18 Avalanches in 2025

Moments of change and global challenges are our greatest opportunity.

Hi friends,

Nice to see you here in 2025.

This year, I will go broader. Not all of these predictions are in the first inning, but they are certainly in early innings. And this is not an exclusive or exhaustive list. I’ve chosen to focus less on the details of technological progress and instead on the areas of implementation for which new technology and innovative thinking can be applied for massive results.

I wrote 14 predictions in 2024 and still stand by them all. They are all happening and unfolding in interesting ways. As a brief tour:

In learning, school choice, alternative education, and efficacious edutainment are all advancing. School Choice was a big US election winner, with clear support from President Trump and his new Secretary for the Dept. of Education to make a big regulatory push in the first legislative session. The startup winners will be those who sell and implement well. Always has been, always will be.

In earning, this one is hard to capture because so many “trends” are more effective practices for how people should run organizations and businesses. Humanizing the enterprise is ultimately a choice for leaders at the top. However, every organization worldwide will be forced to increase productivity in every respect.

In owning, I didn’t make any predictions about government and the public sector. That will be a big change this year. The popular discourse has woken up to the business of government, and there will be much more focus on efficiency, delivery, and decision-making. Last year, I predicted that owning digital assets and platform control would gain importance; I’d double or triple down on this one. This category is the most exciting.

As always, comments, thoughts, and intelligent disagreement are encouraged.

Founders building behind these massive trends, please reach out!

— Katelyn and Avalanche VC

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Big Picture

The Overton window expands.

With Elon Musk supporting Trump's winning election campaign, the Overton window will open significantly in 2025. Ideas previously unspeakable or off-limits have now been brought to the table. Jokes, like DOGE, have become serious. The crypto ecosystem will likely be a huge beneficiary, and stablecoins may very well eat into payments. Prediction markets (a.k.a. gambling) will likely continue with fewer regulations. The new defense technology companies have significant allies in the White House. The US pulling off territorial expansion is already a topic of conversation (and, therefore, a possibility). Maybe Greenland, maybe beyond.

Long-term demographic trends are becoming pronounced.

The dependency ratio worldwide rises as birth rates decline and the aging population lives longer. Government deficit spending cannot continue at its current rate to fill the pension and benefits gaps, especially as the need for support for young families becomes more pronounced. Many implications here will surely take more than this year to play out, but the attention to this trend is rising year-by-year with no solutions being implemented at scale (yet).

Software productivity has accelerated, and computing power is increasing exponentially.

AI and LLM adoption is happening in both enterprise and consumer markets, but we are still in the early innings, particularly for legacy markets. Software development is always first and has shown significant productivity increases. This year, the market will realize how easy it is to commodify LLMs and how quickly the leader can be replaced. The other implication is the need for dramatically cheaper energy, so innovation and a push for nuclear capacity and other highly efficient energy sources will be major topics of interest.

Inflation is here to stay.

The incoming Trump administration's policy proposals—tariffs, deportation and tightening up illegal immigration, and re-shoring American manufacturing—are all inflationary. Bond markets are beginning to price in higher inflation expectations, as the 10-year rate has increased despite the cut in the federal funds rate in December.

For 2025 specifically:

Decentralized and Local.

Crypto, media, security, businesses, regulation, etc. The world is now too complex, fast-moving, and fragmented for top-down action and leadership.

1. Systems and platforms that allow user ownership and control will gain ground. Bluesky saw a big influx in users in 2024; its longevity will be for its decentralized and open infrastructure, not because it’s a liberal haven.

2. Indie creators and collective intelligence show the power of individual influences and the collective to predict and drive change. Prediction markets using collective intelligence have shown themselves to be more reliable than polls. Citizen journalists have broken more significant and ‘closer to the truth’ stories than the traditional media. Breakouts poised for further growth in 2025 include The Free Press, which has just past 1 million subscribers, deceptively not-so-niche podcasters, and YouTube channels with independent takes.

3. Arm the Rebels: Powering the modern SMB. SMBs represent the economic engine of the US. With approximately 30 million SMBs in the US employing 60 million people (47% of the private workforce), the sector is pivotal in driving economic activity. The global SMB software market, valued at $56 billion in 2021, is projected to grow at a CAGR of 7.4%. Yet, SMBs continue to deal with outdated processes, labor shortages, and financing challenges.

