10 Year Perspectives … And A Future Prediction

When Finisar went public in November 1999 our IPO was one of the hottest of all time.  We opened at $19/share but traded upwards above $100/share very quickly in the first few days.  It was a heady ride up for a while and a frightening ride down when the bubble burst in 2001.

During the .com bubble people spoke of the 4 horsemen of the Internet.  Here is the list as I recall it –

  • Cisco – the routing and networking leader who stock had doubled nearly every year for the previous 10 years and who had beat the street estimate for their quarterly earnings by $0.01 for 40 straight quarters
  • Sun MicroSystrems – the server and unix leader whose engines served up the web pages we were so eager to consume
  • EMC – the storage champion whose Symmetrix(TM) storage units held the evolving content
  • Yahoo  – the leading portal and search engine of that time
Each of these were undisputed leaders of that time and in people’s thinking there were so strong that being replaced did not seem possible.
If you ask that same question today – Who are the high tech/web leaders, the surprise is that all of these have been replaced.  In some cases because they have failed to live up to their legacy and in some cases because their importance has simply diminished or their products have become commoditized.
Here is today’s list –
  • Apple – the leader in mobile platforms, content distribution and the “gold standard” for computing
  • Google – the leader in search, web ad based revenue, and so much more including their own mobile platforms
  • Amazon – the leader in eCommerce and in cloud services via AWS
  • Facebook – the leader in social networking
Each of these companies is larger than the previous 4 in so many dimensions.  Facebook has nearly 1 billion users!  Google has deep knowledge of so much of the web and its total user base.  Amazon delivers nearly every product from diapers to eBooks to lawn equipment.  Their product base is larger and the number of customers may make them the largest retailer in the world by some metrics.  And then there is Apple, the largest market cap company in the world AND it was proclaimed dead and not attractive as even a dirt cheap acquisition just a bit before 2000.  Such changes.
Let me add one more data point.  What did this list look like in 1988-1990?  Then the list was –
  • DEC (Digital Equipment Corp) for the compute/server leader
  • AOL/CompuServe for the portal
  • Seagate or IBM for storage
  • ATT/Lucent for networking gear
Here is a table that summarizes this.
Best Tech Companies Over Time - Click to Enlarge

Best Tech Companies Over Time – Click to Enlarge

There are several things that are remarkable about this table.
First all of these companies are from the USA.  I have been asked whether I  expect any Chinese companies to be on the list for 2024.  The straightforward answer is I am not sure.  The demographics and “Asian Century” tsunamis would seem to make the answer yes.  But the corruption and Asian ways work against it because creative destruction is not practiced there.  It is just that creative destruction that we permit our very best companies to not exist in 10 years in the USA that makes the new comers to this list possible.  Even ones that go from failure to largest market cap company in the world in that time frame!  For example, in Singapore, Singtel is still the largest networking company and it was so in 2000 and in 1988 as well and the largest engineering company in Singapore is Singapore Technologies.  Creative destruction is not practiced very well in Asian cultures.  Evolution is more common.
Next, every 12 years or so the list entirely changes.  But the words “creative destruction” are not broad enough to describe what really happens.  Entire fields are redefined.  Storage at the hard disk level was important in 1988 and so Seagate was dominate, storage as a platform was important in 2000 so EMC led, but by 2012 cloud computing and virtualization has rendered storage a commodity and something that you pick up and drop as needed as a part of the cloud so Amazon dominates.  Base technology and the system architecture both change and that is best done in a very free and open platform like the USA provides.
Finally we come to the question that should have an obvious answer by now.
Who is on the list in 2024?
Simple.  None of those on the list today!!!
I can already see some of you rubbing your eyes in disbelief.
But you must think it so … the real question is who should we be betting on today that is small or down and out but who sees the future more clearly than these giants today?

Posted in Essays, Investing, Singapore Incubator, StartUp Ideas