Tuesday, February 28, 2017

Australian Millennials Fear Being Poorer Than Their Parents


Young Australians, many of whom were only twinkles in their parents' eyes when the country last experienced a recession, are pessimistic about their prospects.
Of those born roughly between 1982 and 2002, commonly referred to as millennials,  less than a third expect the economy will improve this year, according to interviews with 300 Australians that formed part of a global Deloitte survey. Worldwide, 45 percent of millennials expect things to get better in the next 12 months. 
But the division between young Australians and their overseas peers is starker when it comes to their folks. Just 8 percent of millennials Down Under expect to be better off financially than mum and dad, compared with a global figure of 26 percent; even worse, only 4 percent of Aussies reckon they'll be happier than their parents, versus 23 percent internationally.

``For millennials, it seems Australia no longer looks like the lucky country,” said David Hill, Deloitte Australia’s chief operating officer. ``I suspect booming house prices in the major cities of Sydney and Melbourne are partly to blame for this pessimism, with many young Australians believing the dream of owning their own home is increasingly out of reach.''

Yet it's not like conditions are terrible now: they weren't trying to repay a mortgage in 1990 when the Reserve Bank of Australia's cash rate was 17.5 percent, or run a business in 1991 during the country's last official recession; and they weren't looking for work the next year when unemployment hit 11.1 percent. Indeed, with the cash rate at 1.5 percent, the economy forecast to expand 3 percent this year and the jobless rate currently 5.7 percent, conditions are pretty good. Instability, though, seems to define this group.

The  survey showed 42 percent of Aussie millennials expect to leave their job within 2 years; 23 percent within two to five years; and 24 percent to hold their position for more than five years. But about three quarters of the age cohort would prefer full-time employment and just 18 percent to freelance. Globally, the numbers were 65 percent and 31 percent, respectively. 
The data also suggest it will be tough for lawmakers to connect with young people, who appear disillusioned about the political future: just 22 percent expect Australia's social and political situation to improve in the next 12 months, compared with 36 percent globally. To get their attention -- and presumably their vote -- two thirds of Aussie millennials want politicians to just use plain, straight-talking language.
“Our survey shows business and political leaders need to find a way to bring millennials with them on key initiatives,” Hill  said. “They are more comfortable with straight-talking language, but will reject leaders who take divisive positions.”
On one hand that may suggest they're less receptive to the populist message that appears to be on the march in the western world; on the other hand, populists tend to be straight talkers who offer simple policy prescriptions and deliver them with passion. 
While the climate and resource scarcity were among top concerns of global millennials four years ago, they've been replaced by crime, corruption and war. As for their Aussie peers, the top worry was terrorism at 30 percent; just over a quarter rated crime and personal safety second, followed by climate change issues, income inequality and healthcare. 
Australian millennials are significantly more pessimistic about their financial and emotional well-being than their global counterparts,'' Deloitte said. ``Despite their propensity for moving around, a more permanent work environment is also important for Australia millennials.''

