Another year is in the books, and it was, well… fine. This may sound dismissive, but promise it isn’t. A year like 2024, that was more or less average in the venture world is actually great, and a welcome change from the rather extreme volatility of the prior few years.
Now, for the 7th consecutive year, I’m pleased and excited to share our predictions for the tech industry in the coming year. Without further adieu, here we go!
The electrification of everything
Electric cars, bikes, trucks, and buses are going gangbusters in Asia – 50% of all car sales in China are now EVs. Meanwhile EVs in the U.S. and EMEA are slowing down. Tariffs will merely postpone the inevitable as EVs will swallow up Latam, MEA, and SEA markets. Big Auto needs to embrace and innovate or risk oblivion (which they almost certainly won’t do until it’s way too late, to which they’ll respond with a woe-is-us PR campaign that ends in a bailout — just trust us here, we’ve seen this movie before.
The money coming into GenAI will mirror the money that went into the dot com economy
And much like the dot com bust, many AI companies won’t be able to fund the computing costs without massive infusions of cash that might not be there. Meanwhile, the smarter companies will understand that the most impactful application of GenAI is in operational efficiencies that should result in a minimum 4-7% increase in EBITDA margins.
Listenership/viewership is going to shift to podcasts and influencer media at an even faster pace
As folks shift away from traditional news outlets that continue to over-index on coverage of disasters (natural and man-made) and partisan bickering that Americans are both exhausted with and intensely distrustful of, audiences will turn to podcasts and influencer media.
Expect a major reduction in the workforce of engineers
The resulting cost and gross profit improvements as companies leverage GenAI for coding. Automation will increase a meaningful percentage of coding and time-intensive tasks, driving a 20%+ reduction in the required R&D headcount for 2025. With market evaluations of public tech companies now heavily weighted toward profit margins, companies will look to find cost savings anywhere they can and will inevitably realize that they can build the same amount of product with fewer of their most expensive employees.
The dual nature of GenAI’s rapid expansion
Growth without management can lead to chaos; the success of AI in 2025 and beyond hinges on balancing innovation with responsibility. But our elected representatives have got this… right? Let’s just move on.
Nvidia will see a material decline in market share for AI chips
Driven by both cloud companies developing their own chips and upstart competitors offering cheaper alternatives for the large and growing swath of the market that requires less computing power than the foundation layer LLMs who have thus far dominated the demand for AI chips.
The impacts on Nvidia will likely be limited, though, given that even a material decline from their current estimated 70 – 95% market share is still a whole lot of market share, and the staggering growth of the AI chip market overall will likely more than make up for any lost ground.
The hype around Google’s new quantum computing chip has its 15 minutes
Then disappears from the public discourse, not resurfacing for the next 12 months and likely well beyond. This is by no means a criticism; it’s hard to overstate Google’s technological achievement here, nor the long-term significance of this breakthrough (quantum computers being so much faster than today’s fastest supercomputers that they require number-naming conventions no one has ever heard of to describe).
That said, the technology is still fraught with fundamental challenges that will take a while to overcome. For example, it uses novel, highly specialized (and expensive) components. It is also extremely fussy, requiring massive cooling capacity and operating environments so tightly controlled they can prevent even the most microscopic disruptions. Oh, and while it can perform computations at incomprehensible speeds, the results may or may not actually be correct (we might have buried the lead there). In fact, one of Google’s recent key breakthroughs was reducing errors from “all the time” to “a lot of the time.” There’s also the fact that quantum computing has no use cases at the moment (no one, understandably, having spent time writing algorithms that require anywhere near this level of computing power).
This strikes us as analogous to Boston Dynamics’ path in robotics, where their reveal of a robot dog doing backflips in the early 2000s was (at the time) an extremely impressive technological leap that captured the world’s attention, but one that quickly faded as it became clear that this was (again, at the time) a hammer looking for a nail, which it ultimately took them another decade-plus to find (though now they’re moving like a roofer laying shingles).
That’s all to say that we do not doubt that quantum computing will be utterly transformative at some point in the future. It’s just unlikely to be anytime soon.
The revenge of the emerging manager
After several years of a slow drip of write-downs with no end in sight (perhaps even culminating in a couple of completely lost vintages), LPs finally reach their breaking point with the Big Name, Bigger Fund crowd and get back to what made venture an extremely attractive asset class in the first place, which results in a resurgence of funding for appropriately-sized, early-stage offerings from tomorrow’s household names (at the expense of 2005’s household names).
Early-stage companies see raise sizes remain flat or decrease slightly
Even while runways grow longer, on the back of rapid deployment of GenAI-driven efficiency tools across the entire enterprise, allowing them to do more with less in everything from sales and marketing to customer success and engineering.
Bonus (non-tech) prediction
The Detroit Lions and Buffalo Bills will meet in the Super Bowl, and it will somehow end in a tie. We know this isn’t supposed to be possible, but with these two fan bases squaring off with a championship on the line, could it really end any other way?
There you have it, folks, our 2025 predictions are laid out and Happy New Year!
