2020 In Review: 8 Key Themes & Takeaways
Publishing The Squeeze has been one of my highlights for 2020. The feedback, requests, and learnings have made this a truly awesome experience that I plan to continue with.
For the last article of 2020, it felt only fitting to look back at this one-of-a-kind year taking note of the key stories and themes that shaped 2020 with lasting impact for years to come.
Video Killed The Radio Star
Video calls are arguably one of the biggest stories of 2020. Growth for video conferencing platforms has been exponential as most of the world was (and is still) unable to go visit family, hang out with friends, or commute to the office.
Video calls moved beyond just a way to host business meetings, they became the way to go on a virtual date, to learn to cook, to go to school, to host your office holiday party, or just to simply hang out with friends.
A major part of this shift towards normalization of the video call has been led by Zoom with growth from about 10 million daily active users (DAU)in Q4 2019 to over 300M DAU in Q4 2020. Growth for Microsft Teams has also been significant with over 100 million daily active users.
Houseparty, a video conferencing tool meant for these new non-work use-cases, has been interesting with a growth of 50 million DAU in March 2020 while non-video disruptors such as Slack have not benefited from these thematic tailwinds.
Overall, the number of daily active users for video tools may change as life returns to a near-normal, and work-from-home isn't simply black or white, but video calls are now mainstream. I look towards innovators such as Zoom building new features in 2021 such as email, calendar, etc. to build an ecosystem and maintain it’s userbase.
AI + Social Media = Addiction
TikTok flew onto the global stage with its nearly 800 million monthly active users (MAU), despite government actions against it; India essentially banned it and Donald Trump tried to sell it (it’s still hard to tell what actually happened with the latter).
But outside of the media circus, TikTok itself is both a technological and a product marvel. The app has highly effective Artificial Intelligence (AI) and Machine learning (ML) algorithms that use viewing preferences from each of its users from short-form videos to drive recommendations and further engagement on the app.
Netflix and Youtube also use recommendation systems, but the TikTok maximum clip length of 15 seconds coupled with 52 minutes in daily usage per user results in over 200 unique data points per user a day. TikTok uses this data on both sides of the marketplace by promoting consumers to watch more content, while also promoting content to creators.
Facebook has noticed and responded both strategically through legal/governmental discussion, with the launch of Reels as a product feature, and backend changes that make it much easier to go down a rabbit hole (as one does on TikTok).
TikTok changed the social media landscape in 2020, and in 2021, we can expect it will be much more addictive than it is today.
The Movie Theatre Came Home
With limitations to the typical social activities and the closures of movie theatres, film and video viewing shifted online throughout 2020. Netflix, Amazon, and Disney+ saw immense increases in viewership throughout COVID-19; so much so, that streaming platforms began to proactively lower video quality in some regions to maximize usage of bandwidth.
Some streaming providers made it easier to watch together when we weren’t actually together, like the ability to watch content with your friends and family using Netflix Party.
With this increase in viewership, streaming providers like Netflix and Disney+ rushed to add more content to their library or opted to early release new seasons of fan-favorite shows, like the Mandolorian. However, once it became clear that COVID-19 wasn’t going anywhere anytime soon, studios and distributors fundamentally changed the distribution model to bring their movie theatre slate online.
Disney+ led this paradigm shift with the live-action release of Mulan for $30 per download. In Q4, Warner Media followed up with the release of their full 2021 slate of movies available digitally on HBO-Max simultaneously with theatres (if theatres are open then).
The shakeup to the film industry is one that is long overdue. Although it’s not clear what film releases will look like in 2021, it’s clear that streaming entertainment will continue to become a bigger part of our lives. Perhaps streaming subscription services start offering physical packages. Imagine a Disney² subscription that comes with a plush toy of the newest movie and a line skip once theme parks reopen. It’s important to note that Disney is the only video provider that owns the entire end-to-end experience including production, the rails, and physical presence.
Can’t Trust Tech
2020 was the year of scrutiny for technology companies. The public peak of this scrutiny was the Tech Antitrust hearings in Q2 2020 where US legislators called out Apple, Amazon, Facebook, and Google for unfair practices.
The first real actions from these hearings came in Q4 2020 with 48 US states filing lawsuits against Facebook for monopolistic practices with an end goal to break them up.
I’m not sure what will materially change from these lawsuits, as I see Facebook using Tik-Tok as an example of how new entrants can successfully compete against them, but I do see company splits as a likely outcome. Rather than actually enact change, I see a potential outcome being Facebook, Instagram, and WhatsApp spinning off into their own publicly traded entities to remove the perception of a market monopoly.
Likewise, I think Amazon can have plenty to gain here by splitting AWS, retail, and media divisions as their own separate publically traded entities to preempt future lawsuits. A pre-emptive split can allow leadership to focus more on their specific businesses, expose and trim the fat, and potentially allow for increased innovation to grow even faster rather than expend resources fighting inevitable legislation.
I’m unsure whether we will start seeing large tech companies splitting in 2021, but I no longer think it is a question of if, but more a question of when.
E-Commerce Is The Only-Commerce
Retail outlets were closed for large portions of the pandemic and online shopping quickly became the only place you could buy things.
Retailers such as Amazon and platforms such as Shopify saw massive growth in 2020 off the heels of these shifts in consumer behavior.
