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A Market Overview and the Industrial Models behind Ariadne’s Investments Presented by Julie Meyer November 2010. What I’m Going to Talk About. Who is Ariadne Capital? Key Thinkers Who Are Framing This Next Age Technology and Financing Trends Predictions for 2015 Entrepreneur Country.

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A market overview and the industrial models behind ariadne s investments

A Market Overview and the Industrial Models behind Ariadne’s Investments

Presented by Julie Meyer November 2010


What i m going to talk about

What I’m Going to Talk About

  • Who is Ariadne Capital?

  • Key Thinkers Who Are Framing This Next Age

  • Technology and Financing Trends

  • Predictions for 2015

  • Entrepreneur Country


About ariadne capital

About Ariadne Capital

Founded in London in December 2000 to build the global leading firms of the 21st century

London-based investment and advisory firm has spun out a fund management business and Entrepreneur Country

Entrepreneurs Backing Entrepreneurs

The Anti-VC VC

Backed by 57 leading global entrepreneurs including the founders of BetFair, Sporting Bet, Easynet, WorldPay, SES Astra and Hotmail

Strong track record helping corporates to identify and transact with game-changing start-ups:

Ariadne Capital has backed winners:


What trends did we spot early in our ariadne s first ten years

What Trends Did We Spot Early in our/Ariadne’s First Ten Years?

The Consumerisation of Technology

through Skype [free calls on the web] – August 2003

Peer to Peer Activity Enabled by Web

through BeTheDealer/Casino Village [world’s first Peer to Peer Gaming] in December 2001

Pay Per Click

through Espotting [first PPC business model] in 2002

Mobile Banking

through Monitise – in November 2004

“Voice” as a new category of communications was carrier ready and ready to be delivered as a managed service

through SpinVox– in 2006


Consumerisation of technology

Consumerisation of Technology

  • Ariadne advised Skype on business development activity in 2003 and 2004

  • The consumer's adoption of services is driving everything, reversing how new products and services used to come to market through the enterprise.


A market overview and the industrial models behind ariadne s investments

How Will the Digital World Change Our Lives in the Next Ten Years?

  • Individual Capitalism, Entrepreneurship and the Internet are activating the citizenry in a way that “Big Business” never could

  • Hotmail in the 1990’s started the de-coupling of the individual to any one device

  • Expectations of on-demand information will increase due to Twitter

  • There is a profound “Network-orientation” to business, and “Ecosystem Economics” will prevail


Individual capitalism is the force for the 21 st century

Individual Capitalism is the Force for the 21st Century

“Capitalism was about empowered authority which didn’t necessarily activate the citizenry; the Internet stands that on its head, and shifts the power to the Individual

– making Individual Capitalism the force of the 21st Century”.


Clay shirky how cognitive surplus will change the world

Clay ShirkyHow ‘Cognitive Surplus’ will change the world

  • The Great Spare Time Revolution

  • Television Time Has Been Redirected

  • The Joy of Doing Something For Its Own Stake

  • Wikipedia – 100 million hours of human activity


Raymond kurzweil the singularity is near

Raymond KurzweilThe Singularity is Near

  • Technology operates exponentially while our minds operate linearly

  • At a certain point, we have to leverage technology or artificial intelligence to continue to model or predict the future


Carlotta perez

Carlotta Perez

Theory of Technological Disruption and Adoption


Five great surges of development in 240 years

Five Great Surges of Development in 240 Years


Technological revolutions

Technological Revolutions

  • 1999 - David wants to kill Goliath


The economy social institutions respond

The Economy & Social Institutions Respond

  • 2010 -David and Goliath collaborate


Some thoughts on financing well

The Deal is Always Done at the Beginning

The Funding is not the Goal; the Positive Architecture is

Chose your Financiers with Care

Don’t confuse the 3 Levels of Power in a Firm:

Shareholder

Don’t share founder’s equity with lots of people

Board

CEO and FD at most from the management team

Management

Raise funding to achieve a specific milestone not for a time period

Some Thoughts on Financing Well


A market overview and the industrial models behind ariadne s investments

There are 5 Stages of Company Development

Concept

Product

Validation

Scale

Sustainability/Exit

Establish Lean Operating Model from Day 1

Keep Fixed Costs very Low

Technology is standardised and componentised in 2010

Applications are moving to the cloud

Free market of opensource

Creating a Positive Architecture


An idea is a marble

An Idea is a Marble


A company is a basketball

A Company is a Basketball


The 5 stages of company growth concept

The 5 stages of company growth - Concept

  • Funded by Friends and Family

  • £25 K to get up and running

  • Insight into a behaviour


The 5 stages of company growth product

The 5 stages of company growth - Product

  • Open Beta

  • Securing Feedback from Target Audience

  • Funded by Private Investors @ £500 K for ~ 33% of firm


The 5 stages of company growth business model validation

The 5 stages of company growth – Business Model Validation

  • Building Market Traction and proving that people buy what you sell

  • Funded by early stage VC’s and private investors at £750 K to £1.5 million for 33% of the firm

  • B2B businesses are B2C2B businesses; prove market demand with consumer uptake, and then use channels to grow


The 5 stages of company growth scale

The 5 stages of company growth – Scale

  • Series B and C round up to a fully funded business at ~£5 million

  • Company scales through Partnerships with carriers, media portals, retail chains etc


The 5 stages of company growth sustainability and or exit

The 5 stages of company growth – Sustainability and/or Exit

  • Company becomes sustainable – either consolidates or gets consolidated

  • Cash flow positive business


Ecosystem economics

Ecosystem Economics

  • Those companies who understand their role in their ecosystem and who are able to organize the business model for the ecosystem will win.

