Startups had a great year in 2015, with record rounds raised and many reaching the coveted Unicorn status. Overall it was one of the best years for tech, innovation, and growth in recent memory. It was also the time during which some of the biggest success stories left Silicon Valley to take on the world. But like all good things, many saw this explosion of growth ending in a bad way when 2016 hit. Some even thought that the dot-com crash would be tame in comparison.
But alas, we came into 2016 relatively stable, with many companies continuing to grow and the market becoming less volatile. Most of the companies that received funding and made you scratch your head have disappeared. Gone are the days of an idea getting funded without any users and gone are the days of the useless app boom. Those who predicted a cataclysmic year of broken dreams and fortunes lost have probably made the market better for all of us in 2016 and beyond.
Now that we are halfway through this year, and past the fund everything days of late 2015, it is time to reflect and predict. We were curious what the “It” industry was going to be in 2016. What companies were going to get funded to the moon and which industries are still stuck in 2014. And we thought it was best to start at the place that handles more new startup submissions, Product Hunt.
With the last six month’s worth of the best products that Product Hunt has featured, we were ready to get to work. Below you can see the 100 most popular product categories across 11 different markets. They have organized from most mentioned to least mentioned in a clockwise fashion. For example, Travel products were the most popular in the Life mega-category and Coffee products were least mentioned. Be sure to take a look at every category, a few will surprise you!
<img src="https://venngage-wordpress.s3.amazonaws.com/uploads/2016/07/startup-trends.png" alt="Infographic: Startup Trends Product Hunt 2016 | Venngage" /> See this <a href="https://venngage.com/blog/startup">infographic on Venngage</a>.
Use the embed code above to post this infographic on your own site, but please attribute!
Using Product Hunt’s handy API, and with a little help from the developers here, we were able to look at exactly six months of products! We settled on only studying products with more than 100 upvotes, leaving us with exactly 2645 products. This gave us about 7500 tags, since each product had about three category tags each. Each of those tags were counted, as well as taking the average upvotes per category.
Additionally, we also tracked the upvotes and averages for each month to help show changes over time. Now that we got how we found it out of the way, let’s look at what we found!
1. Build it for the web, then (maybe) iOS, and if you have to, Android
For those outside of the tech and startup industry, I feel there are a few harmful beliefs regarding apps. Especially when it comes to iOS and Android apps. First, that they are insanely easy to build and second, you can make a boat load off just one app. Those who are even remotely familiar with programming know that both things are far from the truth.
Now I know that some skilled programmers can whip up an iOS app in a day or so, but why would you want to anymore? Search and categorization on the App Store is incredibly broken, with 80% of apps almost impossible to find without a direct link. The average price of a paid app has also decreased by a third in since 2011, dropping to only $1.27. Plus, the developers or makers don’t even get to keep the full $1.27, with a solid chunk going to Apple or Google. And as a final farewell to the app boom, most people are not even downloading ONE app per month and a majority spend upwards of 80% of their time on only three apps.
So I ask again, why start with mobile apps? Especially when you could create and test something relatively quickly and inexpensively with web apps. And there is definitely a demand and market for it. We found that web-based applications dominate the entries on Product Hunt, compared to mobile and desktop operating systems. Even when you combine the total of both iOS and Android apps, which often overlap, you’re still left with about 8% lower shares than the web apps.
And finally, the total upvotes for web apps were double that of iPhone apps–four times more than Android, five times more than Mac and eight times more than iPad. Some of the top web-focused products included Stripe Atlas, Unsplash 4 and Google Fonts over the past six months. Only the extremely popular Tesla 3 was more upvoted than those products. In any case, if you are only beaten by a Tesla, you must be doing something right.
2. People want to be more productive, not smarter or healthier this year
For some people–actually, most people in the startup world–there are literally not enough hours in the day. They want to squeeze every last minute out of their day, whether it be business or personal. We are more busy than we have ever been and the idea to pull a little bit more out of each day is very enticing. When you compare increasing productivity to other life improvement goals, like increasing knowledge or getting healthier, it is not even close.
Products and apps for productivity had triple the mentions of both Health & Fitness and Education products.
And according to TechCrunch, the usage of productivity apps like the ones mentioned above grew 119% over the past year! In comparison, Health & Fitness apps only grew by about 50%.
Products for productivity have also increased from only 17 products in January to more than 50 in June, with Education and Health & Fitness only increasing in mentions from seven to 11 and 10 to 15, respectively. Over that time span, the top Productivity products included Lacona, Instant and the innovative Oristand standing desk.
