<p>1 Gradually, then suddenly DECEMBER 13, 2017 2 CEO and Co-Founder of CB Insights - Inc 5000 company - Glassdoor best places to work (#9 in USA) - 5th fastest growing SaaS co in NYC (47th in USA) Ran AmEx $50M Chairman's Innovation Fund Prior work in VC and M&A Graduate of Wharton (Finance and Accounting) and the University of Pennsylvania (Chemical Engineering) asanwal@cbinsights.com @asanwal About Me 3 What We're Going to Cover Markets are moving faster than ever before Why corporations have trouble responding The impacts of failing to respond How to see around corners 1 2 3 4 #AhaCBI Markets are moving faster than ever 5 "How did you go bankrupt?" E R N E S T H E M I N G W A Y , T H E S U N A L S O R I S E S 6 "Two ways Gradually and then suddenly" E R N E S T H E M I N G W A Y , T H E S U N A L S O R I S E S 7 Corporations are not immune to this acceleration T H E N E E D F O R S P E E D 8 52% of S&P 500 companies have disappeared I N T H E L A S T 1 5 Y E A R S Source: INNOSIGHT/Richard N. Foster/Standard & Poor's 61-years 1955 lifespan 17-years 2015 lifespan 9 Technology is eating every industry 10 Technology adoption is quicker than ever Source: Michael Felton, The New York Times 11 And technology adoption is getting faster Source: Facebook 12 Technology Data The two things making business faster A M A R R I A G E M A D E I N H E A V E N 13 They've changed how & what we think about T H E I M P A C T S H A V E B E E N P R O F O U N D Rational, empirical decision-making Constant redrawing of competitive lines Faster product, process, distribution innovation 14 Public co execs talking FAMGA on earnings calls T E C H I S G E T T I N G M O R E M I N D S H A R E Mentions of the 5 largest tech companies in earnings calls by quarter Source: What tech company are public company execs most obsessed with? Apple Google Microsoft Amazon Facebook 15 A more rational, empirical world D A T A O V E R D E C I B E L S Moneyball / Sabermetrics Discover Weekly Playlists Pregnancy Prediction Score Predicting Elections 16 With new business models and technologies coming to the market, new competitors emerge. And even prior partners start to resemble competitors. Stay in my lane? What lane? N E W F O E S A N D N E W F R E N E M I E S 17 Benz competitors were BMW and Lexus C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS 18 Benz competitors were BMW and Lexus Now it's Tesla, Uber, Google C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS 19 Walmart competitors were Target, Costco C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS 20 Walmart competitors were Target, Costco Now it's Amazon, Alibaba C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS 21 Comcast vs. Time Warner vs. Verizon C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS VS 22 Comcast vs. Time Warner vs. Verizon Now it's them plus Netflix, Youtube C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS VS VS 23 Amex vs. Visa vs. MC vs. Citi C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS VS VS 24 Amex vs. Visa vs. MC vs. Citi Now it's Paypal, Alipay, Stripe and Adyen C O M P E T I T I V E L I N E S B E I N G R E D R A W N VS VS VS VS 25 Volumes up 48x in four years ($81.6B to $3.9T) L I F E C O M E S A T Y O U F A S T Source: Better Than Cash Alliance 26 P R I V A T E L A B E L S M E A N C O M P E T I T I V E S E T I S B E I N G R E D R A W N Old friends become foes? HemisFares Big K Fresh Selections by Kroger Comforts for Baby Home Sense Kroger Products Pet Pride Private Selection Quality Guarantee Simple Truth Value Brand Products Water Quality Abound Luvsome 27 Public co execs talking Amazon on earnings calls B E Z O S O N T H E B R A I N Mentions of the 5 largest tech companies in earnings calls by quarter Source: What tech company are public company execs most obsessed with? Apple Google Microsoft Amazon Facebook 28 The Amazon Impact on Walgreens T H E T H R E A T O F E N T R Y I S N O W E N O U G H Oct 6th - Amazon rumored to enter pharmacy business October 5th at $76.95 2 days later at $70.87 29 The insurgent competitors are multiplying N E W B U S I N E S S M O D E L S , P R O D U C