Thomas Frey Executive Director DaVinci Institute PO Box 270315 Louisville, CO 80027 (303) 666-4133 [email protected].

Thomas FreyExecutive Director

DaVinci InstitutePO Box 270315Louisville, CO 80027(303) [email protected]

Leonardo da Vinci

Slide Rule

End of an Era

End of EraBeginning of a New Era

Maximum

Freud

Maximum Freud

• A time when we’ll spend the most time on a couch talking to our shrink

• Tremendous opportunity

• Major chaos

Approaching Maximum Freud

• Fax Machines• Checking Industry• Space Shuttle• Sign Language• Traditional Television• Invasive Surgery• Regular AM-FM Radio• “Drill-n-Fill” Dentistry

The End of Wires

• Home Telephone Lines

• Cable Television Lines

• Power Lines

Question

• What does wireless money look like?

Trends in Innovation

1. The Age of 100 Million Products – Amazon – 1 million books– Software Superstore – 1 million

programs– iTunes – 700K songs– One new grocery store products

introduced every 30 minutes– Domain Names– Google keywords

Trends in Innovation

2. Patent Filings Reach All-Time High– 2004 – 376,810 patents filed– 2004 – 187,170 patents granted– Backlog of 580,000– 27 month average wait

Trends in Innovation

3. The Next Big Thing was Invented Over 25 Years Ago

– The Internet is 35 years old– Cell phone invented in

1973– Breakthrough technologies

take at least a generation to gain a foothold

Trends in Innovation

4. The Great Talent Gap Continues to Grow – Demand for science & engineering skills

growing at 5% per year– Nearly 50% of today’s workforce eligible for

retirement by 2012– IBM - Additional 2.2 million IT workers

needed by 2010

Top 10 Trends in Innovation

5. Time Compression Driving Consumer Behavior

– People spend 2 hours less per night sleeping than in 1920

– 34% of lunches eaten on the run– 66% of people surf the web &

watch TV– 43% have trouble making

decisions from data overload

Trends in Innovation

6. Aging Marketplace Driving Biotech

• People live 2.5 years longer every decade

• U.S. spending $1.7 trillion on health care in 2003

• Expected to reach $3 trillion within 10 years

Trends in Innovation

7. The Long Tail• Fewer and fewer “hit” products• Many new “Long Tail” aggregators• New business theories

Trend Lines

Money Trends

2500 BC - Banking

3200 BC – The Shekel

806 AD – Paper Money

1494 - Double Entry Accounting 1659 – The First Check

1799 – Income Tax

1879 – Cash Register

1887 – Vending Machine

1939 – ATM Machine

1950 – Credit Card

1974 – Smart Card

2002 – Fingerprint Payments

1918 – Electronic Money

Question

• What is the ultimate form of money?

• Will we ever get there?

Strategies for Dealing with a Dead Horse

Strategies for Dealing with a Dead Horse

1. Buy a stronger whip.

2. Appoint a committee to study the horse.

3. Arrange to visit other sites to see how they ride dead horses.

4. Appoint an intervention team to reanimate the dead horse.

5. Reclassify the dead horse as living-impaired.

Strategies for Dealing with a Dead Horse

6. Harness several dead horses together for increased speed.

7. Donate the dead horse to a recognized charity, thereby deducting its full original cost.

8. Form a quality focus group to find profitable uses for dead horses.

9. Promote the dead horse to a supervisory position

The Top Strategy for Dealing with Dead Horses

Click here to pay $.25 to hear the punch line of

this joke

Micropayments

• Micropayments are approaching viability with the computer game industry leading the way.

The Flying Mouse

Gamer Profile

• 53 million Americans play computer games

• The average gamer is 33 years old and earns $81,000

• Last year they spent $1.2 billion on PC games

• 16% of them play at least 3 hours a day

Universal Commerce

• Visa• Sun Microsystems• Phillips• Cisco

Scott ThompsonCTO - Visa

Universal Commerce

Universal Commerce

Universal Commerce

Universal Commerce

Universal Commerce

Universal Commerce

Universal Commerce

• Many New Business Models

• Potentially Greater Profits

• Risk of Fraud Reduced

Criminal Trends

Criminal Trends

Trend # 1

• The Biggest Security Problems Come from Within

Security Trends

• Cyberterrorism is considered a joke

• If you can defend your networks against teenagers, you can defend against terrorists

• Nigerian scams fading• Phishing attacks on the rise.

