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Miika Huttunen

The next big thing in 2023 will be...

Welcome to issue #42 of next big thing.

At the end of the past two years, I reached out to a set of awesome thinkers in technology to get their thoughts on the year ahead. These have become some of my favorite posts to look back on, to not just see where folks were “right” or “wrong” or simply “too early,” but to better remember how things felt at the dawn of these new years (here are the links to the 2022 and 2021 posts).

A year ago, there was a lot of excitement about what 2022 would bring in crypto and web3 (hmm…), but also concerns about tech backlash and inflation (rightly so!). There was a feeling that the meaning of “work” was undergoing real change, and optimism for the energy (no pun intended) that would be directed towards decarbonization.

So, onto 2023 we go. AI is the most popular theme for where the next big thing lies, perhaps unsurprisingly given the past few months of developments in large language models and their interfaces. Many expect tough times, with resets needed for lots of companies and for the venture capital industry. There’s excitement for the progress that can be made on decarbonization in the U.S. given recent legislation, and in self-driving cars, with driverless cars now hail-able by passengers in places like my home city of San Francisco. And there’s the sentiment that the focus in the tech industry in 2023 must be on business fundamentals and on solving real world problems.

I hope you enjoy these contributions, would love to hear what you think will be the next big thing in the comments, and wish you a happy and healthy holidays.

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… macroeconomic.

The next big thing in 2023 will be government expenditures exceeding 50% of GDP.
The next big thing in 2023 will be lower inflation. In 2022, inflation dominated the macro-economic landscape & changed startup operations in a way not seen in more than a decade. As inflation declines, Startupland will reach a new normalcy that will define the next decade of company building.
The next big thing in 2023 will be America flexing its muscles in the world, not guns but not exactly soft-power either — we'll see more onshoring of manufacturing, more active diplomacy against China in Africa. A dark horse bet would be actually banning TikTok!
The next big thing in 2023 will be India's critical role in global manufacturing supply chains, precipitated by the China driven global supply chain turmoil, hard push by the Indian government and Indian entrepreneurs who are aggressively building rails for global manufacturing out of India.
  • Kunal Bahl, Co-Founder at Snapdeal and Titan Capital

… tough times.

The next big thing in 2023 will be doom and gloom! The slowdown in late stage financings and IPOs will catch up with companies who waited out 2022. There will be sudden implosions and zombie companies with little growth but plenty of cash.
The next big thing in 2023 will be the tech ecosystem absorbing the wreckage of its excesses in the midst of a continued challenged macro environment. The wreckage will stem from the 1200+ private unicorns, many of which will be raising down rounds or getting sold on the cheap; the fallout from a continuing crypto crash, which will result in more bankruptcies and finally regulation; the layoffs from Big Tech; and the significant overhang resulting from record VC fundraising. ‘23 will reward savvy founders, operators and investors who find value in the wreckage, consolidating assets, talent and capital in creative ways supported by strong business models. The overfunded categories best suited to this value capture and aggregation are fintech, e-commerce, crypto/web3, and AI.

… venture capital resetting.

The next big thing in 2023 will be continued recalibration by LPs investing in venture funds. As funds come back to market in 2023, I think we’ll see an increase in LP churn as they take stock of where returns have come from and concentrate on managers they want to be invested with for the following decades, which could look meaningfully different than their current or past portfolio. Re-sets are healthy but can be painful.
The next big thing in 2023 will be a fundamental shift away from LPs away from the large multi-billion dollar firms with their awareness of their inability to produce top decile multiples. However, institutional LPs still have to deploy and this capital will shift to $400M-$750M firms.

2023 will also see the reduction of micro funds ($20M and below). The majority of these are funded by GPs and Founders, both of which have seen material shifts in their net worth in 2022 and have withdrawn in most cases from new fund commitments.

Finally, pre-seed and seed will be the hardest place to invest with large multi-stage funds moving earlier and earlier. They want to reduce the size of capital deployment and so withdraw from most Series A and B. However, are aware they still have to deploy and go to seed and pre-seed. This less price-sensitive influx of capital has and will lead to price inflation at the seed.

The next big thing in 2023 will be a big consolidation / skinny-ing down / choose your own language to describe lots of seed funds going away. Easy access to LP cash in the last few years and a deviation from the traditional three-year fund cycle paired with a ton of inflated books and increasingly cautious LPs will mean that those second or third funds will be very hard to raise. A lot of folks will be excited to get back to operating or re-joining larger outfits where fundraising was taken care of.