  • Ecosystem Economics means that everyone in "the transaction" has to win.

  • Technology is not the point; business model is the game-changer.


Google and ecosystem economics

Google and Ecosystem Economics

  • Google says that they organise the world’s information

  • They actually organise the economics of the world’s information

  • I, as a consumer of their search, am not given any economic upside in the search transaction.

  • They have built a multi-billion pound business using – albeit anonymously – my personal data – aggregated with that of others, but releasing none of the economic value to me

  • Their biggest Achilles Heel is if someone in the search space where to cut a different set of economics for the consumer


How do you launch a global business

How do you launch a global business?

By making it in everybody’s

interest for you to succeed


Mobile money will be a massive market

Mobile Money will be a massive market

‘‘

The number of mobile subscribers who use their phones for mobile banking will exceed 400m globally by 2013, according to a new in depth study by Juniper Research. This equates to double the number of users this year.  Juniper Research, July 2010

'The number of people using their mobile phones to make payments is set to grow from 70.2 million in 2009 to 108.6 million this year, a 54.5% rise.  Gartner, June 2010

'New types of SMS mobile banking alerts will help to treble the volume of mobile banking messages to almost 90 billion per annum by 2015, equating to one message every two days for every mobile banking user. Juniper Research, August 2010

‘‘


Mobile money wiring diagram the monitise network approach

Mobile Money ‘Wiring Diagram’: the Monitise network approach

Cards

Processor

  • Payments

  • Domestic

  • International

Mobile

TopUp

Enabler

  • 3rd Party

  • Providers

  • Sharedealing

  • Insurance

Mobile

Operators

  • National

  • Services

  • Transit

  • Utility

Use of standard Interfaces

Shopping

&

Loyalty

  • Other eg

  • CRM

  • Database

Core

Banking

Wealth

Bank Platforms

  • Bank branded

  • Text and App

  • Differentiated, Segmented, Interactive Propositions

  • Account Management, Payment, Shopping

  • All customers (not just internet bankers)

  • In-built 2FA

  • Managed Service – Minimise internal IT effort

  • Leverage Existing Platforms & Outsource Mobile ‘hassles’

  • Innovate propositions through outsourced 3rd Party Connectivity

  • Collaborative & global platform connectivity

  • Future-proofed


Monitise have a global footprint due to ecosystem economics

Monitise have a Global Footprint due to Ecosystem Economics

Monitise Europe

Monitise Americas

Monitise Asia Pacific

Monitise India

  • JV with FIS to tackle world’s largest consumer markets

  • Launched 2008

  • Over 200 financial institutions signed up

  • Launched in 2006

  • UK as flagship home market before international roll out

  • Significant customer growth in 2010

  • >55% of UK retail banking market coverage

  • Available through all mobile networks

  • Recent JV formed with First Eastern

  • Showcase launch planned for Hong Kong as springboard into China

  • New JV formed with Visa Inc.

Monitise Africa

  • Development underway supported by grant funding (Africa Enterprise Challenge Fund)


Monitise has enabled the banking world not disrupted it

Monitise has enabled the banking world Not Disrupted It

Global

opportunity

Global

opportunity

Global

opportunity

Global

opportunity

Banking & payments touch the lives of billions of consumers worldwide

Blue chip business partners

Blue chip business partners

Blue chip business partners

Blue chip business partners

Adopted by major UK and other financial institutions

Wide platform applicability

Wide platform applicability

Any phone, any network

Via SMS, Java, Brew, Browser, iPhone, Blackberry, Android

Broad range of services

From balance enquiry to instant payment

Account management, payments, mCommerce


A market overview and the industrial models behind ariadne s investments

Gaming Invades Our Life


The smart companies are embracing social

The Smart Companies are Embracing Social

  • Social games have massive audiences

  • They help you acquire customers earlier, cheaper and faster while still monetising them

  • There are huge cross sell opportunities


A market overview and the industrial models behind ariadne s investments

Social Networks

Fantasy Sports

Online Games

Television


Sportsbox

Sportsbox

  • Swush.com develop, license and operate Fantasy Manager games

  • The largest company of its kind in Scandinavia

  • Current B2B distribution partners include:

    • Viasat, DR (Danish Broadcast Corp)

    • BT (2nd largest Danish tabloid)

    • Blich (Swiss newspaper)

    • TV2 Norway

    • Kurier (Austrian newpaper)

  • Creating a pan-European brand, Sportsbox, to provide media brands with:

    • immediate player liquidity,

    • greater virality and

    • greater sponsorship and revenue options

  • Platform offers football, cycling, Formula One, golf, ice hockey etc.


