deep impact2013 juliemeyer-slides
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GOOD AFTERNOON!
Ariadne Capital Limited is authorised and regulated by the U.K. Financial Services Authority
The Face of Every Entrepreneur
They just may not show it to you!
Two Good Reasons
• They see the inevitable and advance the Future
• They are willing to live abnormal lives
Capital Follows Ideas Always Has, Always Will
Remember the New Economy? Turns out it’s latest version of “New”
Economic Growth since the end of the 18th Century has gone through 5 Distinct Stages, associated with 5 successive Technological Revolutions
Five Successive Technological Revolutions, 1770’s to 2000’s
Technological Revolution
Popular Name for the Period
Core Country or Countries
Big-bang initiating the revolution
Year
FIRST The Industrial Revolution
Britain Arkwright’s mill opens in Cromford
1771
SECOND Age of Steam and Railways
Britain (spreading to Continent and USA)
Test of the Rocket steam engine for the Liverpool-Manchester railway
1829
THIRD Age of Steel, Electricity and Heavy Engineering
US and Germany forging ahead and overtaking Britain
The Carnegie Bessemer stell plant opens in Pittsburgh, Pennsylvania
1875
FOURTH Age of Oil, the Automobile and Mass Production
USA (with Germany at fist vying for world leadership), later spreading to Europe
First Model-T comes out of the Ford plant in Detroit, Michigan
1908
FIFTH Age of Information and Telecommunications
USA (spreading to Europe and Asia)
The Intel microprocessor is announced in Santa Clara, CA
1971
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Lifecycle of a Technological Revolution
© Proprietary & Confidential – Ariadne Capital
Gestation period
Big-bang
Paradigm configuration
Introduction of successive new products, industries and technology systems, plus modernisation of
existing ones
Constriction of potential
Time
Period one Period two Period three Period four
Around half a century
De
gre
e o
f te
chn
olo
gy
mat
uri
ty
and
mar
ke
t sa
tura
tio
n
Early new products and industries. Explosive growth and fast innovations
Full constellation (new industries, technology systems and infrastructure)
Full expansion of innovation and market potential
Last new products and industries. Earlier ones approaching maturity and market saturation
AGE OF IT AND TELECOMMUNICATIONS 50 ISH YEAR CYCLE – 1971 TO 20...?
BIG BANG – NOVEMBER 1971 IN SANTA CLARA, CALIFORNIA
• Bob Noyce and Gordon Moore launched Intel’s first microprocessor, the precursor of the computer
on a chip
INSTALLATION – late 1970’s through to Noughties
• 1976 – Steve Jobs, Steve Wozniak found Apple Computer
• 1984 - Michael Dell founds PC’s Limited later named Dell Computer Corporation
• 1985 – Irwin Jacobs founds QualComm, pioneer in Wireless Communications
• 1990 – CERN / Tim Berners Lee
• 1994 – Yahoo founded
• 2003 – Skype – “free calls on web”
• 2004 - Facebook founded
THE TURNING POINT
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THE REVOLUTION STARTS AS A SMALL FACT WITH BIG PROMISE AND MOVES TO A SIGNIFICANT FORCE IN THE MARKET
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Big Bangs attract new investment: successful radical innovations receive and promise extraordinary profits in a mature industrial landscape
The Installation Period is one of tense co-existence of two paradigms
•Once a truly superior technology is available, with higher productivity and clear growth potential, the outcome in the medium term is practically inevitable.
•First 2 or 3 decades of creative destruction after the Big Bang are increasingly turbulent and the benefits of growth uneven.
•A new context is being created; a new common sense is emerging.
•The world of computers and the Internet is very different than the world of the car, mass production and the highway.
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Big-bang
Time
Next big-bang
INSTALLATION PERIOD
DEYPLOYMENT PERIOD
De
gre
e o
f d
iffu
sio
n o
f th
e t
ech
no
log
ical
re
volu
tio
n Turning
Point
The dynamics of the system: three spheres of change in constant reciprocal action
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Production capital
Financial capital
Technological revolutions
Techno-economic paradigms
Socio-political ideas & behaviour
Socio-institutional frameworks
ECONOMIC CHANGE
TECHNOLOGICAL CHANGE
INSTITUTIONAL CHANGE
Technological Revolutions
• 1999 – David with his
slingshot wants to kill Goliath
The Economy & Social Institutions Respond
• 1999 to 2013 – Broadband and Mobile Technologies continue to invade our lives
• 2013 -David and Goliath must
dance
Consumerisation of Technology
Ariadne advised Skype on business development activity in 2003 and 2004
The consumer's adoption of services is driving everything, reversing how new products and services used to come to market through the enterprise.
