2022 Predictions Review
Every year we make predictions for the coming year. We try to get them right, but the real objective is to catalyze a conversation. As I am not the Dark Prince or an alien (either would be fun to roll with in Vegas) I get some right/wrong.
Anway, we’ll be publishing our 2023 predictions in a couple weeks. But first: accountability. Let’s review our 2022 predictions to see what we got right, sort of right, wrong, and … completely wrong. Keep in mind, these auguries were expectorated pre-Ukraine, pre-Elon/Twitter, pre-inflation, pre-a mess of things. Our review below. TL;DR: It was another strong year of predictions.
Fundamentals and Valuations Reunite
Champagne and cocaine for the dawg. We posited that the lofty valuations of growth-y tech stocks and meme stocks, or “story stocks,” would be taken down dramatically (i.e. rationalized). In particular: EV stocks Tesla, Lucid, and Rivian would get cut in half (correct), and AMC and Gamestop would trade below $10 (correct, incorrect). Big Tech gave back the GDP of India. I wrote that 2021 was “the year of the bubble.” 2022, we predicted, would be “the year of the pop.” OK, that’s it for our review … enjoy 2023.
Anyway, this correction is healthy. A pre-revenue car company that commands a market capitalization greater than BMW and General Motors (combined) is just plain farfegnügen. My biggest holding, ABNB, is off 48%. I did eat my own cooking (sort of) and have been writing covered calls for the past 18 months, which cut my losses in half. Note: I’m always in the market, as nobody can consistently predict the market. Anyway.
The Zuckerverse Fails
This was a layup. A basic truth: The cosmos doesn’t want any one organization or person to consolidate all power. There has never been a president of the world, and the richest man controls just 0.04% of the planet’s wealth. The safety mechanism is that power corrupts and makes you stupid. You begin believing that you should spend $45 billion on a micro-blogging platform to spread conspiracy theories, or that people want to spend time in a legless universe. The notion of attaching 3 pounds of plastic to your head to get nausea and a face rash in exchange for a low-resolution, boring, shittier version of reality is just plain stupid. We predicted Zuckerberg’s metaverse would be “the biggest tech flop of the decade.” Meta continues to spend/lose $1 billion a month on Reality Labs.
My idea: Instead, spend the money on employee retention, and every workday at HQ raffle off an Airbus A380 (resale value: $50 million) to a lucky employee. Same cost. Think about that.
Or: Give $5,000 a month to each active user.
Or: Pay the entire cost of attendance for every undergrad in the University of Texas and California systems.
Or: Give away 500 Porsches, 500 Ferraris, 600 racehorses, 700 Harleys, 10 Gulfstreams, an Airbus A380 each month and then roll/ride/gallop/fly to Burning Man, where you set ablaze a stack of benjamins the height of the Statue of Liberty. (No, really, I did the math.)
The places Meta employees could go … on this awesome place called Earth. Instead of venturing to a fucked-up alternative reality brought to you by a man-child with aspirations of being a scientific god who pelts you with Nissan ads and now needs security stationed on each end of his block. Too much?
Meta’s Horizon Worlds is garnering roughly 200,000 monthly active users, which is 300,000 short of its end-of-year target and 2.5 million short of social media relic MySpace. Meanwhile, only 9% of the worlds created by users are visited by more than 50 people, and more than half the headsets aren’t in use six months post-purchase. Anyway, the metaverse as a topic of interest has gone stale. As measured by Google search volume, people are six times more interested in Crocs.
Twitter Gets Acquired
OK, we know what happened … sick of talking about it.
Frances Haugen Is Time’s Person of the Year
I predicted (hoped) that the world would give Frances Haugen the credit she deserved for blowing the whistle on the rage machine that is Facebook — and that this might be reflected in the form of a Time Person of the Year award. Instead, 72 hours later, the award went to Elon Musk. Confirmation that our idolatry of innovators is worsening, as we increasingly treat billionaire tech founders not as influencers or even heroes, but gods whose bigotry and idiocy are just more genius waiting to be revealed.
