When Mary Meeker speaks, people tend to listen.
The former Morgan Stanley MD and, as of 2010, partner of leading Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, is widely considered as one of the most influential and forward-thinking technology leaders on the planet.
Her annual Internet Trends Report, the latest of which was released last week, has become a globally-anticipated bellwether of the state of the world. Given how much of our lives, jobs and relationships now play out across the web, Meeker’s work is well worth a few minutes of anybody’s time.
In this weekend’s Saturday Edition, I wanted to briefly focus on some of Meeker’s predictions, and offer my own assessment of them through the lens of what we are seeing here at The MBS Group.
Quantifying the Scale of the Net:
Internet adoption: As of 2018, half of the world’s population will be on the internet
Mobile usage: Smartphone shipments are flat, internet user growth is slowing. People are spending more time online thanks to mobile
Daily usage: Revenue gains for services like Facebook are tightly coupled with daily user growth
Mobile ads: People are shifting their time to mobile faster than ad dollars are following
If the sheer mass of the internet – with 3.8 billion people estimated to have access to the web – isn’t mind-boggling enough, the fact that it still has the capacity to double in size undeniably is. With the mass adoption of technology, the ever-reducing price and ever-increasing pace of innovation, billions of new internet users will join the web in the coming years.
This unstoppable wave of internet adoption offers both opportunities and existential threats to consumer brands.
The opportunities are evident. More users means more potential customers. Not only that, with the incredible amount of data digital shoppers offer up, from customer location to spending patterns, personal data to preferred items, savvy ecommerce companies can now deliver a level of bespoke yet scaled personalisation that was previously unthinkable. And in a world where the once-crucial metric of brand loyalty has been replaced with unlimited choice, at the touch of a button, a developed understanding of the customer through data technology will be the difference between success and failure.
It’s no wonder we’re working on more and more Chief Data Officer mandates, as companies begin to understand the potential value in the masses of data they hold.
Increased mobile usage also offers the prize of prime marketing real estate. Now that businesses can target every penny of their advertising spend at their core audience, when, where and how they’re likely to want to engage, it becomes harder and harder to envisage a future of expensive, unmeasurable glossy magazine, TV and billboard spots.
Failure to drive a business through data-driven customer centricity, user experience, innovation and, fundamentally, a “mobile-first” approach will inevitably end badly. The growth of the web means a growth in choice, and with the competition a click away, something as simple as a poor shopping experience can cost a brand a lifetime of loyalty and purchases.
Bricks vs Clicks: Shops and Shoppers
Ecommerce vs Brick & Mortar: Ecommerce growth has quickened: 13% of all retail purchases now happen online
China: Alibaba is expanding beyond China with strong gross merchandise volume
Amazon: More people start product searches on Amazon than search engines
Subscription services: Enjoying massive adoption, often with free tiers that accelerate conversion rates
Ecommerce now represents 13% of all retail purchases in the US – with UK numbers at a similar rate. For context, in 2010, the total value of ecommerce sales in the US amounted to around $18bn. Today, eight years on, that figure is close to $45bn.
Retail has been fundamentally disrupted. Millennial shoppers rarely even contemplate hitting the high-street. Their mobile device offers range, instant selection and suggested accompanying items, providing an algorithmically-calculated personal shopping experience that can’t be matched in-store.
Amazon continues to broaden its offering and services. With Amazon Fresh taking on traditional grocery businesses and Amazon Wardrobe arriving imminently, customer expectation will continue to rise. Those who fail to keep up will be left behind.
Meeker’s observation that more customers now begin their product searches on Amazon’s platform than on search engines – for which we can read Google – is a watershed moment for both companies, and one that graphically demonstrates the sheer power of Jeff Bezos’s empire.
In my own experience, every senior executive I speak to says broadly the same thing: “Amazon is our biggest competitor. If they’re not in our sector now, we now just assume they eventually will be.”
But whilst the world’s businesses look over their shoulders at Amazon, 2018 is the year Amazon may be looking over their own towards China, and the emergence of Alibaba. China’s ecommerce trajectory is explosive, with a 28% year on year increase and almost exponential growth in mobile payments volume that has seen a stratospheric rise from zero in 2012 to $16t in 2017.
Amazon have also scaled Amazon Prime at record pace, placing them at the forefront at yet another emerging technology trend highlighted in Meeker’s report: subscription services. Staggeringly, Prime grew from 0 to 100m subscribers in under a year. To put that into context, Netflix, the global subscription service leader, grew 25% in 2017, to 118m members, having launched its streaming function 10 years ago.
Talent: The leaders and workforce of tomorrow
Freelancing: Employees crave – and increasingly expect – scheduling and work-from-home flexibility
Immigration: Really matters. 56% of top U.S. companies were founded by a first- or second-generation immigrant
The guaranteed, high-quality connectivity and functionality that come with the Internet Age offer evolution to employees as much as employers.
The immense power of applications like Whatsapp, Facetime and Google Hangouts cannot be underestimated. Access to free, live and constant face-to-face communications with colleagues anywhere in the world allows employers to hire the best talent, wherever it is, and realise their maximum potential.
With that comes a new level of expectation from employees. Flexible and off-location employment requests, even at the most senior levels, are far more common in contract negotiations today, as employees seek more flexible lives, with many building their work around strategically-selected consulting and freelance jobs.
The options digital connectivity now offer staff with external commitments are genuinely transformative, and I’m heartened to see a large number of our clients going over and above to secure their perfect candidate through creative digital solutions.
Finally, Mary Meeker poignantly illustrates the immense impact immigrant populations to the US have made within the technology world. In a poignant slide, she shows that 56% of top American tech companies were founded by first and second-generation immigrants.
It’s a powerful demonstration of the impact political decisions stand to have on the progress of the planet. Companies are grappling with how best to navigate the choppy political waters that lie ahead, be they Brexit, visa legislation or aggressive immigration legislation under the current American administration.
Many employers are starting to get their heads around the idea that, in order to keep the best talent working on their largest challenges, remote working and digital contribution may well be the best way to guarantee their continued success.
Meeker’s report is a snapshot of our world today. Technology has fundamentally transformed every aspect of our lives, at a pace nobody could have predicted. The only prediction we can safely make is that the pace of disruption will only continue to accelerate.
With the scale of digital fluency society has now achieved, coupled with a level of connectivity that already incorporates half of the global population, the companies who will survive and thrive will be those who acknowledge that technology has changed everything, and have the courage to energetically embrace that change.