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Barry Eggers, Founder and Managing Partner of Lightspeed Venture Partners

4/2/18

By Peter High, published on Forbes

Barry Eggers is the rare venture capitalist in Silicon Valley who grew up in the region. He can recall a time when the area was covered with fruit orchards rather than start-ups. He spent time in the mergers and acquisitions department at Cisco, which had a remarkable track record during his tenure. After a brief stint in private equity, Eggers and a couple of colleagues founded Lightspeed Venture Partners in 2000. As he notes herein, the firm’s approach has been to identify key themes that the company can focus its investments around.

One area of interest for Eggers is Industry 4.0. This describes digital transformation in the manufacturing sector, and the moniker suggests that it is the fourth wave of change to manufacturing. It is especially interesting, as it brings together a wide array of technology trends such as data, analytics, human-machine interactions, and digital-physical conversion. Eggers describes this trend, and its broader implications in this interview.

Peter High: Industry 4.0 is a topic that you focus on at your firm, Lightspeed Venture Partners. Could you define the term and provide insight into the technology trends that are embedded within it?

Barry Eggers: Broadly speaking, Industry 4.0 is the digitization of the manufacturing sector. The reason it is called Industry 4.0 is that many see it as the fourth industrial revolution: the first was steam, the second was electricity, the third was automation, and the fourth is now digitization. Some people also refer to it as cyber-physical systems in the manufacturing industry. We see this as a huge opportunity.

 There are four key technologies that are enabling Industry 4.0. The first is the combination of data, computational power, and connectivity. With this trend, we see computers getting so small and cheap that we can put them into just about anything. The cost of computing in the cloud and the cost of the network have gone to nearly zero, and so the use of sensors and the ability to monitor the physical environment and run analytics has become extremely cheap.

The second technology is analytics and intelligence. That is where breakthroughs like machine learning and artificial intelligence are taking place

The third technology is human-machine interaction. Even with automation, humans are not going away. It has become easier for humans to interact with machines through touch interfaces, voice interfaces, augmented, and virtual reality. I think augmented reality will play a huge role here.

The last enabling technology is the digital-physical conversion. This is what allows you to create things quickly, such as multi-material 3D printing. The combination of these technologies is going to change the way manufacturing is done over the next 10-20 years.

High: You not only have deep connections in the start-up community, but you also spend a good deal of time with leaders – CEOs, CTOs, CIOs – of large organizations. How fast do you see the adoption of Industry 4.0 technologies happening, especially among larger organizations?

Eggers: An industrial revolution takes time. You have to look at the amount of machines and equipment that has to be replaced. With the advent of the steam engine, absolutely everything had to be replaced. With the advent of electricity, very little actually had to be replaced because it substituted electricity for steam. With automation, some estimates say that between 80 to 90 percent of machines had to be replaced.

To read the full interview, please visit Forbes

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