Monday, February 27, 2017

Plummeting wind tariffs raise questions of viability


What they feared, has happened.
For long, the wind turbine manufacturers have been resisting any move for auctioning wind power capacity on the basis of competitive tariff bids, fearing an intense auction room battle would hammer down the prices.
For the machine manufacturers like Suzlon, Gamesa and Inox, the customers are the wind energy companies—the ‘independent power producers’ (IPPs). If the IPPs get low prices for their electricity, pressure would be on the manufacturers to drop prices.
On Thursday, in the country’s first ever wind capacity auctions, four companies won mandates to set up 250 MW of projects each, quoting a shocking Rs. 3.46 a kWhr. Six others lost in the race. But all the ten had quoted tariffs under Rs. 4. The highest quote from the ten bidders was Rs. 3.92 by Leap Green.
The fact that at least ten companies have been willing to sell wind power at less than Rs. 4 a kWhr implies that wind tariffs are decisively declining. The winning tariff of Rs. 3.46 sets a new benchmark, and will be the reference point in all future negotiations.
Until now, wind power companies has been selling power at ‘feed-in tariffs (FiT)’ determined by the various state electricity regulatory commissions (though, some also sell directly to customers at mutually agreed prices or over the power exchanges.)
At present, these tariffs are: Andhra Pradesh Rs. 4.84; Gujarat Rs. 4.19, Karnataka 4.50, Madhya Pradesh Rs.4.78, Maharashtra between Rs. 3.82 and Rs. 5.56 depending on the location, Rajasthan similarly between Rs.5.76 and Rs. 6.04 and Tamil Nadu Rs. 4.16. These tariffs were fixed at various points in time in the past, but they are passé.
Unexpected
The advent of ‘competitive bidding’, the wind industry knew, would stomp prices, but nobody expected it to go as low as Rs. 3.46.
“Completely unexpected,” said Ramesh Kymal, Chairman and Managing Director of Gamesa Renewables, India’s largest wind turbine manufacturers.
He observed that unlike the solar tender earlier there is no guarantee of grid availability or payment security.
However, winners claim they are playing to their strengths. One is possession of lands. Typically, IPPs buy chunks of developed projects from turbine manufacturers. Since land and machine are bundled together, there is less competition among the manufacturers. The competition is reduced to only those manufacturers who possess lands. Companies such as GE, Vestas, Acciona, Senvion, who have good machines sell less because they do not wish to get into acquisition of land and developing it—they would rather sell their machines and leave it to the customer to do the project development himself.
As such, an IPP who has lands can get a turbine cheaper. Both Ostro and Mytrah are understood to be in possession of lands—in Gujarat and Tamil Nadu, respectively.
One source said that while there is no promise of grid uptime or prompt payment of dues, these are no issues. The projects connect to the central grid, owned by the public sector PGCIL, which is up all the time. Likewise, the power purchaser is another government company, PTC, a credible and solvent customer.
Turbine manufacturers fear that state governments will follow the example of this tender and scrap the system of fixed FiTs. However, an industry expert, who did not wish to be named, said that the turbine manufacturers ought not to be worried about their margins shrinking, because what they might lose in margins, they will make up in volumes.
Competitive bidding expands the market. Today, the wind market comprises only eight windy states. PTC, buy purchasing wind power from developers in these states and selling it to, say, Bihar or Haryana, opens up new markets. Further, falling tariffs would attract more customers and state-owned electricity distribution companies, even in the eight windy states, will buy more.

New battery tech to bolster off-grid solar plants


New technology for batteries will soon electrify India’s off-grid power facilities. The Institute of Transformative Technologies (ITT) is currently working on three different battery types in the hope of reducing cost and increasing the lifespan of batteries.
Sanjay Khazanchi, Chief Executive, Access to Electricity (India), ITT, explained that storage of electricity produced in off-grid solar power facilities is one of the biggest challenges in the uptake of solar power in rural areas. One of the challenges lies in the high cost and the other is the relatively short lifespan.
Weakest link
“In a solar mini-grid the pain area is storage. A solar plant lasts for around 25 years. The weakest link is batteries. They last for as low as two years and at most five-six years. For maintaining a solar plant for 25 years, you have to keep changing the batteries. It increases the cost of capex,” Khazanchi said. The institute is currently testing three new battery chemistries from across the world — lithium ion; advanced lead acid batteries being produced in Australia; and a sodium ion chemistry from a company in the US.
Lifecycle tests
ITT is attempting to create the environment of a rural solar mini-grid in the lab, with high ambient temperatures of 45 degrees Celsius, to conduct lifecycle tests, along with replicating the load profiles seen by batteries in rural environment to see which battery performs better vis-a-vis the baseline of the existing technology.
“The intent is to see that the value these new technologies bring in would be far superior to the existing technology (lead acid batteries). Lead acid batteries in rural environment have their own challenges in giving adequate life,” Khazanchi said.
Newer batteries with extended life spans have the potential to attract more investors in the market, which is currently lagging despite big potential and high demand.
“Globally, the industry is watching how India is going to do the off-grid rural electrification. Unfortunately, the volumes we have on the ground and the visibility of the volumes likely to be there in the future is still low. It’s a catch 22 situation. Maybe since the technology is not there and storage is expensive because of that the volumes are low but if we bring in a solution maybe that would solve the problem and make it workable,” he said.
Deepali Khanna, Senior Associate Director of the Rockefeller Foundation, explained that the uptake of renewable energy is still rather slow in India.
“By 2030, renewables would only be 17 per cent of the total energy mix in India. There is a lot more that needs to be happening here,” she said.
Energy efficiency
Rockefeller has invested $1.5million with ITT to resolve the storage crisis. Besides storage, Rockefeller is also looking at facilitating more energy efficiency appliances in an effort to make it feasible for citizen of rural India to use these.
“We have a situation where people want to go beyond light bulbs and productive use and are looking at if they could hook up a TV, a fan or a fridge. So, we are looking at how to get more energy efficient appliances because we know their capacity to pay for electricity is limited. They can’t pay more than ₹500 per month and that is also a lot when you are taking about rural areas,” Khanna said.

