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Gaming on the Rise

I remember the early days of playing Atari. Then came PC games, commodore Amiga, Nintendo, Gameboy… ohh… the joy!

This year we had to play a bit more online and at home… and the gaming industry flourished in 2020!

50 Years of Gaming History, by Revenue Stream (1970-2020)

View a more detailed version of the above by clicking here

Every year it feels like the gaming industry sees the same stories—record sales, unfathomable market reach, and questions of how much higher the market can go.

We’re already far past the point of gaming being the biggest earning media sector, with an estimated $165 billion revenue generated in 2020.

But as our graphic above helps illustrate, it’s important to break down shifting growth within the market. Research from Pelham Smithers shows that while the tidal wave of gaming has only continued to swell, the driving factors have shifted over the course of gaming history.

the whole history here!

Continue reading “Gaming on the Rise”

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chained

In the last few years, multiple transformations in the service and product industries linked to information technologies have taken place – all at a frantic pace as the web 3.0 evolved, matured, and found its place in the market. However, when considering the one that has the potential to be the most disruptive, blockchain is definitely in the spotlight. Nevertheless, since its announcement, there’s been ups and downs and it hasn’t exactly lived up to the hype.

Many factors make the world question if blockchain will effectively be part of our daily lives. Yet, at the same time, there’s already enough proof that the technology is more than Bitcoin and it can actually have a positive impact across different sectors. But don’t let us preach to you about it, let us show you what’s coming next.

Way beyond Bitcoin…

The popularization of blockchain happened mainly due to the use case of digital assets, commonly known as cryptocurrencies. In the aftermath of the 2008 crisis, Bitcoin was created in a totally decentralized approach without requiring governance from any formal entity. In an almost utopian yet controversial way, it poses as a mechanism for transferring and saving “value” in a fully digital and distributed format. Nonetheless, there’s a myriad of other applications aiming at changing the world:

  • Insurtech has stepped up the game and is using blockchain to reduce fraudulent claims and ease a process that typically takes up a lot of time and energy (checking evidence and making reinsurance more efficient). Lemonade is the reference startup (which has become the best IPO in 2020), but several other startups are disrupting the space with P2P Insurance (such as Teambrella or, once again, Lemonade) and Claim Management & Risk Assessment (Tierion is improving claims processes while Cropt is supporting insurers with satellite data to confirm the actual damage presented by farmers, and machine learning algorithms to predict the yield of crops and the risk associated).
  • Supply chains have been drawing a lot of attention with blockchain solutions being deployed to keep track of the goods’ route and also optimize logistics. We don’t have to go far for this one. Both Auchan and Lidl Portugal announced they’ll be tracing the origins of all food with blockchain as a quality control measure to meet the growing demands of today’s consumers. As for some of the hottest startups, it’s worth highlighting:Everledger, Provenance and  TE-Food.
  • In the civic domain, a lot is going on. Startups like WalliD, which is turning to blockchain to privately store users’ ID documents in a digital wallet and design a global protocol for digital ID transactions, and Civic, which has the same principles but applies them to the management of digital currencies, are exclusively focused on identity. Plus, if we take a collective standpoint, there are many other compelling initiatives such as Follow My Vote, which is fighting to bring more transparency to polls and put an end to election fraud, or, speaking of transparent voting, TAIKAI, born in our MVP program as a blockchain-based platform for hackathons, which is fostering open innovation by connecting tech enthusiasts to companies that have challenges and are desperate to solve them.
  • Regarding security, decentralized storage platforms are picking up steam. Nowadays, data is seen by many as more valuable than money, so hackers are sort of modern pirates. To avoid being looted, or in other words, to prevent breaches and better safeguard data, decentralized storage platforms such as the ones that are being built by SIA, Storj or FileCoin (based on IPFS) look like a good option because, instead of having all files stored at the same place, they’re broken apart and scattered across multiple nodes on a network, making it impossible to read the entire content from one fraction.

Blockchain can be set up to operate for a variety of purposes, and its community is committed to expanding the technology’s level of influence. Judging by its success and increased use, I would say it seems that blockchain is poised to rule the digital world soon.

