Exponential Economy - 7 Key Success Factors ands Success Stories

Exponential Economy 7 Key Success Factors

Didier Tranchier [email protected]

What is New Economy ?

New Economy• A phenomenon started in the 90’s, it accelerates and amplifies, and

is now global

• New Economy is replacing the Old Economy because New Economy is exponential

• faster

• more efficient

• more profitable

• I will present 7 key success factors of New Economy using Success Stories examples

• Finally, we will examine what is the situation in France, take examples of French Startups and Why France will be a Winner

Exponential Economy

1st Law of Exponential Economy: Vehicle of New Economy

Instant, Global and Viral access to Customers• Digital networks and social media networks can instantly disseminate information and offer, they are

sound boxes that industrialized the « word of mouth » Effect

• Consequently, a good offer is "accelerated" by digital networks

• We can observe what is called « Traction » , that is to say, a growth rate exceeding 10 % per week or per month , this is the base of the exponential growth

• In order to benefit from Traction, you need Scalability

• The Arithmetic progression of the Old Economy is competing with the Geometric progression of the New Economy

The Digital Economy is changing the whole economy and makes it more efficient

• More competition

• More efficiency for new products

• More flexibility on price

• More agility to meet offer and demand

• What happens if you don’t adapt to these new conditions ?

Exponential Accelerators

• Google, Facebook, Youtube and all social media are Exponential Accelerators

• Why ?

• How we can measure ?

Dynamic ranking creates exponential growth

• Ranking is not only based on traffic and also on traffic growth

• And in particular look not only at your growth but your acceleration

How many views ? 816 Millions

2nd law of Exponential Economy: Moore law / Engine of Digital

3rd Law of Exponential Economy: Power of Digital Economy

Faster

More Efficient

Paradigm shift

Product

Distribution

Marketing & Sales

Brand

Old Economy

New Economy

Brand

Marketing & Sales

Distribution

Product

More Profitable

More qualified Jobs• Some predict that Digital Economy destroys

jobs

• All traditional jobs will disappear in favor of jobs in the New Economy: a Painful Transition !!!

• But the New Economy is not just a substitution economy, it actually creates New Markets and New Types of Jobs:

• Markets: video games, social network, digital service providers, big data, cloud, web security, web sites, ...

• Jobs: community manager , data scientists , CTO , digital marketing, ...

• The creation of a new type of job / market is based on the following conditions:

• Demand

• Expertise

• Economic Efficiency

Success Stories

Uber : a typically French need

• Founded in 2009, following a trip in France …

• Valuation : $41 Billions

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor # 1: Reinventing the customer service from the customer's need

Zirx• Founded in March 2014

• $15 / day to solve parking headache

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #2: Inventing Services that solve Big Problems

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #3: Value Existing Assets by creating new Sharing Services

340 341 394

488 475

235

450

515 526 521

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

6.9% 6.9% 7.5%

8.4% 8.6%

4.7%

8.4% 9.3% 9.3% 9.6%

11.0%

| ACCOR FY 2014 RESULTS | February 18, 2015 16

Record EBIT and EBIT margin in 2014 EBIT (in €m)

Margin

602

Accor figures, restated from Edenred / Motel 6 / Red Roof Inn / GLB

Positive effects from the transformation of Accor and operating momentum

• Founded in 1967

• 5th world's largest hotel group

• €5,5 Billions Revenues in 2014, 4000 hotels, 160 000 employees

• Financial Results are excellent

• New CEO has launched a Digital Transformation Plan in October 2014Digitale en octobre 2014 : €220 Millions investment in 4 years

• Strategy?

• Founded in 1996 in Amsterdam by a computer geek, acquired in 2005 by Priceline for $ 133 Million

• A catalog of 600,000 hotels worldwide, 202 countries, 49 languages

• 12,700 employees, $ 8.4 billion revenues in 2014 ( + 20%) margin: 40%

• An extraordinary ability to sell : 700,000 nights per day, able to direct the flow of customers in an instant

• Online advertising expenditures: $ 2.36 billion in 2014

• What is it going to happen?