Supermarket chain DMart pilots delivery, pick-up centres to reach online buyers faster


Home-grown supermarket chain DMart, which is all set for a ₹1,800-crore IPO next month, is building supply-chain capabilities, to reach its customers faster.
According to sources, the company is piloting a project wherein it plans to open multiple delivery centres or pick-up points in catchment areas, where it has a store, for its online customers.
The company had recently launched a mobile app and a website, to take on big-box retailers such as Star Bazaar and Big Bazaar besides online players such as Bigbasket, Grofers and ZopNow.
Christened ‘DMart Ready’, the centres will be 150-200-sqft stores that will act as pick-up points for customers who order products on its app.
When contacted on the development, Neville Noronha, Chief Executive of Avenue Supermarts, DMart’s parent company, told BusinessLine that he would not be able to comment on the same at this moment since the company is going for an IPO.
Hybrid model

According to experts, hybrid or omni-channel business models are needed to address diverse consumer needs and manage a variety of business constraints.

“Using existing infrastructure, with a ‘digital layer’ on top, is a good way to offer convenience and flexibility to consumers at an incremental business investment,” said Devangshu Dutta, CEO of retail research and consultancy firm Third EyeSight.
Dutta said that when UK-based retailer Tesco launched its online store, the company mapped each customer to its local stores, used store staff’s off-peak time to pick and pack orders, and delivered the merchandise at home through a fleet of trucks. This allowed Tesco to build online traction without having to create a completely new business infrastructure.
Similarly, a brick-and mortar-retailer also benefits from having an existing relationship, and doesn’t have to spend much on acquiring and reacquiring customers, compared with an online-only business, he said. Dutta added that both offline retailers and online players are still struggling with last-mile delivery and logistics and supply chain.
Mumbai-based DMart is experimenting with this strategy in a few places in the city, such as Andheri and Ghatkopar, at present. It will be soon replicated in all the 26 cities where DMart is present.
DMart, promoted by equity investor RK Damani, is one of the most profitable companies with a strong balance sheet, among its peers. According to data collated by business research platform Tofler, Avenue Supermarts’ revenue has grown 40 per cent year-on-year, while its profits have witnessed 50 per cent growth in the past five years. In FY 16, the company’s revenues stood at ₹8,600 crore and profits at ₹320 crore.
DMart’s better financial performance in comparison to its peers has been driven by its differentiated business model, wherein 90 per cent of its stores are located in properties owned by the firm, unlike most retail firms that go for leasing. Also, the company has kept operational costs low by opening stores in suburbs and small towns.

