Predictions for 2018
2018 Time Person of the Year: Robert Mueller.
Chief Justice Roberts swears in Mike Pence as the 46th US President. It’s not that the administration colluded with Russia that forces Trump to vacate his shoulder‑season home — several past administrations have cut deals with adversaries before they were even elected — but that they made no effort to cover their tracks. In addition, an obese 71-year-old in a high-stress job who divides his days between TV and fast food is a decent definition of “pre-stroke.” Note: I don’t wish poor health on anybody.
Al Franken emerges as a frontrunner for the Democratic nomination for president in 2020. Post resignation, his voice against the administration becomes stronger, and his dirty laundry being aired and starched becomes a strength/asset.
The major business stories of the year will be crypto, strange bedfellows (mergers), voice, and the breakup of big tech.
The breakup of big tech begins. Wage growth fails to materialize, and someone does the math highlighting that the heirs of Walton, Bezos, Zuckerberg, Gates, Brin, and Paige will soon be worth more than two thirds of US households combined. Corporations do not invest tax cut windfall (shocker). The decimation of the media and retail landscape continues at the hands of the Four. Other industries begin to feel the pain. An Attorney General from a red state and Margrethe Vestager (EU Commissioner on Competition) lead the charge.
Amazon passes Apple in value, and a Chinese firm breaks into the top five.
Alexa emerges as the iPhone of the next decade, fueling Amazon’s ascent past $1T in market cap. Voice makes the mobile wars look like a border skirmish as big tech and the media industry try to establish their place in an increasingly Amazon world.
Cryptocurrencies crash by over 50% in a month. Large financial complex firms shed a third of their value as blockchain’s potential disruption of ledger-based businesses becomes more visible/believable. Governments feel threatened and jail several execs from crypto firms.
The ad tech landscape goes from bad to worse as the duopoly, Facebook and Google, cements the industry’s structural decline. Large communications conglomerates shed 20–50% of their value when their growth engines, digital agencies, stall as the duopoly begins making online creative and value added services less … valuable.
Twitter, Snap, Buzzfeed, and Pinterest are acquired (or valued in subsequent rounds) for between 25 and 50% of their market highs as all continue to underwhelm at the hands of the duopoly. Almost every digital marketing/content darling (Refinery29, AppNexus, etc.) becomes a distressed asset.
M&A activity hits a fever pitch of horizontal and vertical tie-ups as industry bulks up in response to Amazon.
20–25 US brands and retailers launch online marketplaces to tap into the long tail. Ninety-five percent fail, as they have overestimated the power of their brands, and traffic continues to leak to the OS of retail, Amazon. Several realize they are competitors, but not enemies, and form a consortium to push back.
Online furniture firm Wayfair shares crash. A dot.com business model implodes as weak customer loyalty, Amazon private label furniture brands, and strong offline brands (Williams-Sonoma, Restoration Hardware) take the firm to the woodshed.
Amazon acquires Carrefour. Nordstrom also makes sense, but it’s family controlled, so … who knows.
Walmart establishes a leadership position in online grocery with pickup (everyone else, including Target and Amazon, has wrongly focused on delivery). This puts even more pressure on traditional brick and mortar retail and forces Kroger to make a big acquisition — my guess, Instacart.
Large CPG firms will either merge or forward integrate and acquire retail, as they realize a voice-controlled world is really, really bad for them.
Disney becomes the fifth horseman. Disney is the only old-economy firm with the scale, stones, access to capital, and leadership to develop a Prime-like offering. Disney will offer a Prime/Netflix-like member offering that will include a fat bundle of video programming and preferred access to other assets — cruises, parks, etc. The stock outperforms its peers.
Facebook stock peaks. The Zuck becomes the unwitting poster child for the movement against big tech as a series of half measures in response the Russian interference and the launch of a gateway drug, a social media platform for kids, burnish his reputation as the most tone-deaf CEO in tech. Business will continue to grow, but multiple erosion will occur due to the threat of regulation.
A nation in Europe bans one or more of the Four, opting for the Chinese model of stealing the IP, propping up a local entrepreneur, and capturing all the value domestically.
The world continues to be a better place. Infant mortality, likelihood of death at the hands of another human, deaths from infectious disease, and wealth inequality between the poorest and wealthiest nations continue to decline. The number of girls attending college, global income, and great original scripted TV content continue to increase.
The Tampa Bay Lightning win the Stanley Cup. I know nothing about hockey, but my dad has a decent feel for this stuff and is 100% confident this will happen. Good to know.
Life is so rich,