How Ecosystem Economics™ Predicts the Winners in the Digital Age

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Julie Meyer presents Ecosystem Economics™ - the Ariadne Capital Investment Methodology and EntrepreneurCountry Global Operating System - which she has presented at TED, corporate Board rooms, throughout the business media, and in EC Global workshops

Published in: Leadership & Management

How Ecosystem Economics™ Predicts the Winners in the Digital Age

  1. 1. @EnCountry @juliemariemeyer Channel ECTV julie@ariadnecapital.com How Ecosystem EconomicsTM Predicts the Winners
  2. 2. © Proprietary & Confidential – Ariadne Capital
  3. 3. © Proprietary & Confidential – Ariadne Capital Shift Happens Easter Parade on Fifth Avenue, New York. 13 Years apart Where is the car? Where is the horse?
  4. 4. © Proprietary & Confidential – Ariadne Capital Ecosystem EconomicsTM Three versions of the future The technology platform companies take over every industry Music & Telecoms Advertising Books First Version of the Future
  5. 5. © Proprietary & Confidential – Ariadne Capital Second Version of the Future The Digital David’s become disruptive forces & create new established giants Personal Loans Taxis Travel Ecosystem EconomicsTM Three versions of the future
  6. 6. © Proprietary & Confidential – Ariadne Capital Ecosystem EconomicsTM Three versions of the future DAVID GOLIATH David and Goliath dance David shows technology enables the existence of an ecosystem through data and business model Goliath brings customers, distribution, scale and reach Third Version of the Future
  7. 7. © Proprietary & Confidential – Ariadne Capital PALO ALTO Great Entrepreneurs Can Come From Anywhere The Infrastructure of Entrepreneurship is not Evenly Distributed
  8. 8. © Proprietary & Confidential – Ariadne Capital The face of every entrepreneur They just may not show it to you!
  9. 9. © Proprietary & Confidential – Ariadne Capital The face of every entrepreneur They just may not show it to you! They see the inevitable and advance the future They are willing to live abnormal lives 2 good reasons
  10. 10. © Proprietary & Confidential – Ariadne Capital Capital Follows Ideas
  11. 11. © Proprietary & Confidential – Ariadne Capital Let's continue with the historical perspective…. The History
  12. 12. © Proprietary & Confidential – Ariadne Capital Academic Influences of Ecosystem Economics™ Carlotta Perez Hernando De Soto Polar Ronald Coase Renee Mauborgne Geoff Moore Chan Kim
  13. 13. © Proprietary & Confidential – Ariadne Capital Economic growth since the end of the 18th Century 5 Distinct Stages, associated with 5 successive Technological Revolutions Five Successive Technological Revolutions, 1770’s to 2000’s Technological Revolution Popular Name for the Period Core Country or Countries Big-bang initiating the revolution Year FIRST The Industrial Revolution Britain Arkwright’s mill opens in Cromford 1771 SECOND Age of Steam and Railways Britain (spreading to Continent and USA) Test of the Rocket steam engine for the Liverpool - Manchester railway 1829 THIRD Age of Steel, Electricity and Heavy Engineering US and Germany forging ahead and overtaking Britain The Carnegie Bessemer stell plant opens in Pittsburgh, Pennsylvania 1875 FOURTH Age of Oil, the Automobile and Mass Production USA (with Germany at fist vying for world leadership), later spreading to Europe First Model-T comes out of the Ford plant in Detroit, Michigan 1908 FIFTH Age of Information and Telecommunications USA (spreading to Europeand Asia) The Intel microprocessor is announced in Santa Clara, CA 1971
  14. 14. © Proprietary & Confidential – Ariadne Capital Lifecycle of technological revolution Gestation period Big-bang Paradigm configuration Introduction of successive new products, industries and technology systems, plus modernisation of existing ones Constriction of potential Time 60 to 80 Years Degreeoftechnologymaturity andmarketsaturation Period one Period two Period three Period four Early new products and industries. Explosive growth and fast innovations Full constellation (new industries, technology systems and infrastructure) Full expansion of innovation and market potential Last new products and industries. Earlier ones approaching maturity and market saturation
  15. 15. © Proprietary & Confidential – Ariadne Capital INSTALLATION Late 1970’s through to Noughties 1976 – Steve Jobs, Steve Wozniak found Apple Computer 1984 - Michael Dell founds PC’s Limited later named Dell Computer Corporation 1985 – Irwin Jacobs founds QualComm, pioneer in Wireless Communications 1990 – CERN / Tim Berners Lee 1994 – Yahoo founded 2003 – Skype – “free calls on web” 2004 - Facebook founded Age of IT and Telecommunications 60 to 80 year cycle – 1971 – 2030 BIG BANG NOVEMBER 1971 IN SANTA CLARA, CALIFORNIA Bob Noyce and Gordon Moore launched Intel’s first microprocessor, the precursor of the computer on a chip THE TURNING POINT
  16. 16. © Proprietary & Confidential – Ariadne Capital The Revolution starts as a small fact with a BIG promise and moves to a significant force in the market The Revolution
  17. 17. © Proprietary & Confidential – Ariadne Capital Technological Revolutions 1999 David with his slingshot wants to kill Goliath
