Annual Predictions #1: Key Trends for 2022.
Everyone else is making predictions. Gave me FOMO.
Apologies for the long break.
I was trying out new cameras. I have been a long term Nikon Shooter. There is something very tool like about the nikon DSLR layout that makes for blazing speed.
Of course, now everyone is carrying mirrorless cameras and I wanted to try them for myself. I was hoping that I would be able to shed some weight from the camera setup if I shifted to a mirrorless platform.
After evaluating the Canon R5 and the Nikon Z9 - it is unlikely that my goal of reducing setup weight will be achieved. If the bodies are lighter, the lenses are way heavier. And fucking pricey. However, the Canon R5 has all kinds of black magic going for it. The eye AF is insane. it will latch on to birds, dogs, any eye you name it, it will focus on it like a heat seeking missile.
Insane. Here is a photo I took. This dog was mid stretch and its head was moving pretty fast when I snapped off his photo. The eye is in perfect focus. This is at F/1.8 which means a razor thin depth of field. Any movement is enough to knock the eye out of focus.
What witchcraft is this!!??
I am next going to try out the Leica Q2 Monochrom and see if that does it for me. It’s insanely expensive (like sell your kidney to pay for it expensive) and only shoots B&W, but I tend to have most of my photos in B&W anyway so might just work out. Otherwise I have to wait until the Fuji XT5 or XT6 comes up with an AF as good. I think it will happen in the next 2-3 years and then I can move on to lighter glass.
I read a few VC predictions for 2022. I had a feeling of deep, unrequited FOMO. I tried to tell myself that I must rise about these base feelings and be more civilized about it. But nope. The slightly punjabi part of me will not be outdone.
Here are my predictions for 2022:
There will be a lot of down rounds. Reality of illogical valuations will have to finally catch up with a wide swath of start-ups. Fintech startups will especially be hit by the chasm between what they promise investors and what they actually deliver. Entrepreneurs who are spending VC money to build their own personal brands will hopefully have to account for what they have to show for all the money burned (literally).
Real world businesses and Deep Tech Startups will fare far better in 2022. I expect to see a lot of interest in AI for medicine, Biotech, Robotics and Space exploration.
DAOs will become mainstream in India. If you want a look at true democracy, look at web3.0. 2022 will be the year of the DAO. Plan accordingly. $13.7B worth of NFTs have traded hands on OpenSea alone this year.
Play-to-earn gaming is going to explode onto the scene with platforms like Axie. For India though, it won’t be something like Axie but something on the themes of Fortnite and PUBG. It holds the potential to give millions of people new ways to earn a living. Of course, Dream 11 and likes are going to corrupt it quickly but it’s OK.
SPAC Merged companies will increasingly be taken private by the Sponsors. Saying that the performance has been crappy is a massive understatement. It is also very likely that money will be returned to investors - there will likely be no place to deploy it. Here’s looking at you Chamath.
Smart PE firms will buy insurers. Because permanent capital yo! Buffett was onto something when he chose to buy insurance firms. KKR bought GAFG, Carlyle merged with Fortitude.
There will be many, many more carve-out transactions. Real business environment remains muted and depressed. Family silver (i.e. high performance non-core business units of conglomerates) will be on sale. and smart buyers will pick them off at bargain basement prices. There is pressure on margins, mountains of debt to service and the new ESG bugbear. I expect deal values globally to exceed $300bn.
There is a great consolidation coming in Streaming media. I don’t know if 2022 will be when it happens, but people are not going to keep paying for 20 streaming platforms. Smaller/subscale ones will die and their subscribers and libraries will be gobbled up by the big(ger boys). Definitely within 36 months though. A Super app will emerge. And then content will get standardized across all platforms.
Now, most people are predicting sectors and stuff like there will be more IPOs, more D2C brands being bought up, more funding for influencers/creator platforms, number of unicorns and so on - I found it to be pretty banal (even though I have just done the exact same shit myself). I think a much larger point is being willfully neglected.
As much as the trend of digitization and tech adoption and e-commerce has been helped along by Covid - is a temporary blip in the larger tapestry of human existence and intercourse. We are not built to work from home while ordering everything from potatoes to toilet paper and everything in the middle from Amazon while constantly asking people “am I audible” on zoom calls. Sure, the pandemic did show very clearly that you don’t need to work from an office to be productive, that a lot of things we knew we needed were not necessarily necessities but choices or good-to-haves (like offices). However, the value being ascribed to these purveyors of questionable quality services is (at least in my opinion) vastly overrated.
Take Swiggy as an example1. It has apparently raised its latest round at $11bn valuation. Good for Majety. However, is it really worth $11bn? I am not claiming that it is valueless - Food was delivered and paid for, people received salaries, it served as an important lifeline in the height of the pandemic. Obviously there is economic value. But is it $11bn? At $11bn, Swiggy is more valuable than these companies.
If they really want to tell me that a loss making logistics company is more valuable than one of the largest and oldest packaged food manufacturers in India - something has fundamentally broken. Valuations it seems lie in the spreadsheets of the junior analyst, much like beauty lies in the eye of the beholder.
Now, if you keep putting money in the same company at higher valuations over multiple rounds, you can achieve any number. Why stop at $11 bn? next stop $110 bn. However, i do get it from the VC’s perspective. If they don’t exercise their pro-rata, their entire holding can become moot, so they have to keep on the treadmill as well. Then there are cap tables with 50 investors on them. Safety in numbers. In the end, all this - a whole laundry list of perverse incentives - adds up to the creation of a bubble.
If you believe that there isn’t a bubble, that a company like Swiggy is more valuable than these businesses, there is a great estate in Agra that I would like to sell to you. It has a marble structure, minarets, well kept, expansive grounds and is right on the waterfront.
I read somewhere that there are $10 in VC funding available for each $ of capital needed by “credible entrepreneurs” in India right now. Like normal mango people, highly paid steely eyed capitalists also seem to be extremely susceptible to FOMO.
Here is a chart I shamelessly copied from HT mint. IMO this is FOMO, quantified.
On a funnier note:
I would recommend reading Oaklane’s presentation on Fintech here. It’s very well written.
As always, I look forward to hearing from you. If you liked this post, pls feel free to share this or subscribe to this newsletter using the links below. While I have been tardy of late, I try to write a 1000-2000 word essay once a week.
Yes, I do believe it is a shitty, lossmaking company with atrocious customer service. Of course, it will have a blockbuster IPO before it and zomato go the webvan way.
Excellent stuff