Predictions for 2023

I am late to the party.

Several similar 2023 forecasting posts by some exceptionally well-respected mavericks in the tech world have beaten me to it already (Jason Calacanis, Molly Wood, a16z, Howard Marks and endless other analysts, the list goes on).

But better late than never.

Likewise, I will "steal" some themes they discussed for this post.

Before I started, I have no crystal ball, and I had said a lot in the past, which turned out to be wrong. Could you not take my word for it? These are lousy bets.

Further, it would be more sensible to consider this by joining the macro-micro views together by breaking analysis down per industry or something. But meh, I don't have enough time today. So, let's make this uber macro.

Most Anticipated Trend

Trend: GreenTech/Climate Tech.

2022 saw newly-funded climate tech startup investment reach its peak.

Investment in climate tech reached its highest in history.

Continuing this trend, I hope to see growth in 2023, particularly in sustainable software and data services, infrastructure and compute modelling, and time series forecasting for distributed systems.

Although the collapse of Britishvolt hit the industry hard, particularly the UK's EV industry, I still have high hopes for global markets.

Whatever your opinions on the early stages of ESG and sustainability, it's still growing and growing fast, and I have one eye on the software and data storage space, which remains wholly misconfigured for the oncoming ESG and sustainability wave.

We have seen, though, throughout 2022 a lot of initiatives and marketing strategies, which is good. Snowflake, GCP, AWS, and Microsoft have put their money where their mouth is and invested in small energy optimisation service offerings and climate tech for their data centres.

But unfortunately, there remains quite a lot of snake oil lurking around.

No doubt, this is a great starting position. But I fear we are still in the starting block. Value remains on the fringes for many companies outside of the big four-five.

I expect to see more substance and purpose in 2023, with companies taking more action.

In particular, I want to see more dynamic leadership focusing on using clean technology to protect and advance the planet.

In particular, there is more market interest in regenerative business practices, energy consumption, cloud waste, and more offerings or services tailored toward promoting energy due diligence and systems design.

I am very impressed by what the folks at Spark Fund and Efficient Cloud have established.

Winners

Tech: AI/ML

Applicable Markets: Cloud BI, Data Science, DevOps, DesOps

A close call. I thought the Open Source community in 2022 was thriving and running high. Amazing to see. But for me, AI/ML just takes it with the leap-bound improvements we have seen that have finally made AI/ML available to the "masses".

AI/ML looks to be a solid bet, although black holes surrounding compute usage / consumption-based models remain. It's clear for players like OpenAI where revenue growth will come from, but reliable global infrastructure will be the be-all and end-all.

Microsoft has lined a 10 billion bid for OpenAI with the plan to roll out APIs and GPT integrations across 365. Microsoft's recent layoffs (in the thousands) this week might ease some of that upfront investment (and big bet).

The same goes for Generative AI - where we saw a massive spike of interest and buzz throughout 2022.

However, I see more immediate value in GPT/NLP models being bootstrapped over "text-to-image". There are a few copyright infringement hurdles that Generative AI, still needs to jump. Let's see.

In particular, I think we will see much growth in using AI/ML digital solutions to solve digital problems.

We will see a plethora of new product engineering tooling for AI/ML infra, with Co-pilot and AIOps tooling.

In particular, great work will continue in the "real-time" space. So, AI/ML realtime data ingestion pipelines, and smarter event-driven microservices for apps and products.

Same goes for mundane day-to-day task automation tooling like Levity.ai. I see these types of services and solutions at the top of the pyramid with AIOps tooling and Cloud AI/ML IDEs, like Replit and Cohere.ai (among others), in and around the middle to bottom throughout 2023.

Many more startups to come into this space. Exciting stuff!

Furthermore, at a macro level, with the introduction of scaled AI/ML, I suspect many low-(value) hanging fruit projects within large to medium-sized companies to be shut down throughout 2023. There will be a re-prioritisation of projects targeted towards AI/ML instead.

However, customer fatigue might be the biggest drag on the upslope AI/ML trend line in 2023. Slowing adoption more than expected.

How come? Well, since COVID, many customers across retail, healthcare, manufacturing, you name it - are on their backs operationally and financially.

