An interview series spotlighting global tech influencers, disruptors, visionaries, and of course, innovators.
Season’s Greetings, Readers! Best wishes for a prosperous and healthy 2023 to you and your loved ones.
It’s that time of year again! EKMH Innovators’ 2023 predictions cover a gamut of sectors, topics and trends, including Data, Blockchain, Web Scraping, Web3, AI, Asset Management, Retail, Social Media, Machine Learning and Content Generation. Many thanks to the all the global experts who shared their insights and visions for 2023.
Global inflation and recession are the central macro features highlighted this year. Since that inflation poses imminent challenges to central banks and recession looms, predictions for Q1 resulted in the common theme: asset repositioning. Some experts see opportunities opening and recommend investing in familiar companies and known assets in order to cope with emerging scenarios. Some experts reiterate that the importance of web scraping, blockchain innovation and alternative data cannot be overstated. In today’s data-driven world, having access to a wide range of secure information is crucial for businesses looking to stay competitive and uncompromised. According to experts, web scraping, alternative data, AI content generation, AI growth and ML will continue to profoundly impact society in the coming years. Let’s look into the crystal ball and contemplate the future…
Lilypond Canvas Founder Nuria Ribas Calsina: “1. The retail inflationary period is expected to level off in 2023 but cost cutting will still be a theme as excess inventories are sold off. 2. Environmental sustainability will continue to be the key ingredient of a brand DNA. We expect tougher competition with the proliferation of sustainable and ethical brands. 3. Technology will be the key driver in 2023. Consumers are turning more and more to social media to gain product knowledge and look for more personalized shopping experiences. Influencer marketing will continue to soar, with Instagram and TikTok taking the lead. Influencer marketing has grown exponentially over the last 2-3 years and big companies are diverting their advertising budgets from traditional advertising campaigns to influencer marketing.”
Geeq Founder / CEO Stephanie So: “We spent a quiet year at Geeq building the capabilities of our blockchain back-ends for enterprise applications, which I think will delight and surprise industry watchers in 2023. It will demonstrate, once and for all, that simple deployments of Geeq’s blockchains have many practical and valuable uses that can only be achieved if you have secured transactions on-chain. Traditional databases are designed so they can be changed. If these databases contain your data but you are not in control of them, they can be changed without your permission or knowledge. Now think about how the types of data collected have evolved. It is easy to imagine multiple social credit systems kept without your consent. If they are only in traditional databases, someone could make you unemployable, uninsurable, or unacceptable by deleting any part of your profile - and the consequences could be life-altering. Geeq has worked hard on providing the ability to prove whether data has or has not been changed. That knowledge, in and of itself, has value to people, organizations, businesses, and governments everywhere. First of all, it tells whether or not further action needs to be taken. Secondly, having this kind of certainty and information exchange that is also well-organized and provable makes it possible for people to thrive in an increasingly chaotic world. In 2023, a much deeper appreciation for these benefits from blockchain will develop. Once the media understands, these ideas should spread quickly. As a by-product, Web3 and NFTs will get another chance to make their case, because there is a common thread through all of these solutions that has not been articulated very well. I’m looking forward to becoming one of the standard bearers.”
Fisch Asset Management Chairman Dr. Pius Fisch: “Yield curves in the US and Europe are inverting more and more, sending increasing signals of recession. A "soft landing" of the economy is thus becoming less likely. Structural reasons, such as low debt ratios, solid labour markets and high consumption potential, however, point to only a mild recession. There is still a lot of negativity priced into equity and credit markets, but the short-term risk/reward ratio has deteriorated again after the recent price rallies. However, as soon as the expected shift in monetary policy will be realized in the coming months we will see a considerable upside potential for the remaining year.”
Mapfre CIO Jose Luis Jimenez: “The consensus is that inflation will peak in 2023 and central banks will start a new loose monetary cycle. The not-so-bright view is that inflation reduction will not be a linear process. Being below 4%-5% is going to be tough. And due to central banks’ failure in predicting inflation, interest rates should be higher than market expectation if they want to keep their credibility this time. This will happen in US and emerging markets, but it is not so clear in the euro zone.”
Indépendance et Expansion Portfolio Manager Victor Higgons: “A serious recession is not guaranteed – particularly in the small cap space. It is not so certain that 2023 will see a significant economic recession in the European Small Cap Equity universe. Financial markets have clearly priced it. Nevertheless, onboard inflation is high and top line growth in small and medium sized companies tend to be higher than the average. Therefore, a low single digit GDP recession could translate into a low single digit top line growth for small and medium sized listed companies.”
New Alpha Asset Management Managing Partner Philippe Paquet: “On equities, derating has been significant while bottom-up news is still good. Even if EPS will be revised down slightly, the potential of some sectors or segments looks attractive. In particular, we think Tech, which has already absorbed the interest rate shock significantly, quality growth stocks (e.g. healthcare) and small/mid caps, which have suffered from the liquidity crunch, offer rebound potential. Active boutique managers have assets to exploit these sources of alpha.”
