Google Glass: VC Investment Thesis

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Building an investment thesis around Google Glass.

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Google Glass: VC Investment Thesis

  1. 1. Google Glass 1 OPPORTUNITIES & CHALLENGES FOR VENTURE INVESTORS ALLEN MILLER COLUMBIA BUSINESS SCHOOL MBA INTERN, GOTHAM VENTURES
  2. 2. On the Brink of the Next Wave of Innovation Pattern Recognition: Hardware Platforms Produce Software Innovation 2 Hardware Platform Software Innovation ?
  3. 3. Agenda Deck Overview 1) Trends in Wearable Technology 2) An Overview of Glass • Glass Products & Features • User Feedback & Adoption 3) Investment Opportunities • High-level Use Cases • Industries • Example Companies 4) A Case for Mass Adoption 5) Sources & References 3 Wearable technology Google Glass Industries & Use Cases Companies
  4. 4. Historical Evolution of Wearables WEARABLE TECHNOLOGY 4 Single Function, Unconnected Multi-function, Unconnected Multi-function, Sometimes Connected Multi-function, Always Connected 1970s 1990s 2000s Today Ex: digital or analog watches Ex: digital watches with enhanced features like the G- Shock watch Ex: iPod Applications and the Nike+ Sensor Ex: Nike fuel band, Google Glass
  5. 5. Wearable Technology Landscape Today WEARABLE TECHNOLOGY 5 Wristbands Smart Watches Smart Glasses Smart Clothes …and much, much more.
  6. 6. Growth Forecasts Wearable Technology 6 $- $2,000.00 $4,000.00 $6,000.00 $8,000.00 $10,000.00 $12,000.00 $14,000.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 MarketValue(inmillionsof$) Year (2010-2018) Wearable Device Market Value Source: Business Insider $2.5B market, expected to grow to $12.2B by 2018.
  7. 7. 2013 VC investing in Wearable Tech Wearable Technology 7 In 2013, investors put $458M into wearable companies across 49 deals. Source: CB Insights
  8. 8. Agenda Deck Overview 1) Trends in Wearable Technology 2) An Overview of Glass • Glass Products & Features • User Feedback & Adoption 3) Investment Opportunities • High-level Use Cases • Industries • Example Companies 4) A Case for Mass Adoption 5) Sources & References 8 Wearable technology Google Glass Industries & Use Cases Companies
  9. 9. Hardware Overview Glass Products and Features 9 Source: Techlife Display: • The main function is based on a mini projector, which projects onto a prism. • The prism then reflects a layer over “reality” directly onto the retina. • Equivalent of a 25 inch high definition screen from 8 feet away Audio: Bone conduction transducer. Storage: 12 GB of usable memory, synced with Google cloud storage. Mobile Compatibility: MyGlass for Android and iOS.
  10. 10. Product Selection Glass Products and Features 10 ThinBold CurvedSplit Frames Twist on Shades Earbuds Source: Google
  11. 11. Glass Growth Forecasts User Feedback and Adoption 11 *The forecast for 2014 starts in the second quarter. Source: Business Insider 22 million represents ~7% of the U.S. Population. - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2014* 2015 2016 2017 2018 UnitSales Year Forecast: Annual Sales from 2014-2018
  12. 12. Demographics of “Glass Gravitators” User Feedback and Adoption 12 Base: 657 US online adults (18+) who replied that they would be willing to wear Glass *Base: 4,657 US online adults (18+) Source: North American Technographics Consumer Technology Survey, 2013 Glass Gravitators US Online Adults* Female 44% 51% Gen Z (18-24) 23% 13% Gen Y (25-33) 26% 18% Gen X (34-48) 22% 25% Young Boomers (48-57) 13% 18% Household Income (mean) $83,300 $78,700 Technology Optimist 66% 48% Own iPhone 32% 24% Own Android phone 35% 27%
  13. 13. Some Challenges: Survey Data User Feedback and Adoption 13 Source: YouGov, May 2013 The majority (59%) weren’t interested a year ago. Yes (28%) No (59%) Not Sure (16%) Would you consider buying and wearing Google Glasses? Yes No Not Sure
  14. 14. Some Challenges: Survey Data User Feedback and Adoption 14 Source: Surveycrest, 2013 Yes, 24% No, 30% Maybe, 46% Would Google Glass Invade Privacy? Poor, 53%Average, 24% Excellent, 23% How comfortable can you be viewing things on google glass? Source: Surveycrest, 2013
  15. 15. Agenda Deck Overview 1) Trends in Wearable Technology 2) An Overview of Glass • Glass Products & Features • User Feedback & Adoption 3) Investment Opportunities • High-level Use Cases • Industries • Example Companies 4) A Case for Mass Adoption 5) Sources & References 15 Wearable technology Google Glass Industries & Use Cases Companies
  16. 16. Investment Opportunities Industry Overview 16 Investment Timeline Short Run Healthcare Fitness Platforms Gaming Long Run Consumer Digital Media Advertising Payments News Recruiting Travel Sports & Entertainment Transportation Education Commerce Will begin with a few very specific use cases—mostly “enterprise” in nature. Once mass adoption occurs, continued permeated diffusion of mobile connectivity.
