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Tech Boom Beginning or the End?30 Oct 2013War Room

HiddenLevers War RoomOpen Q + A

Macro Coaching

Archived webinars

CE CreditIdea Generation

Presentation deck

Product UpdatesScenario Updates

Technology = Disruption

Technology Sector Activity

Scenarios- Historical 1990s Tech Boom + Bust- Forward LookingWar RoomHiddenLeversTechnology = Disruption

Disruption

An innovation process where cheap, low-quality products ultimately displacing expensive, high-quality products.

Disruption typically ruins the prospects of organizations caught on the losing side.Qualities of Disruptive technology

much cheaper + easier to useimprove at a rate much faster than the competitionperformance satisfies most demanding usesNew technology dominates5Disruption transforming all industriesAUTOMATED

Hotels + Travel

Industrial + Manufacturing

Professional Services

Brick n Mortar Video

Floor Trading

Wired TelecomPrinting

Meter Reading

3d Printing

Gene Sequencing

Big DataMobile Apps

DESTROYEDCREATED6Moores Law, and its Long-Term Implications

Moores Law: number of transistors on a chip doubles every 18 months

Implications:

Your phone is more powerful than a 70s supercomputer

Computers are steadily acquiring human capabilities7Does Tech Enable Job-Free Growth?

Unemployment drops, but no one rejoins work forceProductivity grows, but not employment8Where are displaced workers going?

% of workers on SS Disability doubled since 1980Low wage jobs growing fastest9Goodbye Middle Class. Hello Tech

source: NELP, Alan Krueger via Huffington PostLeftLower wage jobs dominate the recovery, though higher wage jobs are holding their own

Right The middle class is shrinking steadily, with job automation playing a key role

10income disparity will only worsenstructural unemploymentsuccessful tech = disruptionTech = Disruption Recapautomation = C U L8R middle class

11Technology sector activityHiddenLevers

VC Market Overview Where and What?

sources: PWC Moneytree, Steve BlankVC deals still dominated by software, followed by biotech

California dominates - 46% of all VC funding in 201313VC Market Overview How Much Money?sources: PWC Moneytree, Steve BlankVC funding actually higher in 2011-2012 than today

Could VC trends be front-running public markets?

14VC Market Overview Mark to Mystery

source: Wall Street JournalTwitter, Pinterest, and Snapchat command huge user bases challenge is monetization

Snapchat specializes in disappearing content makes advertising more difficult

All of the above rely on digital ads as business model can the advertising business sustain GOOG and all the rest?15Winners - Four HorsemenFacebook and LinkedIn show strength of large social networks.Netflix threatens cable with original content & streaming.Tesla disrupts automotive and dealership models.

YTD, over $80B has been added in market capitalization.

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Source: LA Times 8 March 2013

Winner - 3D PrintingHewlett-Packard announced 2014 entry into 3D printing.Key patents expiring February 2014 More growth?DDD and SSYS major players. VJET & XONE had 2013 IPO.17Winner - Cloud ComputingHere to stay long-term. 36% annual growth. $200B marketNetwork security & NSA monitoring are concerns now.Players: Dropbox, Evernote, Drive, iCloud.

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Loser - Brick and MortarOnline shoppers killing big box storesOffice Max Office Depot desperation mergerBorders gone, Barnes & Noble shrinking.Source: USA Today Business Insider

19HiddenLeversTech boom or Bust Scenarios

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Tech Boom or Bust Historical Scenarios90s Tech Boom1995-99

Dot Com Bust2000-02

90s Tech BoomFed hiked rates 6 times in 1999-2000. Target rate 6.5%

No rise in defensive equities (soap, food)

S&P up 26% annually, for last 50 months of bubble

source: HiddenLevers

550%200%

Four Horsemen high flyers, ushered in end of days+4000% +1200% +8000% +1400%Dot Com BustYahoo bought Geocities for 5bPriceline went from 1000 to 7Brutal landing in Four HorsemanMarkets followed in 2001

source: HiddenLevers

Nasdaq came back in line with S&P

CSCO-88%

MSFT-63%

DELL -69%

INTL-74%Scenario: Tech consumes the world

serious tech dynamism being unleashed, not just dot comsScenario: Tech consumes the worldorganizational overhauls involve digital innovationno spillover effect between tech + telecomangels succeeding now came from 90s IPO boomglobal dimensions, not just USprivate market runs most of the money flowsource: MSN2013: Reasons its differentDefensive equities best start in 2 decades

Scenario: Tech consumes the worldApple reboundNetflix reboundPriceline dominance in hotelsPriceline first S&P 500 company at 1000/shareAmazon Web Servicessource: Marketwatch, Moscow NewsHints of 1996Autotrader.com2001: 47m loss2013: 62m profit paradigm shiftssmartphonesphotosanalyticsFacebookreboundScenario: Dot Com Dj Vu 2013Nasdaq +20%

4HRSMN +230%Elon Musk says Tesla overvaluedFacebook IPO. (enough said)Four Horsemen current Nasdaq outperformers, leading way to hell?

1 car on fire showed Tesla speculationFB Instagram purchase was done in 1 day source: HiddenLevers, NY Times, ValueWalk, CNN Money, SeekingAlpha

major tech innovations end in speculative frenziesScenario: Dot Com Dj Vu Doubts about economic returns of innovationIncreasing size of early funding roundsBig companies buying their way into relevancyLackluster due diligencesource:Bungled IPOs leading to disappointment2013: Reasons its the same

Yahoo buying Tumblr for 1b, no rev for yearsScenario: Dot Com Dj Vu Priceline double top at $1000/shareClass actions against Zynga Color 43m in first funding round, now bustCorporate profits up 20%/year since 2009S&P annual gains since March 09 match dot com erasource: NY Times Hints of 2000Groupon hijinksturning down 6bRepositioningFiring founderPinterest 1/3 valuation of Twitter with no revenueSquareversusMasterCardSolyndra = Fraudtainting green tech altogether29Tech Boom or Bust Future ScenariosJurys OutTech Consumes the World

BadDot Com Dj Vu

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Coming soon:Notifications + AlertsNew Levers - Technology Product Update31