SKAGEN Funds CEO / Chairman & GBAM Chairman Tim Warrington: “The new investment environment means active bargain hunters like SKAGEN now have better prospects than at any time over the past 15 years. With market conditions more akin to the long periods when value investing reigned supreme, we could be returning to the old normal. My advice in times of uncertainty, as now, is to stick to basic investment principles as they provide a degree of control over the investment process: know what you can know in terms of price and potential and identify the changes that a company might make to improve outcomes, or improve reputation, and help them to do so. That is what makes a difference. Being greedy when others are fearful confers advantage, especially when applied together with a longer-term investment horizon. This is not complex; it is common sense. After all, it is the same in any period of crisis or uncertainty, whether international or domestic. Those who focus on what they can control and care less about what they cannot, invariably prevail.”
Farview Founding Partner Paulo Del Priore: “I am skeptical about macro forecasts and seek the more bottom up approach of building portfolios that are independent of macro scenarios. There are now higher returns on cash and the constraints around quantitative easing thanks to inflation. Additionally, because of higher cash rates and less activist central banks, increasing active manager opportunities will result in higher market price dispersions. Next year will be very different from the last which brings significant challenges requiring a different approach to managing and building portfolios. One approach that manages risk is through portfolio diversification and properly priced risk premiums, particularly when seeking market liquidity.”
First Avenue Founder, Investment Management Chief Investment Officer & Principal Hlelo (Lo) Nc. Giyose: “As we see it, a peak in global interest rates in Q1 ’23, and a slow return to global growth in the 02H23 should stimulate commodity prices and drive economic growth in the country. What will save the markets is that South African companies are generally excellent at capital allocation. The stock market now has the highest number of companies buying back shares than at any other time in history. As well, dividend pay-out ratios are also at their highest levels in history. Low valuations, coupled with capital returns to shareholders, make the South African stock market appealing . While companies are good at capital allocation, investment in South Africa is not without impactful challenges as the country has not learnt how to construct internal growth engines in its economy. In fact, the economy is increasingly held hostage by global growth. Exports of commodities, specifically, account for a significant portion of foreign exchange currency earnings.”
Chartwell Capital Founder Ronald Chan: “Hong Kong’s Hang Seng Index hit its lowest valuation in November at a 7x P/E ratio. This multiple is even lower than what was experienced during the financial crisis in 2008 and stands at a -2.4 standard deviation relative to its multiple average since 2005. Many factors may affect valuation in the coming months. However, in layman’s terms, if we use the index’s five-year P/E ratio average of 10.9x, the upside potential is likely to exceed 50%. While we do not anticipate such an upside in the near to medium term, the overall sentiment is leaning toward the positive.”
SpaceNK Head of Data, former NASA Engineer & Unilever Lead Data Scientist Adi Andrei: “Large Language Models for NLP (like BERT, GPT, and derivatives) will keep improving, and their use will become more pervasive. One pre-trained model will also be able to be used with little modification for many functions (sentiment analysis, summarization, word sense disambiguation, etc.)... Its aim is to learn representations of data by contrasting between similar and dissimilar samples. Transformers, Text-to-Image and diffusion models, require large-scale datasets and supervised pre-training of large models is extremely expensive. The self-supervised Contrastive Learning can be used to leverage vast amounts of unlabelled data in order to efficiently pre-train large models. Furthermore, contrastive search is a related technique which has been shown to significantly improve the output of large language models when used for text generation tasks.”
Stripe Machine Learning Engineer & Paradigm Software Engineer Pujaa Rajan: “In 2022, I was personally most excited by GitHub Copilot, which is powered by the OpenAI codex, and I use it every day. This was the first of its kind, so I expect to see more improvements and more competition in related technologies in 2023. In the same year, we also saw Lensa, which uses Stable Diffusion, used to create photos and content for social media. In 2023, I can imagine this tool being adopted by authors, illustrators, and others.”
Infini8AI Founder / CEO Ali Chaudhry: “Various regulations for AI-powered tools that emerged in Europe, US, UK, and Canada will continue in the coming year with stricter regulations and their implementations. We will see a proliferation of apps built on top of AI-generated content (text and images) through tools like Dall.E and Stable Diffusion. It will be interesting to see the impact of open-sourcing stable diffusion on the AI community. The recent rise of increased interest in AI and NLP in bots have brought great results. OpenAI, a research institute and technology company that is focused on advancing the field of AI, created the well-known ChatGPT as one of their projects. The technology allows bots to understand and respond to human language, providing more natural and human-like interactions. I see ChatGPT replacing Google in many ways and OpenAI emerging as a big tech giant on top of this product. It will be interesting to explore its impact on education, healthcare, and personalized software. It will transform our society in many ways.”