   The 2024 ServiceTitan IPO will pique venture interest in this space. We have seen that typical consumer or prosumer acquisition strategies can unlock the acquisition of SMBs. Additionally, AI-driven software will greatly benefit SMBs, which often lack bandwidth and have lean central teams. For example, Hammr helps contractors track, manage, and pay their people.

Learning and System Change

4. New Schooling: The room where it happens. While the world is transfixed on the potential of AI tutors, most people are still sleeping on the most significant unit of change: schools. Driven by the expansion of school choice and the inability of the existing system to produce the desired results, there is a demand for high-quality, independent schools. In all its forms, schooling is where learning happens, and the implementation of tools is the hinge point. New models will pop up from microschools, podschools, homeschools, and niche private schools of every vertical. Some of the biggest education companies in the world are direct delivery models, and I expect that to continue, given that’s where the true value is created. For example, Stride, the virtual schooling provider formerly known as K12, ended 2024 up 75% in public markets, driven by “families desiring different learning modalities for their kids.”

   There is a recognition that high-quality foundational learning is critical for everyone to succeed in a world with AI and humanoid robots. Nothing in later learning can make up for this critical period of cognitive development.

   We need WAY BETTER new schooling. Cue the cavalry in 2025.

   Our EIR, Arvind Nagarajan, is pioneering a new innovative middle and high school model at Astra Schools. Ben Somers at Recess is just getting started inspiring kids to think bigger and take on enormous challenges.

5. The AI opportunity in education will continue to be the efficiency of systems (vertical SaaS 3.0) in all administrative functions like financial aid, grading, scheduling, admissions, enrollment, payroll, credential validation, etc. AI in learning will flourish, but the breakout products will either be micro-niche (e.g., literacy tools for ESL learners age 3-6), or they will be best-in-class mainstream consumer technology (e.g., OpenAI, YouTube). Enrollment and matching of students to programs is a hinge point in the efficiency of education systems and a huge area that is ripe for innovation. It’s where the system transformation will take place. Platforms like Tether Education and Odyssey Education are implementing these enrollment and placement solutions.

6. Beyond Degrees: “You Can Just Do Stuff.” Increasingly, what matters is the quality of your work, who you do it with, and how the outcome and your network can verify it. This is true even for top AI researchers at OpenAI. People will pay for early job experience as a substitute for what they might have paid for the classroom. Ladder Internship is a good example - an 8-week internship with a startup CEO where the intern pays $2,500. People will be savvier about monetizing their side hustles and online labor.

7. Learning and knowledge are open (and often free). Similarly, people will realize how much of what they want to learn is available on the Internet, on YouTube, or through tools like Perplexity. Getting access to the correct information, bringing it in an engaging format, and formatting it pedagogically optimized manner will be easy to automate. Massive platforms and technology companies will be the main channel for this behavior.

Productivity and Outcomes: Working better, smarter, harder, faster

8. Lossless Collaboration: software for ease of knowledge transfer. It’s estimated that 90% of knowledge economy time and insight is lost. This is the endless meetings with too many people. Insight is never fully recorded. Information and data are sitting in silos or behind gates that never get put together. The opportunity for AI-driven analytics software is to increase productivity by decreasing losslessness. Glean is the enterprise early mover, but the concept quickly expands to all products. Pencil Spaces has created a lossless classroom for tutoring and is thinking big and beyond.

9. Everyone is an Entrepreneur, or they must learn to think like one. The era of defined ‘career pathways’ is over. There is no guarantee that after years of study, a job or career (years of same job with upward progression) will be there on the other end to cover the time or financial investment. Thus, there will be more ‘learn and earn’ arrangements where people learn quickly while on the job, and employers will design training to upskill talent speedily (and not rely on universities).

