The future of boating will not be smooth sailing
There is a part 2 for this blog on the future of boating.
Raise your hand if you know of some boating companies that have faced severe difficulties, went bankrupt or restructured in the last few years. Thanks, you can now all put your hands down.
You can also prepare yourself to see many more in the next few years! How do I know?
I am not saying this based on my intuition or own opinion. My predictions are simply based on weeks of reading and research, studying the most brilliant minds on the planet.
So let’s dive in and see what the future of boating is going to look like!
I will start by asking you two questions:
- Would you invest in a stock that has systematically doubled every 18 months for the last 60 years?
- Would you follow a stock analyst’s advice that would accurately predict the performance of 87 out of 100 stocks?
If you responded yes to both these questions, then keep reading this blog post.
I took the stock analogy to make it simpler but I was actually referring to 2 different things: A technology law and a futurist.
1. A Technology Law
This law is one of the most important principles in the history of technology. This observation was originally introduced in 1965 by Intel Co-founder Gordon Moore and is referred to as Moore's Law. Moore predicted that the number of transistors per square inch on integrated circuits would double systematically every 18 months. This law has consistently been true over the last 60 years and will continue into the foreseeable future.
One of the most important characteristics of the Moore law is the word “double’. Double indicates that we are growing exponentially and not in a linear way. To understand the difference between linear and exponential, let’s take a simple task as an example. Taking 30 linear steps would cover around 30 meters when 30 exponential steps would cover over 1 billion steps or the equivalent of 26 times around the planet!
When it comes to computers, the exponential growth keeps showing mind-blowing progress. For instance, have you ever received a birthday card that once open, plays a little song? Did you know that the computing power in this simple birthday card is superior to the sum of all the computing power that the entire allied forces had in 1945?
2. A Futurist
Raymond "Ray” Kurzweil is an American futurist, author, computer scientist and inventor. Out of 147 predictions that Kurzweil made in 1990, 115 of them have turned out to be correct. Another 12 have turned out to be essentially correct (off by a year or two). That gives him an accuracy to predict future technology by an impressive 87%.
Ray is today the director of engineering at Google. I have read a couple of his books and watched a few of his speeches. He is one of the most respected scientists on the planet. So when Kurzweil predicts something, you should really pay attention to it.
Moores Law and Kurzweil are the two main pillars that I have used to base my predictions on in this blog post. On top of this, I have been following many other brilliant minds such as hedge funds managers, space & technology entrepreneurs, scientists, and authors.
So why is the future of boating NOT what you think it will be?
The boating industry, just like any other industry, is just a reflection of the different areas of our society such as business, economy, technology & trends.
You cannot predict the future of boating based on your experiences in the past. This linear way of thinking might make sense to you, but it is absolute nonsense.
To predict it properly, you must base your predictions on the actual speed of progress, which is explained by the Law of Accelerated Returns.
If you study the history of technology, you will notice that human progress follows an exponential path contrary to a linear way of thinking by the majority of the public.
This is happening because the more we progress, the more we have access to resources, knowledge, and technology to progress even faster.
In his book the ‘Singularity Is Near’, Kurzweil suggests that the progress of the entire 20th century would have been achieved in only 20 years at the rate of progress in the year 2000. It means that in 2000 the rate of progress was 5 times faster than the overall progress during the 20th century.
He explains that another 20th century’s worth of progress happened between 2000 and 2014 and that another 20th century’s worth of progress will happen by 2021, in only seven years. In a bit more than 10 years time, the 20th century’s worth of progress will happen multiple times in the same year. And all of this can be explained by to the Law of Accelerating Returns
To give you an idea of what the future will be, I would like to show you the drawing by Tim Urban below which gives you an idea of the ride we are about to go on! ( AI Revolution, Road to the Super Intelligence; Waitbutwhy.com)
Haven’t you noticed that all new technology is growing so much faster than the previous one? Let’s compare the TVs to smartphones for instance. It took over 80 years for the TV to arrive at what it is today.
Smartphones, on the other hand, were launched around 2005. A few years later, they are used by billions of people worldwide and have replaced hundreds of everyday items in our lives.
Did you know that your smartphone today has more computing power than all the Nasa computers had when they sent the first Apollo mission to the moon in 1969?
Let’s try to analyze the potential challenges that our industry is facing.
1. The trend
A few days ago, I did some research on Google trend. I wanted to see the popularity of the term boating over the last 10 years and noticed a consistent steady decline.
So why is the general population less interested in boating?
Two months ago, I was talking to an executive at one of the top boat builders in the world. I asked him who their biggest competitor was. Surprisingly, he didn’t mention another boat builder. He said that their biggest competitor was all the possibilities offered to the general public nowadays like travel, entertainment, technology, etc.
We have never lived in a world with so many distractions. Everybody is constantly connected and wired with tons of information and entertainment.
