Internet Trends
201
Mary Meeker
June 11 @ Code 2019

INTERNET TRENDS 2019
Mary Meeker
June 11 @ Code 2019bondcap.com/report/it19

Internet Trends 20191) Users2) E-Commerce + Advertising
3) Usage…
4) Freemium Business Models
5) Data Growth6) …Usage7) Work8) Education
9) Immigration + USA Inc.
10) Healthcare11) China (Provided by Hillhouse Capital)

Internet Trends
20192

Thanks

Bond Partners
Michael Brogan & Ansel Parikh helped steer ideas & did a lot of heavy lifting. Noah Knauf,
Collin Ebert, Jesse Ellingworth, Everett Randle, Nancy Xiao, Daegwon Chae, Paul Vronsky &Juliet de Baubigny also dug in & were more than on call with help.
Hillhouse Capital
Liang Wu & colleagues’ contribution of the China section provides an overview of the world’s
largest market of Internet users.
Participants in Evolution of Internet Connectivity
From creators to consumers who keep us on our toes 24x7 & the people who directly help us
prepare the report. And, Kara & team, thanks for continuing to do what you do so well.

Internet Trends
20193

Context…
We use data to tell stories of business-related trends we focus on. We hope others take the ideas, buildon them & make them better.
At 3.8B, the number of Internet users comprises more than half the world’s population. When markets
reach mainstream, new growth is harder to find as evinced by declining new smartphone shipments in
2018. While E-Commerce continues to gain share vs. physical retail, growth rates are slowing. While
Internet advertising growth is solid & innovation is healthy, there are areas where customer acquisition
costs may be rising to unsustainable levels.
While Internet user growth is slowing, global innovation & competition continue to drive productimprovements, new types of usage & monetization – especially in areas of digital video, voice,wearables, on-demand + local services & traditionally underserved markets. Outside of USA, we focus
on especially high growth & innovation in data-driven / direct fulfillment & financial services. We highlightmassive global usage changes related to the evolution of images & interactive gaming ascommunications tools & the broad emergence of freemium businesses at scale.
The rapid rise of gathered / analyzed digital data is often core to the holistic success of the fastest
growing & most successful companies of our time around the world. Context-rich data can help
businesses provide consumers with increasingly personalized products & services that can often be
obtained at lower prices & delivered more efficiently. This, in turn, can drive higher customer satisfaction.
Better data-driven tools can improve the ability for consumers to communicate directly & indirectly withbusinesses & regulators.
Core constituents (consumers / businesses / regulators) are increasingly drinking from a data firehose &management challenges continue to rise for all parties. Broad awareness of challenges (& related
vigorous / heated debates) can be the first step in driving change.
Internet Trends
20194

…Context
Consumers are aware of concerns about Internet usage overload & are taking steps to reduce usage –leading USA-based Internet platforms have rolled out tools to help monitor usage & social media usage
growth appears to be decelerating following a period of strong growth. Privacy & problematic content
concerns are also top-of-mind & are following similar patterns.
Owing to social media amplification, reveals / actions / reactions about events can occur quickly –resulting in both good & bad outcomes. In markets where online real-time rating systems exist,
accountability can be improved vs. offline options as consumers & businesses interact directly whileregulators can also benefit.
Rapidly expanding connectivity has helped amplify voices of good & bad actors. This has brought new
focus to an age-old challenge for regulators around the world – finding the most effective ways to amplify
good & minimize bad, often resulting in different regional interpretations & strategies.
As Internet systems become increasingly sophisticated, data-rich & mission critical, so has the opportunity
for cyber attacks. We are in a new era of cyber security where technology issues are increasinglyintermixed with international diplomacy & defense.
We focus on the impact of the Internet on work (via on-demand services & remote options), education &healthcare – the materiality of current trends imply inflections are occurring. We update USA trendingaround government finances & the importance of immigration to the technology sector.
The Hillhouse Capital team provides insights into China – the largest market of Internet users & a leader
in innovation / scale.

