Ten

Hypotheses for Tech Inves1ng

Presenta(on to SDVG Venture Summit
Roger McNamee Eleva(on Partners

Hypothesis #1

Investors and entrepreneurs risk missing a huge business opportunity because they are using the wrong vocabulary

1998-2006: Internet + Web World Wide Web HTML 4

Internet

2007-Present: Two Separate Markets World Wide Web HTML 4 App Model

Internet

Carriers + WiFi

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How to Revive the Web" by Roger McNamee

2007-Present: Hypernet + Hyperweb World Wide Web HTML 4 App Model

Hyperweb

Hypernet
5/4/2012 How to Revive the Web" by Roger McNamee

Internet

Carriers + WiFi

Hypothesis #2

Businesses are adop(ng consumer technology because it is cheaper to buy, cheaper to support, and works beOer.

Web = Only Half of Addressable Market

Units/$ ===>

HTML 4 Windows/IE Mac/Safari Search: Google

App Model + Carriers iOS Android Search: Apps

Hypernet

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Hypothesis #3

Index search s(ll controls wired web; in mobile, use cases and behaviors are dierent, resul(ng in dierent winners

Apps Replace Google for Mobile Search

Units/$ ===>

HTML 4 100 searches

App Model + Carriers iPad: 10 iPhone: 1

Hypernet

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Web Winners Have Failed to Prot From Mobile Google MicrosoX Facebook Cisco Oracle/Sun SAP Intel Apple Verizon ATT Publishers Amazon B&N

Hypernet

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Hypothesis #4

Apple succeeded by hiding technology wherever possible . . . and subs(tu(ng style.

Customers Dont Love the Web

Units/$ ===>

HTML 4 Open source Long tail Free Commodi(zed Wild West

App Model + Carriers iOS Branded Free + Paid Dieren(ated Secure $400-1,000

Hypernet

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Hypothesis #5

Next genera(on web technology will favor publishers/consumers over middle men

Tech Pendulum Enabling More Content Dieren1a1on

Commodity Content

Dieren(ated Content

HTML 4 Web

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App Model

How to Revive the Web" by Roger McNamee

Future: HTML 5

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Engagement: Metric of Value for Content

HTML 4 Web

iOS 2-5 mins/ app

HTML 5 Web ????

15-20 secs/story

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Value to Publisher HTML 4 zone iOS zone HTML 5 zone

Content = Commodity

Content = Dieren(ated

You are here!

Engagement

Commodi(zed content favors middle men; dieren(ated content favors publishers and consumers

HTML 5 = Higher Produc1on Values, Lower Cost Flash

HTML 4 Flash HTML 4 HTML 4 HTML 4 HTML 4

Flash Flash

HTML 5

HTML 4 - Today
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HTML 5 - 2014
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HTML 5 = Engagement and Mone1za1on

STORY Product 1 Product 2 Product 3

Adver(sement

Product 1 * Product 2 * Product 3 *

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

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4
STORY Product 1 Product 2 Product 3

HTML 5 Apps May Have Mul1ple Forms

3 2
INFOGRAPHIC

1. App: func@ons like a na@ve app 2. eBook: something to read later 3. Bookmark+: content available for later reference 4. Layers

1
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Stock Trading App

Ticker 1 * Ticker 2 * Ticker 3 *

How to Revive the Web" by Roger McNamee

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4
STORY Product 1 Product 2 Product 3

Mul1ple Forms of High Value Mone1za1on

3 2
INFOGRAPHIC

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
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1
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Stock Trading App

Ticker 1 * Ticker 2 * Ticker 3 *

How to Revive the Web" by Roger McNamee

HTML 5 = Wide Open Opportunity

Units/$ ===>

World Wide Web HTML 4

Google

App Model

HTML 5

Apple

???

Content = Commodity Desktops

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Content = Limited Dieren1a1on Smart Phones

How to Revive the Web" by Roger McNamee

Content = Unlimited Dieren1a1on Future

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HTML 5 vs Na1ve Apps

Advantage Scale Open Source Cost Control Economics Func1onality iOS ??? HTML 5 ???

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HTML 5 = Wide Open Opportunity

Units/$ ===>

World Wide Web HTML 4

Google

App Model

HTML 5

Apple

???

Content = Commodity Desktops

5/4/12

Content = Limited Dieren1a1on Smart Phones

How to Revive the Web" by Roger McNamee

Content = Unlimited Dieren1a1on Future

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Hypothesis #6

Children under the age of 8 may never use a PC the way you do.

An Eight-Year Olds Idea of a Computer

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Hypothesis #7

Android has a broken economic model; cannot compete with Apple in the long term

Brand is a HUGE Advantage

COGS

Apples gross margin is roughly equal to gross revenues for a comparable Android

COGS

Apple
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Android
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Android = Entropy at High Velocity

Verizon Original Android Standard

Amazon

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Samsung

Barnes & Noble

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Smart Phone Purchase Drivers

Apple
Content Cool factor

Android
Tech heat seeker Inexpensive

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Hypothesis #8

Social and Mobile are now a cost, not a compe((ve advantage

Hypothesis #9

The Cloud will be highly distributed. Home clouds may prove to be the most valuable.

Compe11on in the Cloud

Apple
Content SAP Cool Microsoh factor
v

Google Amazon Neilix

Private and Home Clouds

v
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v vv v

Hypothesis #10

Disrup(on of cable, satellite, and even NetFlix is beginning.

Economic & Market Environment

US economy is beginning to improve, despite eorts in Washington to reduce decit DJIA, S&P, Nasdaq reect rising op(mism Unemployment remains high; possibly structural Excessive consumer indebtedness acts as a drag on growth Government decits act as a drag on future growth Wars compete for resources with private economy Is Iran next? Investor challenge: what is the happy ending?

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Onward!!

Tech heat Content seeker hOp://www.moonalice.com Cool factor Inexpensive

hOp://www.eleva(on.com

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