Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Intro (01:24)

Nuno: In this episode 13, on the decade of the 2020s, the decade ahead of us, we will be resuming our scenario planning exercise for a couple of other topics. We will be discussing next platforms, technology infrastructure, and the structural tech layers, VCs and startups and how that world will evolve, and we will then bring it all together in some overall framing of the 2020s and their scenarios. For further reference, please listen to our episode 11 and 12, where we talk a lot about a variety of things: the home, work and mobility use cases, we discuss various industries like healthcare, energy, climate change. So listen to our previous episodes that are concluded today in our trilogy of the 2020s. Let’s start today with next platforms, the scenarios for what the world will look like in 2029, 2030, around next platforms

Section 1 – Next platforms & Structural Tech (02:30)

Next platforms – Deep tech

Bertrand:  So let’s talk about deep tech and deep tech is a fantastic topic to start,   episode 13 today. There are of course, a lot of topics in deep tech and we cannot cover all of them, but let’s start with space.

I think what has been amazing was just a few days ago, SpaceX, sent humans to the space station and it worked,  they are in great shape. I believe it was nine years, since the last time astronauts have been sent to the ISS from the US, not needing a hitch from the Russians.  I must say it has been amazing. The last 10 years, what SpaceX has achieved, moving from… I’m not sure they had a single rocket working 10 years ago, to sending now humans, and not just sending humans to the ISS, but sending humans through a very, very cost-effective rocket with a state-of-the-art shuttle. It’s really amazing.

So when you think about 10 years from now, what could be there? Could we ready be on Mars? Nuno what’s 

Nuno: I don’t know. everyone keeps saying it’s the next frontier. There are certainly a lot of things that we can do in space, around low orbits, around communication, around infrastructure that helps us, for example, visualize what’s happening earth, and making more powerful, our decision making processes here on earth. So there’s certainly a lot of potential that I see in space.

I’m not sure we’re gonna start colonizing things by the end of the decade, so I’m not sure we’ll have people in the moon or we will get to Mars or will do a variety of things by the end of the decade. Fascinating times, the reduction of cost is extreme, which, you know, creates a bunch of possibilities in terms of the technology infrastructure that we start setting around us in space, but I’m less positive on the whole final frontier we will start colonizing other areas of our solar system.  

Bertrand: Because if I look at what SpaceX helped create, I mean, there was a wave of new space, companies, but a few years ago it started to not be as hot anymore, probably in 2017 was the peak. I wonder if what SpaceX just achieved might help generate even more interest, in term of startups and investment in the space. I mean, this is a very, very big, milestone they achieved. So for me, it would be interesting, yes, 10 years sounds optimistic, but maybe the 2030’s would be the decade we finally go to Mars. 2020’s might the moon, or if we think like, Jeff Bezos, may be another approach is to actually bring asteroids closer to us.

I don’t know if it’s truly a low earth orbit, maybe not too, not to low orbit, and to start building stuff inside these asteroids. Because obviously there is a huge amount of space available inside an asteroid, and you could, hollow the asteroid, take stuff from what’s inside and ultimately build a new habitat,  for people there.

So, I actually believe it might be  potentially a smarter option than trying to go to Mars, but it’s tough not to recognize the attraction of another planet in our minds and imagination.  Personally very impressed and amazed by what Elon Musk has achieved, and others with SpaceX. 

Nuno: And there are probably some quick wins, some low hanging fruits from space exploration that we have not fully maximized yet, and as the cost comes down we can do a lot more exploration, bring new materials back to earth, new that are incredibly valid and valuable even before colonization becomes an important item. So for me that’s the exciting piece of what we’re seeing in space. It’s the usage of low orbit, the usage of satellites in a different position and different use cases that we’ve done in the past, the maximization of coverage of earth, and all those elements added to exploration materials and things we can bring back for me is very, very powerful. That we can do that sustainably with lower and lower risks to the humans involved is already a huge win.

And then, you know, mining asteroids, using asteroids as habitats, inhabiting the moon, inhabiting other parts, getting to Mars, maybe that’s sort of an afterthought that’s on Horizon 3, so to speak, element to it. In some cases I think exciting times ahead, in space exploration, but we won’t get Star Trek just yet. 

Bertrand: Indeed  maybe one last point you talked about satellites.  Definitely, there is a fight around constellation of satellites. SpaceX has its own. Others are trying. Some are going bankrupt. Some went bankrupt one or two decades ago. So that’s also another angle will we see more, way more satellites in low earth orbit or different orbits. That’s definitely an interesting question, and with space getting cheaper, definitely it’s a possibility. The question would be, what’s the benefit? What’s a use case? 

Nuno: And moving  maybe the discussion to other things more here in our earthly surroundings still a little bit in the air, like drones. I know you and I have slightly different views on, you know, how much drones from a civil perspective will occupy a space, in particular in terms of logistics, and how we will exist with these, electronics around us. 

I’m relatively bullish. I believe by the end of the decade, we will have deliveries made by drone. We will have the ability to deliver things around the world, even long distance by drones or similar types of constructs. 

And that will change a lot of things,  cause we know today, there’s a really significant part of traffic that is actually driven by logistics and by on the ground logistics. So the usage of the air as a new mechanism is something that I’m excited about. 