T S , D I S T R I B U T I O N I N N O V A T I O N S C O M I N G Q U I C K Cost to launch a tech startup Source: Upfront Ventures 2000 2005 2009 2011 $5k $50k $500k $5,000k open source and horizontal scaling cloud and AWS 30 The battle between every startup and incumbent comes down to whether the startup gets distribution before the incumbent gets innovation. Alex Rampell A16Z, Partner 31 Faster product, process, distribution innovation H O W B U S I N E S S E S C O M P E T E I S C H A N G I N G D2C in consumer packaged goods (think Dollar Shave vs Gillette) Netflix thrashed Blockbuster and targets Hollywood Airbnb attacking Hyatt and Starwood 32 Airbnb's valuation is greater than Hyatt and Starwood / Marriott COMBINED F A S T E R P R O D U C T , P R O C E S S , D I S T R I B U T I O N I N N O V A T I O N #AhaCBI Why corporations have trouble responding 34 You need both will and skill T O R E S P O N D T O Q U I C K E R M A R K E T C H A N G E S 35 Source: Paypal filings WILL A culture that is not dismissive of emerging trends and shifts and openly communicates these shifts within the organization. SK ILL A structured method to identify, recognize and react to non-incremental market shifts early and quickly. It's part culture and part knowledge/process C R E A T I N G A N O R G A N I Z A T I O N T H A T M O V E S Q U I C K 36 Corporate dismissal playbook Talk isht Pretend they don't exist Dismissive is deadly. It's good to be paranoid. T H E I N T E L L E C T U A L L Y L A Z Y S T R A T E G Y 37 "Neither RedBox nor Netflix are even on the radar screen in terms of competition." B L O C K B U S T E R O N N E T F L I X Jim Keyes, CEO of Blockbuster (2008) 38 "We've learned and struggled for a few years here figuring out how to make a decent phone PC guys are not going to just figure this out. They're not going to just walk in." P A L M O N T H E I P H O N E CEO Ed Colligan in 2006 39 We do not believe our vendors selling product directly on Amazon is an imminent threat. There is no indication that any of our vendors intend to sell premium athletic product, $100- plus sneakers that we offer, directly via that sort of distribution channel." F O O T L O C K E R O N A M A Z O N Footlocker CEO and Chairman Richard Johnson 40 "Google's not a real company. It's a house of cards." M I C R O S O F T O N G O O G L E Former Microsoft CEO Steve Ballmer 41 Amex just mentioned Venmo for 1st time in a 10-k V E N M O G R O W I N G A T 1 0 0 % Y O Y C O N S I S T E N T L Y Source: Paypal filings Venmo Quarterly US Payment Volume ($Ms) Q3 2013 Q3 2017 42 45.5% EXTREMELY IMPORTANT 39.4% VERY IMPORTANT 12.1% MODERATELY IMPORTANT 3% SLIGHTLY IMPORTANT 85% of corporations view innovation as very important T H E G O O D N E W S Innovation importance Source: CB Insights State of Innovation Report a survey of 677 strategy leaders 85% EXTREMELY / VERY IMPORTANT 43 Customers Employees Competitive intelligence Suppliers / vendors Academic partners and / or scientific literature The things that cause sudden changes don't come from the sources they use G R E A T I N C R E M E N T A L I D E A S Ranking of sources of innovation Source: CB Insights State of Innovation Report 1 2 3 4 5 Industry analysts Accelerators & incubators Corporate venture capital External ideation consultants Bankers & VCs 6 7 8 9 10 44 Generate revenue by enhancing existing products & services Generate revenue by launching new products & services Improving customer satisfaction Wringing revenue out of existing products & services leads to incrementalism A F O C U S O N T H E E X I S T I N G Ranking of goals Source: CB Insights State of Innovation Report 1 2 3 Improving operational effectiveness / productivity Reducing costs for existing products and services Reducing environmental impact 4 5 6 45 It just can't be all you do F L A V O R I N N O V A T I O N I S F I N E 46 More than of corporations want to build I N V E N T E D H E R E Source: CB Insights State of Innovation Report 31% PARTNER 51% BUILD 18% BUY 47 60% take more than a year to launch new (incremental) ideas B U I L D I N G I S S L O W Average time from ideation to launch