10. Capital efficiency and small teams will dominate niche software businesses. SaaS markets will become increasingly competitive with increased software development and sales productivity. These businesses may raise no capital or take on one-and-done seed rounds underwritten more like growth equity than power-law ventures. Josh Mohrer recapped his 2024 as an indie hacker building Wave, a personal AI note-taker, with some big numbers:

11. Software and Services Continuum: It’s the outcomes, stupid! Is it the age of Software AND a Service (SAas)? Software-Delivered Services (SDS)? Services with integrated Software (SwiS)?

    Over the last decade-plus, software-as-a-service has been automating, digitizing, and optimizing most mundane corporate workflows. With the rise of artificial intelligence and the continued scaling of technology companies, many have predicted the demise of professional services. So far, that has not played out. Many services firms have thrived as the leading firms have evolved and outsourced essential functions, developing markets have grown, and technology has proven persistently challenging to implement.

    This year, software implementation in the knowledge workforce cuts even deeper, and every organization must define its technology collaboration model. This could be deflationary over the next several years if outcomes are truly measured and paid for accordingly.

The Business of Government

12. Government success is measured in outcomes. The last decade has seen an onslaught of government spending on big infrastructure and social programs. There’s now a spotlight on results. In many cases, they are severely lacking. Now, catalyzed by Elon and DOGE and the attention placed on this topic on X and other platforms, people demand increased visibility and transparency for those outcomes. This should be a long-term net positive, particularly regarding public dollars. Software-driven companies have an opportunity to help every element of the public sector be more efficient, from permitting to response times to payment mechanisms. These might be more state and local in the US than federal.

13. Technology in the democratic process, policy-making, and resource allocation. Governments are distinct from businesses as the leadership selection and execution decision-making process is more diffuse and decentralized. There are armies of lawyers, lobbyists, special interests, and voters who may need to be convinced, swayed, and influenced. The tooling and organization of this apparatus will improve from technology tooling in 2025 as the public spotlight glares brighter. For example, US Lege is revolutionizing legislative data analysis using AI, ensuring that citizens, businesses, and organizations can stay informed and engaged with the democratic process.

14. Government procurement gets an upgrade. Since the government can’t deliver most goods and services, procurement is the lynchpin of government. In the longer term, we will see the rise of tech-native defensive companies like Anduril and SpaceX and the challenge they pose to incubators like Boeing, Raytheon, and Lockheed that use cost-plus models. On a local level, companies like Civic Marketplace transform procurement to cut down timelines, make purchasing more transparent and competitive, and offer the best contracts for community needs.

15. Helping the private sector navigate the public sector. A wave of new companies is lowering the entry barrier for companies to sell to the government by providing a one-stop-shop platform to access the government’s active bids, providing intelligence on government contacts, and offering AI automation support in proposal writing. These companies make it easy for companies to access governments’ bids and provide wraparound support to help companies win. Starbridge is an example of a leading company in this space.

People Choose to be Happy and Healthy

16. The non-alcohol movement is accelerating. Consumption is already down among younger generations, and new replacement beverages are growing in each category, including beer (Athletic, Heineken Zero), Spirits (Ghia, Seedlip), and wine (which is being replaced by kombucha and pre-biotic sodas, kind of). 

The rise of personal health influences (Don’t Die, Huberman, etc.) drives education and knowledge. The government just added its kicker, calling for a new drink label warning of cancer risks. It’s a piling-on for a trend that is already happening. 

17. People will pay out of pocket for high-quality healthcare. This is driven by the rise of concierge medicine in the name of ‘longevity’ and physicians' decision not to take insurance. Quantified self-tools like Whoop and continuous glucose monitors are more consumerized and mainstream. Health Savings Accounts (HSAs) could be broadened to substitute for some of what consumers except from health insurance (referred to as a ‘discount card’ rather than the traditional model of insurance these days), mainly if there are regulatory changes.

18. Increased search for meaning and revival of religion. As reported in the Wall Street Journal, sales of bibles are booming. Publishers attribute a 22% jump in Bible sales this year to rising anxiety, a search for hope, and/or highly focused marketing and designs. Christian apps posted big growth numbers in 2024. For example, Hallow, a Catholic prayer app ($60M ARR, up 3.5x YoY) and Bible Chat AI, an app that allows you to interact with the bible ($10M ARR, first 16 months in business, 700K+ MAU) as reported by Arfur Rock on X.