Global firms test India market using logistics cos with fulfilment centres



Many global firms are testing the Indian market by tying up with logistics firms that have built fulfilment centres, before they foray into the Indian market, according to DTDC, an Indian firm in the courier business in which GeoPost, Europe’s second largest player in the courier express market, has a stake.
Direct marketing technique
The €6.2-billion GeoPost is Express Parcels’ business unit of €23.3-billion postal network of France — Le Groupe La Poste.
“(There are) many international brands, which want a presence in India — but are not looking to build infrastructure. There are brands entering with an aim to reach the retail sellers directly without any need to have traditional channels,” Abhishek Chakraborty, Executive Director, DTDC, told BusinessLine.
Declining to share names of such clients, Chakraborty said the examples include mobile handset manufacturers — a Chinese player; firms in apparel segment; appliances, and home appliances where popular brands in cookers and mixers which served a local market, are now looking to test other regions. “Then there are sellers — brands — that have never gone online, who say we would like to do something online instead of having separate inventory for that,” shared Chakraborty.
Own fulfilment centres
On why such clients would not choose an Amazon, which also has fulfilment centres and thus poses competition to players such as DTDC, Chakraborty said Amazon fulfilment centres function with a very specific purpose — largely with an aim to serve Amazon as an entity.
“Players like Amazon are huge and generate enough volumes to have their own facilities. But, they usually limit themselves to faster, large volume, heavy turnaround stock keeping units (materials), which is mostly commoditised,” he said.
And there are huge sellers on multiple platforms such as Paytm, Flipkart, Snapdeal, Amazon, who prefer a neutral logistics player. DTDC has invested ₹8-9 crore in its fulfilment centres in 2016-17.
DTDC has about 15 fulfilment centres across the country. Four of these would be of an average size of 50,000-75,000 square feet range, which were built this year; five to six would be in 25,000- square-feet range; and four-to-five would be in 10,000-15,000 square-feet range, located strategically.
The company is witnessing a sharp revenue growth this year, although the growth would have been steeper had India not faced a cash crunch due to demonetisation, given that e-commerce was largely a cash-driven business.
Growth estimated
“We are seeing a 15-per-cent growth on the domestic segment, 20 per cent in international growth — both from India and abroad. Profits have gone up by 45-50 per cent. We saw a dip in November and part of December due to demonetisation — now that has stopped,” he shared. The growth is supported by a mix of increase in tariffs and volumes. With a large share of e-commerce business being cash-based, the whole industry would have been impacted by demonetisation. “We are providing cash on delivery across 6,000 pin codes. Individual consignees can also pay through multiple wallets,” he added.
‘Zero toll a blessing’
While demonetisation initially led to a lot of confusion, DTDC also saw an improvement in transit time during the period, when tolls were not being collected on national highways.
“We did see an improvement of 10 per cent of service levels when toll collection was stopped. But, delays at toll booths are far less than border clearances,” said Chakraborty.

Indian IT: Reboot to digital


IT’s on track, declare some. Not really, say others. Of late, opinion is divided on the strategy adopted by Indian IT companies. While one set of investors criticise them for keeping cash idle and losing the race to global peers, the other set is glad that they are not setting foot in unknown territory but, instead, saving cash for a rainy day.
But what the second lot don’t seem to realise is that the global market for technology is changing at a rapid speed and Indian IT companies need to change and think ‘big’ to stay relevant. Already, export revenue growth has slowed to single digit (from 13.8 per cent in 2013-14 to 10.3 per cent 2015-16. In the current year, Nasscom estimates growth to be 8-10 per cent) and order book expansion is happening at snail’s pace.
If Indian companies do not do a ctrl+alt+delete of their conservative ways and log into digital and consulting capabilities, they can lose significant market share. Also, with protectionism raising its head, uncertainty has multiplied manifold, taking away the ‘defensive’ tag from IT stocks.
If there is revival in the US economy over the next two years, with interest rates going up and more infrastructure investments by the new President, the Indian IT industry stands to benefit from revival in orders from the banking, financial services and insurance sectors (BFSI) and the retail segment, besides a strong USD. But to tap the opportunities, the tech industry must be ready to deliver just what the customer wants.
Against this background, it makes sense for investors to review thier portfolio of IT stocks.
Here’s a closer look at the key challenges the industry faces and how the big players are faring.
Visa overhang

Young software engineers in India have to let go of their US dream. The protectionist rhetoric has become louder in the US with the new President, Donald Trump.

Last month, Indian IT stocks nose-dived in bourses after the news of new legislation in the US to curtail H-1B visas and increase the minimum salary for these visa holders. While the legislation has not been passed yet, there is fear that it may crimp the Indian IT sector that takes a chunk of these visas every year.
Over 60 per cent of the revenue of the $150-billion-plus Indian IT industry is from exports to the US. Tech majors such as TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra have 20 to 40 per cent of their employees onsite. According to investment firm CLSA, Tech Mahindra has the highest share of onsite employees (totally 39 per cent including 19 per cent in North America) and TCS has the least (totally 19 per cent including 10 per cent in America). Infosys has about 26 per cent of its employees working onsite (that includes 13 per cent in the US).
When it comes to filling slots in their US offices, most Indian tech companies prefer to send people across on H-1B visas, given the high cost of hiring employees locally. At TCS, for instance, only 35 per cent of the headcount in the US are locals, for Infosys it is 34 per cent. So, any visa fee hike by the US may impact margins of Indian IT companies significantly. There may be margin erosion of around 200-300 basis points over a period of time as all old visas too get renewed. Wipro and HCL Technologies are placed better. Of the total employees working onsite in the US, 50 per cent are locals for Wipro and 65 per cent are locals for HCL Technologies.
Indian IT companies have already begun scouting for talent locally in the US. TCS’ application for work visas in April 2016 was down by 30 per cent compared to the previous year. Experts say that given that there is shortage of skilled workforce in the US, there may not be any severe restrictions on issue of H-1B visas. A Nasscom report of last year showed that 46 per cent of openings in STEM (Science, Technology, Engineering and Mathematics) jobs were vacant for more than a month in the US. But in view of the recent protectionist rhetoric in the US, Indian companies should try to make do with local manpower as much as possible.
Hit by automation 