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #4: Take Digital Power

• Founded in 2003 by Elon Musk, Electric Car Manufacturer

• Model S : Autonomy : 500 km, 691 horsepower, performances > all sportcars, $70000

• Self park, autopilot, opens with a mobile phone

• Production 2014 : 70 000, predicted in 2015 : 200 000

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #5: Digital reinvents all industrial products

• Founded in 2002

• NASA sub-contracts to Space-X to compete against Ariane

• Key Success Factor #5: Digital reinvents all industrial products (whole industry)

Netflix is an American company founded in 1997 by Reed Hastings, an entrepreneur from the Software industry

Based in Los Gatos, California, it rents DVDs with an unlimited subscription for $ 7.99 / month

DVDs are ordered and sent back by post unlimited

In 1999 , the model is dematerialized and DVDs are replaced by streaming

In March 2014, they have 50 million customers in the US

Now embarked on an international expansion: Canada, UK , Ireland, Denmark , Sweden, Finland Norway, South America and France

Revenues 2014 : $ 5.5 billion, net income of $ 268 million

Netflix data used to be hosted by Amazon Web Services

Netflix traffic represents 35% of total Internet traffic in the United States during peak hours and 30% of total traffic

Netflix PrizeIn 2006, Netflix launched the Netflix Prize, an open competition for the best collaborative filtering algorithm to predict user ratings for films, based on previous ratings without any other information about the users or films, i.e. without the users or the films being identified except by numbers assigned for the contest

One condition: the algorithm must be at least 10 % more efficient than the one designed by Netflix

More than 51,000 participants from 186 different countries

The winning team, BellKor 's Pragmatic Chaos, is comprised of 2 canadian engineers from Montreal Piotte Martin and Martin Chabbert, two researchers from AT & T, a scientific Yahoo and two Austrian researchers

New Value Chain

Film Producer 14cts

Cinemas 95% € 6.86

Customer € 7

Film Producer € 2,1

Netflix 70% € 4.9

Customer € 7

€ €

€€

Data Data

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #6: Develop customer loyalty by measuring his interest and generating what interest him

• Founded in 2009 in New York

• What impact?

• What value?

• Transferable to other markets?

• Key Success Factor #7: Exit traditional industrial models and identify new needs and supporters customers (long tail )

The 7 Key Success Factors of the New Economy

• # 1: Reinventing the customer service from the customer's need

• #2: Inventing Services that solve Big Problems

• #3: Value Existing Assets by creating new Sharing Services

• #4: Take Digital Power

• #5: Digital reinvents all industrial products (whole industry)

• #6: Develop customer loyalty by measuring his interest and generating what interest him

• #7: Exit traditional industrial models and identify new needs and supporters customers (long tail )

What about France ?

• Founded in 2005

• Retargeting inventor

• Revenues 2013 : € 440 Millions

• Listed on Nasdaq, valuation : $ 2,25 Milliards

Online fashionwww.vente-privee.com

Xavier Niel

• Founded in 2006

• 10 Millions users

• Car sharing leader in France, presence in 12 countries

• July 2014, $ 100 Millions round of financing from Index Venture

• Founded in 2009

• Sigfox raises € 100 Millions d’€ in February 2015 for international development

• Founded in 2007 by a former Nortel engineer

• Hybrid music amplifier (Analog Digital Hybrid)

• In 2012, they raise € 15 Millions from Bernard Arnault, Jacques-Antoine Granjon, Xavier Niel, Henri Seydoux, Stéphane Bohbot

• $ 5 Millions revenues in 2013

The end of cars

www.autolib.eu

Heart + Passion

Invented by Pr Alain Carpentier in 2008, founder of Carmat

www.carmatsa.com

French savoir-vivre

www.laruchequiditoui.fr

Crowdfunding

France late … or younger?

• Californian model is based on 3 values:

• Skills

• Speed / Competition

• Work

• We are able to do better on these 3 values… and more

• This is only the beginning …

Vive la crise

Vive la révolution

Vive le savoir-vivre

Conclusion• The Exponential Economy is completely

transforming the economy that we used to know

• It will completely replace the Old Economy because it is much more efficient

• And it creates New Markets … with no limits

• This is a unique moment !!!