In technology and startups, there are what I think of as micro-trends and macro-trends.
I think of micro-trends as moments when everyone starts an X for Y company. Examples might be Uber for Dogs, AirBnB for cars, etc. They pop up and everyone is wrapped up in them for 15 minutes, and then they sputter out.
Macro trends are big paradigm shifts where seemingly everything changes. In B2B there was the migration to the cloud. In consumer there was the iPhone, which shifted value creation to mobile-first companies like Instagram, Uber and Snapchat.
Investors are always looking for the next macro shifts. The key is figuring out which ones will be big, and then figuring out how value will accrue. Blockchain / Crypto is a popular shift that is getting a ton of attention right now. There’s general consensus that blockchain is a big paradigm shift. There is almost no consensus on where value will accrue, which is why we see what looks like rampant speculation.
Another big macro trend that I’m more interested in is narrow AI. In the coming years, nearly everything that we do in life and business will be replaced or updated by versions that use some type of AI to improve the experience.
The combination of humans interacting with narrow AI will produce productivity gains on par with the invention of the wheel. AI is not going to replace human workers, it’s going to make them smarter, faster and much, much more productive.
In terms of where value will accrue, the strange thing about this macro is that it’s not coming in a disruptive wave like the iPhone. It’s going to continue to show up incrementally in our day-to-day lives. It’s not clear to me that there’s an investing position outside of buying more infrastructure that enables more and better narrow AI, and investing in companies that use AI to help drive outcomes.
To give an example that we all understand, narrow AI has been showing up in social media in two ways: one is highly relevant advertising in places like Instagram (machine-learning optimizing for revenue), and the other is in rage-inducing political content and conspiracy theory videos (machine learning optimizing for engagement and retention).
It’s also going to keep showing up in little positive ways. When Google maps finds a faster route, when Tinder suggests someone new, when Spotify nudges up a song that we didn’t know we would like, or when our iPhone creates a new photo album for us to enjoy.
AI isn’t a product by itself. It’s not something we will buy independently. It’s just going to continue working it’s way into our lives. It will create a number of pretty big challenges along the way (self-driving vehicle accidents, unhinged conspiracy theorists).
Despite those setbacks, the non-newsworthy events will be the most interesting and impactful over time. The steady incremental improvements that will happen with literally everything, from air travel to farming. Those changes won’t make the front page news, but we are at the beginning of one the greatest productivity advancements in the history of the world.