Ted Audio Collective.
HBR presents. Hi everyone, if you're listening to After Hours, I'm Yang Mi.
I'm Mi here. And I'm Felix.
Happy New Year, guys.
Happy New Year. Happy New Year.
How was your holiday?
It was fabulous. Lots of eating, lots of drinking, lots of laughing.
Sounds good. How about you, Mi here?
It was spectacular.
Lots of hardcore family time.
And we did Jordan and Turkey.
Oh, that sounds wonderful.
So, Mi here, you sent us the funniest video of yourself in Turkey.
Yes, that was actually the highlight.
I was dying. So explain that video you sent us.
So I went to get a long overdue haircut on December 31st to start the New Year.
And I did it in Istanbul.
And I remembered Felix's story because he had told me about how he had gone to a barber who burned off his ear hair.
And so I went to this barber and he just kind of layered on the services.
He just kept upselling, which was fantastic.
And he gave me a facial.
And then I asked him about burning off this stuff, this process of burning ear hair.
And he did it for me.
And at that moment, I realized I had to send you a video.
Your version looks so much more painful than mine because mine was like, just for a split second, my ears were on fire.
But yours just was, your ears were being roasted.
I agree, the flame was so big.
I was actually concerned because he lit that thing and the flame was huge.
I'm actually glad to hear you say that because I thought it was pretty bad, but I didn't want to be a wimp about it.
But yeah, it was pretty bad.
But then you were also getting a facial at the same time, which I found hilarious.
Which was for you, young me, because it combined everything.
Well, you look fantastic.
It was the first time I think I had had a facial in about 10 years and it felt great.
Fantastic. So are you guys ready to start the new year?
This is going to be a fun episode actually.
Yes, with predictions.
Yes. So we are going to do predictions for 2020, but we're going to start by taking a look back at the predictions we made last year and giving ourselves grades for how well we did.
Sound good? Yeah, let's do it.
Okay, so before we get into predictions for this year, I wanted us to take a quick look back at the predictions we made a year ago.
And I'd love to know, what do you think was your best prediction from a year ago or your worst prediction?
How do you guys do?
Mixed. It is not so easy to predict the future.
I would give myself a solid B.
That's not bad, yeah.
That's not bad. Well, yeah.
So some things I feel great about, which is I had kind of, this is the year of the regulatory crackdown on big tech.
I had a big bank merger.
I had the smaller cloud companies really underperforming everyone else, and that all felt really, really good.
And then I just blew it on, I had Jay Powell kind of renormalizing interest rates and rising by about 100 basis points and I had Trump not running again.
And so, you know, there were some really good ones and then there were some really, really bad ones.
So yeah, mixed bag.
The one I remember is you predicted the death of the Hollywood sequel.
That was a disaster.
Avengers and Toy Story and Frozen, all those sequels would bomb.
Well, thank you for reminding me.
Thank you. This is why we're in academia and we're not in Hollywood.
That's right. There you go.
There you go. Okay, Felix, what's the grade you give yourself?
I got many of them horribly wrong.
I predicted that Apple would buy Netflix, but that was clearly not right.
The one I did get sort of right is I predicted the death of the plastic straw, and in fact, plastic straw consumption did go down quite dramatically.
Then, of course, I also said Google's most popular search term would be Khaleesi, which turned out not to be right.
It was Disney Plus.
Khaleesi was a close second, wasn't it?
Wasn't it number two, Felix?
No, actually, no. And this is despite my effort of searching Khaleesi for weeks and weeks to drive up.
Okay, I give myself an A minus.
Yes, because the ones that didn't come true, I think they just haven't come true yet.
But the ones I got right, Amazon becoming a strong number three in online advertising, the proliferation of ghost kitchens.
The one I got really wrong was I predicted Boston would win everything.
I thought they would repeat in the World Series.
That didn't happen.
The Celtics flamed out.
We did win the Super Bowl, though, although it might have been our last one for a while.