Internet Trends
20195

INTERNET USERS =@ >50% GLOBAL PENETRATION…
NEW GROWTH REMAINS HARDER TO FINDInternet Trends
20196Global Internet User Growth =Solid But Slowing +6% vs. +7% Y/Y

4B

18%

2B

9%

0

0%
2009

Internet Trends
2019

Y/Y Growth (Red Line)Internet Users, Global (Blue Bar)

Internet Users vs. Y/Y Growth

2010

2011

2012

2013

2014

2015

2016

2017

2018

Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia).

7

Global New Smartphone Unit Shipments =Declining -4% vs. 0% Y/Y

1.6B

75%

1.2B

50%

0.8B

25%

0.4B

0%
0%

0

-25%
2009

2010

2011

2012

2013

Android

2014

2015

iOS

Other

Source: Katy Huberty @ Morgan Stanley (3/19), IDC.

Internet Trends
2019

Y/Y Growth (Red Line)

New Smartphone Shipments, Global

New Smartphone Unit Shipments vs. Y/Y Growth

2016

2017

2018

8

Global Internet Users =3.8B >50% of Population
Internet Penetration, 2018
70%

Internet Penetration, Global

51%

35%

24%

0%
2009

Internet Trends
2019

2010

2011

2012

2013

2014

2015

2016

2017

Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia).

2018

9

Global Internet Users =Asia Pacific Leads in Users + Potential
Internet Users by Region, 2018
AsiaPacificPacific
Asia

53% of Global Internet Users
48% Internet User Penetration in Region

48%

EuropeEurope

15%
78%

78%

(15%)

AfricaAfrica&&Middle
MiddleEast
East

13%
32%

32%

South America &Latin America& Caribbean
Carribean
NorthAmerica
America
North

10%
62%

62%

9%
89%

89%

0

3B

6B

Population

Internet Users

Internet Trends
2019

Non-Internet Users

Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia).

10

Global Internet Users =China @ 21% of Total...India @ 12%...USA @ 8%
Internet Users – Top Countries, 2018
China
India
United StatesIndonesia
BrazilJapan
RussiaMexicoGermany
The Philippines
United Kingdom
Iran (I.R.)
Nigeria
FranceTurkey0

0.8BInternet Users

Internet Trends
2019

1.6B

Non-Internet Users

Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia).

11

Global Internet Market Capitalization Leaders =USA Stable @ 18 of 30…China Stable @ 7 of 30
Rank
2019
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Internet Trends
2019

Company
Microsoft
AmazonApple
Alphabet
Facebook
AlibabaTencent
Netflix
Adobe
PayPalSalesforce
Booking.com
Uber
Recruit Holdings
ServiceNow
Workday
Meituan Dianping
JD.comBaidu
Activision Blizzard
Shopify
NetEaseeBay
Atlassian
MercadoLibre
Twitter
SquareElectronic Arts
Xiaomi
Spotify
Total

Region
USA
USA
USA
USA
USA
China
China
USA
USA
USA
USA
USA
USA
Japan
USA
USA
China
China
China
USA
CanadaChina
USA
Australia
Argentina
USA
USA
USA
China
SwedenMarket Cap Value ($B)
6/7/19B
6/7/16B % Change$1,007B
$410B
+146%
888
343
+159%
875
540
+62%
741
497
+49%
495
340
+46%
402
195
+106%
398
206
+93%
158
43
+266%
136
50
+174%
134
46
+190%
125
56
+123%
77
67
+15%
75
--52
20
+167%
51
12
+316%
48
16
+197%
44
--39
32
+22%
38
60
(36%)
35
28
+25%
34
2
+1,297%
33
23
+44%
33
28
+19%
32
5
+509%
30
6
+388%
29
11
+173%
29
3
+808%
29
23
+25%
28
--25
--$6,119$3,064