Phone Phishing to emerge.• Pharming scams on the rise

System Thinking

• Greek Mathematicians– Pythagoras– Archimedes

• Roman Mathematicians– ?

System Thinking

What systems do we employ today that are the equivalent of Roman Numerals?

Trend # 2

• The Income Tax System is on the Verge of Collapse

Exponential Nature of Complexity

Exponential Nature of Complexity

• Tax Code is over 52,000 pages long

• Over 1 trillion transactions per year

• We will soon be unable to compete in the global economy

Top Factors Opening New Bank Accounts

Top Factors Opening New Bank Accounts

Trend # 3

• The Checking Industry is Going Away - Prepaid Debit Cards to Become a Huge Industry

Prepaid Opportunities

• Approx 50 million individuals operate with cash only

• Estimated $840 billion for all ethnic communities, $440 billion by Hispanics.

• Hispanics sent $14 Billion to Latin America last year, paying $1.4 Billion in money transfer fees.

Setting Traps

No More Late Fees

• Competition from NetFlix caused Blockbuster to cancel its late fees

• The same type of competition will cause banks to eliminate most of their penalty fees

Trend # 4

• The End of Penalty Fees

The Fee Backlash

• The online backlash against banking fees is mounting

• The blogging world is growing exponentially, giving an influential voice to consumers

Trend # 5

• Convenience Stores to become a growing competitive threat to the banking industry

V-Com Services

• Conduct ATM transactions• Cash checks• Purchase money orders and

money transfers• Access Verizon residential

telephone services• Pay bills• Purchase phone and stored-

value cards • Buy auto insurance

Squashing the Time Float

• Transaction time and cost is dropping

• Real-time processing is creating new opportunities

Trend # 6

• Introduction of the No-Bounce Bank Account

No-Bounce Advantages

• Greatly expanded market• No credit checks• No delays• Greatly improved

customer relations

Creating New Currencies

Creating New Currencies

• Frequent flier miles now valued at more than all US currency - $700 billion

Creating New Currencies

• Over 5,000 private currencies in circulation

• Swiss Wir operating since 1930s

• Japan is the world’s laboratory for new currencies with over 220 now in place

If the following organizations began issuing their own currency, which would you trust the most?

0 2 4 6 8 10 12 14 16 18

Harvard University

Wal-Mart

Google

Llyods of London

Amazon

Wells Fargo Bank

Microsoft

NYSE

CNN

McDonalds

General Motors

eBay

Trend # 7

• Private currencies to replace national currencies in small countries

Complementary Currencies

• Emerging Dual-Currency Systems

• The World’s First Global Trade Reference Currency – The Terra

Trend # 8

• The Coming Credit Card Boom in China

Credit Card Opportunities in China

• Currently, 350,000 domestic merchants (out of est. 10 million) accept credit and debit cards.

• Of the 400 million bank cards issued in China, 40% are inactive, and less than 10% are credit cards.

Trend # 9

• The Return of Early Stage Deals

The Return of Early Stage Deals

• VC money increased to $25 billion in 2004

• Geographical preference to invest locally

• Investments metered out in smaller amounts with milestones to meet

• Time crunched investors

Trend # 10

• Transitioning from a Product-Based Economy to an Experience Based Economy

Experience Vs Products

• Reputations are based on your experiences, not what you own

• Experiences are now valued more than products

• Baby boomers are beginning to shed their belonging

Power Vs. Freedom

“Power is about what you control. Freedom is about what you can unleash.”

-Harriet RubenFounder Doubleday/Currency Book Publisher

Thomas Edison

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” -- Thomas Edison

Thomas FreyExecutive Director

DaVinci InstitutePO Box 270315Louisville, CO 80027(303) [email protected]