So, you know, all in all with grade inflation.
Yeah. A minus, I think.
It's funny because the important thing is not to let this deter us.
Because I think the easy thing to do is to make safe recommendations.
But I think we should double down on being risk takers on this stuff.
Yeah, and eventually the future will take place.
Yes, exactly. It's just a matter of the world catching up with us, Felix.
So let's do predictions for 2020.
Who wants to go first?
Despite my failure on the political front, I'm going to go back and make a political prediction.
Which is, as you may know, the Electoral College and the popular vote gave two very different results in 2000 and 2016.
And that's a real crisis in a way.
And so I think this year I'm not going to make a call about the winner.
I'm just going to make a call about the fact that we're going to see the largest gap between the Electoral College and the popular vote in the United States.
And that that's going to stimulate really radical rethinking of the Electoral College.
Because for the second election in a row, there'll be a large gap and there'll be the largest gap between those two outcomes.
So I'm not deterred by my political naivete from last year.
I'm going for one more political recommendation.
I think that one has a pretty good chance of coming true.
I'm not sure about the second part, but at least the first part, the largest gap between electoral and popular vote.
Okay, that's intriguing.
Felix. I have one that is closely related.
I think we will see a Trump -Biden contest that President Trump will win.
Oh, wow. You're predicting a Trump reelection?
Yes. I mean, in the end, I think the state of the economy will, as always, will influence dramatically how people feel about politics and lead to the reelection of the office holder.
Wow. What do you think, young me?
Well, you know, it's funny, I was talking to my husband about this recently.
It would be unprecedented for a president not to be reelected, given how strong some of these economic benchmarks are right now.
And so I have to confess that I have the same intuition about this as Felix.
Well, just so we hedge our bets as a collective, I'm going to go against you guys.
Okay. Because I think it's not going to happen.
Actually, I would say that genuinely, but it also evens out our bets across the portfolio, which I'm all for.
Well, you know, related to that, one of my predictions for the year is that I think we're going to feel even more than we already do the effects of such a low unemployment rate.
I think the competition for workers is going to get more and more severe.
And one of the benefits of that, and I think, Felix, you mentioned this in our last episode, that wages are really going up.
And I think this trend is going to make things really tough for Democrats in this election cycle.
Interesting. So, Mihir, back to you.
What's your prediction?
I'm going to go with a topic we touched on earlier this year, which is I'm going to say that Google and Alphabet will mark a really significant change in their capital allocation strategy.
So that's going to mean either one of three big, big things, a very large acquisition.
They did Fitbit last year, but it was tiny by Google standards.
It's tiny as 2 billion.
I think there's going to be either a very large acquisition on the order of 30, 40 billion or a very large special dividend or a very large kind of unique buyback program.
Where they kind of return around 30 to 50 billion dollars of cash.
And so I think one of those three things happens.
And I think it'll be really interesting which one they choose.
So that's my kind of techy, googly prediction for the year.
I have a related one.
I think 2020, we will not see any material, any trust action against Google, Facebook or Amazon.
I think we will see some low digit billion dollar fines for particular transgressions, but I don't think we'll see anything radical like breaking up Facebook or any of these other talks.
I agree with you. Yeah, I think that's right.
OK, I predict that this will be the year of the hearables, not just wearables, but hearables.
And I think that it's only a matter of time before Apple AirPods start to do more than just provide a listening device.
I think you're going to start to see headphones that start to collect health data.
So you put them in your ear and they take your temperature.
They monitor your heart rate.
I think you can look at companies like Bose, Jabra, Bang & Olufsen, all as potential acquisition targets for big tech as these companies realize that hearables might be a promising way to get into wearables more seriously.
Oh, actually, I love that one, young me.
I had not thought about that at all.
I think that's really smart because it also goes to kind of Apple's kind of edge with the AirPods and how important the AirPods are to them more generally.
So I think that's a great prediction.
OK, back to you, Mihir.