USA stable at 18 of 30 refers to the fact that 19 USA companies were in the top 30 using same parameters in 2018. China in 2018 = 8 of 30. Source: CapitaIIQ data collected 6/7/19.
Note: % change only applies to companies that were publicly traded on 6/7/16, private valuations not taken into account. Reflects a global list of publicly traded companies, some companies(e.g., Meituan Dianping) derive the majority of their revenue from one country. Companies selected are considered to be ‘pureplay’ Internet companies that do not derive a significant portionof revenues / profits from other business lines. Example companies that would be included otherwise = Reliance Industries (Refining), AT&T (Telecom), & Naspers (Television).

12

Global Market Capitalization Leaders =USA Stable @ 23 of 30…Technology Stable @ 9 of 30
Rank
2019
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Internet Trends
2019

Company
Microsoft
AmazonApple
Alphabet
Berkshire Hathaway
Facebook
AlibabaTencent
Visa
Johnson & Johnson
JPMorgan
Exxon Mobil
Nestlé
WalmartICBC
Procter & Gamble
Mastercard
Bank of America
Royal Dutch Shell
Samsung
DisneyCisco
Pfizer
AT&T
VerizonUnitedHealth
Roche
ChevronCoca-Cola
Home Depot
Total

SectorTechnology
Technology
Technology
Technology
Financial Services
Technology
Technology
Technology
Financial Services
Healthcare
Financial Services
EnergyFood / Beverages
RetailFinancial Services
Home Goods
Financial Services
Financial Services
EnergyTechnology
Media
Technology
Pharmaceuticals
Telecom
Telecom
Healthcare
Healthcare
EnergyFood / Beverages
RetailRegion
USA
USA
USA
USA
USA
USA
China
China
USA
USA
USA
USA
Switzerland
USA
China
USA
USA
USA
Netherlands
South Korea
USA
USA
USA
USA
USA
USA
Switzerland
USA
USA
USA

Market Cap Value ($B)
6/7/19B
6/7/16B % Change$1,007B
$410B
+146%
888
343
+159%
875
540
+62%
741
497
+49%
505
350
+44%
495
340
+46%
402
195
+106%
398
206
+93%
372
192
+94%
368
318
+16%
354
239
+48%
316
371
(15%)
306
230
+33%
303
221
+37%
285
224
+27%
273
220
+24%
271
106
+156%
262
149
+76%
259
198
+31%
249
166
+50%
248
160
+55%
239
146
+64%
238
212
+12%
237
242
(2%)
237
207
+15%
235
131
+79%
233
224
+4%
231
191
+21%
220
196
+12%
217
161
+35%
$11,264$7,385USA stable at 23 of 30 refers to the fact that 21 USA companies were in the top 30 using same parameters in 2018. Technology in 2018 = 10 of 30.
Source: CapitaIIQ data collected 6/7/19. Reflects a global list of publicly traded companies, some companies (e.g., ICBC) derive the majority of their revenue from one country.

13

Global Internet Market Capitalization Leader Revenue Growth =Slowing +11% vs. +13% (Y/Y – Q1 vs. Q4)

$400B

30%

$200B

15%

$0

Y/Y Growth (Red Line)

Revenue (Blue Bar)

Global Internet Leaders – Revenue vs. Y/Y Growth0%
Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19

Internet Trends
2019

Source: CapitaIIQ. Revenue from Microsoft / Amazon / Apple / Alphabet / Facebook / Tencent / Alibaba / Netflix / Adobe / PayPal / Salesforce.com / Booking.com /Recruit Holdings / ServiceNow / Workday / JD.com / Baidu / Activision Blizzard / Shopify / NetEase / eBay / Atlassian / MercadoLibre / Electronic Arts / Twitter / Square.
Note: *Uber, Meituan Dianping, Xiaomi and Spotify which had recent IPOs that did not provide detailed financials from Q1:15-Q4:16 that are necessary
to illustrate the Y/Y growth rate & are therefore excluded. Due to their revenue scale relative to the cumulative group, they have minimal impact on overall growth rate.