User
Developer
Supplier
Client
Raymond Kurzweil The Singularity is Near
• Technology operates exponentially while our minds operate linearly
• It took 89 years for the fixed line telephone to achieve an adoption of 150 million users, but only 38 years for the television to get to the same point. The mobile phone achieved this in 14 years, the iPod in 7, and Facebook in 5.
• 20,000 years of progress this century.
• At a certain point, we have to leverage technology or artificial intelligence to continue to model or predict the future
The David / Goliath Grid Model
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Strategic Value
Financial Value
Network Effects
Vulnerability
“D
avid
” -
Dig
ital
En
able
r
“Goliath” - Distribution
Ecosystem EconomicsTM – shifting industry players Consumer – Data sets become prevalent Network – Orientation at heart of the consumer insight
When partnering with, 1)Brings new digital revenues 2)Brings lean operating system
When acquired, 1)Can become 2)Can reinforce or gain a position as Industry Architect
Renting Not Licensing
Operating System to the industry
Copyright - Ariadne Capital
Examples of Corporates engaging with Digital Enablers
Large corporates which are partnering and/or acquiring digital technology firms include:
Software is Eating the World
- Marc Andreessen
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GIVEN ALL THAT! WHAT IS THE INVESTMENT OPPORTUNITY?
WE HAVE A CUNNING PLAN
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Innovation is about Economics Not Technology
Otherwise we’d all be flying the Concorde
But we’re packed into Jumbo Jets
Network-orientation to business
and Ecosystem Economics
• Google says that they organise the world’s information
• They actually organise the economics of the world’s information
• I, as a consumer of their search, am not given any economic upside in the search
transaction.
• They have built a multi-billion pound business using – albeit anonymously – my personal
data – aggregated with that of others, but releasing none of the economic value to me
• Their biggest Achilles Heel is if someone in the search space were to cut a different set of
economics for the consumer
• Ariadne Capital found that entrepreneur – John Paleomylites – founder of
BeatThatQuote, and sold his business to Google on the 4th of March 2011 for a 122 EBITDA
multiple for these reasons
© 2003 – 2012 Monitise plc. All Rights Reserved.
Monitise – The De Facto Leader 84
17m Registered
customers
300+ FIs & Partners
1.6 bn+ transactions pa
$20bn Value of
payments &
transactions pa
700+ Mobile Money Experts
FIs
World leading partnerships
Mobile Operators
has created The Mobile Money Ecosystem over the past 9 years
Bank Platforms
Core
Banking
Other eg • CRM • Database
Wealth
Enabler
Use of standard Interfaces
3rd Party Providers
• Sharedealing • Insurance
Payments • Domestic
• International
Shopping &
Loyalty
National Services • Transit • Utility
Cards Processor
Mobile TopUp
© 2003 – 2012 Monitise Group Limited. All Rights Reserved. Confidential. 86
What is Mobile Money? The opportunity is to meet a range of key consumer needs through their mobile
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Underpinned by bank grade technology & security
Convergent Commerce
Retail Transport Ticketing
• Mobile Checkout
• NFC/ Proximity
• BarCode/ Text Purch
• Offers/ Promotions
• Shopping Apps/ Mobile
Web
• Banking/ Alerts
• NFC/ Remote
• Offers
• Remittance
Financial Institutions
• Mobile Prepaid
• Remittances
• App Markets
• NFC/ Private Label
• Remote Direct Bill
Mobile
• Mobile OS
• Marketing Apps
• LBS Services
•Networking
•Offers
Social Media and online advertising
Five Stages of Company Development
Idea Product Validate Business Model; Operating Model Set to Scale
Scale on the back of the Enterprise
Platforms and Corporate Partners
High Growth Sustainable Business
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Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
ACE Fund investment
focus
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In 2013, “Network Benefits” accrue to those Firms who understand their role in their ecosystem and organise the economics for it This in turn leads to exceptional returns for their shareholders
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Individual Capitalism is the Force for the 21st Century
“Capitalism was about empowered authority which didn’t necessarily activate the citizenry; the Internet stands that on its
head, and shifts the power to the Individual
– making Individual Capitalism the force of the 21st Century”.
So I say it’s really very simple....
Follow The Entrepreneur
• He/She has the Market Insight
• He/She is the Creator of Value
• He/She is the Hero
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Thank you ....
www.entrepreneurcountry.com
http://www.entrepreneurcountryforum.com
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