So I have it somewhat related on health care stuff, which is I think what we're going to see this coming year is the year of health care.
And in particular, the one that I'm most interested in is actually Walmart.
I think we're going to start to see some big moves in health care by Walmart.
This is a little bit like CVS Etna, but they've opened up a very interesting supercenter in Georgia where they're providing primary care.
And that alongside with maybe some insurance plays, I think they're going to make a big push into health care.
And I think it's going to be really exciting.
So in the retail space, I guess I have two predictions.
One is about Walmart getting really interested in health care.
And then the second related one is I think Amazon doubles down on bricks and mortar.
And I think they buy Kohl's or somebody else like Kohl's like maybe Target.
And I think they kind of go full force into bricks and mortar in a bigger way than Whole Foods ever was.
And those companies are relatively cheap.
And that could be really interesting for solving some problems.
So those are two retail kinds of predictions.
Interesting. I was thinking about retail also.
And my prediction is that 2020 will be the first time that e -commerce will grow at less than 10 percent.
So historically, this has been as high as 20 percent.
And I think that 2020 is the year when e -commerce will grow less than 10 percent.
And brick and mortar retail will grow at the historic rate of roughly plus four plus five.
I think we're not quite there yet, but we're very close to what we will see as the balance between e -commerce and brick and mortar retail.
Oh, I love both of those predictions.
Of course, every time anyone closes a brick and mortar store, it's an automatic newspaper story.
But it's about 20 companies that are responsible for roughly 75 percent of all store closures.
So it's just not been true that brick and mortar as a whole has suffered.
Brick and mortar has a decade of modest growth.
If you look at the long term data, it grows every year.
Felix, you know, it's not only that brick and mortar is doing fine, but there's real innovation in brick and mortar that I think is to a large part overlooked.
So you mentioned Walmart's super centers.
The innovation in those super centers has been really striking.
And what's interesting is because of where they're located, the story of the rebirth of those super centers has to some extent been underreported, I think.
And so I agree with you, Felix, there is this narrative that retail brick and mortar is dying and nothing could be further from the truth, really.
OK, let's take a break and then come back with more predictions.
OK, more predictions.
I think we're going to see the beginning of the end of the British royal family.
Oh, and I think Prince William will never be king.
I love this. I think poor Prince Charles will finally be king, but he will be the last monarch and he will preside over the dismantling of the royal family.
What does that mean, dismantling?
I think there's going to be a real narrowing of the royal family, but you think Prince William will not become king.
That's pretty radical.
Well, I'm trying to be provocative.
I think you're probably right.
But I love this. You think he's going to take it apart?
He's going to like literally take it apart?
I think you're already starting to see it come apart at the seams.
I think the Prince Andrew Epstein story is really a banishment.
Prince Andrew really did damage to the royal family.
I think there's more economic dislocation to come in England as a result of Brexit.
And I think that all of these stresses are going to manifest in more calls.
That's super interesting.
I had a related thought, which was not as radical as yours, but just that it's kind of been sustained by this woman who has been just totally remarkable, who's the queen now.
I don't think we appreciate how remarkable a person she is.
And so in a way, the fact that it's lasted as long as it has, has more to do with her as a person than anything else.
So once she goes, everything's up for grabs in a way.
And I think that's I think where you're getting at.
I think that's really interesting.
Yeah. OK, Felix, what do you have?
I predict that at the end of 2020, Huawei will be number one in smartphones.
The company is ranked number two right now.
It completely owns the Chinese market.
It's going to face an uphill battle outside China as a result of U .S.
sanctions. It doesn't have Google mobile services.
So a Huawei phone will not have, say, Google Maps, for instance, which, of course, is an impediment.
But still, if you look at Huawei's both the quality of its phones, but then also its growth rates this year relative to much, much more modest growth.
Of Samsung, the number one player right now, I think at the end of 2020 in smartphones, Huawei will be number one.
Interesting. I like that.