Initial thoughts were that this increase in demand was temporary, but as retail slowly opened up (albeit partially) with innovations such as curbside pickup — we quickly confirmed that the increase in e-commerce was actually a fundamental shift in the demand curve.
It isn’t just Amazon and Shopify benefiting from this shift. The convenience factor of online shopping pushed valuations of companies such as Instacart to nearly double in 2020, which led to merger activity (M&A) between Uber/Postmates, Grubhub/JustEat, and DoorDash/Caviar. To cap it all off, DoorDash also had a ludicrous IPO this year.
Habits are sticky, and the importance of e-commerce isn’t a temporary spike in demand, but a pull-forward of the curve itself. In 2021, if brands aren’t thinking of an e-commerce first strategy, they risk missing out on this large and scaling audience of consumers.
Wellness Went Digital
Working out at a gym in 2020 was not a simple experience with the various limits and closures in effect.
Naturally, people went online and sales for traditional gym equipment increased; there were even shortages and waitlists.
A big breakout star for this shift to home fitness was Peloton, known for subscription-based exercise bikes, which managed to recreate the sense of community (even before COVID-19) that the typical digital fitness offering failed to address.
Despite the relatively simple technology of a screen and a spin bike, this community-driven fitness experience has driven the brand to new heights.
While Peloton was the clear winner, Apple is also set to release its own subscription fitness offering, there are the startups Tonal and Tempo, traditional boutique gyms have started white-labeling their own digital platforms, and Amazon has entered the conversation.
As with all these growth industries, there has been M&A activity with Lululemon acquiring Mirror for $500 Million early in the year and more recently Peleton acquiring Precor.
Wellness isn’t just hitting the gym. In 2020, we have seen telehealth become more the norm; doctor visits have gone online and even therapy can be completed from the comfort of your couch.
Digital wellness has quickly built up an ecosystem, and if Amazon & Shopify are sample use cases, ecosystems are here to stay. It may not happen in 2021, but in the next coming years, we could likely see many of these new platforms and devices, such as Peloton, Mirror, Whoop, and BetterHelp, come together to provide their audience with a total wellness experience.
Space Became Cool Again
In 2020, NASA and Elon Musk’s SpaceX launched a two-person manned rocket into orbit and then followed up with a four-person crewed spacecraft “Resilience” to the International Space Station (ISS).
There are over 5 million subscribers to the SpaceX Youtube challenge, with over 10 million viewers for the 2-person launch, and routine socially-distant crowds of almost 500,000 in-person spectators (it’s important to note that 600 million viewed the Apollo 11 mission).
The NASA logo also became a rare fashion emblem you can find everywhere.
While being cool pulls space exploration into the mainstream, and potentially inspires the next generation of scientists, engineers, and financial backers — this “cool” factor is a result of significant accomplishments. Private reusable rockets from Space-X have launched over 100 times, Blue Origin is testing propulsion systems, Space-X has another Starship ready to go, China has successfully mined the moon, Richard Branson is getting ready for the stratosphere, and Tom Cruise will be in Space in 2021.
Space has become cool again because IT IS COOL, and 2020 has been a year full of significant technological success.
I am excited to see what happens in 2021 as the new space race continues to heat up and technological accomplishments get pulled into more day-to-day use cases.
Things Got Heated: A Climate Plan
It’s hard to argue against the fact that humans are destroying the planet. The good news, however, is that emissions were down sharply in the first few months of COVID-19, and remain down for the year overall (however there is a noticeable recovery).
On the other hand, 2020 was also a year where large portions of the world burned uncontrolled and the world ocean temperatures continue to heat up. In this dumpster fire of a year, it’s easy to forget that this year started with the unprecedented wildfires in Australia.
For the first time, it seems like folks are not just proposing small changes to improve the environment, they are proposing bold, big ideas that are challenging the previous conventions and conversations. Take for example the Green New Deal, which sounded outlandish to many in the political world, however, it pushed politicians to think differently. And of course, there is Greta Thunberg, who made the world open up its eyes to the next generation that is fighting to make this world liveable in the future. Other notable callouts include Tesla, who opened eyes to the potential for renewable technology, the economics of renewables are starting to make sense for businesses, and fossil fuel extraction methods such as fracking are seeing poor market economics and likely regulatory headwinds.
I’m an engineer, and I see 2020 as a year of static friction — not a lot of movement. We continued to see a lot of opposition to get the idea of a climate plan moving at all. In 2021, I’m hopeful for kinetic friction — meaning that there will still be opposition to the movement, but there is movement still happening.
As an investor, I am excited to see how new government grants, loans, and plans can supercharge the clean energy sector in 2021 along with large infrastructure and reskilling programs as part of COVID-19 economic recovery.
Putting It All Together
In summary, the eight key themes of 2020 involve digital-first and ecosystem approaches. Digital tools and platforms showed resiliency to the hardships of COVID-19 and ecosystem approaches to problem-solving (focusing on the entire experience) stimulated growth.
This occurred both at a company and at a national level in which COVID-19 was an accelerant to the pre-existing technological/digital divide that has always existed.
Interest rates are expected to remain around 0% for the next few years, vaccine delivery is in effect, and computational power is at an all-time high. I expect that the eight key themes for 2020 are here to say, and the three catalysts of low-interest rates, a vaccine, and cheap computational power will turn 2021 into a smaller-scale version of the roaring '20s — one in which we work to minimize the technological divide between nations.