When I was young, I remember sometimes being bored, so I planned some activities with my friends like fishing or boating on our little boat. Our new generation is not bored anymore, they are constantly connected to social media, smartphones, apps, Internet, etc.
Have you ever heard of the website ‘Virtual Regatta’?
They have 1 million players. Those guys spend days and nights virtually sailing on their computer. A few years ago, they would have gone to the sailing club, but times have changed, and people find more pleasure and interest online.
2. The economic climate
Boat sales are ultimately correlated to the job market.
Have you ever heard of the term technological unemployment?
I was reading an article a few month ago where Bill Gates warned the general public of the imminent dangers of technological unemployment. Several studies, like the one conducted by the Martin School of Business, predicts that 48% of current jobs will be lost in the next 15 years due to technological unemployment.
If you think that outsourcing services and productions to developing countries were already bad for your business, get ready for another roller coaster ride. Even developing countries will face unemployment waves. Imagine the impact that 3D printing could have on China when the majority of goods will be locally produced again. Or the impact in India or the Philippines when the majority of the call centre jobs will be replaced with Artificial Intelligence software.
More and more corporations keep replacing jobs with machines. Here is an article I just read yesterday about Mc Donald's hiring 7000 new cashiers, but they are not the typical employees, they are automated ones.
Technological unemployment is not the only reason for massive changes in our economy.
Corporations and governments don’t want to hire anymore. Globalization, recent economic downturns, mergers and acquisitions are all perfect excuses for laying off more workers. Companies don’t want to take the responsibilities, (taxes, benefits, pensions & salaries) of their own employees and have been referred to large layoffs.
This trend is confirmed if you look at the growth of temp agencies. (See: Temp Jobs Up 57% Vs. 4% For All Others Since Aug. 09)
The American Dream is evolving. Forget the typical life plan: school, college, job for 40 years & retirement. People change careers more often and no longer follow a structured life plan.
What if the American Dream never really existed?
I remember hearing in a podcast that this concept was initially originated by Fanny Mae in the 50s. This major mortgage lender used the concept of the American Dream in their marketing campaigns to influence millions of Americans to get a mortgage and own a home.
All those changes in the job market and economy will make it more difficult for the general public to access boating.
3. The Sharing economy
If 10 years ago I asked you to stay at somebody's house during a business trip, would you have said yes?
If I asked you to be picked up from the airport by a random driver with a cell phone, would you have said yes?
Those things are becoming common practices. Internet is making the sharing of our resources and belongings much easier.
The sharing economy (sometimes referred to as the peer-to-peer economy) is defined as a socio-economic system built around the sharing of human and physical resources. It includes production, distribution and consumption of products and services by different people and organisations.
Several startups were created in the last few years with this concept. One of them is Boatbound with the slogan: Own a Boat (For a Day)
When you know that the average boat owner uses their boat not even 2 weeks per year, this concept makes quite a lot of sense.
The sharing economy is becoming huge in the car and travel industry. I assume that it will grow in the boating industry too.
4. More challenges
On top of this, the boating market will keep facing other challenges such as:
-Peer pressure due to increases in income inequality.
-Difficulty accessing moorage in marinas,
-Lack of interest from the newest generations (Gen Y, Millennial, etc)
Despite all those new challenges, some companies are thriving by leveraging the new opportunities offered in our economy. It is now common to see new startups disrupting entire industries and reaching billions of dollars in valuation in 18, 24 or 36 months!
Those companies share the same pattern. Peter Diamandis, founder of the X Prize foundation and Singularity University called it the 6Ds of the exponential growth:
Digitized (digitize product or service)
Deceptive (you don’t see it coming until it reaches the tipping point)
Disruptive (game changer)
Dematerialize (remove, material aspect, infrastructure)
Demonetize (remove operating cost)
Democratize (globalize via web)
Let’s look at a few industries that have been completely disrupted industries over the last few years: Craigslist with the classified ads business, Airbnb with the hotel industry, Uber with the transportation and taxi industry, Skype with the long distance calling, iTunes with the music, Amazon with the publishing industry.
Uber, the words largest taxi company, doesn’t own any vehicles. Alibaba, the biggest retailer worldwide has no inventory. Airbnb, the world's largest accommodation provider doesn’t own any properties.
The success of those companies can give us an important lesson: The rules of the game of business have changed.
You must adapt and change the way you do business. In 10 years time, 50% of the current Fortune 500 companies will disappear. If you operate the old way, you are certain to face major difficulties.
In the next two weeks, in the second part of this blog post, we will review the different technologies that will change the way boats are built and distributed. (sign up below to receive part 2 as well as regular free updates on boat sales & marketing). We will also review what actions you can take to prepare yourself for this new market and I will share my predictions on what the future of boat sales should look like.
Regards, Vincent Finetti