The Quantified Self


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Quantified Self and Wearables Market Overview and Proprietary Financial Intelligence

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The Quantified Self

  1. 1. The Quantified Self Market Overview and Proprietary Financial Intelligence Note: this is an adopted presentation of one given at the SVB Quantified Summit in Boston on April 3, 2014
  2. 2. Contents • Quantified Self Defined • Key Drivers • Wearable Technology • Software & Analytics • Augmented Reality • Summary #svbQS| April 3, 2014
  3. 3. Quantified Self: Defined #svbQS | April 3, 2014 Products or services that use technology to extract and record data from everyday activities with the goal of providing information and insight that helps users to understand or improve personal behavior.
  4. 4. Quantified Self: Acceleration #svbQS | April 3, 2014 TECHNOLOGY ADVANCES Sensors, smartphones, bluetooth low energy, smart watches, wearables CONSUMER BEHAVIOR SOCIAL Focus on self- improvement and general wellness Connectivity to social networks, gamification MOBILE Tech-savvy, Mobile-centric population The confluence of several key factors has driven the acceleration of this young, but rapidly growing sector
  5. 5. Quantified Self: Hype Curve #svbQS | April 3, 2014 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Mass-Market Wearables Mass-Market Software Niche-Market Wearables Analytics Software The Quantified Self shows great promise but is still in the early stages of maturity, adoption, and social application Expectations Time Note: circle size indicates relative size of markets
  6. 6. Quantified Self: Hype Curve #svbQS | April 3, 2014 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Mass-Market Wearables Mass-market wearables have led the way in Quantified Self development and adoption Expectations Time
  7. 7. Wearable: Acceleration #svbQS | April 3, 2014 Metcalfe’s Law Moore’s Law Ubiquitous Computing Design Focus Battery/Sensor Technology Mobile Integration Advances in cost and performance of technologies, network effects of mobile adoption, and other factors accelerate mass- market wearables
  8. 8. Wearable: Market Leadership #svbQS | April 3, 2014 Fitbit 68% Jawbone 19% Nike 10% All Other 3% 2013 Wearable Device Sales Mass wearables is a highly-saturated market, dominated by a few major players. Incumbents have a significant advantage over new startups with regard to sales, marketing, and distribution channels. In fact, since this presentation was first given, even Nike chose to wind-down its FuelBand.
  9. 9. Mobile Hardware: Replacement #svbQS | April 3, 2014 History of mobile devices provides a lesson for Quantified Self mass- market wearables—namely that one device can do the job of many
  10. 10. Wearable: Cannibalization Risk #svbQS | April 3, 2014 0 40 80 120 160 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 UnitsSold(mm) Release of the first-generation iPhone marked the beginning of a stark turnaround in iPod sales iPod vs. iPhone Device Sales
  11. 11. #svbQS | April 3, 2014 0 0.5 1 1.5 2 2.5 3 2007 2008 2009 2010 2011 2012 2013 0 20 40 60 80 100 120 GarminPNDSales(mm) iPhoneSales(mm) Smartphone vs. Personal Navigation Device Sales Wearable: Replacement Risk Advances in mobile device hardware enable mobile applications to replicate some functionality of a wearable using existing hardware.
  12. 12. #svbQS | April 3, 2014 5.3x 9x 11.3x 5.1x 2.6x 2.5x x 2x 4x 6x 8x 10x 12x <$5M $5M-$20M $20M-$50M $50M+ 0 20 40 60 80 100 120 InvestedCapitalMultiple Revenues (mm) InvestedCapital(mm) Wearable: Shifting Values Pre-2011 Median IC Multiple Pre-2011 Median IC Post-2011 Median IC Multiple Post-2011 Median IC As evidence of saturation, post-2011 wearable technologies required more investment to reach revenue thresholds and had lower valuations compared with previous years.
  13. 13. Quantified Self: Hype Curve #svbQS | April 3, 2014 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Niche-Market Wearables Smartphone data collection isn’t feasible in every situation (e.g. smart swim goggles), providing opportunity for niche wearables Expectations Time
  14. 14. Mobile Hardware: Niche Catalyst #svbQS | April 3, 2014 Smartphones aren’t a replacement, but rather a catalyst for acceleration in niche-wearables—enabling the storage and analysis of personal data collected by niche-wearable devices
  15. 15. Niche Wearable: Stability #svbQS | April 3, 2014 0 30 60 90 120 150 180 2007 2008 2009 2010 2011 2012 2013 UnitSales(mm) iPhone adoption negatively impacted sales for point-and-shoot cameras, however the more niche DSLR camera sales remained stable. iPhone vs. Camera Device Sales
