January 25, 2020

Market Trends at UBS TMT Conference

Last month, professional investment community, industry experts, global private and publicly traded companies covering a broad range of markets met in New York at UBS Global TMT Conference for mutual engagements, investigate investment opportunities, and discuss industry trends and challenges.  The conference was very well organized, with fast and smooth pace, and with interesting industry overviews and debates. GigCapital being a private to public equity (PPE) investment company, our eyes were on the late growth, interesting, and fast-growing companies from the private sector.

Cybersecurity, in particular, ran the show with a larger breadth of applications from pure security products for security operation management, with companies as Recorded Future and Cybereason, or employee training organizations to make smarter security decisions and increase phishing protection, like KnowBe4, to customized integrators of multi-product solutions, like Cyber1. In this regard, an interesting debate was carried out amongst representatives of Menlo Security, Netskope, and Cybereason. A major Cybersecurity industry need which surfaced from the conference presentations and the panel discussion is the shift from a data center connectivity focused network security architecture to a network-edge model like Secure Access Service Edge (SASE), identity driven, with cloud native architecture and distributed security capabilities. This trend considered, emphasis on the global mobile world is a necessary direction for Cybersecurity players.

Industry representatives discussed other hot topics critical for future enterprise opportunities and industry innovation, including artificial intelligence (AI), advertising Direct-to-Consumer (D2C) brands, and 5G deployment status.

AI business case, its operationalization within enterprises, and future developments were analyzed by Afinity, Vectra AI, and UBS experts.  Large amount of data availability, combined with increased computational power allowed the recent growth, upon the introduction of AI, in some industries. However, the applications are mainly restricted to pattern recognition techniques.  Barriers, challenges, and opportunities highlighted by panelists as major area for AI operationalization include:

• the need for simplification of AI nomenclature, which is still very confusing for customers today;
• the definition of approaches and methodologies to create and demonstrate customer success stories and elevating vendors’ positions;
• shifting the customer’s focus from pure technology investment and experiments to critical business/operation metrics and problem to solve, when considering AI introduction;
• the security, regulatory compliance, cloud services, and use of AI to compensate for the lack of experienced resources.

D2C business experts from Babbel and Simulmedia went through considerations for D2C to be successful in marketing directly, without going through the usual suspect middlemen, removing their monopolies. Panelists navigated the discussion touching on topics such as effectiveness of advertisement channels, sales channels, subscriptions as baseline business model, premium products against commodity, customer data availability and usage, typically controlled by middlemen like Amazon, to allow direct/personal advertising, moving from content-based marketing to 1:1 people-based marketing.

In the 5G panel, participants from communication infrastructure industry and investment world, like Everstream, Mastec, and Digital Bridge, confirmed that, in the next two years, we will see the real spending for 5G, with macro-cell towers, and the small-cells becoming fully 5G operational 5G in 2022-2023. At this time, new business models based on 5G, such as low latency applications, will really take off. However, 5G will require large amount of fiber deployment and a complex wireline and wireless convergence, which will result in longer deployment time with respect to previous generations. First mover advantage is very critical for infrastructure deployment, since once the capital investment and the relationships with utilities companies and telecom service providers are established, entry barriers will be very high for new entrants.

Among the appealing and growing companies, Grow Mobility, a micro-mobility company that operates a network of shared electric scooters, with headquarters in Mexico, gave a very good and educational insight on the opportunities and logistic challenges. Smart logistic management, community creations around the mobile app that tie together the users and local merchants, and the adoption of digital wallets are some of initiatives pursued by Grow Mobility, to address and solve such challenges and successfully expand coverage into Brazil and rest of South America. This is yet another reflection of the larger trend of increasing venture investments into the Latin America, focusing on the growths of local commerce and financial transactions, as reported by various financial media outlets. These developments in a large geography toward the economic resurgence and vitality is indeed exciting to see.