US dreams aside, finding an IT job here in India itself is going to be difficult for software engineers. In 2015-16, the Indian IT industry was expected to create 2.75 lakh jobs, but it created only 2 lakh jobs. In 2016-17, the number is expected to be even smaller — 1.7 lakh.

Slowing revenue growth alongside increasing pressure on profit margins is prompting tech companies to go slow on fresh hires. In the past five years, while IT exports have grown at an average 13.7 per cent annually, the headcount growth has only been 8 per cent. Companies have been able to do the same amount of work with less manpower, thanks to automation. A report from global outsourcing research company HfS Research says that by 2021, India could lose 6.4 lakh low-skilled positions in IT services and the BPO industry because of the automation of support and back-office processing work.
Though this is a dampener for a job aspirant, it is a big positive for an industry whose survival is being challenged, as costs come down. Infosyssaved 2,650 full-time employees worth of effort in the December 2016 quarter by deploying automation tools in application maintenance, package systems maintenance, BPO and Infrastructure Management.
Many other IT companies including Wipro and HCL Technologies also report use of automation platform. In 2015-16, Wipro says it freed up 4,300 employees because of its automation and AI (artificial intelligence) platform. For 2016-17, while the company targets releasing 4,500 employees, in the first half of the year itself it released 4,300 employees through use of robotic process automation.
However, what you need to note here is that while on one side automation helps save costs, on the other side, it drags down revenue.
Revenue cannibalisation due to automation, though not a desired outcome, cannot be avoided. Indian IT companies have to be more proactive about convincing clients on automation and sharing the cost benefit with them, else there is risk of losing business to competitors.
Loss of revenue due to automation can be balanced only by growing revenue from new businesses in digital and related areas.
The digital challenge

The worldwide IT services market is forecast to grow 4.2 per cent in 2017, up from 3.9 per cent growth in 2016, fuelled by investments in the digital business, intelligent automation and innovation, according to Gartner. IDC, in fact, has predicted that by 2017, over 50 per cent of spends of organisations will be for third platform technologies, which refers to cloud computing, big data analytics, mobile computing and IoT (internet of things) and by 2018, at least half of the IT spending will be on cloud applications alone.

Indian IT exporters will be left out in the cold if they do not quickly adapt to the changing market. Over the last 7-8 years, the global tech sector has been making the shift from traditional to cutting-edge technologies to keep pace with customer demands. But Indian tech companies haven’t kept pace and so now, since they do not have a track record for large transformational projects, big clients choose to go with market leaders such as Accenture.
Data from HfS Research shows that of all the 371 deals of the 70 large and mid-size IT companies that it tracked in 2015, 137 were digital deals and over half of it was clinched by global IT service providers, including IBM (45 deals) and Accenture (16). India-centric service providers — Cognizant (8), Infosys (5), TCS (4) and Wipro (4) — won only a few deals. This trend has remained the same in 2016 too, says Pareekh Jain, Research VP, at HfS. “I see nothing has changed in the last one year, IBM and Accenture continue to win most deals. They invested very early in digital capabilities and have been able to take the lead…”
A recent Nasscom report states that digital revenues contribute 14 per cent of the Indian IT industry’s overall revenue. To grow the digital business, Indian companies will have to look at inorganic expansion. All MNC digital majors have done it only through M&As. Accenture, which sees 40 per cent revenue contribution from digital, cloud and security services, made more than a dozen acquisitions in 2016. Of these, several were in the digital space — Karmarama (UK), OCTO Technology (Paris), Allen International (UK), MOBGEN (the Netherlands), IMJ Corporation (Japan), dgroup (Germany).
Cognizant, too, was on an acquisition spree last year, with four of its five deals being in the digital consultancy side — Adaptra (Sydney), Idea Couture, ReD Associates (49 per cent stake) and KBACE Technologies.
But looking back at India, there have hardly been any acquisitions by IT service companies. Though they are sitting on piles of cash, they have not been open to inorganic expansion. TCS, for instance, has made only three major acquisitions in the last 10 years — E-Serve International, Citi Bank’s BPO arm, in 2008, the Pune-based Computational Research Laboratories in 2012 and Alti, an enterprise solutions provider from France, in 2013. In the same period, Infosys made seven acquisitions — three of which happened after Vishal Sikka took over as CEO in 2014 — Panaya, automation provider, Skava, a digital solutions provider and Noah Consulting, an information service management provider. Wipro, HCL Technologies and Tech Mahindra too went in for some acquisitions.
However, if we count only digital deals, the number is less. Digital acquisitions in the last five years were just Wipro’s acquisition of Appirio in 2016 — a SaaS (software as a service) provider for $500 million and Designit — a design company for $95 million in 2015, PowerObjects by HCL Technologies (provider of Microsoft Dynamics CRM, in 2015, for $46 million), and Skava by Infosys (for $120 million).
Costly miss on consulting 

