The Empire Strikes Back

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Marian Marsha Reeves
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1 The Empire Strikes Back Amit Pau Partner & MD Ariadne 2017 TM Forum 1

2 Table of Content Digital Disruption - Blink and You Miss it..3 The Three Visions of the Future...4 Is Silicon Valley Prone to Win (Always)? Predicting the Future is Not Easy..7 Don t go to Palo Alto go to EntrepreneurCountry...8 Investment Strategy: Ecosystem Economics 9-11 The David & Goliath Model The Empire Strikes Back Disrupting the Disruptors.19 In Summary TM Forum 2

3 Digital Disruption Blink and You Miss it 2017 TM Forum 3

4 The Three Visions of the Future The Technology Platform Companies take over every industry Apple: Music & Telecoms Google: Advertising Amazon: Books The Digital David s Become disruptive forces & create new established giants Wonga: Personal Loans Airbnb: Travel Uber: Taxis 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 2017 TM Forum 4

Is Silicon Valley Prone to Win (Always)? SV has incubated some of the biggest and more disruptive businesses bn $90.3 Revenue & Net Income (2016) $136.0 $27.6 $215.6 bn Revenue (2016FY) $653.

5 Is Silicon Valley Prone to Win (Always)? SV has incubated some of the biggest and more disruptive businesses bn $90.3 Revenue & Net Income (2016) $136.0 $27.6 $215.6 bn Revenue (2016FY) $653.3 Market Cap $455.4 $436.0 $802.9 Market Cap* *Stock Prices as of $300.0 $200.0 $100.0 $0.0 R&D Spend and Cash Balance bn 21.4% 15.5% 11.8% $ % $13.9 $16.1 $21.5 $32.3 $5.9 $10.0 $ % 20.0% 15.0% 10.0% 5.0% 0.0% R&D Cash and investments R&D as % of Revenue 2017 TM Forum 5

unlikely to survive past year five (Bloomberg) The

6 Is Silicon Valley Prone to Win (Always)? however, do they have an unfair advantage? 8 out of 10 entrepreneurs who start businesses fail within the first 18 months and the remaining 20% are unlikely to survive past year five (Bloomberg) The likelihood for a start-up to reach $500m in revenue is about 1:11,200 (Scale-up) 2017 TM Forum 6

7 Predicting the Future is Not Easy 2017 TM Forum 7

8 EntrepreneurCountry Global Don t go to Palo Alto.go to EntrepreneurCountry 2017 TM Forum 8

into a vision of how the future will unveil itself.

9 Investment Strategy: Ecosystem Economics A Distinctive Investment Methodology We have a unique asset of seeing the future through our hundred + monthly deal flow, which we aggregate into a vision of how the future will unveil itself. We aggregate the visions of the entrepreneurs we work with into a system-level understanding of how the future will unroll TM Forum 9

10 Investment Strategy: Ecosystem Economics B2B SaaS start-ups are re-intermediating mid to large companies into their industries, who would otherwise be disrupted 1 Ecosystem Economics The winners are those companies who are organising the business models for their ecosystem. Identifying your natural allies and aligning interests is paramount 2 Digital Enablers Enabling technologies applied to large distribution bases yield high-growth businesses with scale, leveraging lean operating models and benefitting from network effects Ariadne s Investment Thesis: Non-technology firms have historically not created ecosystems, and so have not enjoyed network effects Back the Digital Davids who bring Ecosystem Economics to established Goliaths Leverage secured access to the partners who bring distribution and exits to the portfolio through EntrepreneurCountry Global Work to accelerate their building of their ecosystem with business development strategy and support 2017 TM Forum 10

11 Investment Strategy: Ecosystem Economics We have spent considerable time analysing adjacent markets to optimise our investment thesis Key Learning In markets where we expect the following (simultaneously): I. Market to grow >3x II. Performance to improve >3x III. Cost to fall >3x IV. Execution time to fall >3x We bet big on new entrants as we ve found these as pre-conditions for the cluster to win However in markets where 3 out of the 4 pre-conditions hold, we have seen the importance for collaboration between incumbents and new entrants To win in these circumstances, we have created EntrepreneurCountry s main value proposition: David & Goliath must dance 2017 TM Forum 11

12 The David & Goliath Model 2017 TM Forum 12

existence of an ecosystem through data and business model

13 Why Davids Must Dance with Goliaths DAVID GOLIATH David and Goliath must dance David shows technology enables the existence of an ecosystem through data and business model Goliath brings customers, distribution, scale and reach 2017 TM Forum 13

build a Digital P&L To identify Natural Allies in the market To

14 TO ACHIEVE THIS, GOLIATHS MUST: Have a consistent and systematic way of engaging with Davids To run test pilots and trials to build a Digital P&L To identify Natural Allies in the market To think radically different about the value and ownership of one s data

GOLIATH/DAVID Partnership Building Net New Revenue Company's ability to Shape industry dynamics Company market power increases

15 Shape your Industry by Changing your Business Model STEP 1 Micro Everything is network based, not linear STEP 2 STEP 3 Macro DAVIDS (revenue generating algorithms) (have customer distribution) GOLIATHS (non-tech trad incumbents of independent retailers) GOLIATH/DAVID Partnership Building Net New Revenue Company's ability to Shape industry dynamics Company market power increases Company Valuation increases CONSUMER DATA (comes from social sphere) Industry > Ecosystem Distribution > Platform WITH NETWORK EFFECTS 2017 TM Forum 15

Success Stories Leading Insurance Group RAPID BUSINESS MODEL Advised on Wearable Technologies and Data Analytics 6 15 18 4 500k 6 Initiatives over 15 months across 18 countries Proof of concept

16 Success Stories Leading Insurance Group RAPID BUSINESS MODEL Advised on Wearable Technologies and Data Analytics k 6 Initiatives over 15 months across 18 countries Proof of concept delivered in 4 countries to 500k consumers ECOSYSTEM ECONOMICS SUCCESS STORIES Leading IT Corporate Leading Bank Delivered a 3x Return over expected outcomes VERTICAL MARKET ANALYSIS Analysed on Horizontal Portfolio Capability. 3X 3 1 Established 3 partnerships and made 1 investment NEW MARKET CREATION Differentiation, Market Engagement, Deal Flow Management 20 Completed over 20 different programmes 100M Created a 100M fund 2017 TM Forum 16

17 The Empire Strikes Back Telcos are Facing Big Challenges ARPU is declining in mature markets. Commoditization is turning telcos into utility-like providers. Loyalty has shifted from the operators to the content and platform providers Over-the-Top ( OTTs ) Content Providers Almost $400bn lost to OTTs Price competition - high churn Network Operators Tech Giants Platform Players Voice-data substitution Tariff decoupling Missed App Store Opportunity 2017 TM Forum 17

18 The Empire Strikes Back Network Ecosystem, Opportunities IoT AgriTech (B2B + B2C) Mobile Banking Digital Identity Management 2017 TM Forum 18

19 Disrupting the Disruptors Customer engagement as a service OTT messaging compliance Customer insights as a service Digital trust in a connected world 2017 TM Forum 19

20 In Summary Don t go to Palo Alto.go to EntrepreneurCountry 2017 TM Forum 20

21 Thank you 2017 TM Forum 21

Digital transformation separating myths from reality

Digital transformation separating myths from reality Steven Spittaels June 2017 REINVENTING YOUR BUSINESS TOGETHER BIG DATA ANALYTICS INNOVATION Digital transformation is hard The goalposts keep moving,