Three Thirds Co-Founder / CEO / Senior AI Engineer Jonas Kubilius: “We will start seeing a shift from using AI for static tasks like classification to language-model-driven interactive workflows that help people perform their tasks more efficiently. The adoption of artificial intelligence within the biotech industry has also been on the rise in recent years. The adoption of AI in the biotech industry is helping improve the speed and accuracy of drug development, which can ultimately benefit patients and the healthcare system as a whole. I believe that AI adoption within biotech will keep accelerating, benefiting not only drug discovery efforts but our general understanding of cell biology.”
Monte Carlo Co-Founder / CTO Lior Gavish: “Designed to prevent data quality issues that occur upstream when data-generating services unexpectedly change, data contracts are very much en vogue. Why? Thanks to changes made by software engineers who unknowingly create ramifications via updates that affect the downstream data pipeline and due to the rise of data modeling gives data engineers the option to deliver the data into the warehouse, pre-modeled. 2023 will see broader data contract adoption as practitioners attempt to apply these frameworks. In lean times, data teams have more pressure than ever to align their efforts with the bottomline. Data monetization is a mechanism for data teams to directly tie themselves to revenue. It also allows for the addition of data insights and reporting to products, a differentiator within an increasingly competitive marketplace. Modern data operations require hyper-scalable cloud infrastructures, but constantly provisioning and maintaining these services can be tedious and time consuming. laC allows data engineers to create more seamless data pipeline infrastructure that is easier to provision, de-provision, and modify - critical when budgets are tight and headcount is limited.”
Ocient CEO / Co-Founder Chris Gladwin: “1. Hyperscale will become mainstream: Data warehouse vendors are will develop new ways to build and expand systems and services. Some leading-edge IT organizations are now working with data sets that comprise billions and trillions of records. In 2023, we could even see data sets of a quadrillion rows in data-intensive industries such as adtech, telecommunications, and geospatial. Hyperscale data sets will become more common as organizations leverage increasing data volumes in near real-time from operations, customers, and on-the-move devices and objects. 2. Pipelines will become more sophisticated: A data pipeline is how data gets from its original source into the data warehouse. With so many new data types—and data pouring in continuously—these pipelines are becoming not only more essential, but potentially more complex. In 2023, users should expect data warehouse vendors to offer new and better ways to extract, transform, load, model, test, and deploy data. And vendors will do so with a focus on integration and ease of use. 3. Data complexity will increase, while data analysis will be continuous: Next-generation cloud data warehouses must be versatile—able to support multimodal data natively, to ensure performance and flexibility in the workloads they handle. The need to analyze new and more complex data types, including semi-structured data. Technology strategists have long sought to utilize real-time data for business decision-making, but architectural and system limitations have made that a challenge, if not impossible. Emerging use cases such as IoT sensor networks, robotic automation, and self-driving vehicles are generating ever more real-time data, which needs to be monitored, analyzed, and utilized.”
Dremio Co-Founder / CPO Tomer Shiran: “1. In 2023 Snowflake will become more of a niche technology as legacy providers costs rise. With Snowflake’s costs increasing on average 71% year over year, based on their earnings report, customers are getting to a point where they can no longer afford to continue that kind of exponential increase in costs. Because of this, customers are going to be much more cautious about what they put in there, and will put up walls of approvals and rules regarding who's allowed to use and access what. With companies becoming more careful in this regard, they will be looking for open alternatives. The demand to make data accessible and to become data-driven is still there; data's still growing very fast. But customers need systems that are able to do that at scale, and customers need them to be cost efficient. 2. Enterprise adoption rates of lakehouse technology are skyrocketing. We’re seeing lots of movement in companies embracing open source, file and table formats. Will data warehouses go away in a year? We can’t say yes for sure, but trends are pointing in that direction.”
Superlayer SVP Partnerships Welly Scully: “Web3: As crypto markets continue to soften, Web3 companies will increasingly feel pressure from investors to monetize, which will bring into the space new companies focusing on monetization (payments, advertising, sponsorship). Web2 brands (Nike, Starbucks, Meta) will continue to experiment in web3, with a continued focus on NFTs as the preferred format, and with an emphasis on customer acquisition and engagement over monetization. Breakout apps in Web3 will look more like the top-downloaded and top-grossing apps in the early days of mobile - simple user experience and graphics with intuitive but innovative engagement and monetization mechanisms - like Angry Birds in 2009. As Web3 app development costs go down, and user acquisition costs go up, there will be an emphasis on quality and discovery. Web3 will have its App Store and AdMob moments, which will help developers and users find each other more efficiently. L1s and wallets will initially compete for this position, but a new player will likely take over. To deal with compliance costs and overhead, Web3 apps will increasingly rely on existing, large-cap tokens to power token-related mechanisms.”
Best wishes for a happy 2023!
As the saying goes, the past is prologue. Click here to read predictions about 2017 marketplace lending, 2018 crypto, 2018 blockchain, 2018 fintech, 2019, 2020, 2021 and 2022.
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*Disclaimer: The views and opinions expressed in this series are those of the speakers and do not necessarily reflect the views or positions of any entities they represent.