Michael Moe's (Founder, GSV) opening keynote presentation at the 8th Annual ASU GSV Summit (May 8-10, 2017) in Salt Lake City, Utah. www.asugsvsummit.com

1. NETwork Effects
2017 ASU GSV SUMMIT
Salt Lake City, UT - May 8, 2017
Michael Moe, CFA Founder, GSV @michaelmoe

2. Chemistry 101…

3. O
H
H
+

4. OH2OWater

5. +Na Cl

6. Salt NaCl

7. CeoChief Execu!ve Officer
TechTechnology Leader
BizBusiness Leader
VcVenture Capitalist
EduEducator
EEntrepreneur
JourJournalist
PoliPolicymaker
AuthAuthor
ArtAr!st
PhilPhilanthropist
InvInvestor
BrdBoard Member
AthProfessional Athlete
RschResearcher
FndnFounda!on

8. Connec"ng
People

9. Edu
Educator

10. Vc
Venture
Capitalist

11. Poli
Policymaker

12. Tech
Technology
Leader

13. Biz
Business
Leader

14. Phil
Philanthropist

15. E
Entrepreneur

17. "The Macintosh turned out so well
because the people working on it were
musicians, ar"sts, poets and historians
– who also happened to be excellent
computer scien!sts.”
— STEVE JOBS

19. Globaliza!on
Ar!ficial Intelligence
Rising Middle Class
7 Billion Smartphones by 2020
Machine Learning
Trump
On-Demand Everything
Asia + Africa Rising
Median Income Stalls 40 Years
Winner-Take-All Economy
Brexit
Women Power
Mindfulness
Brain Science
Adap!ve Technology
Virtual Reality
Internet of Things
CloudUbiquitous Broadband
Everything Free

20. Globaliza"on
Ar"ficial Intelligence
Rising Middle Class
7 Billion Smartphones by 2020
Machine Learning
Trump
On-Demand Everything
Asia + Africa Rising
Median Income Stalls 40 Years
Winner-Take-All Economy
Brexit
Women Power
Mindfulness
Brain Science
Adap"ve Technology
Virtual Reality
Internet of Things
CloudUbiquitous Broadband
Everything Free

21. Four Lines?

22. Four Lines?

23. Four Lines?

24. Four Lines?

25. Four Lines?

26. Three Lines?

27. Three Lines?

28. Three Lines?

29. Three Lines?

30. Nobel Prize in
Literature
2016

31. “Redefining
Boundaries
of Literature…”

32. “Some people
feel the rain.
Others just get
wet.”

33. “Colleges are
like old-age
homes, except
for the fact that
more people die
in colleges.”

34. Entrepreneurs connect dots…

35. Entrepreneurs think
outside of boundaries…

36. …and they’re crazy enough to do
things that haven’t been done before.

37. Every day in
America 1,100
new businesses
are formed.
Source: Gallup, U.S. Census Bureau

38. Every day in
America 1,100
businesses fail.
Source: Gallup, U.S. Census Bureau

39. 20% Chance Company
Survives First 3 Years

40. In 2016, Venture
Capitalists invested in
3,000 companies.
Source: NVCA, PwC

41. In 2016, just 40 venture-
backed companies went
public….
Source: Thomson Reuters, NVCA

42. Entrepreneurs 70% more
likely to have a heart a"ack
Source: Entrepreneur

43. What kind of nut
would start a
business?

44. Name that “Nut”

45. Lost job in ’32

46. Defeated in race for State
Legislature in ’32

47. Failed in business ‘33

48. He had a nervous
breakdown in ’41

49. Defeated in races for:
Congress in ‘43
Senate in ‘55
Vice President in ‘56
Senate in ‘58

50. And the answer is…

52. Teachers told him he was
“too stupid to learn anything”

53. Fired from his first two jobs for
lack of produc!vity

54. Thomas Edison

55. $260 Billion
Market Cap

56. JV partner dropped him…
then sued him

57. First bank cut him off…
Second bank had FBI
inves!gate him for fraud

58. Two creditors showed up at
his headquarters on the
same day to collect

59. U.S. customs slapped him
with a $10 million bill

60. Star brand endorser died
in a car crash…
Replacement wore a compe!tor’s
product on global TV

62. $91 Billion
Market Cap

63. Unemployed, on welfare

64. Hatched book idea while stuck on
a delayed train

66. 400+ Million
Books Sold
$25+ Billion
Franchise Value
Source: Forbes, Scholastic

67. Launched business in 2007 with
3 air ma#resses…

68. …basically from a need to eat.

69. “Raised” ini!al
capital by
selling
custom cereal
boxes at
2008
campaign
events.
Source: Inc.