And if we’re all traveling less, there will be less planes in the air, so there’ll be less things for us to worry about. But certainly, I’m a big believer in drones as a logistic mechanism. On the area of transportation of people by drones, a little bit more skeptical. I think we will find different ways of lifting up people and moving them around. Over this decade, I’m not sure they will become mainstream. There’s also economic reasons, obviously, the airline industry is getting super affected by what’s happening right now with COVID, and so there are a number of incentives for industry to recoup its costs and also continue to exist.

So maybe a little bit more skeptical on transportation of people, very, very bullish on transportation of goods.

Bertrand: You already have today, drones, transporting some specific products. If I take in the medical space, Zipline, for instance in Africa, 

Nuno: investments at Grishin Robotics.

Bertrand:  And is launching drones with blood plasma or medication so that it can be made available very, very quickly to some remote hospitals where it would have taken way too long to get the appropriate resource and where they have limited storage capacity.

So that’s for me an example of something that works. Definitely less bullish that it would go at scale. For me it will stay into some niche product where the high cost is worth the immediacy of the delivery, but we will see.

Where I am probably more bullish is on robotics, automation. So, stuff that, mostly, is on wheels, or is not even on wheels because it’s not moving. It’s your robot on a chain. So that, I can’t see that there would be a lot happening. You have cameras getting cheaper, we have AI system technologies getting cheaper, more efficient, and we’ll talk more about this.

So, I can see big change happening, all of this is around probably the big, umbrella of Industry 4.0. And, I would say I’m quite bullish I think that we will see stuff that used to cost tens of thousands of euros becoming more in the, probably single digit thousands of euros, with way more value than today. And that could bring many benefits, especially in the manufacturing space, but potentially in the delivery space as well. 

Nuno: And in robotics,  we are in agreement, I believe, that we’re entering the golden age of robotics. There will be a lot of single purpose or very well-defined purposes robots around us, potentially even for the delivery of goods, potentially for the actions that are done in the home. The piece I’m less of a believer in, is the piece of the anthropomorphic robot. It’s almost the equivalent of the AGI discussion in AI. You know, it’s always been promised, it’s very difficult to execute on. It has to deal with a variety of complex issues. For example, even the home where you have steps and you have obstacles and you have people and you have things that are left around, I’m more of a believer of a very specific well-defined purposed robots, and they will be around us all the time, not just in the environment of industrial or B2B, but also in the consumer environment.

And just to be clear, the definition I like of robot is really not the anthropomorphic definition of robot. The definition I like of robot is where a variety of fields, mechanical engineering, material science, electrical engineering, software engineering, all come together to deliver something that has physicality to it, that over time automates processes. And I’m very, very, very bullish in the future ahead of us. I don’t know if we’ll have butlers at home, and we’ll have people working, with us side by side that are actually not people, that are robots, but we certainly will have more and more of these well-defined purposeful, robots around us, even in the consumer  

Bertrand: Yes, I totally agree with you, I don’t see anthropomorphic robots in the coming 10 years. Beyond? A question mark, but 10 years, I don’t see that. Let’s not forget the best-selling robot today in the world is a Roomba. It’s your humble vacuum cleaner and not that smart or advanced vacuum cleaner by the way, but still, saving a lot of time, especially if you have dogs or cats at home. So, it’s more pragmatic, more focused on the task at hand type of robot. 

Talking about that, of course we have to talk about self-driving cars. What do we see in term of level of automation, of autonomy? Elon Musk is promising, I believe, for the end of this year, full autonomy in Tesla cars. I have a lot of trouble to believe in Level 5 autonomy in any situation, in any location, even by the end of this decade. 

I will really like it to be there, but I think it will be more limited. I think we are reaching the limit of the current AI paradigm we managed to unleashed in the past eight years, and the more we are touching these limits, the more we discover that we don’t get so easily to that 99.99999% of reliability that we need to fully take our eyes off the road in every situation. What’s your take, Nuno?  

Nuno: I am a little bit optimistic in the sense that I believe we will achieve level four, certainly in certain areas of the world by the end. So again, level four, being high definition mapping-based self driving. So where the car can not go beyond where it has high definition maps and information, and I think we will achieve it in certain parts of the world. I agree with you, as a second point, that the approach that we’ve seen to self-driving cars hasn’t necessarily been the ideal one. And we can talk extensively about this, about the use of different sensors, incredibly costly sensors, about the limitations around some of these sensors. And in some ways, the beginning of this process was very much based on brute force, it was based on rules-based approaches, which we’ve seen can’t really scale. So there need to be other approaches.

There’s a couple of companies right now in the market trying those approaches. Having been a race car driver myself, as I always used to say, you know, in general, I’d like my driver to be a normal driver, but in extreme situations, under extreme duress or extreme danger or risks, I would like it to be a race car driver, right? ‘Cause that’s what a race car driver does. He’s looking, you know, three steps ahead, not the next corner but the corner after, trying to figure out what other drivers are doing, which is so essential in the US ’cause everyone seems to be driving calmly without paying attention to actually driving itself. They don’t take it very seriously, seemingly, and so, I think in some ways the approach has failed us a little bit. So that’s the second element to it.

The third element to it, obviously is: self driving car goes beyond, cars for ourselves consumers. They go into trucks, they go into vans, it goes into shuttles, it goes into very, very specific purpose vehicles like mining vehicles, very expensive vehicles, mining vehicles. And so I am very, very bullish that in some of these use cases, for example mining, construction, maybe even in trucking for long haul trucking, we will see very, very significant automated, self driving vehicles, over this decade. And then when we talk about consumers, again, probably the boundaries are more around again, level four, in certain parts of the world and how that will scale. 