So I think there's an industry that's been ripe for disruption and it's really happening, I think now in this coming year in a new way, which is the asset management industry.
So we know that passive has just been mushrooming like crazy, but the active managers, that entire space has really gotten hammered because of fee compression.
That has followed along with these outflows.
And so I think we're going to see a lot of players have to figure out a new strategy and there's going to be some, I think, some blood on the streets.
And so I'm thinking of like Janice Henderson and like Mason and what I'll read and just a huge number of these companies who are really going to have to figure out either they're going to have to learn how to specialize in certain asset classes where they can claim to deliver value or they're going
to have to combine and merge.
And this is going to be, I think, really seismic.
And so there are many companies like this and it is far, far from clear that they know what they're doing.
And they've started the cost cutting, but I think it's just beginning.
And I think this year will force a real reckoning in the asset management industry.
It's interesting. Okay.
I think this is the year when electric cars hit a real tipping point and become a real part of everyone's consideration set when buying a car.
So here's who's launching a fully electric car in 2020.
I'm talking about fully electric, not hybrid.
So Audi is launching its first fully electric mainstream car.
BMW is launching an upgraded model, Honda, Hyundai, Jaguar, Porsche.
Critical mass is really important here because charging stations need to become more ubiquitous.
That's already happening.
As an electric car owner, I can tell you it's just become easier and easier for me not worrying about running out of charge or finding a place to charge.
So I think this is the year where we hit that tipping point where people, if you're buying a new car, you really think hard about whether or not you're going to buy a traditional car or whether you go fully electric.
Interesting. Okay. Felix.
So I have two predictions regarding artificial intelligence.
One a little more serious than the other.
The more serious one is I think we will see a much weaker version of this notion that China is sort of the supreme power in artificial intelligence.
And I think both people will realize that is much of the advantage that China had in the early days of the technology came from surprisingly cheap labor.
What do you need for really powerful AI?
You need lots and lots of people who label pictures.
And so the labor cost advantage that China had is not going to matter as much as it was before.
And the new arenas, for instance, medical imaging and recognizing cancers and so on and so on, I don't think you can use quite the same labor force that China has assembled.
My less serious prediction is that AI will come to refrigerators, which, well, among many other implications, will mean that maybe finally online grocery business will come under the rock that it spent such a long time.
Once your refrigerator can automatically order milk when you're out of it, I think that might change things a little bit.
That's really interesting.
I had some particular industry predictions.
So I think the travel industry is going to get really interesting.
And I think in particular, we're going to see somebody try to go after a Gencia and maybe JetBlue.
So JetBlue, I think, is maybe going to get swallowed by United or possibly Alaska, which I think would be really interesting because they're kind of complementary routes.
And I'm not sure JetBlue is in a sustainable place.
And similarly, the travel industry website stuff, the platforms, like a Gencia, I think that could be a nice asset for somebody to buy.
And in particular, maybe Google or maybe someone else who wants to kind of get more serious about the travel space.
So I kind of think about that whole travel space as being interesting.
And I think an area where we're going to see some fairly large mergers.
Interesting. Okay. I predict that this is the year we will have our first really prominent deepfake scandal.
So I have to confess that I stole this prediction from Daniel on Twitter.
So if you remember about a month ago, I went on Twitter and I was asking people for their predictions.
And Daniel on Twitter, he predicted some prominent deepfake scandal in 2020.
And the more I think about it, the more I think time is right for this.
Have you guys seen the Tom Cruise Bill Hader deepfake that's online?
I haven't. That's sort of the, oh, you have to check it out.
It's unbelievable. You watch Bill Hader turn into Tom Cruise and then back to Bill Hader again.
It's crazy. Okay. Felix.
One of my entertainment predictions is that Apple TV Plus will not get significant traction.
Apple will keep it alive obviously, but I don't think it will be a serious contender in the streaming wars.
So Felix, maybe this is time to double down on Apple buying Netflix.
Yeah. I mean, along two dimensions, right?
