Entering into my 8th month in VC world, I’m beginning to find my feet. I’ve evaluated (to varying degrees) a couple hundred businesses via proactive sourcing (Angellist, reading, trawling the web, being an early adopter myself), F6S applications, our Warner Yard investor floor, VC/entrepreneur/operator referrals and word of mouth, events in the ecosystem, and conferences (Playfair’s SXSW trip!). And I’m always looking for more sources of deals. This exposure and mass of data points on founders, markets, pros/cons of technology approaches, customer acquisition strategies, and product value propositions has refined a set of four ‘technology themes’ that truly excite me. In the spirit of openness and collective learning, I’ve set out to pen these ideas here. Should anything ring true/false with you, or if you’re building a business within/around these themes, please do reach out to me, I’d love to hear from you!

1. Large scale data-driven software

I constantly think back to the analogy used in Reid Hoffman’s LinkedIn’s Series B pitch to Greylock. It goes something like this: web technologies in Internet 1.0 were about searching and transacting via flat directories (e.g. a phone book). It’s obvious to us that this approach is now archaic because it’s inefficient in terms of speed, scalability, and accuracy. In a world where close to 3 billion people are online, web participants aren’t lone wolves, but instead are members of an interconnected community with varying degrees of information available to qualify their identities. These networks drive today’s Internet 2.0 technologies, in which searching and transacting occurs via networks.

The interesting bit for me is the theme of collecting a mass of input data signals (e.g. on people, transactions, news) and using computational approaches (machine learning, artificial intelligence, statistics, natural language processing…) to find patterns in the data and surface intelligence that would otherwise be challenging to reveal. These results ultimately spawn new hypotheses that inform the evolution of your product and value proposition. This harkens back to my past experience in cancer research, in which hypothesis-generating (new school) genome-wide experiments are accelerating the pace of knowledge creation faster than traditional hypothesis-testing (old school) experiments.

My team and I at Playfair are bullish on this theme, having backed DueDil (the data backbone of business) and OP3Nvoice (the API to search for audio/video). We’re excited about companies building products utilising highly connected, exponentially growing datasets and thus championing the NoSQL movement with graph databases such as Neo4j, for example, or others that are suited to the challenge at hand (more on this topic). One particularly intriguing application of this technology is led by the guys at 3Sourcing/PeopleGraph (known on the street as Project Whoogle!). In my mind, this is a direction for Internet 3.0: while many 2.0 networks now exist (Twitter, LinkedIn, Facebook, Quora), they remain largely siloed and don’t talk to one another enough to add significant cross-platform value to the user. This is set to change.

2. Enterprise productivity tools

As startups find product-market fit, gain traction with their customers, and raise venture financing to capitalise on growth opportunities, founding teams expand and eventually subdivide into product/tech, sales/marketing, finance, HR, and customer support teams (amongst others). With this implementation of organisational structure comes the need to remain nimble in pursuing gaps in the market, iterating and shipping quality code faster than competitors, and keeping customers happy. My view of enterprise productivity herein is a tool that facilitates or increases the efficiency with which employees can do their jobs to build value for their company. We’ve seen multi-hundred million to billion dollar companies created within this theme, including Yammer, Huddle, and Slack in the communication/collaboration vertical; Trello and Basecamp in in project management; Dropbox (a personal favorite), Box, and Evernote in file/content storage; Zendesk in customer support; and GitHub in software development/iteration. I believe that as more entrepreneurs dissect the pain of legacy systems in enterprise, hopefully fueled by their own experiences wishing for something better, we’ll see continued evolution of software solutions that will help companies improve financial and operational performance to ensure customer satisfaction in the long-term. I’m on the continued lookout for startups in this space.

3. Software that provides crucial infrastructure to power an entire industry (IaaS)

I’ve been playing around with the following analogy recently: Say you’re building a new city. What’s required to make it rise from the ground and mature into a functional operation? Concrete to construct buildings, a power and water grid to supply homes and offices, roads to enable efficient transit, and tons of money, amongst other things. Now, if you’re an investor, would you rather invest your capital in constructing the single most badass building in the city (and hope that it remains so for eons) or would you instead invest in a core infrastructure provider that has the potential to service every building in this new city? I’ll bet on the latter, otherwise known (in my book at least) as Infrastructure-as-a-Service (IaaS).

I’m extremely bullish on this theme due to the significance of the operational scale at play in the software world. Just look at Amazon Web Service (AWS): launched in 2006, AWS now powers the technology infrastructure of household names including Airbnb, Netflix, Pinterest, and even the CIA. AWS claims a 35% market share of IaaS to pull in over $3bn in annual gross revenue representing >50% YoY growth (note $74.5bn consolidated gross revenue for Amazon in 2013). Wow. And the size of the IaaS and broader cloud computing market will continue to grow several fold driven by a need for massively scalable, fast, and cheap solutions to power complex systems. What’s more, we’ll see a 22% growth in the number of software developers over the next 10 years in the US. These developers will go on to build more cloud-based software, creating larger companies, employing a greater number of developers, and thus reinforcing the growth story through a positive feedback loop.

Another flavor of IaaS that I am a fan of are payment gateways including Paypal, Braintree, Stripe, and Klarna, which collectively processed >$200bn of transaction volume last year along with double digit growth. Along with their competitors in the physical world, Stripe and iZettle, these innovative behemoths are providing next generation plumbing (the infrastructure) for online and offline commerce (the city). What other flavors of IaaS might blossom in the next 5 years? I’m looking for them.

4. Consumer propositions that remove unnecessary friction

We’re now in a world where almost every product/service is up for Uberification — the process of (often mobile-first) procurement in seconds. I’m a massive proponent of this approach in industry verticals such as delivery and logistics, home services, entertainment, and travel. It’s important to realise here that consumers can be fickle with their choice of product/service provider, while trends (i.e. what’s the new cool thing to do) in society can change quickly. This makes it challenging for investors to pick the true winners that will perdure from the false positives that appear hot in the short term but will ultimately become forgotten. As an entrepreneur, it’s therefore incredibly important to strive to build habit forming behaviors into consumer products to keep users hooked. Nir Eyal dives into this topic in a book by a similar title, which is definitely worth a read. What it boils down to is user psychology, and I vouch for this being paramount to success. In fact, I wouldn’t be surprised if a new role were to emerge with a title along the lines of “Chief User Psychology Officer”.

Here are some key considerations on this point: do you understand in what circumstances/mental state your users ideate the desire to consumer a product/service you are offering? Have you an idea of the hooks to build into your product to encourage this behavior? How can you offer maximum reward (gratification, things/money/information, competency) while minimising the need for your users to expend their most prized resources (money, time, brain cycles)? Teams that have done this extremely well include the usual suspects (Facebook, Twitter, and Uber) but also include fast-growing newcomers such as London-founded YPlan, which focuses obsessively on user experience (and for good reason!). What could possibly be more appealing to a consumer than being two taps away from the product/service they’re in the market to consume? Well, maybe cutting it down to a single tap ☺

All in all, I’m bullish on this theme of using technology to remove friction for the consumer’s experience and bang on about it around the office enough for my partner in crime @victoriadomalik to make it glaringly obvious that I should stop chewing her ear off about it. Enough said!