Bertrand:  Even if I’m not a big believer on the targets, set by Elon Musk, I agree with his approach that you should not need high resolution map. You should not need a laser, simply because we as human manage to drive without lasers, in our eyes, without high resolution maps. 

Going maybe to last point, but, to acknowledge that we won’t talk too much about that point, biotech, definitely one of the big interesting space if you are into deep tech, biotech, there is a lot happening. We already talked a bit in previous episode and this is less our area of expertise so we will go quick on this.

Nuno: Yeah. Agreed. I mean, you mentioned biodefense as, a key area that maybe some governments should have spent a lot more money on in the past. I agree with that, but please refer to our last two episodes, episode 11, and in particular episode 12, where we spent quite a bit of time around healthcare and biotech.

Next platforms – Paradigm Shifts

Bertrand:  So, if we think more from a perspective of paradigm shift, obviously there are a few at work, that have been actually accelerated by COVID.  There is work from home, there is remote work, future of work. All of this is pretty connected, but if you spend more time at home, you have this discussion about home as your castle. Obviously, in that situation, you do more eCommerce, m-Commerce if you leave less the home, everything is getting more digital. What’s your take on all these topic, Nuno? It’s obviously pretty big.  

Nuno: We discussed it extensively in episode 11. So for further reference, please listen to that episode. We discussed a few scenarios that the home becomes more functional, more flexible as an element, that it becomes your castle. So a secure place where you are, but also the place where you consume all leisure, entertainment, gaming. I do think home is gonna be a focal point and it’s also gonna be a focal point of, “Where do I wanna actually live? where do I wanna work from?” And that links well to the whole remote work topic, which is, you know, in a world where there’s increased remote working, if you remember Bertrand and I disagreed on this in episode 11.

I believe more in a hybrid world where offices and coming together will still have value. Bertrand believes that there will be a significant move to more distributed teams. But in a world where there’s either hybrid or highly distributed teams, the home again is the center of where you work from, unless you work from the beach as well, which is quite nice as well. But the tools that we have today for remote work are also not ideal. The HR tools, the recruiting tools, the financial tools are also not ideal, or need to be close to IT departments, to the people that do, for example, installations on our computer, that are able to shift some of our services and applications if we have issues. All of that needs to change. We need to have tools that are fundamentally geared towards remote workers, that are fundamentally geared, for example, for self-provisioning in some cases.

I might have some issues of information that I need, and I shouldn’t need to talk to my IT department all the time. There are better options for me to do this . So definitely , very powerful  element to the future of work that I see ahead. To finalize maybe, two paradigm shifts, we’ve talked extensively around paradigm shifts from the perspective of use cases and user flows, and then industries between 11 and episode 12. The two pieces I would finish with is, again, the reiteration that we’re going to go into a world where everything will need to increasingly be digital. And even verticals that are very old school,  verticals around us that are extremely old school, for example, in some of the energy sub-sectors will need to adapt. They will need to become increasingly digital. And I think for me, that’s fascinating.

But also let’s not lose, from our mind the element of the physical world and how that physical world will evolve. To give a very practical example, if I’m an industrial designer in the future, I believe you’ll need to think about the elements of hygiene around the objects you create as table stakes. It’s something that adds to one of your concerns in your checklist, one of the things you need to do on top of everything else you’re doing. It’s not just about form, it’s not just about functionality, it’s about hygiene. So there are elements that we will see going forward in the physical that are also transformational, not just because of the pandemic, but also because of how our use cases have changed and are shifting right now dramatically. 

Next platforms – Form factors

Bertrand: Let’s discuss about form factors. Are new form factors going to come in place in this decade? What I mean by form factors? Devices with new form factors. Today, the king of the devices, it’s a smartphone. Will there be devices taking over the smartphone in term of how often they are used, how much they are used, by the end of this decade? 

These devices could be anything, could be some AR device, VR device, could be some more modular device.

Personally, I’m quite skeptical, I believe, the smartphone is difficult to beat given that nearly everyone has one in their pocket today. I could see extension of the smartphone, from the watch, to potentially glasses, to of course something in your ears like AirPods. But beyond that, I’m not sure, I’m not sure we’ll see some significant shift at the scale of the smartphone.

Nuno: I’ve been discussing for a while that the next big revolution in platform is actually input and output. How do we consume information and how do we interact with it?

So I’m gonna go the opposite route in saying that by the end of the decade, we will have a massive movement, probably still in the high end, still not maybe fully mass market globally, into new ways of consumption. And where glasses will have a primary role, where processes might just be in our pocket. The limitation of a smartphone is the screen, and if we get rid of that limitation, all sorts of things are possible. There’s also elements of privacy and how we interact and take a look at the information that we’re receiving. 