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When the going gets weird, the weird turn pro.

new edition of the Bright Pixel Newsletter

Weird times… with positive and negative impacts in our individual and collective lives. Personally, I have learned a lot in these last months… to value simple things, to better grasp that sometimes we tend to waste time in matters that simply do not matter, to learn more about the virtues of patience and keeping calm. I lost a bit of weight, I am also increasingly fitter and healthier, and I got closer to friends and family, oddly enough, because of the imposed social distance.

Professionally, we have proven that working together remotely works quite well – we can be highly productive and efficient, working actually more due to a better management of time… but, all of this has a toll after a long period of time. We start to miss personal interactions and the intense back to back routine of endless calls starts to sink in. To maintain company culture and build on top of the long last relationships that we want to explore with our stakeholders, we will need to mix remote with physical contact.

Weird times… indeed. Full of personal and professional challenges to overcome and opportunities to explore to our benefit.

Tech will save us all

Covid-19 sent everyone home and, three months later, not everyone has returned. In the US, before the pandemic, already 4.7 million or 3,4% of the population worked from home, and the number is increasing – according to the U.S. Census Bureau, nearly one-third of the U.S. workforce, and half of all “information workers”, are able to work from home.

Now that everyone is experimenting with the benefits of working remotely, the will to return to the offices is vanishing, with 98% of people saying they would like to have the option to work remotely for the rest of their careers. The same respondents praise the flexible schedule (32%), the possibility to work from anywhere (26%) and not having to commute (21%).

Just on a side-note, not having to commute has a very positive impact on the environment too: Xerox estimated that it saved 92 million miles of driving by allowing its remote workers to avoid commuting, thereby reducing carbon emissions by almost 41,000 metric tons.

This opens up new opportunities for collaboration tools companies, as we have seen in past newsletters – is now the time when virtual reality and augmented reality will enter our daily lives? The expectations are high. Also, it gives companies new chances to re-evaluate their cost structure. Yeah, you read well.

Remote working allows companies to avoid some basic costs such as internet, work computer/phone, or food allowance. In an inquiry done with US workers that worked remotely, 80% of the respondents said the company did not pay for home internet; 72% did not get their phones paid; 87% didn’t receive for costs related to drinks/foods in coffee shops. This is something very small – you already pay for the internet and for your phone –, but there isn’t a good principle behind it.

So why should they keep their high cost offices in Silicon Valley if their workers prefer to work from home? And if they can work from home, then why can’t they be anywhere in the world? Twitter closed its offices until September and Facebook is planning not to open them in the long-term. If companies don’t have a physical space, they can hire people from anywhere in the world and we all know that some countries/locations offer higher wages than others.

Events without sales and networking

Tech events are a big opportunity to generate new leads, which is now more relevant than ever, considering that startups’ survival depends on their sales – 50% of them said they had 6 months or less of runway and 72% saw their revenue drop since the beginning of the crisis with the average startup experiencing a decline of 32%. When all these events are being canceled, postponed or done virtually, how can entrepreneurs do business? Experts say: organize your own event, bet on content marketing, be popular on social media and work on your marketplace.

Going back to the offices

But there is also another way of thinking – the Bank of America and IBM (in the US) believe that innovation and collaboration are essential and can only be done right in person, so they are doing all efforts to bring people back to the offices

Gigging up!

While companies can send everyone home and expect to reduce their fixed costs by cutting real estate expenses and offer lower wages, some believe that it will have a negative impact on the organizational culture and the emotional connection to the company will be lost, meaning there are no reasons for people not to switch to something new that makes them feel more accomplished. There’s an opportunity for the gig economy to be filled with knowledge people.

If new companies are the new cornerstones of the economy, let’s help them!

New companies, tech companies, can save the economies from a complete breakdown, so shouldn’t all governments take some time to think about how to help them? As Startup Genome recently posted in its annual report, continuing to invest in local ecosystems will reinsure its growth and, consequently, will produce more value.

And since this is all about innovation, BCG shared its annual list of the world’s most innovative companies – led by the three A’s: Apple, Alphabet and Amazon – and Sifted shared some lessons about what we can learn from them.

