Presenta(on to SDVG Venture Summit Roger McNamee Eleva(on Partners Ten Hypotheses for Tech Inves1ng
Nov 12, 2014
Presenta(on to SDVG Venture Summit Roger McNamee Eleva(on Partners
Ten Hypotheses for Tech Inves1ng
Investors and entrepreneurs risk missing a huge business opportunity because they are using the wrong vocabulary
Hypothesis #1
Internet
World Wide Web – HTML 4
1998-‐2006: Internet + Web
Internet
World Wide Web
HTML 4
App Model
Carriers + WiFi
2007-‐Present: Two Separate Markets
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World Wide Web
HTML 4
App Model
Internet Carriers + WiFi
2007-‐Present: Hypernet + Hyperweb
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ßHyperwebà
ßHypernetà
Businesses are adop(ng consumer technology because it is cheaper to buy, cheaper to support, and works beOer.
Hypothesis #2
Web = Only Half of Addressable Market
Hypernet
HTML 4 Windows/IE Mac/Safari
Search: Google
App Model + Carriers
Units/$ ===>
App Model iOS
Android Search: Apps
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“Index search” s(ll controls wired web; in mobile, use cases and behaviors are different, resul(ng in different winners
Hypothesis #3
Apps Replace Google for Mobile Search
Hypernet
HTML 4 100 searches
App Model + Carriers
Units/$ ===>
App Model iPad: 10 iPhone: 1
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Hypernet
Google MicrosoX Facebook Cisco
Oracle/Sun SAP Intel
Apple Verizon ATT
“Publishers” Amazon B&N
Web Winners Have Failed to Profit From Mobile
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Apple succeeded by hiding technology wherever possible . . . and subs(tu(ng style.
Hypothesis #4
13
Hypernet
HTML 4 Open source Long tail Free
Commodi(zed Wild West
App Model + Carriers
Units/$ ===>
App Model iOS
Branded Free + Paid
Differen(ated Secure
$400-‐1,000
Customers Don’t Love the Web
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Next genera(on web technology will favor publishers/consumers over middle men
Hypothesis #5
Commodity Content
HTML 4 Web
App Model Future: HTML 5 à
Tech Pendulum Enabling More Content Differen1a1on
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Differen(ated Content
HTML 4 Web
Engagement: Metric of Value for Content
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iOS HTML 5 Web
15-‐20 secs/story
2-‐5 mins/ app ????
Commodi(zed content favors middle men; differen(ated content favors
publishers and consumers
Content = Differen(ated
Content = Commodity
Engagement
Value to Publisher $
You are here!
HTML 4 zone iOS zone HTML 5 zone
Flash
Flash
Flash
Flash
HTML 4 -‐ Today HTML 5 -‐ 2014
HTML 4
HTML 4 HTML 4 HTML 4 HTML 4
HTML 5
HTML 5 = Higher Produc1on Values, Lower Cost
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HTML 5 enables everything to be an app, including ads Ads can be @ed directly to content It may be 2-‐3 years before HTML 5 tools will enable this
HTML 5 = Engagement and Mone1za1on
STORY Product 1 Product 2 Product 3
Product 1 * Product 2 * Product 3 *
Adver(sement
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1. App: func@ons like a na@ve app
2. eBook: something to read later
3. Bookmark+:
content available for later reference
4. Layers
HTML 5 “Apps” May Have Mul1ple Forms
STORY Product 1 Product 2 Product 3
Ticker 1 * Ticker 2 * Ticker 3 *
Stock Trading App
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INFOGRAPHIC
2
1
3 4
1. App delivery
2. eBook: atomiza@on of content enables incremental revenue
3. Content available for
later reference can include mone@za@on
4. Layers can include
mone@za@on
Mul1ple Forms of High Value Mone1za1on
STORY Product 1 Product 2 Product 3
Ticker 1 * Ticker 2 * Ticker 3 *
Stock Trading App
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INFOGRAPHIC
2
1
3 4
World Wide Web
HTML 4
App Model
Units/$ ===>
HTML 5
Google Apple ???
Content = Commodity
Content = Limited Differen1a1on
Content = Unlimited Differen1a1on
Desktops Smart Phones Future
HTML 5 = Wide Open Opportunity
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Advantage Scale Open Source Cost Control Economics Func1onality
iOS √ ???
HTML 5 √ √ √ √ ???
HTML 5 vs Na1ve Apps
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World Wide Web
HTML 4
App Model
Units/$ ===>
HTML 5
Google Apple ???
Content = Commodity
Content = Limited Differen1a1on
Content = Unlimited Differen1a1on
Desktops Smart Phones Future
HTML 5 = Wide Open Opportunity
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Children under the age of 8 may never use a PC the way you do.
Hypothesis #6
An Eight-‐Year Old’s Idea of a Computer
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Android has a broken economic model; cannot compete with Apple in the long term
Hypothesis #7
COGS
COGS
Apple Android
Apple’s gross margin is roughly equal to gross revenues for a comparable Android
Brand is a HUGE Advantage
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Android = Entropy at High Velocity
Amazon
Barnes & Noble Samsung
Verizon
Original Android Standard
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• Content • Cool factor
• Tech heat seeker
• Inexpensive
Smart Phone Purchase Drivers
Apple Android
“Social” and “Mobile” are now a cost, not a compe((ve advantage
Hypothesis #8
The Cloud will be highly distributed. Home clouds may prove to be the most valuable.
Hypothesis #9
33
• Content • Cool factor
Compe11on in the Cloud
Apple Google
Amazon
Microsoh SAP
Neilix
v vv v
v
v
Private and Home Clouds
Disrup(on of cable, satellite, and even NetFlix is beginning.
Hypothesis #10
• US economy is beginning to improve, despite efforts in Washington to reduce deficit – DJIA, S&P, Nasdaq reflect rising op(mism – Unemployment remains high; possibly structural
• Excessive consumer indebtedness acts as a drag on growth • Government deficits act as a drag on future growth
– Wars compete for resources with private economy – Is Iran next?
• Investor challenge: what is the happy ending?
Economic & Market Environment
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• Content • Cool factor
• Tech heat seeker
• Inexpensive
Onward!!
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