So I’m a believer that, you know, I’m not sure exactly the form it’s gonna take. If so, I’d probably had founded a company around it. Maybe it’s glasses, maybe it’s a variation on glasses in terms of output, and there’s many different ways of doing input going forward. We will see something radical. And my belief in this is actually routed on the fact that we had the smartphone revolution starting around 2007 with the iPhone. Prior to that, we had the feature phone revolution in the late ’90s.  And I think there’s something dramatic going to shift this time around, and it’s actually the input and output part of the stack, not necessarily just the software piece. So very bullish. I’m not saying it’s going to be VR big headsets, but definitely we’re going to have different mechanisms in my opinion, on the top end again, on the flagship top end, that will be the defining input and output pieces. And that by itself will lead us to a          

Bertrand: You know, after nearly 7 years of Apple Watch, and seeing that have barely changed my use case, and how difficult it make things when you have such a small screen, I’m still not convinced about how you replace actually what I believe is the biggest benefit of the smartphone, which is its big touchscreen. 

So we will see, I definitely believe there is more, in term of wearable, glasses makes sense, but I must say I’m skeptical it would get way more success than the Apple Watch, if I take that as an example.

Obviously, there is Alexa, an Alexa-like device that you might have more and more in your home, but again, after quite a few years of Alexa around, it doesn’t seem like the use cases have gone to where everyone was hoping for them to go. And it’s been five, six years as well. So, it looks like we have reached some limit in term of UX at least. That will be interesting to watch.

Structural tech layers

Nuno: Maybe moving to the topic on structural tech layers, one of your favorite topics, Bertrand, Chips.

Bertrand: Indeed, definitely there is a lot happening in chips. Just two days ago, we got the big news. Finally, Apple moving away from Intel, moving to their own Apple Silicon as they call it, and it makes a lot of sense. It’s not just an ARM CPU, it’s a neural accelerator, it’s a GPU, it’s an encryption engine, it’s a video decoding system, it’s a lot of things. So, it’s, absolutely not just a CPU, so their marketing makes sense actually believe it or not. 

So it’s exciting news. I think many will probably remember that point as one of the most visible point in time where you could have pinpointed that it’s the end, for Intel. I personally believe so, I believe it won’t be a quick ending in the case of Intel. It won’t be like, Nokia or BlackBerry, but it’s going to happen. It’s very clear that they have lost on so many fronts now. They have lost on mobile, they are going to lose the PC, my expectation is that Windows will try to move to ARM, they will have no choice, they will see Apple killing it with way better device than what you get from, what is originally mostly an Intel device.

And in the data center side, I think it’s also going to move to ARM. So, once Intel loose, on both fronts, it will be only a shadow of itself. I really wish it will be a different story. I had a lot of respect for Intel, but that’s probably where you end up if you’re being run just by the accountants.

In term of great companies, Nvidia obviously, the inventor of the GPU, the inventor of the GPU used for AI, the inventor of the TPU.  These guys have been, behind, the AI revolution, have been the engine for the AI revolution. Obviously, there are others now. Google has their own TPU for instance, even Intel has a solution for AI. So,  a lot is happening, and I think we still have quite a lot to see in the coming decade in term of specialization of chips.

And maybe one last point is around TSMC. There is a lot of discussion about TSMC, Taiwan Semiconductor, they are a fantastic company as they are the one behind most of this innovation because Apple, nVidia and many others at the cutting edge of chip design, manufacture their chips with TSMC, as TSMC is itself at the cutting edge of chip manufacturing.

Nuno: So net, net the win of systems on chip, the win of specialized chips and the slow death of Intel. Moving to artificial intelligence, I think there’s a couple of exciting things that are ahead of us. 

I’ve mentioned it before the move from brute force AI with a lot of data, a lot of compute, into something that’s a little bit more finesse. A lot of people say, “Well, we’ll send you a lot of data, and synthetic data is gonna solve all the problems.” Synthetic data will help in specific machine learning applications and analysis, but I do think that what we have ahead of us is a little bit of a revolution over the next 10 years.

I don’t believe we will achieve AGI, thank God, probably. So I’m very skeptical on AGI. Certainly in the short to medium term, let’s call it a couple of decades, hopefully, but we will see a different type of AI methodologies emerge that will require less data, that hopefully over time will also require less compute, that I am pretty excited about.

Bertrand: Yes, on AI, I would say pretty optimistic that there is more that can be done based on an extension of the current technologies, of the current software approach. But at the same time, I believe up to a point. I believe up to a point because there will be a need for new algorithms, potentially new hardware to support a new approach of AIs that can bring us to the next level.

It’s pretty clear that some problems are not being solved by AI and as a result AGI, which means Artificial General Intelligence, to talk about an AI that is very general in its approach and could mimic more fully, for instance, a human being or more, is still very far ahead. And not just far ahead, but we still absolutely don’t know how to get to there at this stage of the game. So, I would expect an amazing decade in term of improvements, but at the same time, reaching the limit of the current paradigm and hopefully, we will discover a new approach, potentially leading us to a new paradigm. But as you said, AGI, not in the coming 10 years.

Nuno: And maybe we’ll end this section with a rapid fire round on a couple of topics. We could probably spend whole episodes on this.

Starting with 5G, as I mentioned before, evolutionary, not revolutionary, but certainly it will probably be that fixed and mobile networks will be finally at the point of integration that we’ve been discussing now for over a decade and a half. Your thoughts.

Bertrand: Yes, I agree. I think it’s a mistake to see 5G as transformationary, it’s an important piece of the infrastructure obviously, but I don’t see directly so many amazing new things coming from 5G, given we have so much from 4G, as well as your local Wi-Fi network. Simpler, faster, always good, of course I want it, but beyond that, in terms  of truly transformational, not so much.

Nuno: Cloud? 

