Convergence as a Long-Term Trend: Innovation in Perpetual Transition (Mar/2013)

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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 Trend: Innovation in Perpetual Transition (Mar/2013)

  1. 1. CONVERGENCE AS A LONG-TERM TRENDINNOVATION IN PERPETUAL TRANSITIONNo longer at its origin, though far from maturity, digital media & information technologyare 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 adoptionof information technology into other fields. As this occurs, sectors are reshaped & theconvergence between previously disparate worlds, with digital media at the center, isin itself a new form of innovation. This environment shapes & is mirrored in financialflows, structures & valuations, which are important to understand in this context.This presentation illustrates the described trends from a high level, incorporating someideas depicted in other CoRise reports in greater detail. It is not a comprehensivereview of industry activities or a survey of competitors. Nor is it an analysis or set ofrecommendations for purposes of assessing any investment, public or private.MARCH / 2013
  2. 2. BACKGROUNDFROM POLAR ENDS TO AN ENDLESS CYCLEMARCH / 2013
  3. 3. AT ORIGINS: VALUE IS BUILT THROUGH EXPERIMENTATION & VOLATILITY, OFTEN VENTURE BACKED SEED SERIES A VENTURE FINANCE CAPITAL Prototype Iteration Beta ANGELS Development Launch Traction ADVISORS A/B Pricing Scaling testing Partnership FOUNDERS Pivoting Team building MENTORS ACCELERATORS INCUBATORS4 MARCH / 2013
  4. 4. AT MATURITY: VALUE IS BUILT THROUGH STABILITY & THE FINANCIAL ENGINEERING THIS ALLOWS, OFTEN DRIVEN BY CONSOLIDATION OF LIKE ASSETS M&A PRIVATE BANK EQUITY FINANCE Standardization PUBLIC Price Competition MARKETS reduction COST OF Productivity Earnings CAPITAL Reorganization LBO Market REFINANCE expansion ACCOUNTANTS REGULATION LAWYERS VALUATION5 MARCH / 2013
  5. 5. BETWEEN EXTREMES: PROFILES BLEND & VALUE IS BUILT TO REFLECT OVERLAPPING ELEMENTS IN THE MIDDLE PRIVATE VENTURE EQUITY CAPITAL M&A Development PUBLIC BANK MARKETS Competition Pricing FINANCE Productivity Earnings VALUATION Reorganization LAWYERS Pivoting Partnership Scaling Team ACCOUNTANTS building COST OF Market expansion CAPITAL REGULATION REFINANCE6 MARCH / 2013
  6. 6. AS A SECTOR, DIGITAL MEDIA/INFO TECH IS IN A PERPETUAL MIDDLE: WELL PAST ORIGIN, NOT QUITE EVER AT MATURITY REINVENTION ORIGIN EVOLUTION MATURITY GROWTH7 MARCH / 2013
  7. 7. THE LONGER THIS JOURNEY CONTINUES, THE MORE THE SECTOR’S FOOTPRINT EXPANDS GOOGLE MEGAFUNDS HEDGE FUNDS INTERNATIONAL MICRO VCs Y COMBINATOR APPLE MOBILITY FACEBOOK BIG DATA API SECURITY AD NETWORKS APPS AMAZON8 MARCH / 2013
  8. 8. AS IT DOES, EXTERNAL & PREVIOUSLY DISASSOCIATED SECTORS ARE BEING PULLED IN & INTEGRATED... TRADITIONAL MEDIA HARDWARE DIGITAL FINANCIAL MEDIA COMMERCE MARKETS & INFO TECH HEALTHCARE , INFRASTRUCTURE EDUCATION, OTHERS9 MARCH / 2013
  9. 9. ... EXTENDING THE SECTOR’S GROWTH & PERPETUATING ITS TRANSITIONAL MIDDLE-STAGE TOWARDS MATURITY REINVENTION TRADITIONAL HARDWARE MEDIA DIGITAL FINANCIAL MEDIA & COMMERCE MARKETS INFO TECH HEALTHCARE , INFRASTRUCTURE EDUCATION, OTHERS EVOLUTION10 MARCH / 2013
  10. 10. THE REINVENTION OF WHOLE SECTORSCONVERGENCE AS INNOVATION FORMThe following slides are a sampling of sector combinations, providing illustrativeexamples of business & product convergence & the novelty to which this gives rise.MARCH / 2013
