tech boom - beginning or end war room slides
TRANSCRIPT
HiddenLevers War Room
Open Q + A
Macro Coaching
Archived webinars
CE Credit
Idea Generation
Presentation deck
Product UpdatesScenario Updates
I. Technology = Disruption
II. Technology Sector Activity
III. Scenarios
- Historical – 1990s Tech Boom + Bust
- Forward Looking
War Room
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
1. much cheaper + easier to use2. improve at a rate much faster than the
competition3. performance satisfies most demanding
uses4. New technology dominates
Disruption transforming all industriesAUTOMATED
Hotels + Travel
Industrial + Manufacturing
Professional Services
Brick n Mortar Video
Floor Trading
Wired Telecom
Printing
Meter Reading
3d Printing Gene Sequencing
Big Data
Mobile Apps
DESTROYED CREATED
Moore’s Law, and its Long-Term Implications
Moore’s Law: number of transistors on a chip doubles every 18 months
Implications:
• Your phone is more powerful than a 70’s supercomputer
• Computers are steadily acquiring human capabilities
Does Tech Enable Job-Free Growth?
Unemployment drops, but no one rejoins work force
Productivity grows, but not employment
Where are displaced workers going?
% of workers on SS Disability doubled since 1980
Low wage jobs growing fastest
Goodbye Middle Class. Hello Tech
source: NELP, Alan Krueger via Huffington Post
LeftLower 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
income disparity will only worsen structural unemployment
successful tech = disruption
Tech = Disruption – Recap
automation = C U L8R middle class
VC Market Overview – Where and What?
sources: PWC Moneytree, Steve Blank
VC deals still dominated by software, followed by biotech
California dominates - 46% of all VC funding in 2013
VC Market Overview – How Much Money?
sources: PWC Moneytree, Steve Blank
VC funding actually higher in 2011-2012 than today
Could VC trends be front-running public markets?
VC Market Overview – Mark to Mystery
source: Wall Street Journal
Twitter, 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?
Winners - Four Horsemen
Facebook 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.
Source: LA Times 8 March 2013
Winner - 3D Printing
Hewlett-Packard announced 2014
entry into 3D printing.
Key patents expiring
February 2014 –More growth?
DDD and SSYS major players. VJET & XONE had 2013 IPO.
Winner - Cloud Computing
Here to stay long-term. 36% annual growth. $200B market
Network security & NSA monitoring are concerns now.
Players: Dropbox,
Evernote, Drive, iCloud.
Loser - Brick and Mortar
Online shoppers killing big box
stores
Office Max Office Depot desperation
merger
Borders gone, Barnes & Noble
shrinking.
Source: USA Today Business Insider
90s Tech Boom
Fed 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 Bust
Yahoo bought Geocities for 5b
Priceline went from 1000 to 7
Brutal landing in Four Horseman
Markets followed in 2001
source: HiddenLevers
Nasdaq came back in line with S&P
CSCO -88%
MSFT -63%
DELL -69%
INTL -74%
serious tech dynamism being unleashed, not just dot coms
Scenario: Tech consumes the world
organizational overhauls
involve digital innovation
no spillover effect between tech + telecom
angels succeeding now came from 90s
IPO boom
global dimensions, not
just US
private market runs most of the
money flow
source: MSN
2013: Reasons it’s different
Defensive equities best
start in 2 decades
Scenario: Tech consumes the world
Apple rebound
Netflix rebound
Priceline dominance in
hotels
Priceline first S&P 500
company at 1000/share
Amazon Web Services
source: Marketwatch, Moscow News
Hints of 1996
Autotrader.com2001: 47m loss
2013: 62m profit
paradigm shiftssmartphones
photosanalytics
Facebookrebound
Scenario: Dot Com Déjà Vu
2013Nasdaq +20%
4HRSMN +230%
Elon Musk says Tesla overvalued
Facebook IPO. (enough said)
Four Horsemen – current Nasdaq outperformers, leading way to hell?
1 car on fire showed Tesla speculation
FB Instagrampurchase was done in 1 day
source: HiddenLevers, NY Times, ValueWalk, CNN Money, SeekingAlpha
major tech innovations end
in speculative frenzies
Scenario: Dot Com Déjà Vu
Doubts about economic returns of innovation
Increasing size of early funding
rounds
Big companies buying their way
into relevancy
Lackluster due diligence
source:
Bungled IPOs leading to
disappointment
2013: Reasons it’s the same
Yahoo buying Tumblr for 1b,
no rev for years
Scenario: Dot Com Déjà Vu
Priceline double top at
$1000/share
Class actions against Zynga
Color – 43m in first funding
round, now bust
Corporate profits up
20%/year since 2009
S&P annual gains since
March 09 match dot com era
source: NY Times
Hints of 2000
Groupon hijinksturning down 6b
RepositioningFiring founder
Pinterest 1/3 valuation of Twitter with no
revenue
Squareversus
MasterCard
Solyndra = Fraudtainting green
tech altogether