
- Hulu brand goes away (absorbed into Disney+)
- Roku & Shopify make iconic acquisition
- Tesla stock declines 50% (sorry, can’t help it)
- Tom Petty, George Michael, and Prince tour again (hologram live performances become a thing)
- Uber exits food delivery (sells Uber Eats)
- Netflix stock declines 20%+ as capital floods into category; the firm makes an acquisition focused on distribution (a weakness)
- FedEx is acquired
- A stablecoin, eerily similar to Libra, is introduced by a company that commands the trust Facebook lacks
- Mark Zuckerberg and/or Adam Neumann is criminally charged
I’ve been told by CEOs and elected officials that our predictions made them contemplate actions they hadn’t previously considered. Put another way, predictions aren’t guessing, but catalysts for thinking and action.
So, my prediction is I’ll make a greater effort to match my mood to my blessings — less anger, more appreciation. Also, that I’ll have the courage to not assume people are telepathic, and tell them I respect, admire, and love them.
What are your predictions?
Life is so rich,