Looking forward to 2007

Just this morning I was looking out to a snowy yard and relished its clean, white virgin qualities. When the air is crisp and there is fresh snow on the ground, there is no better time to reflect on the past and plan for the future.

I believe 2007 will be an interesting year for politics, the environment and for business.

Politically, we can't keep discussing the same topics without making progress, particularly as we move into an election year in 2008. Immigration; the Middle East; terrorism, the climate and energy crisis' and the economy, all will begin to see a bit of progress with reasonable solutions beginning in 2007. Demo's will no doubt help this effort.

Environmentally, I see big investment in green technologies. It seems that a lot of wealthy private investors are looking at fueling new businesses that promise to innovate, create and solve big problems. VC's tend to bandwagon and in this case, it may be a good thing. But, I hope the VC's that do invest in this industry take a long term view. It will be like investing in a drug discovery company with a ton of regulation.

Business in 2007 will be opportunistic and I see the IPO market opening up again. Two things are driving this; (1) a lot of capital has been invested in young companies over the past few years, so it's time to monetize. Initial Public Offerings will provide the exit needed to return capital to the institutions that provide the capital in the first place; and (2) Financial markets always have and always will be run by fear and greed. VC's are greedy. But, have they really learned from their past mistakes in rushing young companies to the capital markets? This time, however, it may be good for the founders, the investors and the markets. We'll see.

So, here is my top 10 for 2007:

1. Social networking will begin to mature and go vertical. This will be terrific for the consumer as they splinter off to networks that are meaningful to them. Social marketplaces will emerge and go global providing micro-businesses and independent artists with a unique opportunity to build brands online very quickly.

2. Digital media will be the big growth vehicle as all things digital begin to converge. Billions will be invested in 2007 as fragmented markets begin to consolidate providing exits to all of the start-ups founded years before. New leadership will begin to appear and new consumer brands will emerge as portals for independent digital publishing, digital media and consumers too.

3. The music industry will finally start to wake up and embrace the forces of change. This will be terrific for independent artists but it will still take a few more years before radio, music, fans, clubs and distribution are all in sync again. This is a major shift of power in a $75 billion world-wide industry...good things do take time. There will be a few newly formed companies possessing superior business models that offer fresh perspectves that in fact, may be positioned to lead the new digital media industry.

4. Google should have a stock split because that is the only thing that will move the stock again and start attracting fresh employees. Google will also look to form a media company because at the of the day, they don't really believe that user generated content is the future like Yahoo does. This will be an interesting year for Google as they try to remain agile like a start up with the burden of operating like a Microsoft. Many Google employees are now fully vested and will jump ship to take a short break then start new companies. VC’s will back them just because they have Google on their resume. Big mistake. Remember 1996? VC’s should look to support consolidations not continue to frag the market with me-too companies.

5. Fine dining will lead the restaurant industry in year over year comp sales as casual dining finally fills up. It's been years in the making, but we now have too many casual restaurants operating in the States and sales will begin to naturally fall off. Too many seats, not enough customers and boring menus will help manifest this. Quick casual is still hot, but innovation will need to occur before there is too much excitement in this sector. Hotels continue to offer celebrity chefs low risk start up deals and in exchange, drive consumer traffic to the hotels and resorts. Many chefs will start mini chains of their proven upscale concepts and others will begin making simple foods great. This may be the theme over the next several years. So who does make the worlds best hamburger and French fry?

6. Retail and restaurant buy-side multiples are way off their high but sellers are still dreaming of a big pay off. There is also a glut of 30 year old brands looking for buyers and they will have an extremely difficulty time selling. Tired, old, boring restaurant concepts with average or below average unit economics does not an attractive opportunity make. I see more acquisitions fewer mergers and private equity starting to back management teams not just financial statements and hot concepts. So, where are the all star 50-something chain restaurant operators?

7. Back to work. I see people working all of the time. While driving, walking their dogs, sitting in airports and in restaurants, waiting for lights to turn green and on chair lifts...imagine? Blackberry, BlackJack, Palm, Pearl, you name it, we want any gadget that will connect us. Then, there is the natural convergence of sight and sound, the iPod phone? and the Chocolate. Warm fuzzy devices that connect us to our music, our people, our calendars, our contacts and our Internet anytime, anywhere. This place-shifting concept will change how we work and where we live if, companies trust employees to perform. So, I predict a new type of wage scale tied to quantifable performance and results. Historically, only sales personnel had a commissionable performance package. However, some smart HR manager will invent a novel way to pay non-sales employees so the employers get what they need and employees have flexibility and freedom...using their PDA's to connect...anywhere and any time...perhaps all the time!

8. In 2007, the handheld will begin to dominate all technology sectors. Content providers want access to over 1 billion terminals and consumers want to have access to that content and connectivity.

The ability of connect to the Internet is absolutely the killer opportunity over the next 10 years. Imagine having all of your documents stored online somewhere such that they are always with you. Imagine then not requiring anything more than a PDA device with you. You would not need to travel with a lap top. Some smart PC manufacturer will invent a simple $100 device and sell them to hotels by the thousands and to kiosk vending machine operators that rent them by the hour at Starbucks, airports, train stations and schools. No drive required, not really even storage. Online word and spreadsheet programs offered free by Google eleminate the need for Microsoft products. One USB port for a jump drive and an Internet connection and you are working. All you would need is a cellular connection at the least and a broadband connect at best. To call, to write, to access documents, make presentations, listen to music, buy and sell on ebay and research anything anytime anywhere will be the next big thing. The office will shrink to small cubes and conference rooms with digital video teleconferencing when you don’t want to hold an international video conference at the park. Our Occupational Place-Shifting (OOPS), it's happening now.

9. The SUV will begin its slow inexorable march toward its death as the 25-40 year old consumer starts to control auto purchasing. Gas prices will probably never dip below $2.00 a gallon and we have an energy crisis. The consumer knows this and smart consumers have already connected the dots. Oil is the bane of our current existence and is "fueling" climate, economic, terror, war and social crisis' because they are all connected. We need a solution and it will take billions, probably trillions to invent and support a new energy industry. So, we better start now.

10. Health and wellness will become the fastest growth industry when it embraces technology. The reality is that "boomers" are in their 60's, want to live forever and still control 99% of the wealth. You know the saying "if you don't have your health, you really don't have anything at all".

Read a book by Tony O'Donnell called Miracle Super Foods that Heal. This book makes the answer obvious. You are what you eat and we have been eating very well for years.

By combining the passion we as consumers have for gadgets, connectivity and technology with our need to live longer healthier lives, we will see this industry start to dominate all others within the next 5 years. We now drink Xango to relieve pain, seek out antioxidants and spas, rid our bodies of harmful toxins that were not around when our bodies were invented, (means that your liver and kidneys alone will not do the trick in this century) and we look for less fat and to eliminate transfat completely from our diet. We are finally seeing diets that actually work because nutritional programs have been formulated organically to work with our bodies at the molecular level and with our individual personalities to succeed. Isagenix and others like them, will become leaders in a $500 billion industry within the next 5 years. I believe these new age, alternative, nutritionally-savvy comanies have the answer to better nutrition, better health, and the byproduct is living longer and weight loss.

So, Happy Holidays, Merry Christmas and Happy Hanukah! Make 2007 a great year for you, your family and your business. There is no time like the present to start fresh with renewed passion...enjoy the snow.