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No longer at its origin, though far from maturity, digital media & information technology are in a middle state between these polar extremes. Driven by innovation & establishment in parallel, this state will perhaps be endless & is now perpetuated by the adoption of information technology into other fields. As this occurs, sectors are reshaped & the convergence between previously disparate worlds, with digital media at the center, is in itself a new form of innovation. This environment shapes & is mirrored in financial flows, strategies, structures & valuations, which are important to understand in this context. This presentation illustrates the described trends from a high level, incorporating certain ideas depicted in greater detail in other CoRise reports. It is not a comprehensive review of industry activities or a survey of competitors. Nor is it an analysis or set of recommendations for purposes of assessing any investment, public or private.
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CONVERGENCE AS A LONG-TERM TRENDINNOVATION IN PERPETUAL TRANSITION
MARCH / 2013
No longer at its origin, though far from maturity, digital media & information technology are in a middle state between these polar extremes. Driven by innovation, integration & establishment at once, this will be a long-term trend, now perpetuated by the adoption of information technology into other fields. As this occurs, sectors are reshaped & the convergence between previously disparate worlds, with digital media at the center, is in itself a new form of innovation. This environment shapes & is mirrored in financial flows, structures & valuations, which are important to understand in this context.
This presentation illustrates the described trends from a high level, incorporating some ideas depicted in other CoRise reports in greater detail. It is not a comprehensive review of industry activities or a survey of competitors. Nor is it an analysis or set of recommendations for purposes of assessing any investment, public or private.
BACKGROUNDFROM POLAR ENDS TO AN ENDLESS CYCLE
MARCH / 2013
4
AT ORIGINS: VALUE IS BUILT THROUGH EXPERIMENTATION & VOLATILITY, OFTEN VENTURE BACKED
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Iteration
Prototype
Beta
A/B testing
Launch
Team building
Traction
Scaling
Partnership
Pricing
Pivoting
Development
VENTURE CAPITAL
ANGELS
SEED FINANCE
SERIES A
INCUBATORSACCELERATORS
MENTORS
ADVISORS
FOUNDERS
5
AT MATURITY: VALUE IS BUILT THROUGH STABILITY & THE FINANCIAL ENGINEERING THIS ALLOWS, OFTEN DRIVEN BY CONSOLIDATION OF LIKE ASSETS
MARCH / 2013
Competition
Standardization
Reorganization
Productivity Earnings
Price reduction
Market expansion
PRIVATE EQUITY
PUBLIC MARKETS
BANK FINANCE
M&A
VALUATION
COST OF CAPITAL
LAWYERSREGULATION
LBO
REFINANCE ACCOUNTANTS
6
BETWEEN EXTREMES: PROFILES BLEND & VALUE IS BUILT TO REFLECT OVERLAPPING ELEMENTS IN THE MIDDLE
MARCH / 2013
Competition
Productivity Earnings
Market expansion
Team building
Partnership
Pricing
Pivoting
Development
Scaling
Reorganization
VENTURE CAPITAL
PRIVATE EQUITY
BANK FINANCE
M&A
VALUATION LAWYERS
REGULATION
ACCOUNTANTS
PUBLIC MARKETS
REFINANCE
COST OF CAPITAL
7
AS A SECTOR, DIGITAL MEDIA/INFO TECH IS IN A PERPETUAL MIDDLE: WELL PAST ORIGIN, NOT QUITE EVER AT MATURITY
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ORIGIN MATURITY
GROWTH
EVOLUTION
REINVENTION
8
THE LONGER THIS JOURNEY CONTINUES, THE MORE THE SECTOR’S FOOTPRINT EXPANDS
MARCH / 2013
AMAZON
APPLE
HEDGE FUNDS
BIG DATA
MEGAFUNDS
MICRO VCs
SECURITY
MOBILITY
Y COMBINATOR
AD NETWORKS APPS
API
INTERNATIONAL
9
AS IT DOES, EXTERNAL & PREVIOUSLY DISASSOCIATED SECTORS ARE BEING PULLED IN & INTEGRATED...
MARCH / 2013
DIGITAL MEDIA
&INFO TECH
TRADITIONAL MEDIA HARDWARE
COMMERCEFINANCIAL MARKETS
INFRASTRUCTUREHEALTHCARE ,
EDUCATION, OTHERS
10
... EXTENDING THE SECTOR’S GROWTH & PERPETUATING ITS TRANSITIONAL MIDDLE-STAGE TOWARDS MATURITY
MARCH / 2013
EVOLUTION
REINVENTION
DIGITAL MEDIA
&INFO TECH
TRADITIONAL MEDIA HARDWARE
COMMERCEFINANCIAL MARKETS
INFRASTRUCTUREHEALTHCARE ,
EDUCATION, OTHERS
THE REINVENTION OF WHOLE SECTORSCONVERGENCE AS INNOVATION FORM
MARCH / 2013
The following slides are a sampling of sector combinations, providing illustrative examples of business & product convergence & the novelty to which this gives rise.