Bertrand: Cloud has been the big evolution of this past 10, 15 years. I there is more to come. We’ll see every startup, being started right now being cloud-native. We’ll see more and more use of microservices, of a containerized approach.

So, I think a lot will still happen. We are just right now starting to truly, truly think cloud-native in terms of how we design technological architecture for the cloud. So, I still see more going there and going back to chips, I can see ARM chips, I can see AI chips, playing a bigger and bigger part of that revolution and chips that probably will be designed by or for Amazon, Google and Microsoft. I think the same way that Apple is taking charge, we will see that happening as well with the big cloud vendors, providing a lot of new benefits for their cloud infrastructure.

Nuno: This is an interesting topic for me because on the one hand I am bullish on the cloud. I believe there will have more and more things in the cloud, a lot more processing in the cloud, a lot more data in the cloud. But at the same time, we will also have a lot more things on the edge side and a lot more processing on the edge side, and a lot more compute on the edge side and a lot more things that don’t leave for example, our premises, if we’re talking about the home or the work environment that stay with our site to be processed. 

So it will be a coexistence, both will grow. The cool thing is there’s a lot of space to grow on both sides. Maybe we shift radically to one of your favorite topics, some of the times: blockchain and crypto, and we discuss it also in some of our previous episodes.

My personal view is that there will be more and more applications coming out of blockchain and distributed systems that guarantee a distributed ledger that is available through time. Cryptocurrencies and digital currencies, I also mentioned before,  I am more bullish I believe than Bertrand on this, that there will be digital currencies pushed by governments into the market, that will have a specific geopolitical angle to them. You can revert back to our episode 11 in particular on this topic and also episode 12. And, basically as we’ve discussed in the past, it’s the technology looking for problems to solve. I believe they will find those problems to solve over this decade. So I see it as emanating as a core protocol to a lot of the services that will be developed in the decade. 

Bertrand: Yes, it’s a possibility. I agree it’s a technology in search of a problem to solve. Definitely there are some problems. I mean, it’s not efficient to use cash, current payment solutions might not be efficient, moving funds around is not efficient, so they can help support all of this. 

As a replacement of state controlled currencies, that I don’t believe. We might see crypto managed by states, but not the other way around, would be my take at least for the next 10 years.

Moving to another topic, no code…, low-code, is definitely one of the big revolutions of the past few years. And that’s been pretty amazing, some companies from Notion to Airtable have managed to change the game into  what you can achieve with a web-based, cloud-native, piece of technology. In some cases that’s stuff you could do 20 years ago  with Access installed on your Windows PC, but now obviously it’s at a different scale and even easier to use. So, I’m pretty excited. I think we will see more the rise of these tools and it would be a new layer, maybe the only layer than some will use, in term of tech layer, because it’s able to answer most of the needs and its capacity to interconnect itself between different pieces of the puzzle, will make it even more powerful over time. 

Nuno: And a good way to finish our section because in some ways it’s another form of democratization. A lot of people talk about crypto and blockchain as one way to democratize the world and distribute it, but in some ways, no code and low code will be a core element of democratizing access to tech and access to information and automations that you wouldn’t otherwise be able to.

Bertrand: True

Section 2 – VCs & Start-ups (32:48)

So, let’s move to our to our Section 2, VCs and Startups.

Nuno: VCs and Startups, the whole ecosystem is probably going to be subject to significant shifts over the coming decade. One of the first discussions one would have, would be around valuations. How will public and private market valuations evolve. There’s always a couple of scenarios to have in mind.

Again, we’re now at the lowest of the low, so over the next decade, we’re gonna have a tremendous bull market. And we will just go up from the point where COVID as a health crisis is solved, economies will recover and valuations will go back up after this dip. There’s obviously a scenario that says we’re going to go through a cycle again, so probably somewhere along this decade, it will have another bump in the road and have valuations after they go up, come down again and then potentially up again, some more classic cyclical evaluation every four to five years for some of these movements. and finally there’s the, you know, negative view of the world that would say, “Well, valuations will have to stabilize because we’ve just realized this new economy thing again.” We already had realized it’s around 2000, isn’t so new anymore economy, so it’s subject to profits, et cetera. So these three scenarios are probably the scenarios that we have ahead of us from a public and private market valuation perspective.

Bertrand: So actually I’m not sure it’s the lowest of the lowest. If, I look at, public tech companies, market cap, it might be at the highest ever today. I’m looking at Amazon stock. It’s definitely the highest ever, right now, as of maybe even today. 

Apple is doing fantastically well, it’s at the highest, as well, close to the highest ever today or this week. So actually the crazy part in that is at in the middle of this crisis, the valuation for tech companies are running very high and very hot.

Nuno: This is for some of the winners, and obviously we are seeing private market valuations come down dramatically across the board, even hot companies. I was recently looking at a company that’s likely to IPO next year, well, well known company. And they’ve just had a haircut on their valuation. They did a flat round from 2019 to 2020, and they’re now selling a stake of preferred shares at a discount from the last round, which was led by a very prominent, Silicon Valley investor. So obviously we have the big winners in each of the categories commanding higher and higher valuations, but we also see some tech companies reducing their valuation significantly particular in the private space.