14

Global Market Capitalization Leader Revenue Growth =Slowing +2% vs. +7% (Y/Y – Q1 vs. Q4)$1,200B

16%

$600B

0%

$0

Y/Y Growth (Red Line)

Revenue (Blue Bar)

Global Leaders – Revenue vs. Y/Y Growth-16%
Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19

Internet Trends
2019

Source: CapitaIIQ. Revenue from Microsoft / Amazon / Apple / Alphabet / Berkshire Hathaway / Facebook / Tencent / Alibaba / Visa / Johnson & Johnson/ JPMorgan / Exxon Mobil / Walmart / ICBC / Procter & Gamble / Bank of America / Samsung / Disney / Cisco / Pfizer / AT&T / Verizon / UnitedHealth /MasterCard / Chevron / Coca-Cola / Home Depot. Nestle & Royal Dutch Shell quarterly revenue excluded due to bi-annual earnings releases.

15

E-COMMERCE + ONLINE ADVERTISING =SOLID…
BUT SLOWING GROWTH

Internet Trends
2019

16

E-Commerce

Internet Trends
2019

17

E-Commerce Growth =Solid +12.4% vs. +12.1% (Y/Y – Q1 vs. Q4)

$140B

20%

$70B

10%

$0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2010

Internet Trends
2019

2011

2012

2013

2014

2015

2016

2017

Y/Y Growth (Red Line)

E-Commerce Sales (Blue Bar)

E-Commerce Sales vs. Y/Y Growth, USA0%2018 2019

Source: St. Louis Federal Reserve FRED database. Note: Historic data (Pre-2016) adjusted / back-casted in 2017 by
USA Census Bureau to better align with Annual Retail Trade + Monthly Retail Trade Survey data. Seasonally adjusted.

18

Physical Retail Growth =Solid +2.0% vs. +1.6% (Y/Y – Q1 vs. Q4)

$800B

10%

$400B

0%

$0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2000

Internet Trends
2019

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: St. Louis Federal Reserve FRED Database. Note: Physical Retail includes
all retail sales excluding food services, motor vehicles / auto parts & fuel.

2015

2016

2017

Y/Y Growth (Red Line)

Physical Retail Sales, USA (Blue Bar)

Physical Retail Sales vs. Y/Y Growth, USA-10%2018 201919

E-Commerce Share =Gains Continue @ 15% of Retail vs. 14% Y/Y
E-Commerce as % of Retail Sales, USA

E-Commerce Share

16%

8%

0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2000

Internet Trends
2019

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 2019

Source: USA Census Bureau, St. Louis Federal Reserve FRED database. Note: 15% = Annualized share. Penetration calculated by dividing
E-Commerce sales by “Core” Retail Sales (excluding food services, motor vehicles / auto parts, gas stations & fuel). All figures are seasonally adjusted.
Per US Census Bureau, E-Commerce is ~10% of total retails sales in Q1:19, including out-of-scope channels such as gas stations, fuel dealers, etc.

20Online AdvertisingInternet Trends
2019

21

Media Time vs. Advertising Spending =Mobile @ Equilibrium (2018)…Desktop (2015)% Time Spent in Media vs. % Advertising Spending
2010

2018
50%

43% 43%

25%

27%

25%

19%

16%

11%

8%

8%

0%

0.5%

Print
Print

Radio
Radio

TV
TV

Desktop Mobile
Desktop
MobileTime SpentInternet Trends
2019% of Time Spent in Media / Advertising Spending, 2018, USA% of Time Spent in Media / Advertising Spending, 2010, USA

50%

33% 33%

34% 34%25%
18% 18%

12%

8%
7%

3%

0%

Print
Print

Radio
Radio

TV
TV

Desktop
Desktop Mobile
MobileAd Spend

Source: Internet & Mobile advertising spend based on IAB & PwC data for full year 2018 & 2010.
Print advertising spend based on Magna Global estimates for full year 2018 & 2010. Print includes newspaper & magazine.
Time spent share data based on eMarketer (10/18). Excludes out-of-home, video game & cinema advertising.