Although none of these companies are European-based, the old continent is becoming more competitive when it comes to innovation – on the one hand, the EU continues to have a better performance than the United States, China, Brazil, Russia, South Africa, and India; and on the other, Europe has more ecosystems in the Emerging Entrepreneurial Ecosystems list than the other continents. And there are people who strongly believe that Europe is better positioned than ever before to lead the way from now on.

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tech deciphered – covid impact in world

My good friend Nuno Gonçalves Pedro, that also sits with me at Bright Pixel’s Investment Committee, is one of the tech VCs that I admire the most and a continuous source of inspiration and learnings.

He launched recently Tech Deciphered Show – a great podcast about tech and VC (unbiased opinion… really! I listen to a bunch of podcasts and this one competes neck to neck with the best of them!) – with Bertrand Schmitt, an entrepreneur with a great story and track record, that I had the pleasure to also e-meet recently.

I’ve listened to most of the episodes they’ve done so far.

I truly recommend to any entrepreneur or investor that should listen carefully to the two episodes that analyses the impact of covid19 in the world.

 

The full transcript is also here and is a good reading alternative:

Tech Deciphered – Impact of COVID-19 in the World- Venture Capital and Start-ups – Tech DECIPHERED Show 

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the changing value of money

Interesting read that took me back to my economics degree.

In a nutshell, if you do not have the time to read this…

Long on Gold

Be careful with holding USD – it’s reserve currency attribute might be now even more at risk.

”

Most people don’t pay enough attention to their currency risks.  Most worry about whether their assets are going up or down in value; they rarely worry about whether their currency is going up or down.  Think about it.  Right now how worried are you about your currency declining relative to how worried you are about how your stocks or your other assets are doing?  If you are like most people, you are not nearly as aware of your currency risk and you need to be.

So let’s explore that currency risk.

All Currencies Have Been Devalued or Died

”

Read the article

 

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the winner takes it all

Our third edition of Bright Pixel Newsletter – subscribe here!

The winner takes it all

Today is my 51th day confined at home. I would rather we weren’t in these circumstances, but I must admit I have been enjoying the slower pace. There’s a sense of guilt about it, but it was good to realize I wasn’t the only one.

Unfortunately, most businesses are unable to enjoy the silver linings of this situation. Covid-19 has been putting all companies to test, leaving them to the brutal and unsympathetic forces of natural selection. As it often happens in most crises, some players will thrive, while others will struggle to survive.

The winners and losers could be purely  temporary. Most meetings might revert back to face to face, and our problems with overbooked planes and crowded restaurants could soon be back (miss this already?).

Telling long-term winners and losers is much harder than just predicting short-term adjustments. The world has been predicting the demise of cinemas and brick-and-mortar retail for too long now.

 

At this point, we already have some clues about who these winners are

Enterprise software has seen increasing  demand for their services. Zoom is the most obvious one here. As of 28/04, its stock has appreciated 140% since the beginning of the year. Slack is also attracting the attention of remote workers. According to a series of Tweets from the CEO, its user base has grown from 10.4M in March 16 to 12.5M, just 10 days later! Facebook is also joining the party by releasing messenger rooms and even Skype has awakened from the death to make some new announcements lately.

Entertainment is going through some big momentum too. On 21/04, Netflix has crushed investors’ expectations by adding 16M new paying subscribers, more than double of what was expected by investors. Disney+ has seen tremendous growth adding 50M subscribers in its first 5 months, and HBO Max is set to launch in May. Expectations are high.

When it comes to short-video, the youngest social-media giant, Tik Tok was downloaded 2 million times between March 16 and 22, an increase from the previous week’s 1.7 million. The emerging short-video platform Quibi, a high-profile startup in the valley that has raised $1.8B, was made available to the public in April, and Youtube announced it is working on a competitor.

