Five major changes have taken place in the Silicon Valley technology circle in the past year

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The year 2015 that just passed was both a busy and dull year for Silicon Valley. The busyness lies in the fact that countless new concepts and entrepreneurial ideas are still fermenting, and the enthusiasm for entrepreneurship is still hot, but after the prosperity, people here find that life has not undergone earth-shaking changes. Most of the modern "smart life" is still provided by those "tech giants": when you turn on your computer, the first thing you see is still Microsoft's Windows or Apple's Mac OS, your smartphone is still an iPhone or Android phone, you still go to Amazon for online shopping, and you still use Facebook or its other social services to communicate with family and friends. Perhaps the life here that has been changed the most is the travel and accommodation options provided by Uber and Airbnb, but these two companies have been established for more than 6 years and are valued at more than 10 billion US dollars.

Although there are countless startups in Silicon Valley claiming to "change the world", unfortunately, the world has not changed, at least in 2015, nothing has changed in the Silicon Valley. But perhaps this is the norm in Silicon Valley. Countless companies are born and die every day. No giant was overthrown in 2015. Instead, they became stronger. The risk of entrepreneurship is still very high. Several examples this year have once again proved that even entering the "unicorn" club is not safe.

But don't be too disappointed. If you observe carefully, there will always be things that stimulate your excitement and freshness: the peculiarly shaped Google (Weibo) driverless cars that slowly pass by on the road from time to time always attract people's attention; more and more people will choose to pay directly with their mobile phones when checking out in stores; you can also enjoy the "benefits" brought by many start-up companies: free food delivery, free delivery, etc.

After experiencing last year's "overheating", Silicon Valley is gradually returning to the "new normal". It is undoubtedly still a "holy land for entrepreneurship" with the best resources and the most outstanding talents, but don't fantasize that changing the world can be done overnight.

The situation of unicorns: the polarization is more obvious

In Silicon Valley, "unicorns" are undoubtedly the most popular objects, and are the model of success and the goal to be pursued by countless people. The so-called "unicorns" refer to start-ups with a valuation of more than US$1 billion. The members who can enter the "unicorn club" have at least their commercial feasibility recognized by many professional investment institutions. According to statistics from the Wall Street Journal, there are more than 130 "unicorns" in the world so far, including more than 80 in the United States, and most of them are in Silicon Valley.

But even in the same "club", there are differences between unicorns, and this difference has become more obvious this year. "Super unicorns" such as Uber and Airbnb, which are valued at more than $10 billion, have already opened up a clear distinction from other startups with a valuation of more than $1 billion. They are the most sought-after by investors and the most well-known successful startups.

It can be said that although all unicorns are in different situations in 2015, they can even be described as two completely different situations. The first group such as Uber and Airbnb has continued to grow in this year, but Theranos, which is valued at nearly $10 billion, has recently been questioned for suspected fraud. Zenefits failed to meet its performance targets this year, and its valuation of $4.5 billion is also in jeopardy. Evernote, which has encountered a series of turmoil this year, such as office closures, layoffs, and senior executives leaving, is questionable whether it can continue to stay in the so-called "unicorn" club, as its last round of financing took place in March 2014.

When discussing the topic of start-up companies going public, Thomas W. Farley, chairman of the New York Stock Exchange, recently pointed out that Uber, Airbnb and others need to be treated differently. Their financial strength and business scale are far from being start-ups in the traditional sense.

Apart from the first group with valuations of over 10 billion US dollars and start-ups hovering on the edge of the "Unicorn Club", there are only a handful of truly "reliable" start-ups with promising prospects. It is not difficult to see that the high-risk characteristic of start-ups has not fundamentally changed. Even members that have already entered the "Unicorn Club" may face failure at any time or even have everything go back to zero once the market environment changes and performance fails to meet targets.

Extension of listing period

In 2015, the overall venture capital environment in Silicon Valley remained hot. The popularity of entrepreneurial projects and the large amount of funding gave rise to another obvious phenomenon: the time for start-ups to go public was greatly delayed.

According to CB Insights, the 190 tech startups it tracks have raised a total of $25 billion from venture capitalists and other investors, far more than the $9.4 billion raised by tech companies going public this year, a year that has seen only 28 IPOs, compared with 62 last year.

Other market reports also show that this year's technology company IPOs are the lowest since the 2008 financial crisis.

Startups are not short of money, especially the highly sought-after "unicorns" with valuations of over $1 billion. It has become the new normal for investors to scramble for high-quality projects.

But at the same time, another problem has gradually surfaced: early investors need to exit, and they can only do so through the listing or acquisition of the invested companies. For some startups with extremely high valuations, being acquired is not realistic, so the only way left is to go public. Some analysts pointed out that next year may once again be a "big year" for technology companies to go public. At least there is basically no suspense about the listing of "super unicorns" such as Uber and Airbnb, which are valued at tens of billions of dollars, next year.

The benefits of remaining private include not having to disclose information and being able to focus on the long-term development of the company. However, for some startups, remaining private for as long as possible is not necessarily better. The listing of mobile payment solution company Square is a vivid lesson: due to its overvaluation in the early stage, on the eve of its listing, Square had to lower its IPO price to the bottom of the previous offering price range. Based on this calculation, its market value is nearly 50% lower than the valuation in the previous round of financing.

There is great uncertainty in the valuation of the private market. Currently, the valuations of most start-ups are "overvalued". A month ago, investment institution Fidelity Funds lowered the valuations of several start-ups it invested in, reflecting investors' concerns in this regard.