22Internet Ad Spending (Annual)=
Accelerated +22% vs. +21% Y/Y

$120B

30%

$60B

15%

0

Y/Y Growth (Red Line)Internet Advertising Spend, USA (Bars)

Internet Advertising Spend

0%
2009

2010

2011

2012

Desktop Advertising

2013

2014

2015

Mobile Advertising

2016

2017

2018

Y/Y Growth

Source: IAB / PWC Internet 2018 Advertising Report (5/19).

Internet Trends
2019

23

Internet Ad Revenue (Quarterly – Leading USA Platforms) =Decelerating +20% vs. +29% (Y/Y – Q1 vs. Q4)

$60B

40%

$30B

20%

$0

0%
Q1:17

Q2:17

Q3:17

Q4:17

Q1:18

Q2:18

Q3:18

Q4:18

Q1:19

Source: Company public releases & Morgan Stanley estimates. Note: Includes Google / Facebook / Twitter / Amazon / Snapchat / Pinterest.

Internet Trends
2019

Y/Y Growth (Red Line)

Revenue (Blue Bar)

Leading USA-Based Online Ad Platform Revenue, Global

24

Internet Ad Platforms =Google + Facebook Lead But Others Gaining Share
Select USA-Based Advertising Platform Revenue, Global$40B

Google+1.4x$20B

Facebook+1.9x
Amazon / Twitter /Snap / Pinterest
+2.6x

$0

Source: Company public releases & Morgan Stanley estimates.

Internet Trends
2019

25

Internet Ad Buying = Programmatic Gains vs. Direct Continue…
Negatively Impacting Pricing
Programmatic Buying – % Digital Display Advertising, Global% Display Advertising Spend Programmatic, Global

80%

62%

40%

10%

0%
2012

Internet Trends
2019

2013

2014

2015

2016

2017

2018

Source: Publicis / Zenith 2018 Programmatic Marketing Forecast. Note: Programmatic refers to ads bought both via real-time bidding& non real-time algorithmically-driven ad purchases. Does not include non-display advertising (e.g., Search)

26

Ad Share Gain Drivers =Better Targeting + New Creative + Commerce + High-Relevance
Facebook

YouTubePinterest

Twitter

Targeting

Machine Learning

Commerce

High-Relevance

Audience Customization

Automatically Time-Edited Clips

Shoppable Catalogs

Promoted Tweets

Source: Facebook / Google / Pinterest / Twitter

Internet Trends
2019

27

Customer Acquisition Cost (CAC) =Rising in Highly Competitive / Capitalized Sectors
Cost Per User Activation – Mobile Finance Apps, Global per Liftoff

Average Cost per User Activation, Global

$60

$30

$0
1/17

Internet Trends
2019

4/17

7/17

10/17

1/18

4/18

7/18

10/18

1/19

Source: Liftoff’s 2019 / 2018 Mobile Finance App Report. Note: Report draws from internal Liftoff Data from 2/1/17 to 3/31/19, spanning 19B+ ad impressions
across 5MM+ App installs, 270MM+ clicks & 3MM activations / registrations. Data focused on North America, Europe, Middle East, Africa & Asia Pacific.
Note: Activation = Adding & depositing funds to an account, activating a spending card, opening an equities position or starting a paid subscription.

28

Reality =CAC Can’t Exceed LTV for Very LongInternet Trends
2019

CAC = Customer Acquisition Cost. LTV = Lifetime Value.