Source: CB Insights State of Innovation Report < 6 Months 24% 36% 31% 9% 7 12 Months 13 - 24 Months > 24 Months One Year #AhaCBI The impacts of failing to respond 49 Suddenly comes quickly Y O U D O N ' T H A V E T H A T K I N D O F T I M E 50 Which company is this? G R A D U A L L Y , T H E N S U D D E N L Y I N A C T I O N Apple launches 1st iPhone Gradually (21 months) Suddenly (5 months) 51 Nothing to worry about, right? E V E R Y T H I N G L O O K S G R E A T 52 Which company is this? G R A D U A L L Y , T H E N S U D D E N L Y I N A C T I O N Gradually (21 months) Suddenly (5 months) 53 Now, shareholders are getting increasingly impatient G R A D U A L L Y , T H E N S U D D E N L Y I N A C T I O N 54 Now, a failure to move quickly opens up potential battles with shareholders "Jana Partners had snatched up almost 9 percent of Whole Foods' stock " "Bill Ackman says his 'transformation plan' for ADP will more than double its stock price" 55 which can become about CEO & executive survival... "If I could go back 10 years, I might have done some things earlier." - Mickey Drexler 56 Former Gillette employees, according to Nelson Peltz, say P&G should have come up with a strategy to beat Dollar Shave Club and Harry's. "That's what should have happened years ago. It didn't happen," Peltz says. Peltz's $12.7 billion hedge fund, Trian Partners, is seeking to elect Peltz to P&G's board of directors. Billionaire activist blasts P&G for letting online shave clubs obliterate Gillette Source: https://www.cnbc.com/2017/07/17/billionaire-activist-blasts-pg-for-letting-online-shave-clubs-obliterate-gillette.html 57 "Accelerate investments in necessary product and back-end improvements." "Accelerate product migrations, sunset back-end systems, and cut associated legacy spend, with some reinvestment in product and other back-end improvements or other growth initiatives (i.e., Big Data)." "Increase sales force productivity with better product offering." Bill Ackman says his 'transformation plan' for ADP will more than double its stock price Source: https://www.cnbc.com/2017/08/17/bill-ackmans-transformation-plan-for-adp-to-more-than-double-its-stock-price.html 58 Ford Motor Co.'s recent decision to boot then-Chief Executive Mark Fields, a 28-year veteran of the company, exemplified a shift in the priorities of big companies across the U.S. The message is simple: In an age of rapid disruption by the software and tech industries, a leader has to pick up the tempo and make riskier bets sooner or else. Mr. Fields even set a course for adopting these emerging technologies. He just couldn't do it fast enough for Ford and its shareholders. Wall Street to CEOs: Disrupt Your Industry, or Else Source: https://www.wsj.com/articles/wall-street-to-ceos-the-future-is-now-1495791003 59 A hedge fund in New York called Jana Partners had snatched up almost 9 percent of Whole Foods' stock and announced that it would pressure the company to either overhaul its business or sell itselfperhaps to another grocery giant, such as Kroger, or to a less traditional player, such as Amazon. Mackey and other leaders might have to be replaced. The Shelf Life Of John Mackey Source: https://www.wsj.com/articles/wall-street-to-ceos-the-future-is-now-1495791003 60 "I've never seen the speed of change as it is today," the 72-year-old chairman and chief executive of J.Crew Group Inc. said in an interview at his New York office. "If I could go back 10 years, I might have done some things earlier." J.Crew's Mickey Drexler Confesses: I Underestimated How Tech Would Upend Retail Source: https://www.wsj.com/articles/j-crews-big-miss-how-technology-transformed-retail-1495636817 61 Source: https://www.wsj.com/articles/j-crews-big-miss-how-technology-transformed-retail-1495636817 62 The Insurgent Impact Activist threat Activist threat CEO fired CEO fired CEO fired CEO fired CEO fired CEO fired Activist threat Multi-year sales decline #AhaCBI A skill to see around corners 64 Knowing what you don't know M O R E N O N - I N C R E M E N T A L I D E A S There is an immense amount of data and technology out there to help you see these