  16. 16. Niche Wearable: Crowdfunding #svbQS | April 3, 2014 $- $100,000 $200,000 $300,000 $400,000 $500,000 0 500 1000 1500 2000 2500 3000 Crowdfunding$ Number of Backers Quantified Self startups are flocking to crowdfunding platforms, particularly as a source of pre-order funding for new hardware applications, which also demonstrate consumer demand prior to potential venture investment. Crowdfunding Campaigns (Q2-2013 to Q4-2013)
  17. 17. Quantified Self: Hype Curve #svbQS | April 3, 2014 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Mass-Market Software As hardware adoption increases data collection, software is there to store and analyze it Expectations Time
  18. 18. Software: Acceleration #svbQS | April 3, 2014 Social Media Integration Smartphone Hardware User model promotes Viral Growth Data recording and storage Analytics Device Agnostic Growth in software has naturally followed the first wave of hardware development, but viral growth in socialization of information and gamification should be major accelerants of this segment
  19. 19. Software: Device Agnostic #svbQS | April 3, 2014 Mobile software is device agnostic— applications can utilize data from any wearable, creating a cross-platform device for users
  20. 20. Software: Value Accretion #svbQS | April 3, 2014 $2.77 $3.85 $4.00 0 5 10 15 20 25 30 35 40 45 < 5M 5M-10M 10M-50M $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 InvestedCapital(mm) Users(mm) ValuePerUser Total Invested Capital Value per User When the community using a particular software grows, so does its value to investors (and users). This should accelerate as the adoption of Quantified Self technologies increases.
  21. 21. Network Effect and Big Data #svbQS | April 3, 2014 Network effects occur when applications reach a critical mass of users, and social connectivity becomes a driver of engagement. Existing software solutions aggregate mass amounts of data, which creates opportunity for a new wave of health analytics companies.
  22. 22. Quantified Self: Hype Curve #svbQS | April 3, 2014 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Analytics Software Though in the very early stages, the next major push will come from big data analytics Expectations Time
  23. 23. Analytics: Next Accelerant #svbQS | April 3, 2014 Big data analytics represents a tremendous growth opportunity because the tools that will be used already exist and have been implemented in other sectors (e.g. digital advertising).
  24. 24. Augmented Reality: The Internet of Everything #svbQS | April 3, 2014 Data will eventually be collected on most everything, sent to, stored, and analyzed in the cloud, and have recommendations sent back to users to enhance real-time decision-making
  25. 25. Summary #svbQS | April 3, 2014 • Mass-market wearables led the way in the development and early adoption of Quantified Self technologies, but shows limited opportunity for new startups moving forward because of market saturation and replacement/cannibalization risks that have already become evident. • Because smartphones aren’t able to collect data in every situation, we still see acceleration potential of niche wearables (e.g. smart swim goggles). Unlike with mass-wearables, smartphones will further enable—not replace—niche wearables devices. • We are also optimistic about growth acceleration in software, due to the continual improvements in hardware enablement and the viral growth of socialization and gaming. • As adoption of Quantified Self technologies spreads and data collection increases, we see the next big push coming from data analytics—which has already been a major factor in other markets, such as digital advertising.
  26. 26. SVB Analytics 555 Mission Street, Suite 900 San Francisco, California 94105 800.760.9644 This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by SVB Financial Group and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer to acquire or dispose of any investment or transaction. ©2013 SVB Financial Group. All rights reserved. Member Federal Reserve System. SVB>, SVB>Find a way, SVB Financial Group, and Silicon Valley Bank are registered trademarks. SVB Analytics is a member of SVB Financial Group and a non-bank affiliate of Silicon Valley Bank. Products and services offered by SVB Analytics are not FDIC insured and are not deposits or other obligations of Silicon Valley Bank. SVB Analytics does not provide tax or legal advice. Please consult your tax or legal advisors for such guidance. Rev. 06-17-13
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