29

Effective + Efficient Marketing =One’s Own Product +Happy Customers + Recommendations

Internet Trends
2019

30

Effective + Efficient Marketing =Can Be Free Trial / Tier
Online Streaming – Reasons For Trying New Service

42%
42%

Free Trial
Tier
Free/Trial

Content Library38%

Access to Exclusive Content

29%Good User Experience

26%

0%

25%

50%

Source: 2BrightCove / YouGov survey of 10,502 adults in USA, UK, France, Australia, Germany, Canada & UAE, 9/18.

Internet Trends
2019

31

Happy Customers…
Spotify = Free User Conversion to Paid Subscribers…
Free Ad-Supported Product…

…Rising LTV / Subscriber Acquisition Cost Ratio
Morgan Stanley LTV:CAC Estimate

Our freemium model accounts for~60% of our gross added premium subscribers...
the ad-supported service is a subsidy programthat offsets costs of new subscriber acquisition.

Developing a better user experience
produces by far the most viral effect &impact when investing in growth.
Engagement drives conversion fromfree consumption to paid subscription.

Lifetime Value of Premium Subscribers (Adjusted for Advertising
Revenue from Free Users) / Subscriber Acquisition Cost

4x

3.0x

2x
1.5x

0x

2015

2016

2017

2018

Barry McCarthy – CFO, Spotify, 3/18

Internet Trends
2019

Source: Spotify releases & Morgan Stanley estimates of LTV & SAC. Barry McCarthy @ Spotify Investor Day (3/18). Note: Morgan Stanley estimates LTV bycalculating the value of a subscriber (including advertising revenue they generate before they upgrade to a paid user) accounting for gross margin & churn.
Subscriber acquisition cost calculated by dividing sales & marketing spend in a relevant period by the number of new subscribers in the same period.

32

…Happy Customers…
Zoom = Free User Conversion to Paid Subscribers
Free to Join, When Paid User Hosts…

…High LTV / CAC Ratio*
Goldman Sachs Investment Research LTV:CAC Estimate..we really want to get customers to test our product…
It’s really hard to get customers to
try Zoom without a freemium product...
We make our freemium product work so well…
If they like our product, very soon they aregoing to pay for the subscription.
The most important thing is to make sure the existingcustomer [is] happy rather than chasing after new prospects.
Our NPS is in the 67-69 range vs. our peers in the 20’s…
We do not want to spend money on [the]marketing side to generate leads.

Lifetime Value to Customer Acquisition Cost Ratio

6x

3.7x

3.7x

3x

0x
FQ1:19 FQ2:19 FQ3:19 FQ4:19 FQ1:20

FY = January

Eric Yuan – Founder / CEO, Zoom, 8/17

Internet Trends
2019

Source: Interview with SaaStr (8/17). Zoom S-1. Goldman Sachs Investment Research estimates of LTV & CAC. Note: *Goldman Sachs Investment Research calculated LTV as
the value of $1 of Annual Recurring Revenue, discounted for GAAP gross margin, Goldman Sachs Investment Research estimated Gross Churn & an 11% assumed discount rate.
CAC is calculated as the amount of Sales & Marketing expense in a relevant period, divided by the gross new Annual Recurring Revenue added in the same period.

33

Effective + Efficient Marketing =Can Be Recommendations
E-Commerce – Reasons for Trying New Subscription Box
Recommended
Reccomended byby Someone
Someone23%

Try Something New

22%

Financial Incentive

22%

Like the Product12%

Like Subscription Model

11%

Flexibility to Cancel

10%0%Internet Trends
2019

15%

Source: McKinsey Research on E-Commerce Consumers (2/18). Note: Based on online survey from November 8 to 12, 2017, with responses
from more than 5,093 participants in the United States. Of those, 4,057 (80 percent) were online shoppers, defined as people who had spent atleast $25 online in the past month. Of those, 607 (15 percent) had subscribed to at least one service over the past 12 months.