Noticeably, within Big Tech (think Snowflake, Databricks, AWS, Meta, Elastic, and Firebolt), we are very good at "building the computational data crunching machinery to clean, format, and process petabytes of data" with significant performance gains. It's been a core focus over the past 10 years and has been very, very successful.

But for the latest and best AI/ML tooling to roll out for companies with smaller, less active workloads and in older legacy industries, the overwhelming complexity of the current toolchain needs to be trimmed away. Easier said than done.

With this in mind, I suspect, throughout 2023 and beyond, more companies of all shapes and sizes will re-prioritise a future to accomodate AI/ML infrastructure. CTOs, operations directors, you name it, will all be carefully thinking about how best to onboard AI/ML.

But many companies and customers have been on their back since COVID.

They've focused on digitizing as much as possible, and that's great. But older and more established industries, and the companies that operate within, all operate much differently to Big Tech. Therefore, new AI/ML startups must discern these differences to succeed and to make new AI/ML offerings "easy to digest".

For that reason, some industry commentators expect the current AI/ML upslope to eventually plateau momentarily in 2023, as many fatigued customers now try to figure out how best to bootstrap the latest AI/ML infrastructure. This may take some time.

Especially for those companies without the required skillset depth.

But once figured out, there is no doubt there will be another market upslope of immense proportions!

Losers

Tech: Crypto

Applicable Markets: DeFi, NFTs, Cyprto, ETH

Big time. What the hell happened? FTX? Mad Sam? It's a movie in the making. Can the collapse of FTX be attributed to a market performance downturn in both the broader crypto and NFT market? Most likely.

The number of average daily NFT traders decreased -14.4%, so roughly 20,467 traders decreased to 17,562 in and around the same time as the 2022 Q4 collapse of FTX. After that, the price of ETH and other crypto assets took a hit.

The market response reminded the world and many a regulator of the very thin shock absorbers the Defi industry currently has. The industry and market were fragile throughout the end of 2022.

Many commentators see such an event as catastrophic for Defi technology and, even Web 3.0 innovation. Some think that regulators will now be more stringent than ever before. No more wild-wild-west. No more lack of due diligence. No more pump-and-dump.

In return, regulators will set out to slow down market dynamics and potentially curb future startups. Although this may be true, I expect the industry to rebound toward the end of 2023, and I see this black-swan event as a positive outcome for the industry, not a negative. Let's see.

Food for Thought

Some dirty and final takeaways:

• Funnily enough, though, throughout much of 2022, investments in database storage technology outside of the big three slowed down. May we see an upward trendline throughout 2023 with the resurgance of AI/ML?
  
• One could argue that Figma was one of the big winners last year. Figma introduced a new way of product app design and development. But I am looking closely at how the new Adobe acquisition positions itself before making loud statements. On the upside, tooling like Figma paved the way for many other companies like CanvaCT, who are set on integrating "multiplayer" product design and development within regulated environments! This is freaking awesome. Watch this space.
  
• BioTech is still going strong, and I don't see a downturn anytime soon, but to make progress here, continued investment in AI/ML services and those damn Transformers, as mentioned above, is required for the "masses" to leverage. ^
  
• I am curious to see where LabOps, drug discovery and clinical trials go in 2023. There is ever-growing interest from companies in the big pharma industry in this space. Let's see.
  
• FemTech is another growing field of interest with lots of recent investment, and it's great to witness. We are at the beginning of something great, and I hope FemTech can make a positively impact on health policy and health insurance for women (incl. trans-gender). Fingers crossed, this trend continues throughout 2023 💜
  
• Of course, with the availability of AI/ML, there will be plenty of discussion and debate around AI Ethics and governance. I expect this trendline to increase twofold throughout 2023 and beyond. Get ready to put your philosopher's hat on.
  
• Cybersecurity to bite back? Most likely. As software systems grow in size and complexity and users and customers access systems from anywhere and everywhere, I don't see Cybersecurity flattening any time soon.
  
• Arguably, Twitter could have been listed as the most significant "loser" of 2022 as they auction off various SF HQ memorabilia and expresso machines as they struggle to regroup and battle "captial shallowness" problems.