10 Startup Trends That Will Be Huge In 2012

In his inauguration speech, President Obama paid homage to entrepreneurs. The path to greatness, he rhapsodized, has been paved by “the risk-takers, the doers, the makers of things–some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”
Almost three years later, it’s clear he was spot on. Entrepreneurship has been one of the precious few bright spots in a terribly gloomy economy, and this new generation of entrepreneurs, both intentional and accidental, has taken it upon themselves to keep things chugging along. At the same time, starting a business gained serious cool cred.
Consider American Express’ slick ad campaign featuring Patagonia founder Yvon Chouinard; foursquare’s founders as models in glossy Gap mag ads; and the cults of celebrity surrounding “the Zuck” and the late Steve Jobs. Even A-list stars like Justin Timberlake and Lady Gaga added headlines to their clip files from startup-centric blogs like TechCrunch and Mashable.
“Entrepreneurship has become sexy in a lot of ways,” says Clay Newbill, executive producer of ABC’s Shark Tank, which features people pitching their dreams to a panel of deep-pocketed investors, including MarkCuban.
Entrepreneurship has never been more practical, either. According to the Kauffman Foundation, 565,000 new businesses were created in 2010–the most in 15 years–as many new ‘treps were forced into it by the downturn. “Young people know that there’s a high likelihood they’ll have to make it on their own,” says Thomas Knapp, associate director at the University of Southern California’s Lloyd Greif Center for Entrepreneurial Studies. USChas seen a 13.2 percent year-over-year increase in students taking entrepreneurship courses at the school.
Here, 10 sectors to get in on while they’re trending up. Plus, one trend to watch.
Click here to see the trends >
This post originally appeared on Entrepreneur. Trend #1: Decision

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Discovery fuels invention (and purchases)
If the more than 27 million pieces of content shared online every day is any indication that collective knowledge is king, then it should come as no surprise that it’s now a key component of modern decision making. According to a July study on the psychology of online sharing by The New York Times Customer Insight Group and Latitude Research, 85 percent of those surveyed say reading others’ responses helps them understand and process information and events, and 73 percent say sharing helps them process information more deeply. Notably, 73 percent share info to connect with other people with the same interests–a big part of why discovery is an important market, and recommendation engines for everything from music to movies to food are so popular.
“People are looking for a trusted filter to surface good content, good products and good experiences,” says Jonathan Hills, partner at New York City-based Bashki Generation, a digital agency specializing in content sharing. Hills notes that for some brands, every person who shares content brings an additional five new unique visitors back to a site, who on average will spend 1.3 times longer on that site, read 1.9 times more content and experience 27 percent favorability toward the brands they encounter within the shared content.
Decision Profile: Get Out of Town With Wanderfly
A late 2010 study by Forrester Research vice president and principal analyst Sucharita Mulpuru found that 62 percent of online retail shoppers think product recommendations are useful, and 15 percent made purchases based on recommendations. “Rather than have a one-size-fits-all approach, recommendation engines let you automate and personalize the site experience for shoppers based on what you can infer about their needs, wants and shopping preferences,” Mulpuru says.  
Retail was just the start. Decision engines that curate a user’s interests, social information and recommendations from others are cropping up more and more–and even the big players are working to keep up: In 2009, Netflix awarded a million dollars to the team that offered the best solution for improving their recommendation engine’s accuracy of predictions.
“Given the profusion of content out there,” Mulpuru says, “anything to help to filter what is relevant to you makes a lot of sense.” –Michelle Juergen
Leading the way
Spotify Launched in the U.K. in 2008, the digital music service that lets its 10 million-plus registered users discover, listen to and share more than 15 million tracks with friends officially opened to U.S. audiophiles in July. Along with its Facebook integration in September, CEO and founder Daniel Ek announced Spotify’s 2 million paying subscribers, up from 1 million in March.
Ness The iPhone app that serves up restaurant recommendations for about 500,000 locations based on a user’s preferences and ratings and other users’ ratings is just the beginning for Los Altos, Calif.-based Ness Computing, which publicly disclosed a $5 million financing round in July. CEO and co-founder Corey Reese says the “likeness engine” will eventually offer recommendations for movies, music, concerts, local events, shopping, travel and more.
Hunch With the lofty goal of creating a “Taste Graph” of the web, Hunch combines algorithms with user-curated content to provide recommendations to users on things they’ll like. The data in the Taste Graph has roughly doubled in the last year and now includes more than 500 million people, 200 million items–from books to boots–and 30 billion connections between people and items. User-added monthly recommendations more than doubled compared to six months ago.
Trend #2: Collaborative Commerce

