- More people are online than ever before. A little over half the world's population are now connected to the web. A third of us use social media but this may slow as the demand for new smart phones hits 0% year/year.
- Screen time is increasing. Digital media usage grew by 4% to 5.9 hours per day with mobile making up the majority at 3.3 hours. Desktops account for 2.1 hours.
- E-commerce continues to grow, fast. Amazon is taking a bigger share and physical retail continues its decline.
- Subscriptions are bring us more, for less. Salesforce and Adobe on the B2B side, and Spotify and Netflix on the B2C side are showing us where the world is going – to renting rather than ownership.
- We are no longer farmers, we're services. Just like the industrial revolution reshaped industry, technology is doing the same. There are now 120 million workers in business services roles, and less than 2% of the workforce in agriculture.
Mary Meeker, a partner at venture capital firm Kleiner Perkins Caufield & Byers (KPCB), releases an annual internet trends report – this year's is 294 pages, we've gone through it to pull out what's important, so you don't have to.
(Header photo: courtesy of WIRED's 2012 profile "The Indomitable Mary Meeker".)
KPCB is one of the most prominent VC firms in the world, providing early money to some of our most important technology companies, including Amazon, Snap, Google, JD.com, Airbnb, Stripe, Spotify, Uber, and Slack.
Mary Meeker's 2018 Internet Trends Report at Code 2018
Smart phones and internet usage
2017 was the first year where smartphone unit shipments were flat. Like any product, smartphones are being more popular and growth is getting harder to come by.
The same has been true for internet user growth, which rose 7 per cent in 2017, down from 12 in 2016. With >50% of the world online, there are fewer but still many opportunities to get more people online.
The key takeaway here for us is people aren't upgrading their smartphones as much as they used to be. It's important to remember for most of the world access to the internet is synonymous with having a smartphone; so as the average smartphone continues to improve we will see less people buy a new one and sell units sold (hence the flatlined global growth in smartphone shipments).
And while global growth in Internet users is slowly, there is still a lot of room for Internet companies to grow into, whether that be because of an increase in the raw number of people on the internet or the increase in hours that we're spending online.
The key takeaway here is the Internet is not only growing in raw numbers but also usage within the market that exists.
And as I said above, the average smartphone is getting better, faster, and cheaper. It's a real testament to Apple's brand and the iPhone that each flagship model has managed to increase in price each and every year. This lower cost should help drive continued growth in global internet users as smartphones become more accessible to less-developed markets.
We may still see flatlined growth in new smartphone unit shipments as older models remain "good enough" for users.
The trend towards digital commerce doesn't seem to be going anywhere, with 60% global respondents saying their last 10 everyday transactions were digital.
We believe innovation in digital commerce is largely being driven by China who continue to lead the rest of the world in mobile payment adoption, with over 500 million active mobile payment users in 2017.
And the trend in e-commerce sales continues to accelerate up 16% year/year vs. 14% in 2016 but it continues to eat at physical retail.
That said, one of the more interesting trends are technology companies helping small offline businesses succeed through technology, whether that be Square's Points of Sale (POS) system, Xero's payroll, or Facebook advertising bringing sophisticated prospecting and conversion software to everyone.
And while Amazon is quickly becoming the go-to place for finding products, there is clear room for strong Direct-to-Consumer (DTC) brands like Warby Parker and Dollar Shave Club.
What remains to be seen is if this will continue to be a sustainable to go market strategy for future brands that are relying on digital advertising through Facebook as their primary channel because as ad engagement and Click-Through Rates (CTRs) are increasing, cost is increasing faster.
Technology companies are becoming a big part of our economy
Tech companies are no longer the outlier, accounting for ~25% of U.S. market capitalisation in April, and they're responsible for the growing share of corporate R&D and capital spending.
During the dot-com bubble, there was no double that technology was going to impact every aspect of the economy, and they were right – but their timing was wrong.
While some people may see this as a turn for the worse, given the increasing R&D and Capex spending of the world's largest technology companies, we think it's more likely due to the power of their core business allowing them to invest heavily in other sectors, especially sectors where others cannot – think self-driving cars and new speculative health-tech.
Subscriptions: Tech is making stuff cheaper
Software-as-a-Service (SaaS) has been a tour de force for many B2B businesses, think Salesforce and Adobe. But what we're seeing now is an increasing trend towards consumer-focused subscriptions services that bring greater access and selection at a lower price with a better experience through increasing personalisation.
Spotify has been a pioneer of the Free-to-Paid Conversion driven by a great free user experience with 45% of their monthly active users (MAUs) as paying subscribers, up from 0% in 2008.
And it's not only software that technology is making cheaper. You only have to look at the falling price of online retail versus offline retail (which is largely due to structural advantages like not having to have massive stores on expensive real estate).
But arguably the most interesting two slides in the whole deck are this pair.
Food is not only getting cheaper but less and less of us are farmers. The question is: are services jobs at their peak before they decline to new forms of work? The good news is what this shows us is if the machines do come for our jobs, humanity has broadly shown we have the ability to shift employment to new places.