If you’re a CEO and sometimes think your technical team speaks a different language, you’re not alone. My world is saturated with tech jargon because I am a venture capitalist who reviews and meets with hundreds of tech startups every month. But which buzzwords are the most important for a CEO to understand? Which tech terms have gained prominence because they point to significant trends that, if not harnessed, can leave a business eclipsed? Look no further than the taxi industry and how it was outmaneuvered by the tech-savvy Uber for a prime example.

If I could only pick 3 buzzwords for every CEO to know, they would be: APIs, Artificial Intelligence (AI)/machine learning, and Internet of Things (IoT). Before I define these buzzwords in layman’s terms and explain why a CEO should care, let me tell you how I added a twist to this exercise.

I wanted to compare my opinion with a group of business people so I commissioned a one-day survey through Survata. Nearly 300 people participated in the survey with the following roles: C-level and VP exec (25%), director (22%) and manager (53%). Approximately 35% were female, 65% were male. The majority (42%) were aged 25 to 34 years-old; with the next biggest group (20%) aged 35-44 years-old.

Respondents hailed from a nice cross-section of all the regions in the US, as well as, industries from telecom/technology, finance, healthcare, construction, manufacturing, retail, logistics, entertainment, transportation, education, energy, government and more. Below are the top-10 industries represented. The survey asked respondents to select the top-3 most important buzzwords for CEOs from a menu of 10 buzzwords that I had come up with, including: AI/machine learning, data science, APIs, microservices, blockchain, Internet of things, bots, AR/VR, drones, and autonomous vehicles. We also gave respondents the option of writing in a tech term they liked better, but no one did.

And guess what? Our selections were similar. The respondents selected: Internet of Things (19%), data science (15%), and microservices (12%) as the top-3 buzzwords every CEO should know. I selected APIs while they picked microservices – but those two concepts are two sides of the same coin. Similarly, to continue the coin analogy, I chose AI/machine learning on one side of the coin, while they chose data science on the other – both are related and symbiotic.

This is admittedly an unscientific sampling of opinions, but instructive nonetheless for what’s on the minds of business people in the US.

So, let me go through each tech term and why CEOs should care:

Internet of Things

Simply put, the Internet of Things refers to interconnected devices that collect or transmit data via the Internet. A device can be anything with an on/off switch and includes virtually anything you can think of: cellphones, wearables (like Fitbit or Apple Watch), CPAP devices, TVs, thermostats, home security systems, robots, ATMs, Coke machines, and oil rigs.

These physical objects are connected via wired and wireless networks to monitor and control embedded sensors (e.g. lasers in a self-driving car), actuators (opening a dam’s floodgates), and fleets (Uber drivers). As an example, if diligent drivers agree to have a sensor installed in their cars, an insurance company can offer the customer lower auto premiums based on actual driving behavior rather than projections.

Now extrapolate that. Think of all the “things” that can be Internet-enabled across every industry, including electricity grids, medical equipment, homes, manufacturing floors, and much more. Per analysts at McKinsey & Company, 26-30 billion objects may be connected in this “Internet of Things” fashion by 2020.

This is important for CEOs because this hyper connectivity means access to massive amounts of data. And data means opportunities to innovate new revenue streams, improve efficiencies, and delight customers.

Data Science

This brings us conveniently to our second buzzword.  With billions of connected devices generating vast amounts of data, businesses will need to figure out how to store, track, analyze, protect, and ultimately extract knowledge from so much information. That’s where data science comes in.

Data science helps us glean insights from usually mountains of data. The volume of data we are talking about is usually too much to fit on a single computer or to manipulate with traditional statistical tools or databases. Also, data increasingly comes in many different forms like audio, video, text, images, etc.

Using skills that combine social science, statistics, information and computer science, as well as design, data scientists create algorithms to find correlations and patterns to make human judgements faster and more accurately.

Here’s why AI /machine learning are related to data science. The hottest new trend in data science is AI/machine learning – which is when computers sift through vast pools of data to find correlations and patterns that humans could never find, and automatically update self-learning models that predict the future.

Every industry, from finance to healthcare, entertainment to government, now has access to more data than ever imagined. Mining the data effectively will be a key challenge – and opportunity – for CEOs. Entrepreneurs are pitching venture capitalists daily with how AI can transform or upend existing businesses. Just as with chess and the game “Go,” it is almost a given that certain jobs, from Uber drivers to radiologists, will succumb to the AI revolution.

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Microservices

The third most popular buzzword every CEO should know per our survey respondents is microservices. Microservices are smaller, modular applications that focus on one basic business capability – like a product catalog, a price list, an online payment system, or a customer database. Each microservice has one discrete function and can be compared to an individual Lego block. Snap together those discrete functions and you have a larger, more comprehensive shopping application for example.

The microservices model is the opposite of traditional monolithic applications, which are like Legos that have been super glued together into one big, inflexible block.

Companies such as Netflix, eBay, Amazon, the UK Government Digital Service, Twitter, PayPal, Gilt, The Guardian, and many other large-scale websites and applications have switched from a monolithic to a microservices architecture.

And the benefits are obvious: using and reusing microservices in nearly endless combinations gives an organization the agility it needs to change and innovate.

Now remember I said microservices and APIs go hand in hand? Let me explain why.

APIs

I am a big believer in the transformative power of APIs. I’ve served on the board of MuleSoft since its inception in 2006 when I led Morgenthaler Ventures’ investment in the company’s Series A financing. MuleSoft was built on the widespread adoption of API-led connectivity.

What are APIs and how are they synergistic with microservices? API stands for “Application Programming Interface”. Think of them as the Yellow Pages, dial tone, and translation services necessary for microservices and applications to communicate together.  A microservice alone (that modular, single-task app) can’t be discovered or understood by a broader set of users if it isn’t accompanied by an API.  On the other hand, a microservice with an API is vastly more useful – because both internal developers as well as customers, partners and suppliers can connect to and use those microservices to innovate new applications modularly and rapidly.

For example, UPS has developed a large and fast growing e-commerce shipping business by making their shipping API ubiquitously available to all commerce websites – big and small. This API, easily discoverable and accessed via the web, has become a very cost effective sales and distribution vehicle for UPS.

All businesses have equal access to the fast-growing pool of API-enabled microservices offered by Salesforce, ServiceNow, Workday, Box, Google Maps, Microsoft Azure machine learning algorithms, Shopify, etc.  Tomorrow’s industry leaders will be the companies that take steps today to architect their IT organizations to adopt API-led, plug & play development to compose new competitive services at unheard of velocity.

We live in an increasingly interconnected world where every conceivable physical and electronic device will be monitored or controlled, creating vast amounts of data to be analyzed and optimized, and fed to new applications that will change the world as we know it. It is a very exciting time for those companies that embrace the Internet of Things; data science and AI/machine learning; and microservices and APIs.  And it will be a sobering time for those who sit back and watch.