12
COMBINATIONS WITHIN “NEW” MEDIA
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S O C I A LI N F O R M
AT I ON
TR
AN
SA C T I O N A L E N T E R T A I N
ME
NT
I N F O R MAT I O
N
I N F O R MAT I O
N
AppleAmazon
I N F O R MAT I O
N
Google + FB Graph Search
iBooks & iTunesKindle Fire
FB Credits
AMZN Reviews/Suggestions
Android
Siri Voice Search
Google Shopping
Kindle Silk
FB Apps
iMessage
Tumblr
MySpace
Friendster
StockTwits
Yelp Flickr
InstagramSkype
Bing
Wikipedia
Quora Yahoo!
WebMDWeather.com
MapQuest
TechCrunch
GigaOm Business Insider
Aol MSN
Netflix
Hulu
Spotify
Pandora
Turntable.fm
Zynga
YouTubeEBay
Groupon
Gilt
Kayak
Etsy
Priceline
Zillow
Foursquare
Hailo
Square
Uber
Craigslist
PayPal
13
BETWEEN "NEW" & "TRADITIONAL" MEDIA
TRADITIONAL
NEW
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INTO NOW / GETGLUE / SHAZAM
GOOGLE /ZAGATS, FROMERS
NETFLIX
Magazines
Television
Music
Radio
Books
Movies
Newspapers
Cable
Mobile
Digital
StreamingSocial
Interactive
Broadband
APPLE TV / HBO GO
SPOTIFY
iBOOKS / KINDLE
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INTEGRATING SOFTWARE & HARDWARE
SOFTWARE
HARDWARE
3-D PRINT MICROSOFT TABLET
ANDROID
MARCH / 2013
GOOGLE GLASS
INTERNET OF THINGS
15
INTRODUCING INFRASTRUCTURE INTEGRATION
MEDIA/TECH
INFRASTRUCTURE
AMAZON WEB SERVICES
VERIZON FIOS
MARCH / 2013
GOOGLE FIBER
16
COMBINING MEDIA & COMMERCE
MEDIA
COMMERCE
EBAY/PAYPALAMAZON
GROUPON
MARCH / 2013
ETSY
BITCOIN FOURSQUARE
Engagement
Community
Access
Distribution
Merchandise
Promotion
Payments
Brand
17
OFFLINE
ONLINE
SQUARE / STARBUCKS
B&NNOOK
APPLE STORE
MARCH / 2013
BLENDING ONLINE & OFFLINE RETAIL
UBER &HAILO
AMAZON PRIME
GOOGLE SHOPPING EXPRESS
18
COMBINING MEDIA & FINANCIAL MARKETS
MARCH / 2013
MEDIA
MARKETS
SECOND MARKET
LENDING CLUB
ANGEL LIST CB INSIGHTS
STOCKTWITS
Information
Distribution
Content
Capital
19
AT THE INTERSECTION OF MEDIA & HEALTH
MARCH / 2013
HEALTHCARE
MEDIA/TECH
WEBMDFITBIT BLUEPRINT HEALTH
20
INTRODUCING NEW FORMS OF (& FACILITATING) EDUCATION
MARCH / 2013
EDUCATION
MEDIA/TECH
LYNDACODECADEMY KHAN ACADEMY
21
REFLECTING OVERLAPPING NEEDS & STYLES OF CONSUMERS & THE ENTERPRISE
MARCH / 2013
CONSUMER
ENTERPRISE
IPAD BLOOMBERGLINKED IN
SECTOR STATUS MIRRORED IN FINANCEWHERE STRATEGIES LEADCAPITAL FOLLOWS *
MARCH / 2013
The following slides illustrate ways in which capital flows & funding sources have started to reflect the blend & integration themes highlighted. As in prior slides, this is only an illustrative sampling, not a survey or database.
* Though sometimes vice-versa
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OVERLAP BETWEEN EQUITY INVESTOR TYPES IN PURSUIT OF DIGITAL MEDIA ASSETS
MARCH / 2013
VENTURE CAPITAL
PRIVATE EQUITY
HEDGE FUNDS
STRATEGIC CAPITAL
TIGER GLOBAL
SPECTRUM A16ZGOOGLE
BAIN KLEINERINTEL
VALIANT CAPITAL
24
MIX OF FUNDING SOURCES WITHIN CAPITAL STRUCTURES
MARCH / 2013
PE/VC/HEDGE FUNDS
INSTITUTIONS
BANKS / FINANCE CO’S
MUTUAL FUNDS
EVERNOTEPINTEREST BOX TWITTER
25
BLENDING OF DEBT FINANCE INTO EQUITY-BASED MODELS
MARCH / 2013
EQUITY
DEBT
SURVEY MONKEY
DELL
MICROSOFT
PICTURE OF A SEGMENT IN TRANSITIONALWAYS ON ITS WAYNEVER SETTLED
MARCH / 2013
27 MARCH / 2013
VENTURE CAPITAL
PRIVATE EQUITY
BANK FINANCE
M&APUBLIC
MARKETS
REFINANCE
DIGITAL MEDIA
&INFO TECH
TRADITIONAL MEDIA HARDWARE
COMMERCEFINANCIAL MARKETS
INFRASTRUCTURE
GROWTH
EVOLUTION
REINVENTION
ORIGIN MATURITY
COST OF CAPITAL
HEALTHCARE , EDUCATION,
OTHERS
WHERE ARE YOU IN THIS LANDSCAPE?WHERE ARE YOU HEADING?
MARCH / 2013
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TO DISCUSS FURTHER:
CONTACT INFORMATION
MARCH / 2013
