Digital transformation in the last decade has been exponential. Imagine what the next 10 years could bring. Take a step back and consider the changes in the last 10 years: global smartphone penetration has risen from 5% to 41%, while average time spent on mobile phones and tablets has gone from 24 minutes to more than 4.5 hours per day in the US. In the previous decade, there were two large consumer tech businesses: e-commerce marketplaces and travel booking platforms. But in the last decade, consumer tech has spread across a wide spectrum of businesses: from streaming a movie, to booking a ride, ordering restaurant food, and getting groceries delivered, to transferring money in seconds. Tech is also influencing our bigger asset decisions like car and home purchases, as well as our doctor visits and continuing education. Imagine, what the next 10 years could bring, especially given the exponential rate of change we are seeing. US e-commerce in 2020 was USD792bn or merely 5.6% of the overall consumption pie of USD14trn. 

The entire consumer wallet is up for grabs. In this report, we break down the wallet into 10 products and services that a household spends money on and find tech disruptors across the board. Healthcare/pharma is being disrupted by telemedicine and e-pharmacies, housing/auto by classifieds, non-food retail by marketplaces and specialized online players, financial services by consumer FinTechs, food at home by online grocers, food services by delivery aggregators, travel/recreation by booking platforms and ride hailing companies, media/telecom by streaming platforms, education by Ed Tech companies, and other services by aggregators for home services. 

Five overall themes for consumer tech include: 1) identifying consumer tech disruptors is not very complex; 2) the ‘winner takes all’ concept is often exaggerated; 3) TAM is important, but not the only thing that matters; 4) traditional incumbents may be down, but not out; and 5) first and second derivative businesses could be as attractive, if not more so. We dig deeper into the disruptors and present key themes that will matter over the next few years, include thoughts on TAM, and analyze operating metrics and valuation of DM majors for read across to emerging markets. Consumer tech valuations have been volatile lately as the market looks for clarity on inflation (transitory or not), long-term rates, and the rotation trade into post COVID-19 vaccine re-opening plays. In the meantime, we focus on fundamentals and come up with important considerations while valuing these companies.