Fortune Brainstorm TECH 2017 Wrap-Up

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1 Fortune Brainstorm TECH 2017 Wrap-Up Source: Youtube Fung Global Retail & Technology attended Fortune Brainstorm TECH 2017 in Aspen, Colorado this week. The event seeks to discuss the myriad of ways that companies are trying to prepare for the future, including products, processes and/or services. The panelists were comprised of Fortune 500 leaders, emerging entrepreneurs and financiers. Below are our top takeaways from the three-day event: 1) Autonomous vehicles require a new transportation paradigm 2) Robots are unlikely to rise against us for the foreseeable future 3) Dell is benefiting from going private in being able to invest for the long term 4) Instagram continues to evolve, including opening to businesses 5) Mobike has experienced explosive growth, providing three times the number of daily rides provided by Uber 6) Target is benefiting from its diversified model 7) General Electric is creating brilliant factories that marry industrial and digital technologies 8) Amazon creates separable, single-threaded teams to take on new business areas 9) Toys stimulate imagination, creativity and storytelling in children 10) Wells Fargo is launching new technologies 1

2 Fung Global Retail & Technology attended Fortune Brainstorm TECH 2017 in Aspen, Colorado this week. The event seeks to discuss the myriad of ways that companies are trying to prepare for the future, including products, processes and/or services. The panelists were comprised of Fortune 500 leaders, emerging entrepreneurs and financiers. Below are our top takeaways from the three-day event: 1) Autonomous Vehicles Require a New Transportation Paradigm As automobiles required reinventing the transportation ecosystem to replace the horse and buggy, the same will be true for driverless cars. Automobiles can be considered personal transportation devices, however, there are some startups that are disrupting that idea: robo-taxi startup Zoox is developing shared, on-demand, zero-emission mobility vehicles; and Cruise, acquired by General Motors, is testing driverless cars and expects to move up the ranks in terms of the human intervention required (i.e., human disengagement). There are numerous partnerships and cooperations under way, and autonomous vehicles will constantly collect data in order to improve. There are also certain regulatory questions that need to be answered i.e., does a driverless car need a driver s license, can it cross state lines and others. Data sharing on driverless cars will also be tricky. 2) Robots Are Unlikely to Rise Against Us for the Foreseeable Future Despite concerns that robots are going to take away jobs, an expert from Google s Nest believes we should design them to do jobs that humans cannot perform well such as performing repetitive tasks and lifting heavy loads. Robots perform the following actions: sensing, thinking, taking action, even if they do not move (like an intelligent thermostat). While not every customer is serious about saving energy, Nest thermometers have already saved enough energy to power a large city. The talk on robots concluded with a discussion of the challenges of transitioning from academic research to developing products for humans. Yoky Matsuoka, Nest Lab 2

3 3) Dell Is Benefiting from Going Private in Being Able to Invest for the Long Term Companies are facing four transformations digital, IT, workforce and security and the new Dell Technologies believes that it is the best-positioned company to fill those needs. In addition, public companies face frequent management changes and the pressure of quarterly earnings reporting, which makes it difficult to invest for the long term. Dell, as a private company, is able to make these investments. Going private appears to have paid off, as the company took in $1 billion more revenue than planned in the most recent earnings period. Companies look to purchase from a number of vendors, while Dell seeks to sell the entire package. Many of the companies at the conference are Dell customers. The new Dell termed Dell 2.0 was able to make a risky and gutsy move to combine the two companies (Dell and EMC). Michael Dell, CEO of Dell Technologies 4) Instagram Continues to Evolve, Including Opening to Businesses Instagram COO Marne Levine outlined Instagram s mission: to strengthen relationships. She further discussed major changes that have taken place at Instagram since her arrival, including changes to the feed, Instagram stories, video and live (which allows people to hang out together), and the difficulty in making these changes. She shared her belief that successful companies change every two years. Instagram now has more than 700 million in its community, 80% of which are outside of the US. Currently, 250 million people use Instagram stories on a daily basis, connecting people and businesses with shared interests. Some 80% of the community connects to a business voluntarily. Since it was acquired by Facebook in 2012, Instagram has gained access to its talent, technology and a user base of 2 billion users, which has accelerated its growth. The company now has 1 million advertisers, in feed and stories, using the full screen and video. One-third of the most-viewed stores come from businesses, indicating user interest. One in five minutes on a mobile phone in the US is spent on Facebook or Instagram. Levine further provided examples of Instagram used by businesses around the world. 3