Bertrand: Indeed, indeed. there’s also the question is that right now, investors might not know where to put their money, so many industries are at risk because of COVID, that they basically think that, “If there is one less risky asset, it’s tech companies” but that’s very impressive for today, but it might be a risk, meaning that tomorrow when less risk is perceive for other companies ’cause we are beyond COVID, potentially, some companies might lose their peak in market share. At the same time, some of these companies are definitely going to be the winners of tomorrow and the coming decade as well. So, I would definitely not short them either.

Nuno: So talking about the landscape in terms of investment, the investment value chain so to speak, all the way from friends and family, Angel Investors, to big private equity funds, some of the hedge funds, I personally believe that there’s going to be significant shifts to this landscape. 

We’ll see a higher degree of specialization in the earlier stages, from very generous funds that were classically the venture capital firms of Silicon Valley and San Hill road to, maybe only the top tier funds can get away with being generalist. Then we have very specialized funds that focus in specific areas, that focus also their checks around early stages, like series Seed, series A, maybe a higher specialization of some of the angel, and super-angel funds and syndicates. So certainly some shifts around the early stage.

I don’t see crowd funding is taking over the world, it will be something that will be there. It’s a type of public retail market, I don’t see that as shifting dramatically. But maybe at the later stage there’s going to be some bigger shifts. There’s some discussion because of what we’ve seen with SoftBank and the Vision Fund. If we are at the end of mega funds, my stick in the ground is we’ll see potentially one or two more mega funds this decade, maybe not driven by SoftBank, maybe driven by SoftBank. We’ll see, but the craziness won’t stop just yet.   

Bertrand: Yes, indeed, I think another topic that’s pretty interesting for some of the late-stage companies is, how do you do IPO? So I think there is a possibility, we’ll see another approach to IPO, like we saw with Spotify and Slack. The  direct IPO, where today you are limited because you cannot sell stock at the same time, where you do a different type of roadshow, and a different approach to allocation where you let the true market decide in term of price.

That for me would be a very interesting development if it’s acted and it looks like it’s moving in the right direction, where the IPO will eschew the typical old school roadshow process with allocation reserved for the friends of the investment bankers. So that would be an interesting development and might help change things in term of how fast companies decide to go public. Let’s not forget that companies have been more and more slow to go public. I think at some point it’s not very sustainable as a trend. 

Nuno: In one of my portfolio companies precisely to your point, DraftKings just did a reverse merger to become public, to avoid all this complex process and their track record as a public company has been stellar. So clearly there’s something about speed and getting to IPOs. 

But maybe moving to the nitty gritty of the funding investment landscape operating models. Obviously all these funds, private equity funds, venture capital funds operate by managing in some ways what I would call a fun- a funnel, from a top of funnel where they are sourcing deals and trying to figure out, you know, the best deals out there, to filtering those deals, to then doing very deep due diligence investing, if they are allowed to invest in some cases, and then creating value post investment.

For the funnel piece itself, I think there’s a lot of disruptions ahead of us. One, in how you source deals. There is a tremendous democratization of innovation and creation of startups around the world. There’s a lot more innovation in parts of the world that were not classically ecosystems that we would compare to Silicon Valley or Beijing. There are companies being created all over the world that are incredible. And so the top of funnel needs to adapt to that. I foresee a lot more data driven approaches to sourcing deals and seeing companies out there. 

Due diligence: how can you get better due diligence with normally very lean resources? A lot of the venture capital firms we’ve discussed in past episodes, 95% of all venture capital firms in the Bay Area have less than 10 people. So how do you scale your due diligence process so that you’re still hitting all the core risks of the investment in a proper way.

And finally the whole element around post-investment. How do you create value back to your portfolio companies certainly if you don’t have billions under management? And if you don’t have billions under management, you’re limited by the value you can bring. So I foresee a lot more hacks, a lot more tools also on top of those hacks that are being given to some of these firms, venture capital firms to enhance their value add to the market. 

So the net of it is I see in the next decade, a world that will be more data driven even for earlier stage investment, and less relationship based. Relationship is almost table stakes, the networks that you’re involved in, but the added value needs to come from being more analytical, more data driven in your decision making, in your sourcing of      

Bertrand: Yes, I totally agree on the more data driven part, that makes a lot of sense, and I’ve seen a lot of sense, and I have seen a progressive transformation of the industry, starting from the biggest guys and the later stage, and I think as you say that it is coming to earlier stage, and smaller funds.

Talking about Geos, I think that what’s happening with remote work, shelter-in-place is probably to force a change in what was probably already a small trend, but is going to accelerate, which is VCs ready to invest more regionally, acknowledging that you don’t just invest 10 miles away where you can drive in 20 minutes, but more investing at least in your region.

If you are a Silicon Valley-based VC, you are now ready to invest all over North America.  And vice versa, if you’re a French VC, you are ready to invest at least all over Europe. I would expect this change even more VCs going global as well. It was already there, but it’s already accelerating and I’m hearing more and more of that from some of the bigger funds. 

What’s your take Nuno?  

Nuno: I fully agree. As you know, I’m a big believer, Bertrand, in multi geography approaches to investment. And in some cases maybe we’ll reach what I call almost geography-agnostic, investment cases. And that’s what we have ahead of us, not just because of the point I made earlier that innovation is happening all over the world, but also because the dominion that Silicon Valley has had as an innovation center in startups is not a given. It’s not a given post this world of COVID where the cost of living here was so high. 

Now, obviously it’s going to decrease dramatically.