Web3 Is the New Yogababble
Yogababble is the word I use to describe platitudinal, pseudo-intellectual techno-drivel — saying and promising a lot without actually saying or promising anything. This was Adam Neumann and SBF’s superpower. Several scandals and $1.5 trillion in value destruction later, Web3 has cemented itself as the official yogababble of 2022. In Silicon Valley (birthplace of the term), Web3 is now synonymous with Ponzi schemes and fraud. Despite massive capital inflows and relentless hype, the concept has yet to deliver a single use case that isn’t dependent on the pumping and dumping of “tokens,” i.e., fake stocks. Can Web3 deliver a fraction of its vision? Dunno, but Cathie Wood just (no joke) reiterated her Bitcoin price target of $1 million by 2030. Her reasoning? “Bitcoin hash rate is at an all-time high. And that is a real indication of the security of the network.” You can’t make this shit up.
OpenSea Valuation Doubles
In November 2021 it was reported that NFT trading platform OpenSea had raised funding at a $10 billion valuation. Soon after, I predicted the valuation would double in 2022. My thesis? NFTs were hot, and they’d continue to be hot by leveraging scarcity, credibility, and passion properties in an increasingly digital world — and OpenSea would monopolize the sector. A couple months later, OpenSea received a $13.3 billion valuation. However, the NFT market has since collapsed, with trading activity down 90% since the beginning of the year. That $13.3 billion valuation was a step toward our prediction, but at this point it’s likely shed enormous value. I still believe an emerging generation of investors will buy and trade digital assets.
Luxe Coins Emerge
Sort of … I’m being generous with myself here. An example: Coachella launched an NFT “key” which granted the holder lifetime access to the music festival. And high-end restaurants have been exploring reservations on the blockchain. The wrinkle? Further development stalled with the onset of crypto winter. Even the Coachella NFT has been caught up in the FTX meltdown. But if there’s a new crypto spring (note: not a prediction), expect to see more of this. A better prediction is that luxury brands and venues will begin securitizing scarcity/access — crypto let the genie out of the Chanel bottle, and the brands won’t look back.
Mexico City Is the Next Austin/Miami
I was focused on the upside for Mexico City, a wonderful, cosmopolitan global capital with low costs and spectacular weather, just a few hours’ flight from U.S. hubs. What I didn’t see was that the crypto meltdown would send a chill across Southern Florida (FTX Arena?), or that Austin would wilt under its own weight. Flight data shows that more than 10 million Americans visited Mexico in the first nine months of 2022, 24% more than in 2019. According to Tripadvisor, 4 of the 5 most-desirable vacation locations for Americans are in Mexico. And the number of U.S. citizens seeking residence permits in Mexico is up 85% since 2019.
The Business Word of 2022 Is Super App
The world’s third (and dropping) richest man bought an influential social network with the stated intent of turning it into a super app. Then, just this month, The Information reported Microsoft is contemplating turning its suite of products into a super app for business. As mobile is the key touchpoint for trillions of dollars in services, every company on Earth except two is looking to exit the iOS/Android stranglehold. Building a super app, similar to Tencent’s WeChat, is a play for the Iron Throne.
Zooming out, this has been a great year for the West and the U.S. The largest democracy in Latin America, Brazil, is (so far) enjoying a peaceful transfer of power. The EU is a Union, and NATO has stirred from its impending brain death. In the past two months, Ukraine has recaptured more territory than Russia seized in the previous six, without a single U.S. boot on the ground. At home, the stain that is Trump is being cleansed from the American fabric; the candidates he endorsed shit the bed, and election deniers were denied office. We are energy and food independent, and we made strides toward reducing our carbon emissions and renewing our infrastructure. We also took a giant step back re womens’ rights. However, our vaccines reign supreme, and last week we took a major step toward replicating the sun, here on Earth … at the Lawrence Livermore National Lab.
Two Hundred Something
I’m sitting at the bar (alone), eating dinner at the Cipriani in Doha and writing a newsletter for 297,000 people. The wealth here is staggering — the annual income of the average Qatari household is $228,000. But for expats, usually migrant workers, the minimum wage is $250 a month. There are few women out, and no mixed-gender tables anywhere. Prosperity is difficult, human rights harder. We (America) have both.
Life is so rich,
P.S. I’m running the Business Strategy Sprint again this January. Want a preview before you pull the trigger on membership? You can watch the first lesson here.