Audaces fortuna iuvat. BAML MegaTrends European Conference Technology and Beyond Andy Brown November 2014 Audaces fortuna iuvat. “It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.” — Niccolò Machiavelli, The Prince 1 Audaces fortuna iuvat. Who Am I? • Andy is currently CEO of Sand Hill East Ventures (www.sandhilleast.net) • Andy is lead independent director on the board of Moogsoft, and an independent director on the board of Guidewire (GWRE) • Andy was a Director at ServiceMesh - sold to CSC in November 2013 • A founder of Desktone - sold to VMware also in November 2013 • Advisor to Cyvera - sold to Palo Alto Networks in March 2014 • Andy currently advises Wickr, Lastline, Zscaler & StreetScale IT • In a prior life Andy was o o o o o o o Group CTO @ UBS 2010-2013 Head of Strategy, Architecture & Innovation @BofA 2008-2010 CTO Infrastructure Credit Suisse 2006-2008 Chief Architect (& Various) Merrill Lynch 1996-2006 Chief Architect Paribas Capital Markets 1994-1996 Senior Engineering Advisor, British Telecom 1988-1994 Stints @Shell Oil and ICI Pharmaceuticals 1984-1988 • Andy holds a BSc. Honors degree in Chemical Physics from University College London 2 Audaces fortuna iuvat. Our Key Investment Theses At Sand Hill East, we have specific investment themes that guide most of our investments as follows: • Machine-based learning is the best way to automate analytics, provide insights and surface anomalies • Mobile is not a verb, it is a state of being • BigData is not inherently useful, as it has to be used in a context people care about to be monetized • Standardization (in FinTech in particular) is not only a great commoditizer but also a requirement for the next wave of innovation • People are at the center of many processes and it is equally important to understand the human aspects as well as the technical ones • Privacy, security and, in particular, encryption are a requirement for data inside or outside the enterprise • Disruption in FinTech is going to happen because large banks are not focused on it 3 Audaces fortuna iuvat. Our Portfolio Has A Strong Security Focus Enterprise/FinTech Enterprise/B2B/B2C 4 Mobile/Social Audaces fortuna iuvat. Key Tech Mega-Trends • • • • • • • • Software wins Mobile wins The 5Ws Social wins My Device My Life Human-as-a-Service Integration Security “All the World’s an App” “Always Connected” “Analytic Data Trails” “Always Informed” “Wearing the brand” “Virtualize Expertise” “Plug ‘n’ Play, not Plug ‘n’ Pray” “Encrypt to Survive” 5 Audaces fortuna iuvat. All The World’s An App (and we are merely the players) Key Sub Trends • Apps are the unit of measure for software • App integration with devices, people and each other is expected behavior • Apps provide decision support • Open Source is a clear winner • Full Function Multi Device Development • Containers (Docker) become the unit of measure for server side “Cloud” Functionality – IaaS • Solutions (SaaS) beat pure products • Information Protection is driven from Apps • Many new verticals emerge (Life Science, Wellness etc) 6 Audaces fortuna iuvat. Transition To Cloud Forces SAP To Slash Earnings Projections Image Credit: Shutterstock/Pavelk • • • • German software maker SAP cut its earnings outlook because more customers are switching to its cloud services Taken together, the latest update highlights the tricky balancing act that legacy companies like SAP face as big customers move away from the traditional packaged software business toward cloud-based services Cloud services operate on a subscription model, which means less money up front but more regular revenue over time SAP is confident that the cloud deals being made today will bolster earnings in future quarters Source: News360.com; Chris O’Brien 7 Audaces fortuna iuvat. All The World’s An App (and we are merely the players) Key Investment Takeaways iWear Device vSaaS SaaS PAAS IAAS 8 Audaces fortuna iuvat. Mobile Wins – “We Are Always Connected” Key Mega Trends • nG/LTE, NFC, WiFi, Bluetooth and iBeacon define Mobile Ecosystem (ME) • Large CRE’s (Mall, Tenant buildings) adopt ME • Applications adapt to guide business process • – People are connected & identified everywhere – Bricks and Clicks deliver “integrated experience” Life Science, Wellness and Healthcare processes revolutionized. vHealth emerges • iWear solutions (contact lens, Watch etc.) will rapidly overtake #s of devices • Enterprise Services will be delivered on consumer devices & iWear (Voice, Video, Presence, Productivity, etc, etc) • mPayment = transaction 9 Photo credit: Forbes Audaces fortuna iuvat. “Never Mind Software – Mobile Is Eating The World” • It has been three years since Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, wrote his influential essay, “Why Software is Eating the World.” Nothing has changed since then to cast doubt on the ideas he presented • One big change has occurred, though: The rise of mobile Source: WSJD 10/28/14 10 Audaces fortuna iuvat. Never Mind Software - Mobile beats Web! Source: WSJD 10/28/14 11 Audaces fortuna iuvat. Never Mind Software – “Email is for Grandparents” Source: WSJD 10/28/14 12 Audaces fortuna iuvat. Mobile Wins – “We Are Always Connected” Key Investment Takeaways + ? Telephony “Voice” 13 • IBM / Apple partnership has strong potential • Tech/BioTech cross overs create new revenue streams • IoT supply chain vendors are very interesting • Mobile TelCo Data usage will continue to rise • Droid security addressed • WiFi/Bluetooth/NFC/iBeacon supply chain has a lot to offer the market • BI Visualization leaders (DATA, QLIK & Others) will grow >> market • Big Vendors Oracle/SAP seem to be missing this boat! Audaces fortuna iuvat. The 5 Ws – Analytic Data Trails (Who, What, When, Where, Why) Key Mega Trends • • • • • • • • • I was at the dentist in London this morning for a root canal. I posted on facebook and my friends sent me ice cream Context is the most important facet of real time marketing & interaction Social and Mobile Data Trails define 5Ws ++ use cases “Audience of One” is driven from understanding my5Ws Data ownership, protection and controls hugely important Insight, Analytics & Alerting solutions will grow Scariest context is MyHumanGenome Data of every type every where (FB, Gdrive, SkyDrive, DropBox, Box, UsendME etc) but not policy managed or encrypted by default Privacy emerges as an even bigger global topic… 14 Audaces fortuna iuvat. Consumer Privacy Is Improving …As Device Encryption Enters Stage Left KEY TAKEAWAY – ENCRYPTION OF CLOUD INFORMATION NEXT; SIMILARLY ENTERPRISE DATA CENTER’s MOVE FROM PERIMETER TO CONTENT 15 Audaces fortuna iuvat. The 5Ws – Analytic Data Trails (Who, What, When, Where, Why) Key Investment Takeaways • Integration of data trails is owned by ‘Appgregators’ • Context based marketing and advertising will define the new generation • Email marketing • mobile hooked will succeed • Traditional email marketing will disappear (SaneMail) … 16 • Business Processes will be lightweight, adaptable and value may be delivered through one killer useful orchestration or function • Management of and entitlement of data trails very important Audaces fortuna iuvat. Social Wins – We Are Always Informed Key Mega Trends • Continued growth, expansion and incremental enhancement of major brands • New business models being built on major social hubs • Social “owns” “Face time”, advertising, marketing, mobile • Social Commerce becomes the norm 17 Audaces fortuna iuvat. Social Wins – “We Are Always Informed” Key Investment Takeaways 18 • FB, TWTR, LNKD continue to lead. • Overlays, feed consumers to close loop around real time sentiment emerging (e.g. Pivit) • Contextual Social is a Big Threat to GOOG, YHOO, BING • AAPL Desktop Search starting to threaten Search giants • Threat to AMZN, eBay et al but integration can be powerful • New paradigm for regulation emerges as finance moves into this space • mPayment and CyberCurrency will drive changes Audaces fortuna iuvat. iBeacon Enabled Business Processes = Apps + Mobile + Social + Payments Above: The mobile customer journey, seen by MobileROI Image Credit: MobileROI 19 Audaces fortuna iuvat. iBeacon At Auto Dealerships: Context-Aware VIP Experiences Image Credit: MobileROI 20 Audaces fortuna iuvat. My Device My Life Key Mega Trends • • • • • 21 Devices persist, but pace of innovation slows Wearables that integrate with Devices via cloud drive extremely high growth Traditional Desktop PC is as dead as Monty Python’s Parrot Wellness & Illness will dramatically transform Services businesses will integrate with Wearables and Devices to make life much easier vs 800 ‘n’ wait Audaces fortuna iuvat. My Device My Life Key Investment Takeaways • Supply Chain providers to wearables very interesting; Specialized and high barrier to entry • Vertical integration (Devices, apps, Cloud) remains very interesting. Positions FB, Goog, AAPL positively • PC ecosystem very negative • Enterprises that face consumers have to participate or risk antiquity 22 Audaces fortuna iuvat. Human-As-A-Service Key Mega Trends • Global Virtual Enterprises emerge with completely different economics than “The Bricks” • Expertise is acquired as a service and paid for when it is used • Digital training, and expertise acquisition becomes very important • Education seen as the vehicle to generate wealth. 