4 5) Mobike Has Experienced Explosive Growth, Providing Three Times the Number of Daily Rides Provided by Uber Bike sharing has existed in the US since 2005, however, Americans are unlikely to be familiar with bike sharing in China, where bike-sharing enterprises have sprung up like mushrooms after the rain, including Mobike. Mobike CEO Davis Wang provided the background of his company which is looking to solve two social problems: congestion and air quality, and the solution is bicycles. Mobike is the fusion of mobile and bicycle. In many cities, docks had been an impediment to bicycle rental. Mobike was launched in Shanghai on Earth Day 2016 and has: 100 million registered users, 6 million connected bikes and 20 million rides a day, three times the number of rides provided by Uber. Mobike transports more than 20 million people a day, not only in China, but in Singapore, Manchester and several cities in Japan. The company aims to be in 200 cities by the end of this year. Wang envisions Mobike being more like a smartphone that can be used anytime, anywhere, charging $0.15 per 30 minutes, less than the cost of a subway ride. Davis Wang, CEO of Mobike 6) Target Is Benefiting from its Diversified Model CEO Brian Cornell outlined Target s remodeling of 600 stores and investments in fulfilment. While the big-box model will continue to evolve over time, Target wants to offer flexibility for its customers. More than 1,000 stores are being used as flexible fulfilment centers, as part of a smart network for shopping and returns. Target is located within 10 miles of 85% of the US population. Having a smart network and being in the consumer s neighborhood gives it enormous flexibility. 4

5 July 21, 2017 Brian Cornell, CEO of Target In terms of innovation, Target plans to test and iterate over the next three years. Some innovators had drifted away from Target s core base and had to be reeled back in. Target is embracing technologies such as machine learning in order to do its business better. Over the next three to five years, the company thinks it needs to master experience above all, including from a digital standpoint. Brands remain important to the guest both own brands and external brands. Fulfilment is important to fulfill both store and customer needs. In addition to experienced employees, Target has brought in external experts to improve the art and science of retail. Regarding the proposed Amazon-Whole Foods deal, Cornell sees the transaction as a validation of stores still matter, supported by 90% of US retail deriving from physical stores. Moreover, Target s uniqueness derives from its diversity, enabling it to participate and lean into new trends and back out of declining trends. 7) General Electric Is Creating Brilliant Factories that Marry Industrial and Digital Technologies Although GE s new CEO has not yet started, the company has transformed itself, moving to digital, among other initiatives. Although GE is not usually considered a digital company, the perception is changing, as it fuses industrial and digital. The value of the industrial domain knowledge is likely underestimated and irreplaceable i.e., it cannot be picked up easily by digital experts. Thus, it is easier for industrial experts to add digital expertise. As GE began to focus on the industrial Internet, the company also focused on changing the company. A brilliant factory uses advanced manufacturing, digital technology, additive manufacturing (i.e., 3D printing) and 3D technology. For example, GE collects data on locomotive engines to understand what condition they are in before they are brought into the factory called conditional manufacturing which reduces the maintenance cycle time. 5

