the empire strikes back - digital transformation world · 11/5/2017 · telcos are facing big...

© 2017 TM Forum | 1

The Empire Strikes Back

Amit PauPartner & MD

Ariadne Capital@amit_pau

© 2017 TM Forum | 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)?.......................................................................5-6

▪ 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……………………………………......................................12-16

▪ The Empire Strikes Back……………………………………….........................................17-18

▪ Disrupting the Disruptors…………………………………………………………………….19

▪ In Summary……………………………………………………………………………………20

© 2017 TM Forum | 3

Blink and You Miss it

Digital Disruption

© 2017 TM Forum | 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

David and

Goliath Dance

Wonga: Personal Loans

Airbnb: Travel

Uber: Taxis

David shows technology enables the existence

of an ecosystem through data and business model

Goliath brings customers, distribution, scale

and reach

© 2017 TM Forum | 5

$13.9 $16.1 $5.9 $10.0

$92.4

$21.5 $32.3

$256.815.5%

11.8%

21.4%

4.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$0.0

$100.0

$200.0

$300.0

R&D Spend and Cash Balance

R&D Cash and investments R&D as % of Revenue

Is Silicon Valley Prone to Win (Always)?

▪ SV has incubated some of the biggest and more disruptive

businesses…

$90.3$136.0

$27.6

$215.6

Revenue & Net Income (2016)

Revenue(2016FY) $653.3

$455.4 $436.0

$802.9

Market Cap Market Cap*

£’bn

*Stock Prices as of 11.05.2017

£’bn

£’bn

© 2017 TM Forum | 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 | 7

Predicting the Future is Not Easy

© 2017 TM Forum | 8

EntrepreneurCountry Global

….go to

EntrepreneurCountry

Don’t go to

Palo Alto…

© 2017 TM Forum | 9

A Distinctive Investment Methodology

Investment Strategy: Ecosystem Economics®

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.

© 2017 TM Forum | 10


B2B SaaS start-ups are re-intermediating mid to large companies

into their industries, who would otherwise be disrupted

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

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

1

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

© 2017 TM Forum | 11


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 | 12

The David

& Goliath™

Model

© 2017 TM Forum | 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

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

© 2017 TM Forum | 15

Shape your Industry by Changing your Business Model

DAVIDS

(revenue

generating

algorithms)

CONSUMER DATA

(comes from social sphere)

(have customer

distribution)

GOLIATHS

(non-tech trad

incumbents

of independent

retailers)

GOLIATH/DAVID

Partnership

Industry > Ecosystem

Distribution > Platform

Company's

ability to

Shape

industry

dynamics

Company

market

power

increases

Company

Valuation

increases

STEP 2 STEP 3 Macro

STEP 1 Micro

WITH NETWORK

EFFECTS

Building Net

New Revenue

Everything is network based, not linear

© 2017 TM Forum | 16

Success Stories

ECOSYSTEM ECONOMICS

SUCCESS STORIES

RAPID BUSINESS MODELAdvised on Wearable Technologies and Data Analytics

6 Initiatives over 15 months

across 18 countries

6 15 18 4 500kProof of concept delivered in 4

countries to 500k consumers

VERTICAL MARKET ANALYSISAnalysed on Horizontal Portfolio Capability.

Delivered a 3x Return over

expected outcomes

3X 3 1Established 3 partnerships

and made 1 investment

NEW MARKET CREATIONDifferentiation, Market Engagement, Deal Flow Management

Completed over 20

different programmes

20Created a €100M fund

100M

Leading

Insurance

Group

Leading IT

Corporate

Leading

Bank

© 2017 TM Forum | 17

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

Network Operators

Tech Giants | Platform Players

Almost $400bn lost to OTTs

Price competition - high churn

Voice-data substitution

Tariff decoupling

Missed App Store Opportunity

© 2017 TM Forum | 18

Network Ecosystem, Opportunities


IoT

(B2B + B2C)

Mobile Banking Digital Identity

Management

AgriTech

© 2017 TM Forum | 19

Customer engagement as a service

OTT messaging compliance

Customer insights as a service

Digital trust in a connected world

Disrupting the Disruptors

the empire strikes back - digital transformation world · 11/5/2017 · telcos are facing big...

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