It’s nice to share
A preschool lesson catches on for adults
Sharing is a beautiful thing, and that’s become particularly true in the business world. The last few years have seen a veritable Cambrian explosion of startups in the collaborative-consumption space.
Rachel Botsman, co-author of What’s Mine is Yours: The Rise of Collaborative Consumption, attributes the trend to consumers’ increasing comfort with technology, which has enabled disruptive platforms that allow sharing, bartering, lending, renting and gifting–of goods, skills, money, space or services–at a local, peer-to-peer level, on a scale once thought impossible. It is, Botsman says, “a multibillion-dollar market opportunity.”
Decision Profile: With Zaarly, You Can (Usually) Get What You Want
No kidding. The product-rental market (Rentcycle, AnyHire) is valued at $85 billion; the vacation-rental space (Airbnb, CouchSurfing) at $80 billion; the ride-sharing industry (Zimride, liftshare) at $117 billion. In addition, the North American car-sharing market (Zipcar, Getaround) is projected to grow to 1.4 million members in 2012, up from 600,000 in 2011; and research firm Gartner has estimated that in 2013, there will be $5 billion in outstanding peer-to-peer loans (Zopa, Prosper), not to mention the billions invested on crowdfunding sites like Kickstarter and IndieGoGo.
Leah Busque, founder and CEO of Cambridge, Mass.-based TaskRabbit, billed as an eBay for errands, says 2011 has been a banner year. In the last six months, the company has expanded to six cities, up from just two in May, and task volume has increased twelvefold. What’s especially interesting about the phenomenon, Busque says, is that these technologies are actually being used to move transactions off the internet and create “meaningful” connections with others in the community.
“Last year I was traveling the world talking about these ideas and VCs looked at me like I was slightly crazy,” she recalls. “Now every-one … is pointing to it as one of the big investment areas.” –J.W.
Leading the Way
Getaround Getaround is a social car-sharing service that enables car owners to make money by renting their underused vehicles to other drivers via smartphone. Launched in the San Francisco Bay Area in May, the company received $3.4 million in funding in the fall. More than 5,000 people have signed up; the average yearly revenue across active cars is projected at approximately $4,000.
Grubwithus Launched out of Y Combinator in January, Grubwithus provides a “social meal experience” by allowing people to sign up to dine family-style at restaurants (and make some friends before dessert arrives). In May, the company, which has brought in solid revenue since day one–it takes a cut from participating restaurants–raised $1.6 million from angel investors. Grubwithus.com is now live in seven cities.
Rentcycle Potentially the Amazon.com for rentals, Rentcycle’s “access over ownership” platform aims to help independent rental stores (for everything from sporting equipment to party hires) shift their inventory online, where customers can more easily and efficiently search and book services. Since going live in March, the site has attracted more than 30,000 monthly users. In August, the company received $1.4 million in seed funding.
Trend #3: Customization

Have it your way

Designed and customized, down to a T
“Any customer can have a car painted any color that he wants so long as it is black,” Henry Ford once said.
That statement is now as outdated as the Model T. Giving consumers the option to be picky has become a viable business model as the penchant for personalization grows. Mass customization isn’t new–expert B. Joseph Pine II published influential work on it in the 1990s calling it “the new frontier in business competition,” and large companies like Dell, Nike and M&M’s have employed it for years. But the interest hasn’t waned: More than 35 percent of U.S. online consumers are already interested in customizing product features or in purchasing build-to-order products that use their specs, according to a study done this year by Mashable. And customers are willing to spend at least 25 percent more to get products built specifically to their needs, according to a March study by research firm The NPD Group. Seventy percent of product strategists currently offer customized products, according to an April study by Forrester Research.
And it’s becoming a startup’s playing field, made possible in part by the lowering costs of customization configurators–in the past decade, developing one cost $1 million and took nine months to build; today they can be developed for $50,000 in two months, according to research done earlier this year by Forrester–as well as the success of customization retailers like CafePress and Zazzle, whose maturation and market penetration are inspiration for other entrepreneurs, says Frank Piller, a leading expert in mass customization and founding faculty member and co-director of the MIT Smart Customization Group at MIT. “There’s still a lot of opportunity in this market,” he says. “Even after more than 15 years of research in mass customization, I’m still excited about it.” The companies that will be sustainable, Piller says, are the ones that offer products not just with aesthetic value (like the option to choose colors), but also functionality.
Jon Chait, a partner at Waltham, Mass.-based Dace Ventures, says the early stage VC firm has seen a rise in the number of customization companies looking for financing–from about one or two in the startup phase two years ago to one or two per month today. “And it’s not just the same companies cycling around,” he says. “It’s people launching new models.”
Take that, Henry Ford. –M.J.
Leading the Way
Chocomize Customers can build their own chocolate bar online with Chocomize. In the first six months of 2011, the company gained as many new customers as it had in all of 2010; it’s also moved into a space four times the size of its old one.
Shoes of Prey Founded in 2009 by a team of three, this women’s shoe customization site now has a 17-person staff, five offices worldwide and averages 60 percent revenue growth quarter over quarter. Since launch, women have designed tens of millions of shoes, down to the heel, toe, fabric, color and embellishments.
Gemvara Since launch in February 2010, this jewelry customization site has provided more than a million pieces of high-quality, made-to-order jewelry to shoppers and seen 300 percent growth in orders year over year. Monthly page views (in the millions) have grown 20 times since launch and the Boston-based startup has raised more than $25 million in funding.

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