Among the best performing sectors this year is healthcare. Finding a cure for this virus would be the best news for any stockholder (and everyone in general) in a pharmaceutical company. At the same time, technology is also gaining space in a science-led industry. From real-time well-being trackers and medical professional’s support systems, to less obvious spaces like sextech

 

Many are struggling but not backing down just yet

Mobility is definitely one of the hardest-hit sectors. Even with questionable unit economics, the sector has been one of the hottest investment topics in recent years, with Bird holding the record of the fastest startup to ever reach the unicorn status, in only 2 years. Right now,  these companies are reinventing their purpose, such as the micro-mobility company, Felyx, that has made their electric scooters available at a reduced rate to entrepreneurs who want to serve customers at home.

Tourism and hospitality are also going through a rough period with most restaurants and hotels closed.  Travel companies are providing virtual booking services for sightseeing and others, such as online-only classes and webinars. Restaurants are selling vouchers for post-Covid-19 meals to keep their businesses alive. Airbnb has also debuted online experiences and their accommodation offers are becoming less short-term and more long-term rentals. Even movie theatres found a way. In a very “back to the future” style, some are promoting drive-in experiences. Do you have Grease vibes?

 

This time is different

At the risk of falling for the same trap of those who predict the end of industries for too long, we will place our bets on who the long-term winners will be.

The first one is Cybersecurity. The growing importance of this vertical is not new. As people and devices become more connected and dependent on online services, cyber risks increase significantly. Still, IT architectures are shifting towards becoming more decentralized and reliant on 3rd party services, exposing companies to new attacks and increasing their vulnerabilities. Just in March, online threats have risen by as much as six-times their usual levels. By accelerating remote work and promoting digital environments, this crisis emphasizes the relevancy of cyber security for years to come.

As we scale-down human interactions, our reliance on digital engagements is increasing. Existing user interaction platforms must evolve towards automation and new interfaces. We’ve never seen brands being so dependent on customer experience as they are in the digital age, and now, more than ever, customers are unsatisfied. They want refunds of their trips, they expect their favorite restaurants to have take-away, and they order groceries to be delivered within a day. How to deal with such demanding clients? You’re right: with a very efficient contact center and an optimized virtual assistant.

For the near-future, we expect a bumpy road ahead with lower growth expectations, scracer capital availability and rising unemployment. Still, on the health front, things seem to be improving, and hopefully, the peak of the worst health crisis of our generation is past us, and we can go back to business (almost as usual) soon enough

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building times

Marc Andreessen just wrote recently a great post about what society (US centric) should be doing differently… He is one of the best Venture Capitalists in activity and with a great view of what we need to tackle in our collective future.

In a word: build

In a couple of more words: if we build what is really needed – more and better housing, transportation, hospitals, universities / schools for all, we as a society will evolve.

The article itself – click here

Every Western institution was unprepared for the coronavirus pandemic, despite many prior warnings. This monumental failure of institutional effectiveness will reverberate for the rest of the decade, but it’s not too early to ask why, and what we need to do about it.

Many of us would like to pin the cause on one political party or another, on one government or another. But the harsh reality is that it all failed — no Western country, or state, or city was prepared — and despite hard work and often extraordinary sacrifice by many people within these institutions. So the problem runs deeper than your favorite political opponent or your home nation.

Part of the problem is clearly foresight, a failure of imagination. But the other part of the problem is what we didn’t *do* in advance, and what we’re failing to do now. And that is a failure of action, and specifically our widespread inability to *build*…

read the rest…

 

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venture capital threads

fred destin
a great twitter storm about the effect of coronavirus in our venture capital lives…
 