… companies resetting.

The next big thing in 2023 will be rapid resets of companies to eliminate organizational debt and compete with startups.

Coming off a decade of excess, where the easiest way to acquire customers and scale organizations was the throw more money and people at the problem, the world is left with countless bloated organizations, redundant teams, and extraneous processes. But today's economic woes are a much needed forcing function. We're departing the "carbs era," where we satiated our needs with the quick but fleeting benefits of carbs, and entering the "muscle era," where we must solve problems by refactoring how we work and building a more resilient and capable team. Resourcefulness outperforms resources, but only when you're forced to do so.

We're starting to see this happen. The case study of a century is Twitter. While I have a lot of empathy for those afflicted and don't identify with the process, I am fascinated by the impact of collapsing the stack of an organization. What happens when you remove multiple levels of managers and bring everyone doing the work closer together. Do you regain the agility of startups? Do you shed, in an instant, years of "organizational debt" that restrains a product's potential? Organizational debt is the accumulation of decisions that should have been made but weren’t, and the people and processes that have become outdated or redundant yet remain. I suspect we'll see more bold resets of companies around the world, reimagined for a world where most functions can be automated and process management is better accomplished with a stack of SaaS products than legions of people.

The next big thing in 2023 will be more reductions in force — aka layoffs. We have seen the big guys tighten their belts but there's still more discipline to get at in the market and many smaller firms are waiting until the holidays to announce the news.
The next big thing in 2023 will be small teams building billion dollar businesses.
The next big thing in 2023 will be the forced transformation of high growth / low profitability companies into slower growth / higher profitability ones. By the end of the year, these companies will find themselves in a much stronger place: with right sized cost structures and more thoughtful product-market fit. These companies, though pained now, will finally be poised to become formidable and sustainable mid/large-cap companies.

… great companies standing out.

The next big thing in 2023 is the separation of great management teams and everyone else. 2023 and even 2024 seem to be likely hard years to navigate. Investors pay high prices for growth stage tech given the implicit agreement that when companies get to massive scale, and are semi-monopolistic in nature, they produce lots of profits, or when the economy turns, managers can pivot their companies to profitability. This will necessarily imply tough decisions, disciplined capital allocations and creative problem solving. 2023 will be the year where the great managers show their greatness.
The next big thing in 2023 will be meaningful dispersion in software valuations. This down market will really show us which software companies are more secular (mission critical) vs more cyclical in nature. The former will show more resiliency and see a meaningful, sustained, valuation premium than the latter.

… M&A.

The next big thing in 2023 will be M&A - 2023 will be a record setting year for technology acquisitions as Qatalyst ends the year with more revenue than Google, Microsoft and Apple combined.

… a focus on reality and fundamentals.

The next big thing in 2023 will be hopefully steel eyed sanity: real people building real solutions to real problems.
  • Garry Tan, Co-Founder at Initialized Capital & incoming CEO at Y Combinator
The next big thing in 2023 will be a renewed focus on outcomes (and fundamentals). In healthcare, this means doubling down on companies that make people healthier (eg in maternal health, reduce c-section rates and NICU admissions), and with a true alignment of incentives, it means creating long term value for all stakeholders.
The next big thing in 2023 will be primary life fundamentals taking center stage. Primary life fundamentals (think: personal well-being, financial stability, community and belonging, environmental safety) are seemingly obvious components of life, but that’s just the problem — they are increasingly scarce and unreliable, with legacy systems that are woefully insufficient for today’s more dynamic society. Fundamentals have become luxuries. We see an enormous opportunity in the entrepreneurs helping rebuild these core life foundations.
The next big thing in 2023 (at least one can hope) will be a return to humility in the startup world. If there is anything that we learned in 2022, it's that hype can be very shallow and true substance can be hard to come by.

… in work culture.

The next big thing in 2023 will be the realization that some 'regretted attrition' (what we typically call high performers who leave your company) is ok. Determining new work practices coming out of peak pandemic has been a challenge for many organizations and they risk underperforming as a result. No one solution to 'remote' vs 'hybrid' vs 'in-office' will make every employee happy. Instead CEOs will have to embrace a decision about how they want to best run their companies which is stage and situation appropriate. And then deal with the fact that some folks will leave as a result. It's ok, there are equally talented people at other companies who prefer what you are offering. Yes, I see plenty of people who prefer 'in-office' - specifically many early career engineers in major cities.

