Boom businesses of the future
Posted on 14 August 2010 with 3 comments from readers
From my own entrepreneurial background as a partner in the private equity sale of the Dubai dot-com AME Info four years ago and my interest in stock markets, I retain a strong interest in the macro-overview of global business.
It was therefore curious to find a list of seven major business categories in the newly published book ‘Supertrends’ by Danish futurologist and serial entrepreneur Lars Tvede. He thinks the best future lies with seven supersectors: finance, real estate, commodities, alternative energy, luxury, IT and biotech/genomics. Here are my comments and quibbles.
Financial crisis
Finance is an odd choice as we are still living with the effects of the global financial crisis of 2008, and there is probably a good deal more deleveraging or debt reduction to come. Yet looking forward the urbanization challenges of the emerging markets like China and India surely mean a boom for finance.
Even in the UAE you can imagine housing finance as a new boom sector going forward. The problem is that the financial sector may go through another rough patch before it gets very much better. The recovery from 2008 has been too quick to be true.
Real estate comes with a similar warning on timing. That said if you look at the US and UAE real estate markets there are some great bargains now. It is just that the correction may not quite be over. Longer term the UAE is strong on five out of the seven supersectors, surely a mutually reinforcing process over time.
Commodities look a sure thing as China and India grow and the US pushes dollars into the global economy to support its recovery. That is good news for an earlier than expected recovery in the UAE. As Marc Faber argues deflation will never be allowed to happen and helicopter drops of US dollars can mean only one thing for commodity prices going forward. They will go up.
Alternative energy looks a winner, if only because higher oil prices will make it more and more competitive. In the 1970s this was a boom area despite a poor global economy at that time.
Living with luxury
On luxury I am less certain. Lar Tvede argues that the emerging markets will unleash legions of new consumers anxious for Cartier watches and Ferraris. But emerging markets are notorious for their own volatile business cycles, and I wonder if this is not getting too carried away with projecting straight lines from present growth rates. The nouveau riche have a habit of blowing it.
Information Technology is an obvious yes, given that technology like iPads and iPhones continue to transform our lives. But this will increasingly be dominated by a number of very large and powerful companies, and I think the entrepreneur is going to be squeezed out. We have never quite recovered from the dot-com bust and there is still too much capacity in some areas of IT for anybody to make a serious profit.
Biotech and genomics – the study of the human genome or DNA structure – are again another certainty for a mushroom in business activity, but this is even more highly specialized than IT. You could not imagine researching the human genome on your kitchen table!
Its an intriguing list and one to challenge entrepreneurial imagination anywhere.
3 Comments posted by readers:
I am the author of the book and appreciate the comment. Just to elaborate briefly on how I see the winning sectors (long term, so from today to year 2050):
1. Finance partly because most of the emerging markets have very limited use of credit yet and have huge capiotal spending and property construction to do. Also venture finance due to expected extremely rapid rates of innovation
2. Property because we will build new residential property for 100 millioo0n a year, and because the cycle has just been reset
3. Commodities due to emerging market economic boom
4. Alternative energy for same reason as 3 plus global warming threat
5. Luxury because it is a sector where the barrier5s to entry are extremely high and where I expect demand to grow 5-10 times until 2050.
6. IT because “you aint seen nothing yet!”
7. Biotech and genomics because productivity is improving even faster here than in IT and because it can solve numerous problems in relationship to resources and aging.
Thanks it is a brilliant book – the best piece of futurology this year.
Commodities, biotech, genomics, and IT are “no brainers.”
Property, OK, depending on geography and country-specific economic situations (e.g. not good for the US; and not good in the near term for China, where there are 65 million condos and scads of huge office parks that remain empty).
Overlooked Something?
One area that the author didn’t mention is nano-scale. Nano-tech is still quite a few years away, but we are currently on the verge of a major boom in nano-scale, with applications in all kinds of industries.