Welcome to my last newsletter of 2019. The days are getting shorter, the first snow has fallen in the Sierras, and San Francisco welcomed the first rain of our wet season: Time to look forward to 2020 and at the first hot thing of the new year. Please read below what I feel is hot in technology and innovation and , therefore, worth thinking about.
TikTok is hot! I have been talking about it for over a year, and now it has become the fastest growing social media app ever (thanks Sven Ruoss for triggering me!). But what is TikTok? Is it just a fad? No! It is the next and highly addictive version of Vining-Instagramming-blogging-tweeting-vlogging, and all rolled into one: Do. Not. Ignore. It. Anymore.
I wrote about “XaaS = Everything as a Service” in my last newsletters. Lastly, in this mini-series, let’s look at the backend of XaaS, which is a great business opportunity in itself! Early players already started claiming land there. Conclusion: It might be more advanced than you think…
I want to thank YOU, dear reader, for your support, comments, and feedback to my newsletters – I love these conversations.
Happy reading, happy holidays, and my best wishes for 2020!
Till soon, Gert
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Hot Trend: TikTok! The next big thing for self-expression, not just a music-selfie app.
“Every now and then, a technology appears that is so intriguing that it spikes fantasies of what it is, does and all the things it might make possible…” this is how I started an article about Blockchain in the July 2019 Digigram. And here we go again: The next such technology is TikTok, the world’s fastest-growing social media platform and the hottest new thing for 2020!
TikTok will be very BIG. And it is way more than just a selfie-app for kids: Firstly, it completely hits the sweet spot of today’s mobile social media users – A “video first” combination of Facebook-Instagram-Vine-Snap-Twitter all in one. Secondly, it is easier to use than its predecessors – It includes tools for video creation and editing and for adding music (legally and without royalty costs!). An advantage that is hard for Instagram & Co. to copy because of their user interface legacy. And thirdly, they started with an almost exclusive focus on the teen segment, precisely the age group that advertisers will want to communicate with once TikTok has gone global mainstream. And when these two will come together, it will result in a massive “Ka-Ching” for TikTok – watch-out YouTube! In summary: TikTok is THE highly addictive platform for the quick mobile video candy that one of the most attractive consumer groups wants.
If you are still not convinced that TikTok deserves your attention, consider its mass appeal through the 1.2b downloads globally, of which over 100m in the USA alone, according to a FastCompany article. One social media consultant told me that in Asia, the reach of TikTok already surpassed the one of Instagram – all advertisers must take note! So let’s download the app and start filming and posting (you could start by trying to find me on the platform. Hint: Cat). Promise: I’ll make my first TikTok-video about this Digigram article. TikTok may still be pretty nascent outside of Asia, but it is growing more rapidly than any platform before, and consequently, there is still plenty of room (and usernames) to be occupied. So, nothing to lose, really!
But not so quick! On the downside of TikTok, there are serious allegations and concerns because TikTok is a Chinese company (owned by Beijing-based unicorn ByteDance). And obviously, there is a big difference between Chinese privacy norms, cultural and political tolerances, and Western ones. And this has already led to conflicts: Allegations include that TikTok suppresses content which is unsuitable to Chinese policy. The Guardian reported having seen TikTok moderation guidelines that banned “highly controversial topics, such as separatism, religion sects conflicts, conflicts between ethnic groups, for instance, exaggerating the Islamic sects conflicts,” aka as the Chinese government’s controversial efforts to “re-educate” millions of Muslim Uyghurs.
And a Muslim girl living in the USA who uploaded a video criticizing China for this effort had her account blocked. Furthermore, TikTok has been accused of storing videos on its servers in China even without users saving them. So think twice what you upload to TikTok.
I for one say that we should all start TikTokking and make our own experiences. Let me know what you think about TikTok!
XaaS – Everything as a Service – The backend is a BIG business opportunity
Using an app to order your dinner delivered from your favorite restaurant? You just Xaas’d your food, a business that is growing at 25% per year, according to McKinsey. They predict that online deliveries could eventually make up as much as 65% of all food deliveries. Can your favorite restaurant even cook this volume? And does it make sense to cook a meal at a restaurant when the meal ist to be delivered? Apart from the kitchen, the infrastructure to prepare food for delivery is different than the one in a dine-in restaurant. What if – the kitchen could become a service? Some prominent entrepreneurs work on precisely this: Travis Kalanick, Uber’s former CEO, is buying up industrial kitchens and renting them out (per hour? per stove? per meal cooked? I don’t know). His customers are those who need to use a kitchen for a couple of hours to deliver ordered meals: Only pay for what you need; the kitchen as a service, the XaaS of food.
