Bigger than the Dotcom Boom…and Not Ready to Pop

From Ukraine to Syria, and Israel to Yemen, war is quickly spreading throughout the Eastern Hemisphere.

Meanwhile, the threat of another financial bubble looms as the currency war intensifies.

With so much adversity standing in our way, it’s hard to be optimistic about our future.

But being that today is about the celebration of life, let’s focus on the positives – things we can, and should, be excited about.

Bigger than Dotcom

There is a growing trend that no one in Canada is talking about.

Over the past couple of years, this sector has become the fastest growing space in the world. The valuations are extreme, but the promise of a more efficient future is real.

Its growth has put failing Internet giants, such as Yahoo, back on the map of relevancy and profits. It’s turned Apple into the world’s biggest company. And its about to create another group of new billionaires and millionaires – the way Facebook and Google did.

I am talking about something that is even bigger than the dotcom boom.

I am talking about the mobile boom.

While most of you have seen the mobile opportunity grow over the past years, its not until you begin taking a closer look at the numbers that you truly realize just how big the opportunity has become.

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Shocking Numbers

There are now more active mobile devices on the planet than there are humans. Mobile penetration has now surpassed 100% in most developed markets.

More importantly, as George Berkowski wrote:

“In 2013, the average US consumer spent an average of 2 hours and 38 minutes per day on their smartphone and tablet. That accounts for a whopping 17 per cent of their waking hours – that’s almost one-fifth of the time we spend with our eyes open.”

Incredible! But that’s not all. The average smartphone user also looks at his phone more than 150 times per day.

Just take a look as you walk around the city: everywhere you go, someone is looking down at a phone. You’re probably reading this newsletter from your phone right now.

But as big as the smartphone has become, the opportunity isn’t the phone itself – far from that.

It’s in the applications these smartphones can power; the phone is simply the device that hosts a world of new applications and opportunities.

So never mind the battle between Apple and Samsung for top smartphone spot; the more important and more substantial theme is that because these mobile devices give anyone the ability to connect, businesses will forever change the way they operate. Or end in failure.

A Dramatic Shift

Many businesses will cease to exist as a result of this shift to mobile; the same way Blockbuster and Yellow Pages were brought down by the Internet.

From email to messaging apps, and from GPS devices to mobile GPS, this shift is happening so fast that its hard to grasp just how much it has changed a number of industries.

One look at the new mobile ride services such as Lyft (which just closed a $530 million funding round) and Uber (which is now valued at over $40 billion), and you can see how mobile is already taking over the world’s taxi businesses and changing that space forever.

Last year, Comscore showed us how far we’ve come in this shift to mobile – so far that in many categories, digital media usage is almost exclusively happening on mobile devices now.

Take a look at this chart by Business Insider:

mobileappusage

This is why the mobile opportunity is far greater than the dotcom boom. There’s already more data usage happening on mobile devices now than there was data usage for the entire Internet during the dotcom boom.

But that’s not all.

For the first time ever, mobile app usage has actually exceeded that of desktop usage in the U.S.:

Via CNN:

“Americans used smartphone and tablet apps more than PCs to access the Internet last month — the first time that has ever happened.

Mobile devices accounted for 55% of Internet usage in the United States in January. Apps made up 47% of Internet traffic and 8% of traffic came from mobile browsers, according to data from Comscore, cited Thursday by research firm Enders Analysis. PCs clocked in at 45%.

Although total Internet usage on mobile devices has previously exceeded that on PCs, this is the first time it’s happened for app usage alone.

The shift follows a free-fall in PC sales, which suffered their worst decline in history last year.”

Another Bubble?

With all of this growth comes an enormous amount of capital fueling this mobile propulsion.

We’re now once again at a time where insane valuations are being given to non-revenue producing startups, fueling the parties and cocktails in Silicon Valley.

While risk capital in Canada has fallen to some of its lowest levels in history, due primarily to a failing public market, the private equity model in N. America is thriving.

In the last year alone, the private equity market, through buyout and corporate finance, venture capital, mezzanine, funds of funds and secondary funds, raised $266.2 billion, an 11.7% increase from the already whopping $238.35 billion raised by 661 funds a year earlier.

According to Dow Jones, 765 U.S. funds closed on capital in 2014 – the highest amount of funds since 2000.

According to Thompson Reuters, in 2014, Venture Capitalists (VC) raised $29.8 billion from 254 funds, the biggest annual fundraising haul for venture capitalists since 2007. That’s a 69 percent increase in from 2013.

And the majority of this VC capital has been flowing into mobile apps.

Of course, with the valuations and money that we’re seeing flowing into the space, many are already calling it another bubble.

There’s even a mobile app that raised $1.5 million with a $10 million valuation and all it does is send your friend a “YO” message.

But are we in a bubble?

Last year, the U.S. saw post-crisis highs in both capital exited and number of VC liquidity events, at $80.6 billion and 904, respectively. That means that while capital has been flowing into riskier assets, much of that risk has been recycled through liquidity events.

So even if this mobile opportunity is a bubble, its not yet ready to pop and it’s creating a new world of real opportunities dedicated to changing the way we all interact and conduct business.

Just imagine: instead of googling for a handy man and returning hundreds of results, you simply use an app on your phone to find the best one; instead of looking for the best restaurant and returning thousands of results, you simply use an app to simplify the process.

The mobile opportunity is about taking a very fragmented Internet, and organizing its information to make it more accessible – and ultimately, universal.

Luckily for Canadians, we’re not being left out of this boom.

Social media powerhouse Hootsuite, based in Vancouver, has raised more than $200 million over the last two years. Just the other day, Varagesale, based in Toronto, announced that it raised $34 million investment from two of silicon valleys biggest venture capital names, Lightspeed Ventures and Sequoia Capital.

Are we in a new mobile tech bubble?

We Need to Change

This shift to mobile is just beginning, and it’s so big that many can’t yet comprehend its size. Think of how Blockbuster and Rogers Video stores were forced to shut down. Now think of that happening to many other businesses.

While this sounds gloomy, its not about doom and gloom. It’s about change – a major cultural shift that is happening now.

This change will bring about more than just new technology; it will bring change to our way of life.

Technology has already transformed how kids learn at school; now its time that schools start leaning about technology.

I urge our politicians and our teachers to embrace this change quickly. There is a world of opportunity in our future, but it won’t be ours if we wait.

It all starts with a drastic change to include computer science and web development as a requirement in our education system.

If we continue with our current archaic education system and choose not to embrace this change, then yes, we are doomed.
But if we embrace this change, the future holds many new opportunities.

Equedia
The Equedia Letter is Canada’s fastest growing and largest investment newsletter dedicated to revealing the truths about the stock market.