  18. 18. © Proprietary & Confidential – Ariadne Capital The Economy & Social Institutions Respond 1999 to 2014 Broadband and Mobile Technologies continue to invade our lives 2015 David and Goliath must dance
  19. 19. © Proprietary & Confidential – Ariadne Capital The David & Goliath™ Model
  20. 20. © Proprietary & Confidential – Ariadne Capital Our Framework: David & Goliath Ecosystem EconomicsTM DigitalEnabler Strategic Value Financial Value Network Effects Vulnerability Distribution Ecosystem Economics™ shifting industry players Consumer Data sets become prevalent Network Orientation at heart of the consumer insight When partnering with, 1) Brings new digital revenues 2) Brings lean operating system When acquired, 1) Can become 2) Can reinforce or gain a position as industry architect Renting Not Licensing Operating system to the industry
  21. 21. © Proprietary & Confidential – Ariadne Capital Engaging “Natural Allies” with incentives Ecosystem EconomicsTM You Natural Ally 1 Natural Ally 2 Natural Ally 3 You Natural Ally 1 Natural Ally 2 Natural Ally 3 You 100%
  22. 22. © Proprietary & Confidential – Ariadne Capital Innovation is about Economics not Technology Otherwise we’d all be flying the Concorde but we’re packed into Jumbo Jets
  23. 23. © Proprietary & Confidential – Ariadne Capital APPLICATIONS “Digital Enablers” Digital Davids enabled by Goliaths + EC Global Goliaths INFRASTRUCTURE High Regulation, Low Margin, Others using your investments without contribution PLATFORMS (Google, Facebook, Apple, Amazon) Make Investments in assets (Costs) Take advantage of Revenue (Profits) The Platforms are Making All the Money Ecosystem EconomicsTM
  24. 24. © Proprietary & Confidential – Ariadne Capital Shape your Industry by changing your business model Step 1 Step 2 Step 3 Business model/Transaction Micro Industry > Ecosystem Distribution > Platform With Network Effects Goliath/ David Partnership Macro Building Net New Revenue Everything is Network-based, not linear • Everything is Multi-stakeholder Company’s ability to shape industry dynamics Company valuation increases Company market power increases
  25. 25. © Proprietary & Confidential – Ariadne Capital Imagine a world where you couldn’t get: Now imagine a world where everything you do is part of your aggregated personal transactional ability. a credit card on the housing ladder Where you had no assets
  26. 26. © Proprietary & Confidential – Ariadne Capital Europe is an eldest child; it values the “estate”. The US is a later born child. B2C Raise huge amounts of capital Disrupt Industry B2C2B Capital efficiency @ Unit Economics Enable & Extend Industries European Model to Win Classic Valley Model
  27. 27. © Proprietary & Confidential – Ariadne Capital Google 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 were to cut a different set of economics for the consumer • Ariadne Capital found that entrepreneur – John Paleomylites – founder of BeatThatQuote, and sold his business to Google on the 4th of March 2011 for a 122 EBITDA multiple for these reasons
  28. 28. © Proprietary & Confidential – Ariadne Capital Industries are being transformed by digital business models
  29. 29. © Proprietary & Confidential – Ariadne Capital In 2015, “Network Benefits” accrue to those Firms who understand their role in their ecosystem and organise the economics for it. This in turn leads to exceptional returns for their shareholders.
  30. 30. © Proprietary & Confidential – Ariadne Capital PALO ALTO If you didn't go to Palo Alto at the beginning, you will go to Palo Alto in the end …
  31. 31. © Proprietary & Confidential – Ariadne Capital Building the Future From the Future In EntrepreneurCountry, You Build the Future “If I had asked my customers what they wanted, they would have said faster horses.” - Henry Ford STATUS QUO REMAKING THE INDUSTRY BY DEFINING THE FUTURE OF IT
  32. 32. © Proprietary & Confidential – Ariadne Capital Creative Destruction defines the problem … … Ecosystem Economics™ provides the solution.
  33. 33. © Proprietary & Confidential – Ariadne Capital From the Financial Times 20 October 2015 We take that as a personal challenge. You should too… “We are the only European player with significant size to build great businesses in Europe and keep a large share of it”, Samwer says.
  34. 34. © Proprietary & Confidential – Ariadne Capital Shift Happens Easter Parade on Fifth Avenue, New York. 13 Years apart Where is the car? Where is the horse?
  35. 35. © Proprietary & Confidential – Ariadne Capital Don't go to Palo Alto
  36. 36. © Proprietary & Confidential – Ariadne Capital Go to www.entrepreneurcountry.com
  37. 37. © Proprietary & Confidential – Ariadne Capital The Prince by Nicolo Machiavelli CHAPTER VI And it ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them. Thus it happens that whenever those who are hostile have the opportunity to attack they do it like partisans, whilst the others defend lukewarmly, in such wise that the prince is endangered along with them.
  38. 38. © Proprietary & Confidential – Ariadne Capital David Wins Because he sees the future

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