CEOs should be communicative, empathetic, and provide their leaders with the guidance and resources to be successful in new models. But 2023 will be the year that each company figures out what working style is right for them and lets the chips fall.

The next big thing in 2023 will be the shifting of work culture. In the face of market and economic pressures, we will return to a time where outworking creates advantage. Some will resist this and not do it but many will view it as a potential advantage. This means an office-first culture--probably not an office-only culture but a value on in person, dedicated work and time together with team mates vs remote-first. The shift in talent accessibility will further this as it becomes slightly easier to get great talent in hubs.

.. in learning.

The next big thing in 2023 will be employers prioritizing internal talent mobility in a world where people are hiring less and focusing on retention. The research shows that the most effective skill training happens on the job and as employers move away from degrees to focus on skills-based hiring, the power of L&D leaders will grow and job-embedded workforce development initiatives will be prioritized to drive promotions, a raise, or a new challenge for employees. Also, job-embedded education drives the cost of education down to zero for the employees which is important to keep in mind (similar to a nurse getting their entire education paid for from CNA all the way to a masters degree while working). While apprenticeships are helpful, most of these initiatives are low volume/expensive and employers are increasingly seeking workforce development initiatives at scale that can help thousands of people at scale on an annual basis with clear ROI that saves time and money for staff that is administering the program.
The next big thing in 2023 will be shifts in learning. Despite behavioral bumpiness coming out of COVID, we will see a continued shift towards learners and families wanting a stronger say in how learning happens versus the old school defaults. Learning will continue to unbundle into its parts--content, outcomes, social, etc--with big direct to learner opportunities across them emerging.

… more online.

The next big thing in 2023 will be the end of pre-internet culture and the beginning of internet-native societies.
The next big thing in 2023 will be a renaissance for internet weirdos ヾ(⁍̴̆◡⁍̴̆。)ノ!! From the return of tumblr to the rise of webtoons, subculture software and niche virtual communities will go mainstream.

… new social platforms.

The next big thing in 2023 will be a new set of vertical-focused social platforms built to be "sufficiently decentralized. " Unlike the platforms before them, these businesses will guarantee that users own a direct relationship with their audience * and * that developers can always build on the network - thereby better meeting the needs of both consumers and solving the frustration of the developer community. We believe this will lead to a new generation of vertical-specific social networks - like Goodreads (for readers), Ravelry (for knitters), and Behance (for creative professionals) - ultimately resulting in a set of new businesses that can better acquire, serve, engage and retain their communities.
The next big thing in 2023 will be social apps being actually social again :).
The next big thing in 2023 is decentralized social networking. We're finally beginning to see users waking up en masse to the risks of centralized social networking companies, not least catalyzed by the recent threatened ban of TikTok and Twitter's capricious suspensions and prohibiting linking out to other platforms. Users, creators, and businesses have realized that it's dangerous to invest in building an audience on these platforms when there's a looming risk that the rug gets pulled out from under them. We're at a moment where there is a collective sense of "We’ve lived with the existing paradigm of closed social platforms for 15 years. What comes next?" I think we'll see a decentralized social network start to gain steam in the next year that allows users to own their social graph and content and port it across various applications. We'll also see more creators experimenting with web3 tools that allow them to reach their audience in a platform-less way, i.e. through tokens acting as a new kind of social graph.
  • Li Jin, Co-Founder & General Partner at Variant

… on-chain media.

The next big thing in 2023 is the proliferation of on-chain media. Interfaces like block explorers and analytics platforms aren’t just technical crypto products — they’re tools for storytelling. In a world of public data, every company is a media company.

… the convergence of web2 and web3.

A true convergence of web2 and web3 as many of the largest companies like Nike, Starbucks, Instagram and Visa integrate exciting blockchain features. The main use cases will be loyalty programs, cross-border payments, and the expanded product market fit of stablecoins. We often hear web3 companies say they “want to onboard the next billion users” — but through these releases billions of users already have crypto and blockchain capabilities embedded within the products they use everyday.

(editor’s note: Jeff’s contribution came in a few days after the post was released, hence why this does not show up in the image)

… in AI.