  17. 17. Investment Opportunities Industry Overview (Current Landscape) 17 Source: Compiled from Google Of the 110 current apps, these 4 spaces are the most promising in the short run. 0 5 10 15 20 25 30 35 40 Healthcare Fitness Gaming Platform & Infrastructure Development Photo & Video Financial Services & Commerce News Aggregation Food & Beverage Number of Google Approved Apps by Industry (as of April 2014)
  18. 18. Investment Opportunities Example Companies 18 Healthcare Sample Company: Prisine.io CEO: Kyle Samani Location: Austin, Texas (pristine.io) Currently Funded: No (angel financed) Emergency responders are using Pristine to beam in specialists in 1st person into the field and the ambulance. Surgeons are using Pristine to livestream cases in 1st person to residents, fellows, and surgeons at medical centers across the world.
  19. 19. Investment Opportunities Example Companies 19 Fitness Sample Company: LynxFit (Byte an Atom) CEO: Noble Ackerson Location: Washington D.C. (http://www.lynxfit.com) Currently Funded: No (angel financed) 1) Subscribe: Choose from carefully curated categories of workout routines. 2) Schedule: Users can securely schedule routines by location or by time. 3) Share: View, aggregate and share data gathered from exercise activities.
  20. 20. Investment Opportunities Example Companies 20 Gaming Sample Company: Mind Pirate CEO: Shawn Hardin Location: Silicon Valley (http://mindpirate.com/) Currently Funded: Seed (Bessemer Venture Partners, Signia Venture Partners) Developed games include: Little Bandits, Shard & Singularity.
  21. 21. Investment Opportunities Industry Overview 21 Platform & Infrastructure Sample Company: OnTheGo Platforms CEO: Ryan Fink Location: Portland, Oregon (https://www.otgplatforms.com/) Currently Funded: Seed (Rogue Venture Partners, Foundry Group) OnTheGo is developing gesture recognition technology to build a platform layer that sits in between the glass hardware and Glass apps.
  22. 22. Agenda Deck Overview 1) Trends in Wearable Technology 2) An Overview of Glass • Glass Products & Features • User Feedback & Adoption 3) Investment Opportunities • High-level Use Cases • Industries • Example Companies 4) A Case for Mass Adoption 5) Sources & References 22 Wearable technology Google Glass Industries & Use Cases Companies
  23. 23. A Case for Mass Adoption Three Possible Challenges to Adoption 23 Product Functionality Price Point Social Norms • Clunky, awkward feel • Weak Visual display • Wifi antena is spotty • Battery Life is too low Missing several critical pieces of core functionality. At $1,500, Price Point is too high for the average would-be consumer Glass also violates a number of current social & cultural norms that could prevent broad adoption including: • Threats to privacy • “Glasshole” perception • No established etiquette for obtaining the consent of those being recorded. As with most new products, successive iterations will become more aesthetically pleasing and higher in quality. As the cost of production lowers, so too will the price point. The bigger challenge to adoption centers around social norms. I will make the case that social norms will continue changing to make Glass usage more socially acceptable.