For some startups, not going public is the last "fig leaf" because once listed, the public information, abundant liquidity and free trading in the secondary market will more truly reflect its intrinsic value. Perhaps this market price is far from its previous valuation. An example is Dropbox. After the last round of financing in January 2014, the company was valued at $1 billion. Another cloud storage company Box, which went public this year, currently has a market value of only $1.73 billion. If the two are simply compared and calculated at the same market-to-sale rate, Dropbox's valuation may be only $300 million.

Giants become more powerful

Compared with the vastly different circumstances of start-ups, 2015 was a year of steady progress for many technology giants to further expand their scale and industry status. The market capitalizations of Apple, Microsoft, Google, Facebook and others have set new highs, their leading advantages in their respective fields are still expanding, and their market position remains unbreakable.

At the same time, it is obvious that these giants have a stronger sense of being prepared for danger and actively seeking change. The "sense of insecurity" seems to be felt in every giant. Although Apple is the undisputed leader in the smartphone market, it has further expanded into the field of wearable devices by launching the Apple Watch this year. In addition, there are reports that Apple is also actively developing driverless cars. In this year, the traditional software giant Microsoft expressed to the outside world its stronger determination to enter the hardware field. Its high-end two-in-one laptop Surface Book and the latest generation of Surface Pro have even set a benchmark for the notebook R&D and production industry, leading the next generation of notebook R&D and design ideas. Google has made its business lines clearer through the readjustment of its corporate structure. Whether it is search, advertising, and Android system businesses for ordinary users, or life sciences and driverless car research that are far from the market but have huge prospects, a more powerful "Google Empire" has gradually taken shape in 2015. And the "King of Social Networking" Facebook has not comfortably enjoyed the fruits of its more than one billion users around the world, but has been constantly exploring new fields and new businesses. Its attention and investment in virtual reality, drones and other fields make a more diversified Facebook worth looking forward to in the future. In 2015, no giant fell; instead, they became even stronger.

Entering China

Another hot topic in Silicon Valley in 2015 is about business entering China. Since the beginning of this year, there have been constant reports about Google and Facebook entering China. Although there is no confirmed news yet, it should not be unexpected that these two giants will start business in China in the near future. Interestingly, the attitudes and reactions of these two giants are completely different. Google has kept a low profile, and its founder is not willing to make too many statements on this matter. Instead, it is promoted by its specific business departments. The most confirmed news at present is that Google Store will be the first to enter the Chinese market. As for Facebook, its founder Zuckerberg has visited China many times. Whether it is talking directly with President Xi Jinping in Chinese at the China-US Internet Summit held in Seattle, or giving speeches in Chinese at Tsinghua University many times, it has greatly expressed Facebook's positive attitude to enter China to start business. However, at least there is no confirmed news about Facebook entering China.

For the two "super unicorns" Uber and Airbnb, the former has taken the lead in entering the Chinese market and occupied an important market position. However, facing strong local competitors such as Didi Kuaidi, Uber is not having an easy time in China. There are big questions about whether it can maintain its market share by relying on subsidies for a long time and whether it can retain users in the future. Airbnb also clearly conveyed to the outside world this year a strong signal that it wants to enter China. Through Sequoia and Broadband Capital, Airbnb hopes to further expand its business in China through these two "pioneers".

For any company, the Chinese market is undoubtedly huge and full of opportunities, but countless previous experiences have also shown that there has been no good solution to the problem of "not being able to adapt to the local environment". Linkedin, which has entered the Chinese market for two years, is exploring a set of ideas to promote two products and conduct "localized" business, but it has not achieved very good results so far.

In addition to the differences in market environment, companies from Silicon Valley will inevitably encounter some issues related to policies and regulations when entering China to conduct business.

Smart wearable devices are coming

At the beginning of 2015, the concept of smart hardware was very popular and was generally considered to be the next "trend" after the smartphone era. From giants such as Intel, Qualcomm, Apple, and Google to countless smart hardware startups, it seemed that the entire industry was actively promoting this field. However, a year later, the "trend" that people expected did not emerge, and this field is still tepid. After Apple released the Apple Watch, although it led a trend of smart wearable devices for a period of time, Apple has not yet announced the sales of the Apple Watch, perhaps reflecting that the sales may not be as expected.

One of the reasons why wearable devices have not become popular is the lack of unified standards in the industry. At present, major manufacturers are pushing their own ecosystems, and the establishment of this system is far from complete. In addition, the low market acceptance of smart hardware devices is another important reason. At present, powerful smartphones can almost meet all people's daily needs. Smart hardware is far from replacing smartphones. At most, it can only serve as a component of the ecosystem around smartphones.

In addition, similar problems exist in the field of virtual reality. Since last year, attention to virtual reality has been increasing. Virtual reality research and development led by giants such as Microsoft and Facebook has made the prospects of this field promising. However, after 2015, more and more people have begun to realize that virtual reality is still too far away from consumers. Whether it is the maturity of technology or the richness of related content, it is far from meeting the standards for market entry. Facebook and Microsoft's virtual reality or augmented reality devices have only appeared a few times at developer conferences and are still semi-public to the outside world. Magic Leap, another VR company that can be called the most mysterious, releases some cool VR videos from time to time, but other than that, no one knows how their current research and development progress is.

The research and development of driverless cars is also facing many challenges in terms of technology, laws and regulations, market acceptance, etc. From the perspective of consumers, the attitude towards driverless cars is mostly wait-and-see and curious, so it is not difficult to understand why the recent news of "Google's driverless car was stopped by the police for driving too slowly" has even become social news or entertainment news. It may still be a long way to go for driverless cars to truly enter the market and enter the homes of ordinary users.