The next battleground

The Next Battleground

  • Can Google effectively challenge Facebook?

  • Is Google just about Utility – Search, Email and Video, or will they be able to build effective social technology?


Gaming has gone mainstream

Gaming has gone mainstream

  • Google has bought Slide (for $182m) and SocialDeck in the social gaming space in the last 2 months.

  • The Dena/ngMoco acquisition is rumoured to be at over $400m: 

  • Virtual Goods - a primary monetisation model for most social games - have increasingly overtaken advertising revenues, on the iPhone at least.


Gaming has gone mainstream1

Gaming has gone mainstream

  • Micropayment Engines

    • Fortuno, Zong, Boku and Flexion, as well as established companies like PayPal, are all vying to enable micropayments on other mobile platforms, whatever your carrier.

  • Google recently paid $70m for Social Gold (Jambool) - micro-payments coupled with the ability to run virtual currency and goods trading in social games:

  • Betfair revolutionised traditional bookie-2-punter gambling by creating an online peer-2-peer 'social' gambling experience.


Mobile devices are more than phones they are a new breed of interaction

Mobile devices are more than phones – they are a new breed of interaction

  • The explosion of mobile tablet devices combined with their social interactivity are enabling a new user behaviour

    • Privacy in context (e.g. FourSquare and location)

    • Activating behaviour and friends across devices

    • Mobile wallet and micro transactions

  • Social platforms are embracing mobile as an extension of their ecosystem

    • Facebook, LinkedIn, MySpace strong mobile applications


What is a mobile today

What Is A Mobile Today?

  • Mobile is no longer simply ‘a cell phone’ but a portable, always on, IP device that happens to handle calls sometimes:

    Mobile is your wallet (Monitise, PayPal)

    Mobile is your diary (Outlook, iCal)

    Mobile is your contact list (iContact, Outlook)

    Mobile is your social network (Facebook, LinkedIn, Phone, SMS, email)

    Mobile is your entertainment on the move (video, music, games, social)


So what has changed mobile

THEN

SLOW

LATENCY

WALLED GARDEN

MOBILE PLATFORMS

CHARGES TOO HIGH

DON’T DOWNLOAD

So, What Has Changed Mobile?

  • NOW

  • SUPERFAST 3G, 4G, Wi-Fi

  • BROADBAND LIKE ACCESS

  • OPEN INTERNET

  • HTML5 STANDARDISATION

  • UNLIMITED DATA ACCESS

  • DOWNLOAD VIA APP STORES


A market overview and the industrial models behind ariadne s investments

Mobile Internet > Desktop Internet


A market overview and the industrial models behind ariadne s investments

Mobile Web Is Bigger Than App Stores

  • The mobile web is beyond apps

  • The walled garden has fallen

  • Source: Taptu, February 2010

65%Mobile web

29% iPhone apps

5% Android apps

<1% Blackberry apps

<1% Nokia apps


A market overview and the industrial models behind ariadne s investments

Transition From App Store To Web

Entertainment >>> Services

App Store

Mobile Web

Source: Taptu, February 2010


The world of the entrepreneur

The World of the Entrepreneur

  • Nick Ogden, the founder of WorldPay and VoiceCommerce Group

    • most proud of: "Never missing payroll"

  • As Candace Johnson, the founder of SES Astra always says

    • "Never give up, never accept no, and never ever go away – even when they want you to"


Follow the entrepreneur

Follow the Entrepreneur

  • He/she has the market insight

  • He/she is the value creator

  • He/she is the hero


Where is entrepreneur country

Where is Entrepreneur Country?

It is where Breakthrough Moments Triumph Over Near Death Experiences....


What is entrepreneur country

What is Entrepreneur Country?

Entrepreneur Country is a community of entrepreneurs at www.entrepreneurcountry.net

Fortnightly Digest

News, Views and Issues from Entrepreneur Country

Biannual Forum

Upcoming Forum scheduled in Feb 2011

Online

www.entrepreneurcountry.net


Predictions for the european entrepreneurial community by 2015

Predictions for the European Entrepreneurial Community by 2015

  • Europe will have its own Mark Zuckerberg

  • ‘Entrepreneurs Backing Entrepreneurs’ will become the dominant model for the financing of entrepreneurship

  • The Supernova Exits of the new Europe will spread like a rash; the majority of under 30’s will not want to work for anyone else


Predictions for the european entrepreneurial community by 20151

Predictions for the European Entrepreneurial Community by 2015

  • Economics will be in the driver seat, and Politics will recognise it is “in service” to Economic Forces

  • Ecosystem Economics will be the new Industrial Model;

    • Who owns the Economic Value of your personal information will be the key battleground

  • The Business of Doing Good will be established as a Business; Entrepreneurs will lead the way


Thank you

Thank you

If you would like this presentation or to get in contact, send me an email on

[email protected]

www.ariadnecapital.com


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