  24. 24. A Case for Mass Adoption In the Short Run: Product & Price (Not an Issue) 24 Historical Example: The Mobile Phone Source: ASYMCO Price Evolution Product Evolution
  25. 25. A Case for Mass Adoption In the Short Run: Core Functionality (Possibly an Issue) 25 Historical Example: The Palm Pilot Palm Had Functional Challenges The iPhone added Critical Functionality • Inability to seamlessly sync all existing contacts, music, etc., into the device w/o manually entering • Primitive Operating System • Poor web browsing capability • Ability to sync iPhone contacts, songs, etc., to Mac computer with the click of a mouse • Best-in-class OS (iOS) • Apps greatly enhance web experience
  26. 26. A Case for Mass Adoption In the Long Run: Social Norms (The Bigger Issue) 26 The more important question is whether Glass will overcome key challenges from a social perspective. Many products in the recent past have failed the “social test.” Segway Sony Aibo Facebook Home
  27. 27. A Case for Mass Adoption Social Norms – Historical Parallels: The Mobile Phone 27 Back then… • In 2000, only 28% of U.S. respondents owned a cell phone • In 2007, 82% of cell phone users expressed concerns over location tracking • Concerns over: privacy violations, waning attention spans, location tracking, etc., Source: American Association for Public Opinion Research, Journal for Interactive Advertising But now…
  28. 28. A Case for Mass Adoption Social Norms—Historical Parallels: Facebook News Feed Back then... When News Feed launched in 2006, there was a tremendous backlash among users: • Users petition for FB to remove News Feed due to privacy concerns • CEO Mark Zuckerberg issued a public apology and increases pricacy controls 28 Share of Time Spent on FB, 2011 But now… Source:WebWashed
  29. 29. A Case for Mass Adoption Social Norms: A 3-pronged Argument 29 1) Social Norms are already changing. We are moving away from privacy and towards open information and continued mobility. Anyone on the Internet can already information through a number of avenues: 2) Google is poised to focus on the 2 social norms that matter most: • Control: Provide users with complete control over their personal information • Privacy: Protect privacy through an “op-in” fully secured operating system 3) Historical Parallels (Phone & Newsfeed) lean very strongly in Google’s Favor Google is already taking steps to avoid a major flop by taking feedback from users (Explorer Program), expanding aesthetics & functionality (frames, prescription lenses, ear buds, etc.,) , opening its platform to developers (MyGlass) and investing heavily in quality supply chain partners (like Himax).
  30. 30. Agenda Deck Overview 1) Trends in Wearable Technology 2) An Overview of Glass • Glass Products & Features • User Feedback & Adoption 3) Investment Opportunities • High-level Use Cases • Industries • Example Companies 4) A Case for Mass Adoption 5) Sources & References 30 Wearable technology Google Glass Industries & Use Cases Companies
  31. 31. Sources & References Works Cited 31 Sources AngelList Business Insider CB Insights CrunchBase Forbes Fortune Google LynxFit Mind Pirate NY Times OnTheGo Platforms Pristine SurveyCrest TechLife VentureBeat YouGov Interviews Glass Explorers/Entrepreneurs Dave Cho: COO, Soko Glam Katy Kasmai: CEO, Xocracy (Founder of Glass NYC Meetup) Ryan Fink: CEO, OnTheGo Platforms Tom Emrich: Co-Founder, Wearable App Review & Glass Eats Kyle Samani: CEO, Pristine Lindsay Macvean: COO, Facial Network Venture Capitalists John Burke: Founder and Partner, True Ventures Micah Rosenblum: Partner, Founder Collective Amit Mukherjee: Associate, New Enterprise Associates Zak Schwarzman: Associate, Gotham Ventures Lucas Nelson: Principal, Gotham Ventures Special thanks to Lucas Nelson and Professor R.A. Farrokhnia (Columbia Business School).

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