6 Jamie Miller, CEO of GE Transportation Management s focus is on tech areas such as virtual reality (VR), artificial intelligence (AI) and machine learning, and GE focuses on these as well. GE put computing power onto the locomotive itself, which collects data on the train, track and payload, and constantly tunes the engine, reducing fuel consumption by 10%. The businesses of GE Transportation break down into locomotives, mining and marine power. 8) Amazon Creates Separable, Single-threaded Teams to Take on New Business Areas Regarding the question, How does Amazon tackle everything at once? Jeff Wilke, CEO, Worldwide Consumer, Amazon, answered that Amazon has separable, single-threaded teams, which are single-focus teams that organizationally have their own application program interfaces (APIs) and software, and do not work on anything else. Amazon s culture has 14 leadership principles. (To read them, please click here.) Auditing and inspection is an Amazon term for the leader peering into the organization and asking if things are running as envisioned. Amazon tried not to think about the quarter, and prefers to think over the long term, say five to seven years. Amazon does have an annual plan, which is divided into quarters, which are to be used as guideposts. Although the Amazon-Whole Foods merger came together quite quickly, there is still much to think about. Wilke is a huge fan of Whole Foods, which was given as a reason for the proposed acquisition. Giving no specifics, Wilke believes that many Amazon Prime Members are Whole Foods customers, and vice versa. For Amazon, invention means inventing for the customer. Invent and simplify is a management principle, which may involve being misunderstood for some time, and Amazon is open to experimentation and failure. Amazon s Treasure Truck features unusual locally-offered items for sale, being tested in just a couple of markets. 6

7 Jeff Wilke, CEO of Worldwide Consumer, Amazon Another question asked was, does Amazon want to crush every retail business out there? Wilke s answer was that Amazon is focused on pioneering, rather than crushing, although disruption is inevitable. In answer to could Amazon become so big that it could face antitrust problems? Wilke claimed that Amazon has a 1% share of global retail, yet believes that all substantial entities deserve scrutiny. 9) Toys Stimulate Imagination, Creativity and Storytelling in Children The moderator commented that the speaker, Margo Georgiades, CEO of Mattel (formerly of Google), had stepped into the CEO role and immediately there was an earnings issue, whereas people were expecting change. Georgiadis was asked how toy makers get kids excited about physical toys when they are accustomed to electronic devices? She referred to these individuals as Generation Alpha Millennials. She outlined a link between play and imagination and creation, which is very similar to the designthinking process. The company remains focused on how to create the next generation of innovating thinkers and leaders. Margo Georgiadis, CEO of Mattel Despite the advent of electronic devices, the amount of time children spend playing with toys remains constant. Generation Alpha expects toys to be immersive, on demand and interactive. Still, many educational toys have not been fun and have therefore 7

8 July 21, 2017 failed. Mattel s toys are built to stimulate storytelling. For example, Barbie enables stories about the limitless potential of girls, e.g., with a virtually unlimited selection of careers; President Barbie was a bestseller. Regarding being relevant in different cultures, the company went international early and empowered local leaders to localize Mattel toys. One topic discussed was how to use Mattel s toys platform to interest children in relevant skills like coding. 10) Wells Fargo Is Launching New Technologies Incoming Wells Fargo CEO Timothy Sloan has worked for the company in a variety of roles throughout his career. Founded in 1852, Wells Fargo originally moved people and packages on horseback, and the company has continued to innovate: it was one of the first banks to roll out online banking in the 1990s. Most recently, the company has introduced cardless access to its ATMs. Timothy Sloan, CEO of Wells Fargo Wells Fargo combined all its innovation activities into one group and recently formed a payment group. It is also introducing a new product called Control Tower, which manages common payment settings, enabling customers to turn cards on and off for travel, for example. People generally do not think of the big banks in terms of innovation payment startups such as Venmo usually come to mind but many payment startups are already partners of Wells Fargo and the bank was one of the first supporters of Apple Pay. Although Control Tower is convenient, Sloan commented that biometric authentication is more likely to come from the phone providers rather than from ATM makers. 8

9 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: Esme Pau Analyst Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 18th Floor New York, NY Tel: FungGlobalRetailTech.com 9