When we compare average upvotes, the trends are about the same as the mention frequency. Products for productivity claim 52% more upvotes at than Health & Fitness products and 25% more than Educational ones as well. For a final test we can even compare overarching categories of Life, which Education and Health & Fitness belong to, and Productivity. Again, Productivity outperforms them significantly with 292 upvotes–an average of 24% more upvotes than Life. To conclude, products for Productivity achieved about 10% more upvotes than average.
3. Bots & AI are trending upwards
Bots have become somewhat mainstream since Facebook Messenger Bots were announced back in April. Now there are 11k bots that have been created since then. And they have played a big role in making Slack one of the tech world’s favorite apps. Many tech writers and publication are calling them the future of tech, business, and marketing. With that increased exposure, investors are taking a harder look at the potential behind bots. Now it seems like almost every week a new bot–focused startup is raising money to take over the industry. I wish there were more concrete numbers on how much the industry is raising as a whole, but I believe it is too early to tell!
We do have some numbers from our Product Hunt data that will help illustrate their growth. Over the past six months, Bots were the 20th most mentioned product, while Artificial Intelligence was the 15th most mentioned–putting it ahead of very popular categories like Social Media Tools and Email Tools. Bots also beat the average upvotes by 20%, which is always a great sign!
But it was not always like this: in December there were ZERO mentions of Bots. But by May and June there were more than 20 products for each month. The top Bot focused products included Quartz, Statsbot and Botlist.
Artificial Intelligence is another buzzword that seems to be taking over 2016. It is one of those ideas in tech that can be applied to so many different business sectors and situations, and it’s intertwined with the bot growth we have seen lately.
A.I. it is all about making someone more productive. Whether it be automating software development methodologies or helping someone purchase shoes, A.I. is everywhere. Additionally some of the most stingy investors are taking notice, with over $1.2B invested in 2015, the highest ever, and the uptick in funding looks to continue well into 2016. Some of the most popular A.I. products on Product Hunt included Parsey McParseface, Trim and Chatfuel.
Compared to bots, A.I. products had about 11% LESS mentions over the past six months. But they followed the same rapid increase in mentions that Bots products witnessed. In fact, they jumped from zero mentions in December to over 20 in both April and May.
But on average over the last 6 months, those A.I. products only had slightly more upvotes compared to the sample average. They received only 387 upvotes per product or about 8% more than the average product. Still, it’s an exciting time for A.I!
4. Slack is the platform of choice
If you told me an employee-centric social network and chat app would be worth billions in 2016, I would have called you crazy. But in a few short years, the people at Slack have built a platform that boasts millions of daily users. Actually, now it is around three million daily users…for a work app! And as it continues to grow, it’s slowly killing my LEAST favorite communication outlet: email.
One of the big drivers for bringing Slack to the forefront of the business world was its extensions. While some call them “Slack Bots” and others call them “apps,” they do the same thing by allowing third party applications to integrate with the platform.
Right now there are a few thousand official integrations from big players like Twitter, Trello and Kayak. You can check out all of the official extensions here. Some of the most popular ones over the last few months were Franz, Statsbot and Drift. And if the data we pulled from our study is to be believed, there will probably be hundreds more added to that total by the end of the year.
Slack was the 11th most mentioned category out of the whole study, averaging about 17 products per month with a total of 120 mentions–from January to May, there were over 20 products each month. In other words, people love Slack and developers love building for the platform.
Also, because Slack is thought of as a social network for work, we might as well compare it to the other social networks. But first, it should be noted that LinkedIn, the “official” work social network, was only mentioned exactly twice in the whole study: once for their official Student App and once for finding sales leads. In other words, most people do not like LinkedIn.
When we compare Slack to the other social networking platforms it performs surprisingly well, accounting for almost half of all mentions of social networks fin the entire study. If we remove Facebook Messenger from the mix because it overlaps heavily with Facebook, it performs even better.
Although Facebook wins for average votes, Slack still comes in second and beats every other social network. The openness of the platform and support for developers are key things that the other networks have not been able to match.
Even when looking at Slack’s direct competitors like HipChat, Telegram or Yammer, Slack stills comes out on top. Telegram only had nine products mentioned and Yammer and HipChat had ZERO. There was one mention of HipChat in a product tagline but it was for a universal messaging platform called Franz.
It also should be noted that some of the most popular products are Slack Bots, which confirms our earlier point that bots are top performers in the tech and business industry. I really believe that Slack has helped bots breach the mainstream and, like we said before, bots have increased Slack’s market share and usability. And Slack grateful for that; they’re investing about $80M into bot developers this year.