1/ A little thread on how one venture capitalist thinks about the pandemic from a fund standpoint
2/ First of all stating the obvious — this is first and foremost a global scale humanitarian crisis right now. It’s staring us in the face but from (most of ) VC Twitter you wouldn’t know it.
3/ My job is to manage a fund. As such my first take is to form a view on the depth of the crisis. The difficulty is that no one can model this thing. Any forecast we make is more likely to reflect our own appetite for risk and view of the future than anything else.
4/ Analysts are paid to produce numbers, and so numbers they will produce, but we do not believe that any macroeconomic model can cope with the current situation, in the same way that the 2008 crisis broke the “dream machine” of risk models that underpinned credit derivatives.
5/ Neither do we trust the numbers coming out of China, or think that any of the South Asia countries are out of the woods yet. We will see. There is too much we don’t know. The best hope lies with science (notably, cheap testing).
6/ We do however have to advise our startups on what to do, so we need to form a somewhat informed view of the future, and a decision framework. As Howard Marks recently told Harry on his podcast, investors cannot let themselves be impacted by emotion.
7/What we can reasonably assume is that it will deeper and longer than 2008, probably harsher than 2000-2003 and probably, hopefully, nowhere near as bad the Great Recession.
Government response, agile manufacturing and health / biotech mobilization should ensure that.
8/ Because travel and trade froze at the same time, and given that the whole world is gradually moving into lockdown, the global economy is experiencing a combined supply and demand shock which is unprecedented.
9/ Working capital gets hit first and hard, with household wages and consumption following in lockstep. Credit follows naturally.
10/ Governments have played the Quantitative Easing game non-stop over the last few years. Rates are so low that even the Fed has nowhere to go, and it is unclear what rate cuts would achieve anyway.
11/ The US is also hampered by deep partisan politics which render both federal government and states less effective in their stimulus response. All this does not bode well.
12/ On the other hand comparisons to the Great Recession seem excessive — governments have long understood how to use Keynesian methods in recession, and the massive stimulus packages are witness to that.
13/ We are anticipating a deep dive that will last 12 months or more, followed by a tough period of stagnation before a return to growth. As I said, these are planning assumptions not forecasts, and they will be overrun by facts week after week. Hope this tweet ages badly.
14/ In the face of such uncertainty — VCs will look at existing portfolios first and look at (a) crisis impact company by company (b) financing risk on the existing portfolio (c) valuation risks.
15/ At @stride_vc we are relatively “lucky” in that (a) we invest at seed so burns are usually low and valuations are reasonable (b) almost all our companies are funded into 2022 (c) we are only about 30% invested and early in our investment history
16/ The companies most at risk are those who have recently starting investing into growth and are into that weird “Series B gap” where you start tooling up for scale and are heavily reliant on hitting growth forecasts. A tough place to be right now given the uncertainty.
17/ Per company assessment yields a surprising picture – a majority of our companies are not currently seeing a major impact and a few are accelerating. I don’t know how long this lasts. The point is that the data does not tell you what you’d necessarily expect right now.
18/ The immediate adjustment tends to be hiring freeze and a hard reassessment of cash flow forecast with deep cuts in growth and a significant uptick in churn. Anything else and you’re probably deluding yourself or not being prudent. That is the only way to forecast runway.
19/ We tell all our management teams that forecasts do no matter anymore — the only things that matter are (1) taking care of your team (2) making a calm and dispassionate assessment of the impact on your business (3) taking a few but well reasoned decisions right away and …
20/ … deciding very exactly what to measure and what leading indicators you are going to monitor obsessively to determine where your market is going. This is completely company specific, and it is important to avoid confirmation bias on positive news.
21/ Right now I am SURPRISED at how functional our companies’ clients are in the face of this pandemic – decisions get made, deals get closed. Large corporations have not frozen in the face of this crisis – they are moving, and fast. Long may that last.
22/ From an investment standpoint – we here hit the pause button for a bit — I am not smart enough to process this information and have confidence in our decisions on new investments, and our focus is 100% on assisting our founders with hands-on advice.
23/ Whether we hit pause for 2 weeks or 2 months I don’t know yet. We invest money on behalf of other people and right now we do not feel confident putting cash to work. I read voraciously and try to understand as much as I can, and I haven’t gotten my head around this yet.
24/ What is absolutely clear in my mind is that you can expect deal volumes to plummet this quarter. It makes for good marketing to say that you are open for business, and I like the positivity, but we need to see how much $£ actually gets put to work.
25/Uncertainty kills decision making.
VCs are in the business of taking risk AND managing risk.
Right now you can take it, but in most cases it’s really hard to manage it
PS/ and for clarity, since question was asked, yes we absolutely do support our existing portfolio companies.