The next big thing in 2023 will be AI seeping into existing software tools to meaningfully enhance the end user experience. LLMs have reached an inflection point where they are going to be commercially viable for a ton of applications, and 2023 will be the year where we'll start to see more and more real world applications.
The next big thing in 2023 will be building LLMs into disruptive products and linking of LLMs to other useful programmatic + intelligent systems. We're in the early days of driving LLMs into really disruptive products and it will cause an entire examination of how everything in computing works. We're seeing some early examples of linking LLMs to other software and intelligent systems like what Facebook did with Cicero or what Adept is doing, but this is going to happen everywhere. It will lead to a whole new class of "intelligent software" that acts dynamically with the user's intentions in mind.

We're at a point where AI is progressing at an exponential rate. The best analogy I have is the next few years will look like we're going from the Model T to the Model S to the first flying car, all in just a couple of years. The end result is that the next 3-5 years are going to be a revolution of massive proportions, probably larger than the internet revolution. 2023 will be the year we go from seeing twitter debates where people post jaw-dropping examples and examples where they break to where LLMs and associated tools + products become the next big wave.

The next big thing in 2023 will be the rise of contextual computing, powered not only by AI, but new hardware, too. This is when we finally hear a good answer to “what comes after the smartphone and Google search.”
The next big thing in 2023 will be consumer-first AI. As the AI market rocket ships, the clearest and most straightforward applications will be around business efficiencies. But the most interesting may emerge around mental health/social/fun. We will break through the notion that talking to a non-human friend is strange as it starts to become normalized and we see applications that make leaps on loneliness and mental health in both effective and weird ways.
The next big thing in 2023 will be a shitload of cash flowing into generative AI startups. While most will fail reasonably quickly (destroying all the impressive paper gains for their early-stage investors), a handful will go on to revolutionize their areas and create big, lasting companies. My gut says that although all the hype will be in flashy consumer applications, the value will be driven by less sexy business applications of the technology in areas that have been waiting on the next technology step-change which haven't seen a ton of innovation since mobile.
The next big thing in 2023 will be reimagining every mundane detail of every software with large pre-trained models that’ll be widely available.
The next big thing in 2023 will be AI becoming mainstream!
The next big thing in 2023 will be new interfaces and UIs for prompt engineering that increase the usability and accessibility of generative AI, beyond simple text prompts. This will lead to significantly expanded usage across all roles in all kinds of organizations.
The next big thing in 2023 will be GPT for Pixels.
The next big thing in 2023 will be Generative AI used in sound and video applications.
The next big thing in 2023 will be GPT-4.
  • Ho Nam, Co-Founder & Managing Director at Altos Ventures
The next big thing in 2023 will be the widespread adoption of artificial intelligence and automation in various industries.

… in healthcare.

The next big thing in 2023 will be meaningful AI in healthcare. Healthcare is the largest and fastest growing industry in the US (and worldwide). While AI has transformed many industries (smart phones, email, self-driving cars, image recognition and shopping), healthcare has not yet been transformed. We believe this is on the verge of happening given the urgent need, the massive size of the market, structural problems with hospitals' existing business models, and technical advancements in AI over the last few years.
The next big thing in 2023 will be the rise of Independent Providers. Providers in healthcare have the optionality, the tooling and the skillset to be independent, and are empowered to do so.
The next big thing in 2023 is the increasing control of the consumer in healthcare. As US consumers spend more and more on their healthcare, they’re starting to make more data-driven decisions about what to pursue on their journeys. Just like one might search for the best vacuum cleaner on Wirecutter, healthcare consumers are seeking out key resources and data to help them make decisions about their care. This research-based approach is accelerated by the intersection of strong patient communities and the unbundling of the clinic (i.e. more CPG/ D2C brands) particularly in areas where there is less established research, such as fertility.

… in biology.

The next big thing in 2023 will be a resurgence of bio. Record low valuations and record high levels of cash in the industry will set off a hyperactive year in acquisitions and dealmaking. A series of long-awaited readouts of novel therapeutic approaches similar to this week’s Merck/Moderna cancer vaccine announcement will spark life in the sector along with investment activity.
  • Nan Li, Managing Partner at Dimension

… in climate tech.