The market leaders in the global IT space today, be it Accenture, IBM or Cognizant Technology Solutions, have a strong consulting arm. Given that about 13 per cent of the overall IT services market is made of consulting and the segment is growing faster than the overall market (Gartner research), it cannot be ignored. Also, as consulting expertise is essential to win digital orders, there is an urgent need to invest in consultancy. But Indian IT service companies have not built a consulting brand for themselves. Infosys’ Consulting and Package Implementation business contributes 30 per cent to the total revenue today — unchanged from five years back. Pure consulting revenue in this may be only about 10 per cent, say analysts. Infosys acquired Lodestone, a management consultancy firm in 2012, but it was only in 2015 that the company decided to merge Lodestone with its own small consultancy business and bring more focus on the consulting practice.

If you take TCS, the company reports revenue from consulting and enterprise solutions as one segment — which, in the recent December quarter, contributed 17 per cent to overall revenue. Wipro, HCL Technologies and Tech Mahindra also do some consulting work for their large clients with whom they have a longstanding relationship, but revenue is not reported separately. Today, all high-level strategic consulting business of clients go to large players such as Accenture, PwC, Deloitte, Boston and Cognizant.
But Indian IT players too have an opportunity, says a JP Morgan report. They can target the ‘ground-level’ projects in digital re-architecting of IT systems, analytics, mobility, cloud computing and process re-engineering. Though deal sizes are small here, the deals are numerous, the report adds. Big players do not come in here as organisations look for cost-competitive players.
Indian IT companies have to take lessons from Cognizant’s success. In the last five years, it has successfully built a standalone consulting practice because it didn’t shy away from investing. Analysts at JP Morgan point out that Cognizant’s success in consulting was also helped by the matrix structure of the organisation where consultants have dual responsibility to both the industry head as well as to the consulting practice’s head, which facilitated collaborative work

Are you ready for the future?


In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.  Within just a few years, their business model disappeared and they went bankrupt.
Interestingly the inventor of digital photography in 1975  Steven Sasson worked for Kodak but Kodak ignored the new technology and in the process ignored their future!!

What happened to Kodak will happen in a lot of industries in the next 10 years - and most people don't see it coming.

Did you think in 1998 that 3 years later you would never take pictures on paper film again? Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore's law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superior and got mainstream in only a few short years.

It will now happen with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs.

Welcome to the 4th Industrial Revolution.

Welcome to the Exponential Age.

Software will disrupt most traditional industries in the next 5-10 years.

Uber is just a software tool, they don't own any cars, and are now the biggest taxi company in the world.

Airbnb is now the biggest hotel company in the world, although they don't own any properties.

Artificial Intelligence : Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected.

In the US, young lawyers already don't get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% fewer lawyers in the future, only specialists will remain.

Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses.

Facebook now has a pattern recognition software that can recognize faces better than humans.

By 2030, computers will become more intelligent than humans.Autonomous Cars:

In 2018 the first self-driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don't want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving.

Our kids will never get a driver's license and will never own a car. It will change the cities, because we will need 90-95% fewer cars for that. We can transform former parking space into parks. 1.2 million people die each year in car accidents worldwide.

We now have one accident every 100,000 km, with autonomous driving that will^ drop to one accident in 10 million km. That will save a million lives each year.