71. 100+ Million
Nights Booked in 2016
Source: Reuters

72. $31 Billion
Market Value
Source: Wall Street Journal

73. Failed Chinese university
entrance exam 3 "mes

74. Job applica!on rejected by
30 companies, including KFC

76. $280 Billion
Market Value

77. Big Ideas Don’t Always
Find a Recep!ve
Audience… Par"cularly
in Educa"on

78. Socrates taught
Plato and Aristotle…

79. …and then they
killed him.
X X

80. New Oriental $10.1B Bright Horizons $4.5B
TAL Educa!on $9.8B China So. Publishing $4.4B
Kroton $7.8B Grand Canyon $3.6B
Informa $7.0B Nord Anglia* $3.4B
Pearson $6.9B Graham Holding $3.3B
1
2
3
4
5
6
7
8
9
10
Top 10 Public Educa!on Companies =
$61B Market Cap
Source: Capital IQ (*To be taken private @ $4.3B valuation)

81. Market Cap: Top 10 Public Companies
Source: Capital IQ
$3.4T
Technology
$1.6T
Energy Healthcare
$1.6T
Educa"on
$61B

82. $640 Billion
Market Cap
Source: Yahoo Finance
(Google)

83. $3.1
Billion
2006
25% CAGR
Source: GSV Acceleration
$278
Million
2016
VC & Growth Investment
Educa!on & Talent

84. Educa!on & Talent
Bus. Intelligence & Analy!cs
Monitoring & Security
Accoun!ng & Finance
Adver!sing, Sales & Marke!ng 15
15
18
24
25Educa"on & Talent
Source: CB Insights
2017 IPO Pipeline
25

86. GRAVITATIONAL SHIFT 1:
Digital Na!ves Rule

87. Class of 2020

88. 18 Years Ago…

90. 4 Trillion Searches Per Day

92. Smartphone = Phone

98. 50% of the
Class of 2020
think online
courses are as
good or be"er.
Source: Chegg

99. No memory of
the DotCom
Bubble

101. Source: Forbes
2007 Today
39%
48%
Millennial Home Ownership

102. More cars sold last year to
people aged 75+ than
18-24-year-olds.
Source: Bloomberg, Board of Governors of the Federal Reserve System

104. Class of 2020
Projected
Lifetime
Careers: 15+
Source: Forbes, U.S. Bureau of Labor Statistics

106. GRAVITATIONAL SHIFT 2:
Geographic

109. 2000
9% of Global Popula!on
Source: The Economist, United Nations, International Monetary Fund

110. 2000
52% of Global GDP
Source: The Economist, United Nations, International Monetary Fund

111. 2000 - 2015
-0.1% GDP Growth (CAGR)
Source: The Economist, United Nations, International Monetary Fund

112. Today
26% of Popula!on Older than 60
Source: The Economist, United Nations, International Monetary Fund

113. Today
15% of Popula!on Younger than 15
Source: The Economist, United Nations, International Monetary Fund

114. In Japan last
year, more
adult diapers
sold than baby
diapers.
Source: NPR Marketplace, QZ

115. Today
1.6 Fer!lity Rate
Source: The Economist, United Nations, International Monetary Fund

116. Today
41% of Global GDP
Source: The Economist, United Nations, International Monetary Fund

118. “VChIIPs”

119. 43% of Global Popula!on
Source: The Economist, United Nations, International Monetary Fund

120. 28% of Global GDP
Source: The Economist, United Nations, International Monetary Fund

121. 8.1% GDP Growth Rate
Source: The Economist, United Nations, International Monetary Fund

122. 11% of Popula!on Older than 60
Source: The Economist, United Nations, International Monetary Fund

123. 24% of Popula!on Younger than 15
Source: The Economist, United Nations, International Monetary Fund

124. 2.3 Fer!lity Rate
Source: The Economist, United Nations, International Monetary Fund

125. Old Center of
Gravity

126. New Center of
Gravity

127. On Deck

128. Ci"es with 1M+ Popula"on
U.S.
10
Source: Wikipedia, OECD

129. Ci"es with 1M+ Popula"on
CHINA
160
U.S.
10
Source: Wikipedia, OECD

130. Shanghai Pudong: 1990

131. Shanghai Pudong: Today

132. Shanghai’s popula!on is 24 million

133. Demographers say it’s 40 million…

134. …larger than Canada.

135. Xi'an (13 million) is the 10th
largest city in China…

136. …It’s bigger than Sweden and
you’ve never heard of it.