I believe Silicon Valley and the Bay Area will have a role to play, but you know, places like Beijing were already, becoming the alternative, certainly for Chinese entrepreneurs, we see other parts of Europe creating interesting ecosystems, other parts of the U S also creating interesting ecosystems. So truly believe that we’ll have more and more multi geo, more and more distributed teams to your point, as you said that the headquarters might be in place X, but then teams all over the world in some cases, and in many cases almost liquid, with liquid distribution around the world. So I think we’re going to have a couple of big ecosystems, really, making Silicon Valley run for its money. The Bay Area will still be very, very important., but definitely you will have to be multi – geo if you want to compete in this world.

And then the great thing is people like you and me, Bertrand, who are international, have worked across a variety of continents and countries, will have a great edge because we can actually say, “We have worked across all of these different markets. We can help you with your business in China, your business in France, in Portugal, in Africa, et cetera, et cetera.” So definitely, a great value proposition for international people like us.

Bertrand: I think you’re hitting a good point, a great point because I believe that yes, it might look like suddenly the world is immediately there and available to you, but you still need to understand other cultures, know how to work well with other cultures, understand other type of approach. Not just understand, but respect, value other types of approach. So think for a lot of people and companies, that part is not a given. Even VCs need to understand that the Silicon Valley-style of approach, it’s not how other ecosystems are actually working, and you should not judge them based from that perspective, from that angle. I would say, another piece obviously is if you invest more globally or regionally, you will want to invest in companies that still have at least regional, if not global aspiration, if you just have very local aspirations as a business, you should stick to the very “local focus” type of investor.

But obviously, if you have more regional or global aspiration, I think that working with regional or global VCs, can make a lot more sense. And obviously given what happened just two days ago in the US, with a new executive order restricting and actually blocking the issuance of multiple type of visas from H-1B visas to L-1 visas for intra-company transfer, there’s a serious question around the attractiveness of the US for entrepreneurs, for engineers, for scientists. And that’s a really big question for the US, I start to be significantly worried. Immigrants have been hugely important to businesses and innovation in the US: immigrants launch more than a quarter of all  U.S. businesses, 55% of America’s privately held billion dollar startups have an immigrant founder. Nearly half of the Fortune 500 were founded by immigrants or their children. Sergei Brin, Eric Yuan, Steve Jobs, and Jeff Bezos are all 1st or 2nd generation immigrants. The US will loose its edge in innovation by closing the doors of immigration, and this seems to be getting forgotten these days.

And, on the other hand, had some other countries perfectly understand that, and we see some countries like Canada,  some countries in Europe that are trying to become more attractive for this type of immigrants: the entrepreneur, technology person, engineer. And I think that’s ultimately the right approach and that’s probably the biggest scare to the Silicon Valley ecosystem in the coming 10 years, at least from my perspective. It’s that dramatic shift, especially at a time where remote work is becoming more and more easy and so ultimately people can work from another continent or country.

Nuno:  And switching gears to thesis, what we normally in venture capital call thesis, areas of focus or what the layman normally would ask is, “What are the new hot areas for the decade ahead?” In all honesty, we’ve shown some of our enthusiasm around some of these areas already in episode 11 and episode 12, around work, home, mobility and around some of these vertical aspects, I’m super excited about the shifts we’re seeing and going to see in consumer driven by demographic shifts we’ve discussed in the past, with GenZ-ers and the senior population. A lot of things that are happening in leisure and entertainment, gaming, social communication, communication in general.

There’s a lot of fascinating things also happening around financial services and FinTech. Maybe a little bit less excited from my perspective, around some of the elements of energy, which are still very classically capital intensive. Obviously there is always one question that we’re asked as venture capitalists and as investors, which is, “Are you investing in companies that are focused on changing the world, or are you focused on companies where you will make money?”

Ultimately, this is sort of a mood discussion. Some of the best investments I’ve made have been very impactful companies, companies that are really focused on changing the world and they’re making great progress and they’ve raised a lot of money and they’re worth, quite a lot. The objective and the fiduciary duty obviously of a fund manager is always to make money for his investors. And so, you know, it has to start from that perspective. Obviously we’re seeing more and more impact investing or double bottom line investing where you have the objective of making money, but you also have the objective of changing the world. I believe we’ll see more and more of that. I believe that there are so many pieces of the infrastructure that are missing today, that we will see investments aligning more around those two elements of double bottom line, where you will both make money and shift something dramatically, that is not working well today. So actually I’m very optimistic about this. It will be about making money, but hopefully in the process, we will change the world.

Bertrand: Ultimately I’m always also careful about stuff that is too directly trying to change the world in some ways, let’s not forget that stuff comes from very different ways. And you need a lot of things to really change the world. It’s rarely one man, one technology, one product that change the world in itself, but a combination. And sometimes it’s a very indirect approach. I mean, for sure smartphones have changed the world, for sure computers have changed the world. And so we have to be careful about how we think about changing the world.

There is always that dreamy version, ” Elon Musk” type about, “I’m building rockets and cars, and I’m going to save the world from climate change,” but indirectly, a lot of stuff needs to be built, needs to be constructed to make that possible, but this other stuff might sound less sexy, but is actually very necessary to ultimately change the world. So hopefully as well we make some positive impact, actually, I have no question that we will make some positive impact in the world in the coming decades.

