Disruption An innovation process where cheap, low-quality
products ultimately displacing expensive, high-quality products.
Disruption typically ruins the prospects of organizations caught on
the losing side. Qualities of Disruptive technology 1.much cheaper
+ easier to use 2.improve at a rate much faster than the
competition 3.performance satisfies most demanding uses 4.New
technology dominates
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Disruption transforming all industries AUTOMATED Hotels +
Travel Industrial + Manufacturing Professional Services Brick n
Mortar Video Floor Trading Wired Telecom Printing Meter Reading 3d
Printing Gene Sequencing Big Data Mobile Apps DESTROYED
CREATED
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Moores Law, and its Long-Term Implications Moores Law: number
of transistors on a chip doubles every 18 months Implications: Your
phone is more powerful than a 70s supercomputer Computers are
steadily acquiring human capabilities
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Does Tech Enable Job-Free Growth? Unemployment drops, but no
one rejoins work force Productivity grows, but not employment
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Where are displaced workers going? % of workers on SS
Disability doubled since 1980 Low wage jobs growing fastest
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Goodbye Middle Class. Hello Tech source: NELP, Alan Krueger via
Huffington Postvia Huffington Post Left Lower wage jobs dominate
the recovery, though higher wage jobs are holding their own Right
The middle class is shrinking steadily, with job automation playing
a key role
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income disparity will only worsen structural unemployment
successful tech = disruption Tech = Disruption Recap automation = C
U L8R middle class
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TECHNOLOGY SECTOR ACTIVITY HiddenLevers
Slide 13
VC Market Overview Where and What? sources: PWC Moneytree,
Steve BlankPWC MoneytreeSteve Blank VC deals still dominated by
software, followed by biotech California dominates - 46% of all VC
funding in 2013
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VC Market Overview How Much Money? sources: PWC Moneytree,
Steve BlankPWC MoneytreeSteve Blank VC funding actually higher in
2011-2012 than today Could VC trends be front- running public
markets?
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VC Market Overview Mark to Mystery source: Wall Street
JournalWall Street Journal Twitter, Pinterest, and Snapchat command
huge user bases challenge is monetization Snapchat specializes in
disappearing content makes advertising more difficult All of the
above rely on digital ads as business model can the advertising
business sustain GOOG and all the rest?
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Winners - Four Horsemen Facebook and LinkedIn show strength of
large social networks. Netflix threatens cable with original
content & streaming. Tesla disrupts automotive and dealership
models. YTD, over $80B has been added in market
capitalization.
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Source: LA Times 8 March 2013 Winner - 3D Printing
Hewlett-Packard announced 2014 entry into 3D printing. Key patents
expiring February 2014 More growth? DDD and SSYS major players.
VJET & XONE had 2013 IPO.
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Winner - Cloud Computing Here to stay long-term. 36% annual
growth. $200B market Network security & NSA monitoring are
concerns now. Players: Dropbox, Evernote, Drive, iCloud.
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Loser - Brick and Mortar Online shoppers killing big box stores
Office Max Office Depot desperation merger Borders gone, Barnes
& Noble shrinking. Source: USA Today Business Insider
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HiddenLevers TECH BOOM OR BUST SCENARIOS
Slide 21
Tech Boom or Bust Historical Scenarios 90s Tech Boom 1995-99
Dot Com Bust 2000-02
Slide 22
90s Tech Boom Fed hiked rates 6 times in 1999- 2000. Target
rate 6.5% No rise in defensive equities (soap, food) S&P up 26%
annually, for last 50 months of bubble source: HiddenLevers 550%
200% Four Horsemen high flyers, ushered in end of days +4000%
+1200% +8000% +1400%
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Dot Com Bust Yahoo bought Geocities for 5b Priceline went from
1000 to 7 Brutal landing in Four Horseman Markets followed in 2001
source: HiddenLevers Nasdaq came back in line with S&P CSCO-88%
MSFT-63% DELL -69% INTL-74%
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Scenario: Tech consumes the world
Slide 25
serious tech dynamism being unleashed, not just dot coms
Scenario: Tech consumes the world organizational overhauls involve
digital innovation no spillover effect between tech + telecom
angels succeeding now came from 90s IPO boom global dimensions, not
just US private market runs most of the money flow source: MSN
2013: Reasons its different Defensive equities best start in 2
decades
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Scenario: Tech consumes the world Apple rebound Netflix rebound
Priceline dominance in hotels Priceline first S&P 500 company
at 1000/share Amazon Web Services source: Marketwatch, Moscow
NewsMarketwatchMoscow News Hints of 1996 Autotrader.com 2001: 47m
loss 2013: 62m profit paradigm shifts smartphones photos analytics
Facebook rebound
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Scenario: Dot Com Dj Vu 2013 Nasdaq +20% 4HRSMN +230% Elon Musk
says Tesla overvalued Facebook IPO. (enough said) Four Horsemen
current Nasdaq outperformers, leading way to hell? 1 car on fire
showed Tesla speculation FB Instagram purchase was done in 1 day
source: HiddenLevers, NY Times, ValueWalk, CNN Money,
SeekingAlphaNY TimesValueWalkCNN MoneySeekingAlpha
Slide 28
major tech innovations end in speculative frenzies Scenario:
Dot Com Dj Vu Doubts about economic returns of innovation
Increasing size of early funding rounds Big companies buying their
way into relevancy Lackluster due diligence source: Bungled IPOs
leading to disappointment 2013: Reasons its the same
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Yahoo buying Tumblr for 1b, no rev for years Scenario: Dot Com
Dj Vu Priceline double top at $1000/share Class actions against
Zynga Color 43m in first funding round, now bust Corporate profits
up 20%/year since 2009 S&P annual gains since March 09 match
dot com era source: NY TimesNY Times Hints of 2000 Groupon hijinks
turning down 6b Repositioning Firing founder Pinterest 1/3
valuation of Twitter with no revenue Square versus MasterCard
Solyndra = Fraud tainting green tech altogether
Slide 30
Tech Boom or Bust Future Scenarios Jurys Out Tech Consumes the
World Bad Dot Com Dj Vu
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Support for SMA + managed products Scenario Modeling to Reports
improved workflow War Room updated interface Performance + Speed
improvements Coming soon: Notifications + Alerts New Levers -
Technology Product Update