Most car companies may become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels. I spoke to a lot of engineers from Volkswagen and Audi; they are completely terrified of Tesla. 

Insurance Companies will have massive trouble because without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear.

Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighborhood. Electric cars won’t become mainstream until 2020. Cities will be less noisy because all cars will run on electric.

Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can only now see the impact. Last year, more solar energy was installed worldwide than fossil. The price for solar will drop so much that all coal companies will be out of business by 2025.With cheap electricity comes cheap and abundant water.

Desalination now only needs 2kWh per cubic meter. We don't have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.

Health: There will be companies that will build a medical device (called the "Tricorder" from Star Trek) that works with your phone, which takes your retina scan, your blood sample and you breathe into it. It then analyses 54 biomarkers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medicine, nearly for free.

3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster.

All major shoe companies started 3D printing shoes.

Spare airplane parts are already 3D printed in remote airports.

The space station now has a printer that eliminates the need for the large number of spare parts they used to have in the past.

At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home.

In China, they already 3D printed a complete 6-storey office building. By 2027, 10% of everything that's being^ produced will be 3D printed. 

Business Opportunities: If you think of a niche^ you want to go in, ask yourself: "in the future, do you think we will have that?" and if the answer is yes, how can you make that happen sooner? If it doesn't work with your phone, forget the idea.

And any idea designed for success in the 20th century is doomed in to failure in the 21st century.

Work: 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a small time.

Agriculture: There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all days on their fields. Agroponics will need much less water.

The first Petri dish produced veal is now available and will be cheaper than cow-produced veal in 2018. Right now, 30% of all agricultural surfaces is used for cows. Imagine if we don't need that space anymore.

There are several startups that will bring insect protein to the market shortly. It contains more protein than meat. It will be labeled as "alternative protein source" 
(because most people still reject the idea of eating insects).

There is an app call "moodies" which can already tell in which mood you are.

Until 2020 there will be apps that can tell by your facial expressions if you are lying. Imagine a political debate where it's being displayed when they are telling the truth and when not.

Bitcoin will become mainstream this year and might even become the default reserve currency. 

Longevity: Right now, the average life span increases by 3 months per year. Four years ago, the life span used to be 79 years, now it's^ 80 years. The increase itself is increasing and by 2030, there will be more than one year increase per year. So we all might live for a long long time, probably way more than 100. By that time the elites will have a secondary Brain embedded close to both sides of their fronto-temporal scalp it stores information about their experiences books they read what they heard etc through a High Def Camera just below their eyelids. For those who can afford it forgetfulness will be a forgotten phenomenon.
Advanced stem cell technology will allow you to " make " your own organs or replace defective ones early. Life expectancy will be around 115 to 125 yrs in most of developed world and around 100 years in the rest of the world.

Education: The cheapest smart phones are already at $10 in Africa and Asia. Until 2020, 70% of all humans will own a smart phone. That means, everyone has the same access to world class education.

Are you ready for the future?

Getting Rich vs. Staying Rich


Abraham Germansky was a multimillionaire real estate developer in 1920s. He also loved stocks, betting heavily as the market boomed. As the crash of 1929 unfolded, he was wiped out.
And that was basically the end of Abraham Germansky.
Germansky disappeared on October 24th, 1929. The New York Times posted a short story near the back of its October 26th edition, with Germansky’s lawyer, Bernard Sandler, asking for information on his whereabouts. It tells a powerful story in just a few words:


Later that week another investor in the same city had a very different experience.
Jesse Livermore returned home on October 29th to a wife who, seeing news of the day’s record market crash, was prepared to console her husband and return to a life of frugality.
Jesse said that wasn’t necessary. He was short the market and made more money in the crash of 1929 than during the rest of his life combined.
“You mean we are not ruined?” his wife asked, according to Livermore’s biography.
He replied: “No darling, I have just had my best ever trading day – we are fabulously rich and can do whatever we like.” He made, in one day, the equivalent of $3 billion.
Polar opposite stories. Germansky went broke, Livermore became the richest man in the world.
But fast-forward four years and the stories end up nearly identical.
Livermore made larger and larger bets, and went on to lose everything in the stock market. Broke and ashamed, he disappeared for two days in 1933. His wife set out to find him. “Jesse L. Livermore, the stock market operator, of 1100 Park Avenue missing and has not been seen since 3pm yesterday,” the New York Times wrote in 1933. He returned, but his path was set. Livermore eventually took his own life.
The timing was different, but Germansky and Livermore shared the realization that getting rich is one thing. Staying rich is quite another.
Everything in the economy is cyclical. Nothing great or terrible is likely to stay that way for long, because the same forces that cause things to be great or terrible also plant the seeds to push them the other way.
Bull markets make stocks expensive, expensive stocks leave little room for error, and little room for error increases the odds of bull markets ending. Same thing in the other direction. Recessions cause pessimism. Pessimism causes underproduction, underproduction leads to scarcity, scarcity leads to a new boom.
People and companies, whose behaviors are changed by their own success, are vulnerable to the same cycles.
I’ve noticed a pattern: Getting rich can be the biggest impediment to staying rich.
It goes like this. The more successful you are at something, the more convinced you become that you’re doing it right. The more convinced you are that you’re doing it right, the less open you are to change. The less open you are to change, the more likely you are to tripping in a world that changes all the time.
There are a million ways to get rich. But there’s only one way to stay rich: Humility, often to the point of paranoia. The irony is that few things squash humility like getting rich in the first place.
It’s why the composition of Dow Jones companies changes so much over time, and why the Forbes list of billionaires has 60% turnover per decade.
Andy Grove, Intel’s founder, put it this way: “Business success contains the seeds of its own destruction.” Scrappiness and the ability to think differently turns into complacency and the desire to keep things the same. Harvard Business Review wrote about Grove’s management philosophy in 1996:
Grove believes that at least some fear is healthy—especially in organizations that have had a history of success. Fear can be a healthy antidote to the complacency that success often breeds. A touch of paranoia—a suspicion that the world is changing against you—is what Grove prescribes.
Michael Moritz, the billionaire head of Sequoia Capital, was asked by Charlie Rose why Sequoia was so successful. Moritz mentioned longevity, noting that some VC firms succeed for five or ten years, but Sequoia has prospered for four decades. Rose asked why that was:
Moritz: I think we’ve always been afraid of going out of business.
Rose: Really? So it’s fear? Only the paranoid survive?
Moritz: There’s a lot of truth to that … We assume that tomorrow won’t be like yesterday. We can’t afford to rest on our laurels. We can’t be complacent. We can’t assume that yesterday’s success translates into tomorrow’s good fortune.
Not skill, or market insight, or even hard work. Fear and humility.
Humility doesn’t mean taking fewer risks. Sequoia takes as big of risks today as it did 30 years ago. But it’s taken risks in new industries, with new approaches, and new partners, cognizant that work worked yesterday isn’t what will work tomorrow.
IBM and Xerox did this when they shifted from hardware to services.
Netflix did it when it cannibalized its DVD business to invest in streaming.
GE has reinvented itself about every 20 years for the last century, going from a lightbulb company to a dishwasher company to a bank to a wind turbine company.
Each could have looked at their past success and concluded they were doing the right thing, patting themselves on the back. But they didn’t. They were, for the most part, paranoid, eager and willing to jettison past success in an attempt to keep up with where the world was heading next.
It’s not easy to do.
For decades people used Coke, Gillette, and American Express as examples of companies whose success was so solidified – whose moats were so deep and protected – that you could foresee their dominance indefinitely. But now all three are under attack. Coke’s is fighting 13 consecutive years of soda decline. Dollar Shave Club came out of nowhere to take 14 percentage points of market share away from Gillette. And as Charlie Munger, one of AmEx’s largest investors said this week: “If you think you know what the state of the payments system will be 10 years out you’re in a state of delusion.” Only the paranoid survive.
We don’t know much about Abraham Germansky – only that he went from rich, to broke, to disappeared. But we know a lot about Livermore, whose life was well documented.
Livermore was was one of the most skilled people in the world at getting rich. But few people in the early 20th century had a harder time staying rich. He made and lost at least four fortunes, never going more than eight years without flirting with bankruptcy.
After his third wipeout, Livermore recognized his mistake: Getting rich made him feel invincible, and feeling invincible led him to double-down with leverage on what worked in the recent past, which was catastrophic when the world changed and the market turned against him.
He reflected:
I sometimes think that no price is too high for a speculator to pay to learn that which will keep him from getting the swelled head. A great many smashes by brilliant men can be traced directly to the swelled head.
“It’s an expensive disease everywhere to everybody” he said.