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