trends, technologies and insurgents 65 The information to predict and identify the drivers of these future trends and shifts is available 9 0 % O F T H E W O R L D ' S D A T A H A S B E E N C R E A T E D I N T H E L A S T T W O Y E A R S 66 But we need to realize that the ways we've been taught to figure out what's next were made for a world that no longer exists B R I N G I N G A K N I F E T O A G U N F I G H T 67 Customers Employees Competitive intelligence Suppliers / vendors Academic partners and / or scientific literature Organizations have to look beyond typical sources of innovation L O O K I N G B E Y O N D T H E U S U A L S U S P E C T S Ranking of sources of innovation Source: CB Insights State of Innovation Report 1 2 3 4 5 Industry analysts Accelerators & incubators Corporate venture capital External ideation consultants Bankers & VCs 6 7 8 9 10 68 Methods used were designed for a bygone era S L O W , A D - H O C A N D I N C O M P L E T E " D E S K T O P R E S E A R C H " Rich with info but only useful if you know the questions to ask. Too often you don't know what you don't know. P U N D I T A R M Y Sundry management consultants & advisors. There is simply a volume of info beyond human cognition. N E T W O R K People and organizations consistently overestimate the quality and value of their network. 69 Technology Data Use the things that are making business faster S E E I N G W H A T ' S N E X T 70 Understanding consumer habits using technology M A R K E T R E S E A R C H 2 . 0 Source: Next Gen Focus Groups (CB Insights) 71 Expert Automation & Augmentation Software T H E E C O S Y S T E M EAAS (\z\) is AI focused on algorithms and technology that replicate human cognition. 72 Machines take over the thankless tasks that were, until recently, too complex to be automated, and humans get to immerse themselves in the most creative and rewarding aspects of their jobs. Source: WIRED, "Welcome to the Era of the AI Coworker" #AhaCBI A view into what the CBI machine will soon enable 74 It's in the data exhaust W H E R E I S T H E S I G N A L - Patents - Web traffic - News - Social media - Earnings transcripts - Financial statements - Regulatory Documents - Clinical trial data - Website descriptions - Partnerships - VC, M&A 75 "The problem is not information overload. It's filter failure." W H A T W E ' V E L E A R N E D O V E R T I M E A S W E ' V E S T U D I E D T H E M A R K E T Clay Shirky 76 Our fundamental goal is extending the business graph we have for companies and industries by ingesting new datasets to . And then ultimately making them available and combining them in novel ways. Extending the business graph D A T A . D A T A . D A T A . 77 Going beyond private markets Ingesting public company data from 50 global exchanges: Stock prices Fundamentals (P&L, Balance Sheet, etc) Ratios (P/E, P/S, % on R&D 78 Enjoy finding logos on Google? Market Map Maker lets you map industries and market landscapes in seconds Categorize companies Visualize Present and Share Note: our development team used the Binary Tree Bin Packing algorithm to position the company logos 79 Less pivot tables You can now generate beautiful reports on topics of interest with just the click of a button. 80 No more control-F on transcripts Earnings transcript search engine Ingesting transcripts for 6500 public companies over last 10 years. Analyze public companies' interests in topics overtime. Rough Wireframes 81 Transcript analytics Extracting topics from transcripts to provide you an an informational edge on company strategy and trends. 82 Database of market sizings We've created the largest global database of market sizings (9000+) via crowdsourcing and extracting estimates from unstructured documents. Rough Wireframes 83 Lucy lhuang@cbinsights.com Justine jkolsky@cbinsights.com Alex atestu@cbinsights.com If you want to talk product WHO TO TALK TO 84 Trends and technology infiltrate new industries Liza Landsman Jet.com President Michael Vaughan Venmo COO Othman Laraki CEO, Color Genomics CONVERSATIONS TO WATCH THIS AFTERNOON 85 Gradually, then suddenly DECEMBER 13, 2017 86 cbinsights.com @cbinsights </p>