Nuno: And I always give some of the same examples, but I will again refer to it because it is a company that is very close to my heart. One of my best investments in the second half of 2010s decade was a company called Verta Health, and their objective is actually pretty clear, to reverse diabetes type 2 in a hundred million people by 2025. 

Now that’s a company that is trying to change the world, but also it’s a for-profit company. They’ve raised over $150 million. They’re doing extremely well. And it’s very close to my heart not only from a financial, potential financial return perspective, but because it changed my life. I was a diabetic  and I reversed diabetes type 2 in three and a half months with their service. I’ve lost, more weight than I can count right now. And so for me, you know, I think both are possible.

I agree with you. It shouldn’t be about just changing the world. It should be about changing the world in a sustainable way, going after a big aim and a big objective, but making it sustainable at the end of the day.

Section 3 – Overall framing of the 2020s (50:46)

Bertrand: Yes. Let’s talk about an overall framing of the 2020’s. So let’s map out what could be a few possible broad global scenarios for the coming 10 years. So we will start from the worst possible scenario to the most optimistic, hopefully realistic scenario. 

I will start with doomsday, and we can alternate. so let’s talk about, obviously see some worst-case scenario.

There is obviously the full doomsday mode, a way bigger, tougher, more dangerous pandemic happens sometime in the coming 10 years, we have a near full scale war between very big powers. We have a nuclear attack, a nuclear explosion, the world goes back to basics. A lot of systems, financial, government, get restructured, re-evaluated. Millions, billions… hopefully not billions, die. So that’s a doomsday one, hopefully everything will get better versus this scenario. What could be a “doomsday lite”, Nuno?

Nuno: Doomsday Light is probably we would have another virus, potentially slightly worse than COVID-19, hopefully not COVID-20 or 21, to be that bad ’cause I think we need a little bit of respite from it. There would be likely some instability in parts of the world where military takeovers and coups. We would reassessment and significant shift from where we are today with people really much more focused on their own security and protection. Back in some ways to a world that would be more individualistic, which hopefully certainly in certain parts of the world we’ve moved away from. And so where all the progress  that I mentioned earlier in our COVID-19 episode would be sort of lost in the end.

Another scenario would be that, we go into something that’s not dramatic. It’s not a doomsday scenario, but because of COVID, everyone starts basically hunkering down and by everyone, I mean states, regions, start hunkering down. The US focuses a lot more on itself. China refocuses on itself. Certain countries in Europe, you know, in some ways refocus on themselves. And so in that world, we will have domestic or alliance markets emanating that might not be the alliance markets we have today, it might not be the European Union. Where travel will be limited, potentially except for some leisure, where the world is still accessible but everyone refocuses. Where supply chains, we’ve talked about that in the past, get redefined. Where there’s local production that serves local needs, maybe at a higher cost.

Where economies really reverse from, a full-on globalization to a regionalization or becoming more domestically focused.

Bertrand: So hopefully two more scenarios, a bit more optimistic. One is we go back to 2019, meaning we’re in 2029, and we are back to a highly connected world, a lot of traveling, truly one world type of approach and mindset. I think it’s hopefully definitely a possibility. Another even better scenario would be, you can call it “our sci-fi future is upon us”, significant advancement in a lot of technologies, for instance, in a way thanks to COVID-19, the world move faster to healthcare innovation. We are able to fight with much better success rate and approach new type of virus, bacteria. We have made significant improvements there, the world has become fully digitized. We have self-driven vehicles with us, we start to see the rise of AGI happening. We have a global world, but probably realistically still with geopolitical tensions.

Nuno: In order to sort  of put all of this together, I would say I’m an optimist, I am a believer in the last two scenarios Bertrand, that you highlighted. The 2029 as the evolution to 2019, where, you know, it’s one decade later better, we’ve evolved, or even in some cases, the sci-fi future being upon us. And I’m optimistic in looking at those two scenarios also with the realization that these two scenarios might manifest themselves in different parts of the world. It might be that certain parts of the world end up in positive scenario number one, 2029 as evolution to 2019. And in other parts of the world will be sci-fi future’s upon us. Maybe states that are well run that have a lot of infrastructure that have the means and resources to create this type of sci-fi future upon us.

But for me, I’m an optimist in general. I hope that most of the world will end up in these two scenarios, ’cause that’s, a great evolution from where we are today.

Bertrand: I’m definitely looking forward to hopefully the last scenario or even the second to last. My rational self, has to accept that there is a risk, and maybe it’s not, doomsday, doomsday lite, it’s just a COVID-like type of crisis that happen in the coming decade. But I think this is a risk. There’s also risk that our governments go a bit crazy as they seem to be doing in some regions right now. And they don’t really go back. But ultimately even if that was to happen, I still believe we will still see strong innovation in technology, that I am a strong believer in.

Conclusion (56:07)

So maybe to conclude, thank you for having listened, one, two, maybe three episodes, we recorded on the coming decade, the coming 2020’s. This is the conclusion of this trilogy. 

We also did, a prequel, if you have not followed, it was episode 10A, 10B around what happened in 2010s. And if you liked episode 13 and you have not listened to episode 11 and 12, please do so. We want to thank you so much. It was a new type of format, and we will try to keep innovating in this podcast. 

Nuno, one last word.

Nuno: Thank you, and this is a pleasure to discuss the future with you Bertrand.

Bertrand: Same here. Thank you Nuno, that was a lot of fun.