The next big thing in 2023 will be decarbonization being cheap! The combination of compounding technology development curves for clean power and the Inflation Reduction Act's injection of $300B+ in climate funding will make low-carbon technologies cheap faster than anyone expects. This is a big deal, especially now -- as a tight economy forces every company to scrutinize every dollar, they'll rush to carbon solutions that save money.
The next big thing in 2023 will be the consumerization of energy. As we've seen over the course of the last cycle, consumers today are increasingly expecting trust, transparency, personalization, and values alignment across all aspects of their lives. Their standards when it comes to how and where they consume energy are no different. With global energy prices just off of all time highs, increasing economic angst in the face of seemingly unabating inflation, and the introduction of hundreds of billions of available energy related tax rebates thanks to the Inflation Reduction Act, there has, arguably, never been a better time to usher in a new conversation surrounding the intersection of consumer x climate. Moving forward, with accelerating electrification and decentralization, the energy ecosystem of tomorrow is likely to look far more like the Internet -- dependent on real-time data, frictionless interoperability, and consumer choice. I cannot wait :)
The next big thing in 2023 is a bonanza in climate technology deployment and job creation in the United States, as the financial incentives from the Inflation Reduction Act kick in. Across the market - mobility, manufacturing, industrial production, the built environment, energy generation - decarbonized technologies are now simply better-performing and lower-cost than the fossil-fueled incumbent technologies that they're replacing. This is the the beginning of a new era for foundational decarbonization of the US economy.
The next big thing in 2023 will be marketplace forces continuing to accelerate the dent companies and new technologies have on clean, sustainable, energy.

… self-driving cars.

The next big thing in 2023 will be self-driving cars. I know, I know, you’ve heard this before. But, hear me out: computer vision and machine learning has finally advanced to such an insane level that 100s of fully driverless cars—with no safety driver required—are today concurrently driving amongst humans on the streets of San Francisco. In 2023, this will accelerate to thousands of self-driving cars, deployed across multiple major cities, serving millions of customers and rekindling that Uber-in-2009 vibe, when transportation was last delightful.

… in B2B software.

The next big thing in 2023 will be a new refresh cycle for B2B software. Companies that have been around 10 years + and are now public companies moving further upmarket with "heavier" products are going to be disrupted by leaner startups who focus on solving end user pain points quicker and optimize architectures for the infrastructure that has become ubiquitous since then (K8s, container adoption, eBPF, open telemetry, modern data stack, JAMstack, etc).
The next big thing in 2023 will be automation disrupting knowledge work. Manual, repetitive tasks will start to go away, freeing human capacity for more creative and complex problems in the world.
The next big thing in 2023 will be developer platforms, meaning platforms that enable developers to build applications much more easily. Historically, these “platforms-as-a-service” have been tiny compared to “infra-as-a-service” (think Heroku vs AWS), because developers demanded infinite degrees of flexibility. That’s changing for three reasons. First, the AWS console has grown so complex that many (particularly front-end) developers never want to touch it. Second, more activity (eg, security) is “shifting left”, forcing developers to use higher level tools just to keep up. Third, the platforms are getting better, with new entrants like Modal or Railway that balance simplicity and flexibility better than before. It’s a similar evolution to what we’ve seen with Legos (because really, do we ever grow up?). People loved having random assortments of Legos so they could built anything. But they loved it even more when Legos came with instructions so they could build Optimus Prime or the Millennium Falcon.

… in legacy markets.

The next big thing in 2023 will be that boring and legacy markets will become vogue. Markets like construction, manufacturing and insurance, which have generally been ignored, will start to pick up some heat.

… a number of exciting things!

The next big thing in 2023 will be vertical SaaS that actually impacts operating expenses (OpEx) vs “productivity”, community driven marketplaces, and capable and concerned capital. What a time to be alive!
The next big thing in 2023 will be personalized beauty and hair care, Blockchain for everything but crypto, and Diverse founders because of course.
  • Mac Conwell, Founder & Managing Partner at RareBreed Ventures
The next big thing in 2023 will be intersections between digital and physical. Some of the most exciting applications of AI involve applying it to the physical world, a la AlphaFold. Climate and energy projects are using the good parts of crypto to bring liquidity and transparency to carbon credit markets or build distributed energy grids. Software is as much a part of modern factories as the CNC machines and robots they coordinate. People have bemoaned the fact that we wasted the ZIRP Decade on products that don’t really contribute to human progress, but I think in 2023, we’ll see that the software built in the past decade can be applied to solving complex challenges in the real world.

I started next big thing to share unfiltered thoughts. I’d love your feedback, questions, and comments!

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