137. Share of Middle Class Consump"on: 2015
All Other
51%
Asia Pacific
23%
North America
26%
Source: The Brookings Institution

138. Share of Middle Class Consump"on: 2030
All Other
31%
Asia Pacific
59%
North America
10%
Source: The Brookings Institution

139. 10%
33%U.S.
Asia
Source: U.S. Bureau of Labor Statistics
Family Spending: Housing

140. 15%
2%U.S.
Asia
Source: U.S. Bureau of Labor Statistics, Milken Institute
Family Spending: EDUCATION

141. China’s Myopia
Epidemic
Under pressure to perform
academically, children are
spending most of their !me
indoors, depriving them of
the sunlight that allows
their eyes to develop.

142. China’s Myopia
Epidemic
Under pressure to perform
academically, children are
spending most of their !me
indoors, depriving them of
the sunlight that allows
their eyes to develop.
“Between 10% and 20% of primary
school pupils start classes with myopia.
Then the percentage rises to up to 50%
for secondary school students.
In university, 90% are short-sighted.”

143. 1991
Founded
Exxon 1870
Philip Morris 1847
Wal-Mart 1950
General
Electric
1892
Merck 1891
Biggest Market
Caps
25 years ago
Source: Capital IQ, Yahoo Finance

144. 2016
Founded
Apple 1976
Alphabet
(Google)
1998
Microso$ 1975
Amazon 1995
Facebook 2004
Biggest Market
Caps
TODAY
Source: Capital IQ, Yahoo Finance

145. #10
#11
#20
Source: Capital IQ, Yahoo Finance

146. #10
#11
#20
…And these companies
didn’t exist 20 years ago

147. Aus"n

148. Boston

149. Chicago

150. Sao Paulo

151. Mumbai

152. Shanghai

153. Dubai

154. Global Silicon Valley

155. The Global
Silicon Valley
Handbook

157. “…one of the most
ridiculous but informa!ve
books I’ve ever read…”
-TJ MILLER

158. Popula"on Size
1.7B 1.3B1.4B
Source: Facebook, World Bank

159. Virtual Reality

160. Pokémon Go
500 million downloads
+ fastest game to
reach $500 million in
revenue
Source: TechCrunch

161. $80
Billion
Today
2025
63% CAGR
Source: Deloitte, Goldman Sachs
$1
Billion

163. GRAVITATIONAL SHIFT 3:
Digital Disrup!on & Automa!on

164. Netscape
1994

166. Internet Access
Source: Gartner, Nielsen, A.T. Kearney, eMarketer, KPCB, GSV Asset Management
3.7 billion

167. 1994 Today
$0.03
$93.77
Cost of Compu"ng (per MM transistors)
99%+ decline
Source: Deloitte

168. 1994 Today
$0.02
$173.36
Cost of Storage (per GB)
Source: Deloitte
99%+ decline

169. Smartphones
2.6 billion
Source: Ericsson Mobility Report (2015)

170. App Downloads
258 billion
Source: Forrester

171. 1994
Amazon Born

172. 1994
$16B
Market Cap

173. Today
$1B
Market Cap

174. Today
$450B
Market Cap

175. Source: Capital IQ, GSV Asset Management
2006 Today % Change
$186B $75B (60%)
Market Value

176. Source: Capital IQ, GSV Asset Management
2006 Today % Change
$186B $75B (60%)
$100B+
Market Value Lost

177. Department stores have shed
100,000+ jobs since October
2016
Source: The Atlantic

178. That’s more than the
TOTAL number of coal
miners employed in the
U.S.
Source: The Atlantic

179. Good News
e-commerce
sector has
created 355,000
new U.S. jobs
since 2007
Source: The Atlantic

180. 45,000+
Amazon
Warehouse
Robots
Source: Business Insider

181. Source: XX
Chinese firms buy 90,000+ industrial
robots per year…
Source: IFR, National Robot Associations, GSV Asset Management

182. Source: XX
175,000+ by 2020
Source: IFR, National Robot Associations, GSV Asset Management

183. 350+ Million
Global Manufacturing +
Warehouse Workers
Source: McKinsey, GSV Asset Management

185. 10+ Million units sold…
40+ Million per year by 2020

186. Q2 2016 Q3 2016 Q4 2016 Q1 2017
12,000
5,100
3,100
1,000
Echo “Skills”
Source: Amazon, Business Insider
12x Increase

188. Ridiculous?

189. 250,000+
Marriage Proposals to Echo

190. New “features” announced last
week include whispering and
pausing for emphasis

191. AI is the new
electricity.
— ANDREW NG

192. U.S. Workforce Breakdown: 1790
Knowledge &
Services
Agriculture
Industrial &
Manufacturing
Source: U.S. Bureau of Labor Statistics, GSV Asset Management
95%
2%
3%

