Presentation by Herman Kienhuis about innovation at Sanoma by SanomaVentures and SanomaLab for LIME CFO audience at Sanoma's Media Matters event. July 11, 2014, Hoofddorp, The Netherlands.

1. Venturing @ Sanoma
Herman Kienhuis, director SanomaVentures
Hoofddorp, 11 juni 2014

2. chemical engineering /
mckinsey / mba / sanoma
finance & strategy / digital
product development /
venture capital
family-man / music-maker /
vintage-lover / internet-geek

3. Innovation = doing new things
“the embodiment, combination, or
synthesis of knowledge in original,
relevant, valued new processes,
products, services or business models”

4. “I’ll be happy to give you innovative thinking. What are the guidelines?”

5. Innovation = discovering the unknown
“a messy business which creates novel
solutions to important problems”

7. Collapse of newspaper advertising

8. Boom of mobile consumption
0%
10%
20%
30%
40%
50%
TV Online Radio Print Mobile
US Consumer Media Consumption Share
2009
2010
2011
2012
2013
Source: eMarketer, Aug. 2013

9. Explosion of tablet adoption
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
UK France Germany Spain Italy
Tablet user penetration (% of population)
2010
2011
2012
2013
2014
Source: eMarketer, May 2014

10. Rapid shift to automated ad trading
Source: MagnaGlobal, Oct. 2013

11. The Next Big Thing?

12. $3bln $2bln

13. Technological change
Organizational change
The Speed of Change
?

14. Strategy under uncertainty
requires experimentation

15. Defend and extend
core businesses
Build emerging
businesses
Create options
for future growth
Addressing all three horizons of growth
Time
Value

16. @ Sanoma

17. Sanoma activities across the three growth horizons
2nd horizon:
Expansion
3rd horizon:
Exploration
Current business
optimization
Key Growth Projects
(“Oaks”)
SanomaLab
Optimizing/
consolidating
Subsidiaries
M&A
SanomaVentures
1st horizon:
Exploitation
InternalExternal
• Building on existing (in-
house) assets and
expertise
• Deliver leads (prototypes)
for Growth projects
• Building on (external)
entrepreneurial talent and
innovation outside current
core
• Deliver leads (minority
interests) for M&A
Revenue growth
Speed of execution
Discovery
Cost of experimenting
EBIT
Marketshare

18. SanomaLab
Internal accelerators &
venture projects

19. Train staff in lean
development

20. Supporting
intrapreneurs

21. Collaborate

22. Trial & error

23. Move fast,
break things

24. 1. The Kickoff

25. 1. The Webinars
2. Webinars

26. 3. The Bootcamp

27. SanomaLab internal venture projects:
Funneling ideas into businesses
Discovery & Testing of opportunity for initial validation. Four sources of
ideas: Accelerators, Existing Business, Partnership or SanomaLab.
Hypothesis phase & establishing a Venture. Work on continuous validation, with
a number of pivots expected. Prototypes built only for testing purposes. No
product dev.
Product building phase. Venture working on continuous delivery of product while still
testing riskiest elements of funnel (metrics: acquisition, activation, retention, revenue,
referral).
Acceleration phase after proven demand. Continuous building of product with clear
product backlog and low maintenance.
Venture has been proven and the startup has become a business with substantial revenues.
Standards enforced, transfer to business unit.

28. Criteria
1. The (wo)man and The Plan
2. Ability to Execute
3. Unfair Advantage
4. Fit for Sanoma

32. SanomaVentures
External start-up investments

33. Access to
unrestricted
innovation and
entrepreneurial
talent

34. Reducing cost of
experimentation

35. 11 juni 2014 Presentation name35
Create
alternative
options for
future growth

36. Creating value from
expertise, network
and media as
investment currency

37. 11 juni 2014 Presentation name37
Right time: growing entrepreneurial
activity, less bank financing

38. SanomaVentures objectives
R&D: Create access to external talent and innovations and substantially
reduce cost of experimentation; aiming at 24 investments in 3 years
Growth: Create options for future growth; execute sufficient quantity and
quality investments, and build up a portfolio generating >€20 mln revenues
in 2017
Value creation: Support startups with expertise, network and sell media as
an investment currency; Manage portfolio companies towards positive
growth and return and create 5 ‘exits to Sanoma’ (acquired) in 6 years
Transformation: Facilitate knowledge exchange, bringing new insights
into our organization, supporting Sanoma’s transformation to digital
PR: Help build Sanoma’s innovation and growth story towards advertising
market, labour market and capital market

39. SanomaVentures investment strategy:
geographies
SanomaVentures investment strategy:
geographies

40. SanomaVentures investment strategy: geographiesSanomaVentures investment strategy:
scope
Consumer Media
• Consumer web
services
• Mobile & Tablet
publishing
• Online Video &
connected TV
E-commerce
• Advertising &
marketing services
• Lead generation &
Marketplaces
• Commerce services
Education
• Pre-school educational apps
• K12 ecosystem
• Personal/professional
development

41. capitalneed(EURx1000)
>20.000
20.000
10.000
5.000
2.500
1.000
500
250
100
50
25
Incubators/
accelerators/
angel investors
start
development phase
friends & family
venture capital
Sanoma
Ventures
(€0.1-1.0m)
pre-seed seed early-stage /
venture
growth later-stage
• Very difficult to screen (no
metrics available)
• Low success rate
• 5-7 years for return
• Competition from VC’s
• Limited ability to acquire >15%
stakes
• Much capital required
• Less investors, lower
valuations
• User metrics available
• 3-5 years for return
sweetspot
SanomaVentures investment strategy:
investment stage

42. 4.DECISION MAKING 5.EXECUTION
1.SCOUTING 2.ASSESSMENT 3.NEGOTIATIONS

43. Criteria
1. Team
2. Product
3. Plan
4. Sanoma value-add
5. Deal structure

44. ROOMLR
SOCIAL
SHOP

47. “The difficulty lies not in the new
ideas, but in escaping the old ones”
John Maynard Keynes

48. get started
@kienhuis #smm14
Questions?