Seven Turning Points To Watch For In 2015

[This post first appeared at on January 1, 2015.]

Accountability is a good thing. Here are my predictions for 2014 and how they played out. Last year I called for: 1) continued progress for the U.S. economy, 2) acceleration of healthcare reform, 3) beginning of similar reform in higher ed, 4) big data impacting many sectors, 5) tech/media/fashion converging, and 6) robotics becoming pervasive. Looking back, I would say that the economic forecast was right on; healthcare reform went slower than I expected because of the botched federal exchange roll-out; higher ed reform is accelerating; big data is having various impacts [but that was a softball prediction]; slow roll-out of smart watches is beginning a tech/media/fashon convergence; and robotics became pervasive in interesting ways.

We poll the NAV partners annually about the new, new things of the year past. My partners chose remarkably compelling flying drones such as the DJI Phantom II [a type of robot]; self-driving features in cars foreshadowing robotic cars; Uber becoming a juggernaut and a verb (e.g., “we going to Uber-ize primary care”); the first-generation smart watches; and the new crop of phablets (iPhone 6/+, Note 4), which take smart phones across a threshold, making them a truly useful connected computer in the pocket.

Data via eMarketer, 4/2014.

Data via eMarketer, 4/2014.

What will be the key turning-points in 2015? Here are seven to watch for:

1. Mobile computing will be the dominant platform, and desktop machines will become legacy technology. This is already true for the leaders, e.g., Facebook and Apple, with Google close behind. Mobile as a medium is already eclipsing many traditional media (see chart above). In 2015 phablets will make this a turning point. They make the mobile web truly usable by combining the web capabilities of a tablet with the connectivity and app capabilities of a smart phone, all in one pocket-able device. And phablets will quickly be ubiquitous.

2.  Consumers and businesses will choose their cloud partners. The cloud is an ecosystem with many interlinked parts, e.g., consumers use the cloud for back-up, file sharing, messaging, file and settings sync across devices, and audio and video conferencing. The cloud is built into mobile and desktop operating systems. The major vendors (Google, Microsoft, Apple) are building out complete cloud offerings. As they do so consumers will choose a primary vendor: interoperability benefits and pricing incentives will make this unavoidable. Businesses may stay longer with best-of-breed cloud services for different needs, but consolidation incentives will affect business too. So 2015 will be the year of the land-rush in the clouds [apologies for the mixed metaphor]. It’s no surprise that you see an ad for IBM’s cloud every time you turn around in an airport.

3.  Equity markets will level off, leaving investors hungry for alpha. Equities have had a great run since 2009, but equity valuations are now high by historical standards. The price war between the OPEC and Texas will halt earnings growth for energy companies, a key stock market sector. And investor enthusiasm will be dampened by risk factors that are building up globally: Ebola; civil wars in Syria, Iraq, and Ukraine; perpetual chaos in Afghanistan; muscle-flexing by increasingly-powerful China or increasingly-belligerent Russia; the Greek-fired return of Euro-jitters; and sumo wrestling between a Republican Congress and Democratic White House. Valuations for venture exits will level off too, as shown by the New Relic, HortonWorks, and ZenDesk IPOs, which occurred at or below the price of preceding private rounds. This will put the brakes on the late-stage and secondary gravy train in venture capital. Investors will need to reassess their venture capital allocations; hopefully some of them will find the longer-term play in early stage VC to be a good source of hard-to-find alpha.

4.  Robots will be accepted as part of life. Much of Christmas was picked and packed by Amazon’s Kiva robots. Many cars will self-park or station-keep in traffic today, and perhaps you passed Google robotic car in California recently and did not even notice. Part of the movie you watched over Christmas may have been shot with a drone, and soon your roofer may use a drone to examine that chimney cap that keeps leaking.
And, more specifically for Healthcare Business Transformation (where my investing focuses):

5.  Healthcare cost control will accelerate, mostly driven by the government at this stage. Providers are showing they are “coin-operated”, responding to incentives and penalties for control of readmission and the total cost of an episode of care. Start-ups,  e.g. Careport, are creating tools to help manage care transitions and the liability associated with discharged patients. How much this will affect total healthcare cost remains uncertain, however.

6.  We will see how fast medical customers (fka “patients”) learn to behave like consumers. A wide variety of tools for medical customers have been introduced, e.g., ZocDoc for scheduling appointments, GoodRx for deals on prescriptions, GrandRounds for second opinions, or HealthSherpa for buying insurance on None have hit a home run yet. Early signs suggest that changing medical customer behavior is difficult (probably because of the complexity of the healthcare system and the risk to well-being that people see in doing things differently), and the most successful companies are those that sell to sophisticated corporate buyers, like CastLight.

7.  The doctor/medical customer relationship will be re-booted. Demand for primary care doctors is rising as more Americans gain insurance coverage and plan sponsors come to believe that intensive primary care pays dividends in better health and lower total costs. Supply of primary care MDs is tight and slow to change. A variety of new options are emerging: concierge practices (e.g., OneMedical) for those who can afford them; physician-extenders (NPs and PAs); consultations via phone, email, etc. that are enabled by new payment schemes such as direct primary care; urgent care and drug store clinics for routine medicine; tele-doc services like MDLive for first-line care, and re-birth of employer on-site clinics. In 2015 we will begin to see what works and what the medical customer chooses.

2015 looks to be a great year to be an entrepreneur or an investor, in many fields. Please send me your comments and thoughts on where the turning points will be.


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