5. On-demand startups are cooling off
If 2016 is the year of bots, 2015 was the year of on-demand startups. Uber hit its mainstream stride (i.e. my parents were using it) and thousands of other startups copied its business model. It was overwhelming, to say the least, but investors still gave them a ton of cash to burn.
According to this great piece by the Wall Street Journal, the Uber model does not translate, no matter how bad the founders wanted it to. And it is not a good time to be in the sector, large companies are shutting down, investors are looking elsewhere and it looks like only a few will survive long term.
According to CBInsights, in first quarter of 2015, there were 59 funding deals made for on-demand startups. There also was about $5.1B raised from investors. Over the same time period in 2016, there were 56 funding deals but only $1.3B raised; a decrease of almost exactly 75% in funding during just one calendar year. It’s not looking good.
For a little context, searching “Uber for” on Product Hunt brings up about 250 results. Searching for “on-demand” brings up another 200 more products. That may make it seem like the sector is booming, but the most popular results were featured over a year ago.
Now over the last few months, there have only been 15 mentions of On-Demand products. It barely makes it inside the Top-100 most popular categories at number 95, above Snapchat but below Emojis.
Although there were a few very solid on-demand products like Luka and PRX, the majority were not as popular. Around 70% of the rest of the products had less than the average votes. I guess not everyone wants to order a tiger.
6. VR is still not mainstream, but soon it will be
Since the Oculus Rift hit Kickstarter in 2012 and was bought by Facebook only two years later, we have been waiting for a great virtual reality experience. In the four years thereafter, VR has been adopted by the tech and hacker crowd pretty universally. But I think 2016 is when VR will really take that jump to mainstream crowd.
First, there has been a large increase in investment and new startups forming just in the last year. In the first quarter of 2016 alone, more was raised for VR/AR startups than the over the 12 months before it! Clocking in at $1.2B invested, VR seems to be taking the hype from the on-demand startups that held our attention just a year ago. Companies like Magic Leap, Oculus and Mindmaze are now worth over a billion dollars, and they are hell-bent on bringing VR experiences to the masses. Plus, the projected market for VR in 2020 is $120B, which helps move things along a little faster.
Secondly, in 2016, there are more platforms for VR to flourish. Google Cardboard and Gear VR were more a novelty item than a device to drive industry growth. The Oculus Rift and HTC Vive were released just a few months ago but they still are out of mainstream buyers’ price range. Microsoft’s Hololens looks useful enough to do the same thing to kickstart VR/AR’s use in business and industry. But I think the Playstation VR is going to be the one that really moves the industry into people’s minds and houses. The fact that it costs under $400 and sold out in literal minutes shows that there is a huge market for casual users. Heck, I will be buying one as soon as it launches too!
With two of the most robust VR platforms launching halfway through our study (HTC Vive and Oculus Rift), we were not able to get very solid growth numbers in this category. That being said, it is starting to ramp up; in the last three months the mentions of VR products tripled, with only 6 in the first half of the study and 16 in the second half! I believe that will continue to double or even triple again in the next few months. Also, over the last few days, the VR/AR game Pokemon Go has taken over the world.
Frequent readers know that I like to judge if a product has gone mainstream by seeing if my parents have heard about it. And just today, my mom asked me if I knew what Pokemon Go was because all of her employees were obsessed with it. So now that The Pokemon Company has seen such a giant reward from an even bigger risk it will hopefully give other developers the push to build new things and grow the market this year.
To conclude with VR, some of the most popular products in the category were Project Soli from Google, Gravity Sketch and Gear VR. VR products and apps ranked as the 71st most popular category by mentions.
After pouring over all of these products, we were able to spot some overarching trends pretty quickly. But some new trend could pop up tomorrow and we would all be taken aback. For example, some markets, like VR and bots, have been simmering for a while but really took over the first half of 2016. Their growth could not have been predicted the way we forecasted above because they were boosted by some massive companies in the process. In this case, Facebook and Slack helped bots and messaging grow, and Oculus (owned by Facebook) pushed VR to the masses.
In all honesty, we all could wake up tomorrow and see that a game from almost 30 years ago has taken over the world…disrupting the way we interact with our smartphones and the world around us and taking down some of the biggest social networks in the process…oh wait, that already happened. My Squirtle and an increase in random exploring can attest to that.
The industry of building companies from nothing is a crazy ball of ideas and passion that sometimes is hard to predict. But that does not mean it is impossible to spot the trends in certain markets like we did above. It just means those predictions can fall apart a little more spectacularly in this industry. And because of that I will leave you with this quote from Hunter S Thompson that describes the startup world so well, “Yesterday’s weirdness is tomorrow’s reason why.”
The infographic in this article was created by Steve Shearer.