  11. 11. COMBINATIONS WITHIN “NEW” MEDIA Google + INF FB Graph Search OR I AL Tumblr TechCrunch M C SO AT AT AT AT LinkedIn Twitter GigaOm Business Insider IO Pinterest N Flickr MapQuest Aol MSN Bing Yelp Facebook Google Instagram Quora Yahoo! Skype Friendster Weather.com WebMD MySpace StockTwits Wikipedia Siri Voice AMZN Reviews/ iMessage Search Suggestions Kindle Silk Google FB Apps Shopping FB Credits Groupon Android Netflix YouTube EBay Etsy Gilt Priceline Kayak Craigslist Hulu Pandora Amazon Apple Square Foursquare NT TRA PayPal Zynga Spotify ME Zillow Hailo NS Turntable.fm IN C Uber A TI Kindle Fire RT A ON iBooks & iTunes E AL ENT12 MARCH / 2013
  12. 12. BETWEEN "NEW" & "TRADITIONAL" MEDIA Magazines Newspapers Music TRADITIONAL Cable Movies Radio Television NETFLIX Books GOOGLE / ZAGATS, FROMERS APPLE TV / HBO GO INTO NOW / iBOOKS / KINDLE GETGLUE / SPOTIFY SHAZAM Mobile Social Streaming NEW Digital Interactive Broadband13 MARCH / 2013
  13. 13. INTEGRATING SOFTWARE & HARDWARE SOFTWARE ANDROID INTERNET OF THINGS GOOGLE GLASS 3-D PRINT MICROSOFT TABLET HARDWARE14 MARCH / 2013
  14. 14. INTRODUCING INFRASTRUCTURE INTEGRATION MEDIA/TECH AMAZON GOOGLE FIBER VERIZON WEB FIOS SERVICES INFRASTRUCTURE15 MARCH / 2013
  15. 15. COMBINING MEDIA & COMMERCE Engagement Access MEDIA Community Distribution GROUPON ETSY AMAZON EBAY/PAYPAL BITCOIN FOURSQUARE Merchandise Payments COMMERCE Brand Promotion16 MARCH / 2013
  16. 16. BLENDING ONLINE & OFFLINE RETAIL OFFLINE APPLE SQUARE / STORE STARBUCKS GOOGLE AMAZON SHOPPING PRIME EXPRESS B&N UBER & NOOK HAILO ONLINE17 MARCH / 2013
  17. 17. COMBINING MEDIA & FINANCIAL MARKETS Content MEDIA Information ANGEL LIST CB INSIGHTS SECOND MARKET LENDING STOCKTWITS CLUB Capital MARKETS Distribution18 MARCH / 2013
  18. 18. AT THE INTERSECTION OF MEDIA & HEALTH HEALTHCARE FITBIT WEBMD BLUEPRINT HEALTH MEDIA/TECH19 MARCH / 2013
  19. 19. INTRODUCING NEW FORMS OF (& FACILITATING) EDUCATION EDUCATION CODECADEMY LYNDA KHAN ACADEMY MEDIA/TECH20 MARCH / 2013
  20. 20. REFLECTING OVERLAPPING NEEDS & STYLES OF CONSUMERS & THE ENTERPRISE CONSUMER LINKED IN IPAD BLOOMBERG ENTERPRISE21 MARCH / 2013
  21. 21. SECTOR STATUS MIRRORED IN FINANCEWHERE STRATEGIES LEADCAPITAL FOLLOWS *The following slides illustrate ways in which capital flows & funding sources havestarted to reflect the blend & integration themes highlighted. As in prior slides, thisis only an illustrative sampling, not a survey or database. * Though sometimes vice-versaMARCH / 2013
  22. 22. OVERLAP BETWEEN EQUITY INVESTOR TYPES IN PURSUIT OF DIGITAL MEDIA ASSETS VENTURE HEDGE CAPITAL FUNDS TIGER VALIANT GLOBAL CAPITAL BAIN SPECTRUM A16Z KLEINER GOOGLE INTEL PRIVATE STRATEGIC EQUITY CAPITAL23 MARCH / 2013
  23. 23. MIX OF FUNDING SOURCES WITHIN CAPITAL STRUCTURES PE/VC/HEDGE BANKS / FUNDS FINANCE CO’S PINTEREST BOX EVERNOTE TWITTER MUTUAL INSTITUTIONS FUNDS24 MARCH / 2013
  24. 24. BLENDING OF DEBT FINANCE INTO EQUITY-BASED MODELS EQUITY SURVEY MICROSOFT MONKEY DELL FACEBOOK DEBT25 MARCH / 2013
  25. 25. PICTURE OF A SEGMENT IN TRANSITIONALWAYS ON ITS WAYNEVER SETTLEDMARCH / 2013
  26. 26. REFINANCE VENTURE PRIVATE CAPITAL EQUITY TRADITIONAL HARDWARE MEDIA PUBLIC MARKETS M&A DIGITAL FINANCIAL MEDIA ORIGIN MARKETS & COMMERCE MATURITY INFO TECH BANK REINVENTION FINANCE HEALTHCARE , INFRASTRUCTURE EDUCATION, OTHERS COST OF EVOLUTION CAPITAL GROWTH27 MARCH / 2013
  27. 27. WHERE ARE YOU INTHIS LANDSCAPE?WHERE ARE YOUHEADING?MARCH / 2013
  28. 28. CONTACT INFORMATION TO DISCUSS FURTHER: CoRise Co., LLC 535 Fifth Avenue, 4th floor New York, NY 10036 Telephone: (646) 532-6690 email: info@coriseco.com www.coriseco.com29 MARCH / 2013

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