One is if streaming wars are in fact decided by how significant is the library.
Yeah. I think that's just a super, super hard game to play if you're relatively new like Apple.
And then I think the global dimension also where Netflix has its traditional advantage would be a really an amazing compliment for Apple.
The one thing where I think my previous prediction where I guess I didn't think through it carefully enough is I think at this point in time, I'm not sure if that any trust concerns around mergers at that scale, whether they're just now top of mind, so many executives, so many policymakers that now
I think there's a little bit of a trend in taking any trust more seriously than people have in the last decade or so.
And so I'm not sure if that could happen just for regulatory and legal reasons.
I think you're right.
The timing for this is risky.
Yeah. I'm here. So I think this year will be the end of something that I'm looking forward to seeing the end of, which is climate change denialism.
So we still have politicians around the world who will deny the nature of climate change.
And I think with what is happening in Australia, that strategy, and of course, what happened in California and these fires, they're changing the political conversation in very quick ways.
And so I don't think there is going to be room anymore for any politician to deny by the end of 2020, the reality of climate change.
Maybe that's a little bit of wishful thinking.
Maybe wishful thinking.
But I think it's going to be the death of climate denialism.
Wow. Okay. I predict that this is the year where you begin to see real innovation, not just at the corporate level, but at the city level.
And by that I mean cities that decide they're going to brand themselves by their commitment to carbon neutrality, maybe even going so far as to ban private cars in certain parts of the city requiring alternative energy sources, but also other things.
I can imagine a city saying we're going to have laws in place that restrict gun ownership, for example, all designed to attract people to live there.
So I can imagine smaller cities, more progressive cities using this as a mechanism to brand themselves, to attract people to the city.
You already see cities beginning to experiment on some of these dimensions, but I think it's just a matter of time before a city comes out and says, look, we're going to put forth a whole package of things.
And this is what living in the city represents.
This might be wishful thinking because I think it would be cool, but that's what I predict.
Felix. I have a tech prediction.
I think 2020 will be the year when faces become mainstream as a form of identification.
It's true now at the border where, for instance, if I have global entry and I don't type anything, there's video recognition of my face.
And then I sail through immigration.
As we're taping this tonight, I'm in southern China in a city called Tianjin that is close to Hong Kong.
You will not believe the number of vending machines that only work via face recognition.
So you use Ollie Pay to pay for your beverage.
And how does the machine know which Ollie Pay account to draw on?
That's, of course, your face.
That's amazing. I think where you're really going to start to see it is at large events, like sporting events and concerts and things.
I think Taylor Swift is already using it.
You know, anywhere there's a security concern, I think you're just going to start to see this in more and more places.
I have a couple of more.
I think you guys have a couple more as well.
Okay, so let's do these quickly.
I'm going to bundle these all together, but I have some sports predictions.
Of course you do. I think the Patriots aren't going to make it to the Super Bowl.
That's what I think.
You think? Too soon.
Too soon. Sorry. So legalize sports betting.
Mm -hmm. 2020 will be the first year in which the majority of states permit sports betting.
And this is going to increase interest in sports for sure.
But it also creates a very different kind of dynamic and pressure on leagues and referees.
It really heightens the energy, both positive and negative, over the outcome of different kinds of sporting events.
Mm -hmm. The story of the 2020 Olympics will be women athletes.
Our new feminist icons are essentially women athletes, people like Megan Rapinoe and Simone Biles.
And so I think that's going to be the big story of the 2020 Olympics.
And I think this will be the year that the first women will be hired to be the head coach of an NBA team, probably Becky Hammond, who is currently an assistant with the Spurs.
But maybe not even her.
There are a number of women who serve as assistants on NBA teams.
And so those are my sports predictions.
Felix. And I have a related prediction.
2020 will be the year when the first Asian -American woman will be nominated for the best actress, Oscar, Awkwafina.
She just won a Golden Globe.
Yes. Yeah. That's cool.
In a really strange category, right?