193. U.S. Workforce Breakdown: 2020
Knowledge &
Services
Agriculture
Industrial &
Manufacturing
Source: U.S. Bureau of Labor Statistics, GSV Asset Management
12%
1%
87%

194. What does 2120
look like?

195. “Our policy is to hire as
many talented computer
engineers as we can
find. There aren't
enough people who
have these skills today.”
— MARK ZUCKERBERG

196. 1.2 Million
Computer Science
Job Openings by 2020
Source: U.S. Department of Labor, Fortune

197. “Data Science
— The sexiest
job of the 21st
Century.”

198. 1060
Time
Humans
Knowledge, Skills, Abili!es
Computers

199. 1060
Time
Humans
Knowledge, Skills, Abili!es
Computers
We Are Here

201. 12 Million
U.S. Middle Skills Jobs
Eliminated by 2025
Source: McKinsey

202. $7 Trillion
Managed by
Robo-Financial Advisors
by 2025
Source: Deloitte

203. 3,000+
Financial
Reports Per Quarter
Source: New York Times

204. 50%
Jobs At Risk of
Replacement in
20 Years
Source: The Economist, Oxford University

205. “We could be looking
at a society in which all
the gains in wealth
accrue to whoever
owns the robots.”
— PAUL KRUGMAN, 2012

206. “If a robot comes in
to do a human job,
you’d think that we’d
tax it at a similar
level.”
— BILL GATES, 2017

207. “The obvious
conclusion is that
the government will
just have to give
these people
money.”
— SAM ALTMAN, 2014

209. “New disease…
technological
unemployment.”
— JOHN MAYNARD
KEYNES, 1930

210. “I have too much regard for
the poor kni"ers to approve
an inven!on that will
deprive them of
employment, and reduce
them to starva"on.”
— QUEEN ELIZABETH I, 1580

211. “The plow is the Devil…
and the beginning of the
end of man.”
— KING SOLOMON
1 Kings 3:1
950 B.C.

212. The plow is the
Devil… and the
beginning of the end
of man.
THE REST ARE TRUE!

213. Automa"on Eats Jobs…
Farming
Factory
Informa!on
Knowledge

214. …But it doesn’t eat WORK
Farming
Factory
Informa!on
Knowledge

215. GRAVITATIONAL SHIFT 4:
Knowledge Economy

216. Source: U.S. Department of Commerce, Census Bureau
<HS HS 2-Yr 4-yr Master's+
$59,100
$49,900
$35,000
$30,000
$25,000
Earnings Directly Correlated to Educa!on…

217. Source: U.S. Department of Commerce, Census Bureau
<HS HS 2-Yr 4-yr Master's+
1.9%
2.8%
3.8%
5.4%
8.0%
…So is unemployment

218. Source: Arntz, Gregory, and Zierahn (2016) calculations based on the PIAAC 2012; “Artificial Intelligence, Automation, and the Economy” (White House, 2016)
<HS HS 2-Yr 4-yr Graduate Degree
0%1%
6%
19%
44%
% of Jobs with
High Automa"on Risk
by Educa!on Level
>1%
…So is Automa!on

219. Source: Bloomberg, College Board
Cost Increases Since 1980
CPI Medical
0%
601%
280%
1,120%
College

220. Source: U.S. Department of Commerce, Census Bureau
U.S. College Debt, 2007-2016
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$589B
$1.4T
9% CAGR

221. KaizenEDU

222. KaizenEDU

223. Old System, 1900
PLAY LEARN JOB RETIRE

224. New System
LEARN
PLAY SCHOOL JOB JOB JOB

225. NETwork Effects

226. Network Effects:
Every node added to the network
creates exponen"al value as
opposed to linear value

227. Seamless + Invisible

232. Blackberry Apple
$70B$70B
2007 Market Cap: Apple vs. Blackberry
Source: Capital IQ, GSV Asset Management

233. Blackberry Apple
$811B
$5B
Market Cap Today
Source: Capital IQ, GSV Asset Management

234. Network Effects:
Connec!ng People, Ideas, and
Opportuni"es to Create
Exponen!al Outcomes

235. Network Effects
Talent

236. Network Effects
Talent Work

237. Network Effects
Talent WorkEduca!on

239. N
Network

240. N
Network
E
Educa!on

241. N
Network
E
Educa!on
T
Talent

242. N
Network
E
Educa!on
T
Talent
W
Work

243. NETwork
Effects
NETwork
Effects
NETwork
Effects

258. NETwork
Effects