2nd and 3rd world countries will lead because they are hungrier 23 Audaces fortuna iuvat. Human-As-A-Service Key Investment Takeaways Strategic Big N Integrators consulting 24 • New Service providers unlike ACC, INFOSYS etc emerging • Aggregators emerge who can connect buy side and sell side of the market • Orchestrators emerge who integrate aggregators with buy side on a transaction and longer term basis • Labor becomes a traded market for commodity labor types (e.g. like TopCoder) • Traditional strongholds of margin such as ERP programs become fewer as cloud wins Audaces fortuna iuvat. Integration – Plug ‘n’ Play Not Plug ‘n’ Pray Key Mega Trends • Integration is all about software protocols • Software defines everything (Security, Storage, Servers, Network), but requires integration • New technologies being “cloudified” by the day • Open Source playing big role in standardization but – Appgregators have an opportunity to deliver significant value proposition 25 Audaces fortuna iuvat. Integration – Plug ‘n’ Play Not Plug ‘n’ Pray Key Investment Takeaways • Technical integration becomes all about the normalization of content, and automation using standard interfaces • Delivery is Mobile (Phone or Tablet) • Normalized Content creates context which is the enabler for marketing advertising and useful services • Mobile app providers are very well positioned to combine Cloud and Appgregation and win in Integration 26 Audaces fortuna iuvat. Security – Encrypt To Survive Key Mega Trends • Technology proliferates, major successful exploits target human weakness via social exploitation – Social Media Scams and Malware Flourish on Mobile – Prevalence of scams fail to change behavior on social media • • • • APT biggest issue is zero-day vulnerabilities and unpatched websites which facilitate wateringhole attacks Ransomware attacks grew by 500 percent in 2013 and turned vicious Attackers are turning their attention to IoT Current approaches are failing - Impossible for Internet Security Threat enterprises to stay ahead Source: Report 2014 :: Volume 19; Symantec “Financial services firms need to spend much more on security than they currently are” Jim Cramer after JPMC hack in October 2014 It seems clear at this point that perimeter defense has failed and Encryption of content is required to secure data 27 Audaces fortuna iuvat. Security – Encrypt To Survive • JPMorgan Chase & Co. announced in October that a recent cyber attack compromised customer information for about 76 million households and 7 million small businesses J.P. Morgan CEO: “Cybersecurity Spending to Double” • New York's financial regulator told banks in a letter to tighten their cybersecurity, particularly in terms of third-party service providers they might use (Reuters) • Federal officials also warned companies that hackers have stolen more than 500 million financial records over the past 12 months, essentially breaking into banks without ever entering a building (USA Today) • "We're in a day when a person can commit about 15,000 bank robberies sitting in their basement," said Robert Anderson, executive assistant director of the FBI's Criminal Cyber Response and Services Branch Conclusion : Hackers compromise enterprises daily. Consumer Encrypted, now Enterprise Encryption ESSENTIAL! MSSP's only scaleable model. 28 Audaces fortuna iuvat. Security – Encrypt To Survive Key Investment Takeaways • Companies that are specialists in security defense will win (i.e. Horizon, Accuvant, Symantec and Dell Secure Works + Newcos) • With so much personal data increasingly being aggregated the need for strong security is increasing • Combinations of vendors will be needed to fight attackers • Security spending will continue to increase (double) each year for the forseeable future, because threats are • Encryption will drive the tipping point for public cloud and signal the end of perimeter based defense Enterprise Encryption Vendors (Dell, Symantec, Voltage) Enterprise APT Defense Vendors Enterprise Perimeter Defense Vendors Traditional AV 29 Audaces fortuna iuvat. Sand Hill East Q&A Contribute to these ideas: http://www.sandhilleast.net/ @sandhilleast Audaces fortuna iuvat.