How is it a musical performance?
I don't know. I don't understand entertainment.
The Golden Globe rules, yeah.
And speaking of entertainment, I think after Carrie Fisher's brilliant performance in the last Star Wars movie, we will see many more dead actors appear, both on television and the movies, both for economic reasons and because technology is so wonderful.
Wow. We're going to bring back James Dean.
Yeah, that sounds great.
Nice. OK, picks. These are our first set of picks for 2020.
Who has a pick? So sometimes I'm hesitant to watch an entire season or even a show.
If I know there are many, many, many episodes and if I end up really liking the show, then I will not have time to binge watch the way I would really love to.
So part of my holiday break I used to watch at Jane the Virgin.
Have you watched that show?
No. It is fabulous.
It's been running, I think, for maybe four or five years and it came to an end, sadly, this summer.
When you first watch it, you think it's a show that makes fun of melodramatic Latin American series.
And then it's much more complicated, much more cheerful.
It's just really delightful to watch.
So if you have a chance at Jane the Virgin, there are a trillion episodes.
And so you better know once you get hooked, it's a big project.
I've always liked the actor who plays.
She's the star of that show.
I've always liked the energy she exudes.
The acting, it's so exaggerated, much of it, that you sort of see the skill that goes into making fun of a particular genre.
It's actually just delightful to see.
Oh, that's a nice one.
That sounds great. OK, I have a recommendation and this is an audio recommendation.
I continue to be so struck by how quickly the medium of audio is evolving.
So this is a podcast episode that is four and a half minutes long.
It's equivalent to a short story, really.
And in fact, this particular episode, which again is only four and a half minutes long, has won some awards for podcasting.
But what you're hearing is a very brief phone call between a granddaughter and her grandmother, who's 91 and hard of hearing.
And the older woman speaks some English but is more comfortable in Marathi.
OK. While her American granddaughter speaks that language with a more limited vocabulary.
And they're trying to communicate with each other and it's just it's so beautiful and it's actually quite moving.
And so the episode is called Row Cub and it's on a podcast called Radio Atlas.
So I'll post a link to it in the description.
But it's really it'll take four and a half minutes to listen to.
And it just gives you a sense of how the medium of audio is just evolving in so many interesting ways.
So anyway, I loved it.
Wonderful. That sounds really nice.
Yeah, me here. I think when we talked about food one time, I mentioned the high, high, low, low strategy, which is going to really nice restaurants and then going to food trucks.
So you avoid the middle mediocrity.
So I have an analogous one for travel, which is I'd like to recommend airport hotels.
I think airport hotels are fantastic and underutilized.
So they are great in certain settings.
So we had a very long day where we've arrived at an airport around 11 and we're taking a flight early in the morning.
And we stayed at the Yotel in the Istanbul airport, which is new.
And we've done this in many places, actually.
We've stayed in airport hotels and it is so much fun and it is so easy.
And it brings down your average daily rate pretty nicely.
And so if you think about your average daily rate, which I sometimes do on travel, then it allows you to like go splurge when you go to a place for longer.
But I think airport hotels are great.
We've used them in different places in Milan and in San Fran.
And rather than kind of wake up early at some place and then drive to the airport early in the morning, consider an airport hotel and it is great.
And now we have really good ones in San Fran.
We have really good ones actually all around.
And so these are great experiences.
You stumble out of the bed in the morning and you literally are in the airport for some of these.
And it's just so great.
So to bookend your travel almost.
Yeah, it's almost always bookending, right?
We happen to be in a situation where we had an early morning flight and a late night arrival from a different place.
And so rather than go back into town, it was, let's just stay at the airport hotel.
And for some reason it provokes incredible hilarity.
Like we just have the most kind of fun in airport hotels.
So that's my recommendation.
Nice recommendation.
Okay, so that's it for this week.
We will be back with a regular episode next week.
Thanks everyone for listening.
This is After Hours from the HBR Podcast Network.
Thanks for watching.