You don’t think this will be big? Apparently, Saudi sheiks believe it will be and already invested $400 million into CloudKitchens, Kalanick’s new venture. Travis is uberizing the backend of the food delivery industry (pun intended)!
The CloudKitchens website lists the sales arguments: Lower real estate costs, more efficient labor, lower CAPEX. When Xaas’ing backend infrastructure, the benefits are the same regardless of the industry: CloudKitchen is to food delivery what WeWork is to office space. And this is a BIG business opportunity for those who get in early on virtualizing backend infrastructures because of the platform effects.
Backend XaaS is happening in many industries. Take supermarkets & retail: They are building “dark stores“ to support their growing online business. These are stores not open to the public but only to own employees or XaaS’d home delivery gig workers who fulfill online orders. Dark stores became necessary after customers started being hindered during their shopping by the increasing number of employees picking online orders. Quite ironic, if you think of it: The dwindling numbers of customers of brick-and-mortar stores are more than replaced by XaaS-workers providing service to the growing number of online customers! According to CNN, some chains are even turning closed stores into dark ones: More backend infrastructure turned into a service.
A little further out, perhaps, but very real, too: Parking garages are a backend infrastructure where people-driven cars can wait while their drivers go about their business. Parking garages will be needed much less once XaaS self-driving car fleets appear (the term “MaaS = Mobility as a Service” has been an official one since 2012, I wouldn’t have thought!). Fleet cars will be shared by many passengers and will, therefore, have much less go-wait-in-a-parking-garage-time. When they are not needed, they can drive themselves to a low-cost location at the edges of cities, away from the expensive downtown real-estate. The beginning of this trend is already visible: Airports traditionally made 20-40% of their revenue from parking fees, taxi permits, and car rental company tenants. However, Uber and Lyft came and changed this by XaaS’ing more and more passengers into using their services instead of own vehicles of their own, taxis, or rental cars.
Consequently, the airports’ car-related revenues started shrinking. To compensate, Airports began charging fees to Uber and Lyft, and at least at L.A. airport, this new revenue more than made up for the lost one. But what about the increasingly empty parking garages and rental car terminals? These infrastructures are in less demand because of the ride-hailing trend, and self-driving cars will need them even less because they will be shared by many! On the other hand, the much harder working fleets of self-driving cars will need much more frequent servicing. And the shared fleets will need regular checking, cleaning, and servicing. And because these vehicles will be mostly electric, they will need locations for the time-consuming charging. Add the above personal self-driving cars needing to go somewhere during standby times, and it becomes clear that airport parking garages and rental car terminals might be in for an exciting second life as XaaS backend infrastructure for self-driving cars!
One early mover in this field is Cox Automotive who provide backend services to the car industry, serving more than 40,000 car dealers worldwide.
A year ago, it created the subsidiary Pivet for end-to-end car fleet services and converted a 35,000 square-foot former auto auction space near Atlanta airport into a purpose-built center offering cleaning, fueling, charging, maintenance, storage, parking and logistics for car fleets. Clients already include – wait for it – Lyft!
We should all think about how technology can enable the virtualizing of assets, be it to create new customer-facing services or to turn investment-heavy backend infrastructures into pay-per-use services. I am very curious to hear your ideas! What is the next industry to be XaaS’d?
Top of the Month
26 managers from Swiss companies/master students at HWZ University Zurich’s Institute of Digital Business again toured Silicon Valley with me. It is always a privilege to accompany them; their perspectives help me stay fresh, hungry, and up to date! Please read one of their daily blogs here (or all of them here). And I am thrilled to share that at UC Berkeley, one of the teams in my class reached 4th place among all 200(!) entrepreneurship projects this semester. Go team “MeghaScore”: Denesh Chandrahasan, Antonio Flores, Dhriti Hampapur, Sophie Han, Shivani Patel, and Malika Sugathapala!
Meet me here:
Want to do something about the plastics crisis? Join me at UC Berkeley for my next course, “Deplastifying the Planet.” Students will work in teams to find entrepreneurial solutions for plastic challenges. Corporate sponsors are welcome: Join by sponsoring a challenge! Find a flyer here.
On my table:
Thanks are on my table. Thank you for your interest in this Digigram. Thank you for your support, for listening to me, discussing with me and for your feedback and advice. I am very thankful. I wish you and your family fantastic holidays and lots of happiness & success in 2020!