30%

34

Happy Customers…
Stitch Fix = Recommendations Drive Growth
Data-Driven / Personalized Recommendations…

…Stitch Fix Active Clients

The better way to [sell clothing] is throughpersonalization – get to know product, get to know
people & generate really good recommendations…
What's really special about Stitch Fix is that
100% of what we sell is based on recommendations.

Stitch Fix Active Clients

3.0MM

1.5MM

We have over 4,000 stylists…what makes themsuccessful is listening, empathy & delivering
what the client wants & doing that without
judgment…Our business is about helping
people feel their best, not necessarily
selling the big high-end fashion trends.
Katrina Lake – Founder / CEO, Stitch Fix, 6/18

0
1/14

1/15

1/16

1/17

Source: Katrina Lake interview @ JPMorgan Technology, Media & Communications Conference (6/18). Stitch Fix SEC Filings.
Note: Active Client refers to a client who has checked out at least 1 recommended ‘Fix’ in the past 12 months.

Internet Trends
2019

1/18

1/19

35

Advertising TBDs

Internet Trends
2019

TBD = To Be Determined

36

TBD = Impact on Ad Targeting…
Privacy Changes…privacy [concerns] are a headwind for [Facebook] in 2019.
It's one of the factors that's contributing to our expected
deceleration of revenue growth throughout the year.
You've got regulatory – which was GDPR in 2018…
the regulatory arc will be longer-term in playing out…
Platforms like iOS are making bigger
pushes in privacy & that has the potential impact…
then changes that we're making ourselves…
we've elected to rollout GDPR-type controls globally…
later this year, we'll be launching Clear History,
which will also affect our ability to do third-party targeting.
David Wehner – CFO, Facebook, 2/19

Internet Trends
2019

Source: David Wehner speaking at Morgan Stanley’s Technology, Media, Telecom Conference, 2/26/2019.
TBD = To be Determined

37

TBD = Impact on Ad Targeting…
Digital TV-Based Ads (Aided by In-Hand Mobiles)
Multi-Platform Data Improves Relevancy…

…Creating Opportunities for Better Ad Experiences

88% = Use a Second Digital Device
While Watching TV$600MM

60%$300MM

30%

Y/Y Growth (Red Line)

Nielsen Audience Report (USA)Xandr Revenue (Blue Bars)

Xandr Revenue vs. Growth Y/Y

71% = Look Up Content Related To
Content They Are Watching
41% = Message Friends / Family About
Content They Are Watching

$0

Q1

Q2

Q3

2017

Q4

Q1

Q2

2018

Source: AT&T / Xandr Releases. Nielsen Q2:18 Total Audience Report (12/18). Note: Survey based on Nielsen National USA
Panel data. Note: 2018 USA Mid-term elections drove above-average television advertising spend on Xandr platform.

Internet Trends
2019

Q3

Q4

Q1

0%

2019

38

INTERNET USAGE =SOLID GROWTH…
DRIVEN BY INVESTMENT + INNOVATIONInternet Trends
2019

39

UsageInternet Trends
2019

40

Digital Media Usage =Accelerating +7% vs. +5% Y/Y
Daily Hours Spent with Digital Media per Adult User, USA
8

Hours Spent per Day, USA

6.3

4.9

5.1

5.6

4.3
4

3.7
2.7
0.3

0

3.0
0.3

3.2
0.4

0.8

1.6

2.3

2.6

2.8

3.1

3.3

3.6

2.3

2.4

2.6

2.5

2.3

2.2

2.2

2.2

2.1

2.0

2.2

0.2

0.3

0.4

0.3

0.3

0.3

0.3

0.4

0.4

0.6

0.7

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Other Connected Devices

Internet Trends
2019

5.4

5.9

Desktop / Laptop

MobileSource: eMarketer 9/14 (2008-2010), eMarketer 4/15 (2011-2013), eMarketer 4/17 (2014-2015), eMarketer 10/18 (2016-2018).
Note: Other connected devices include OTT & game consoles. Mobile includes smartphone & tablet. Usage includes both home &work for consumers 18+. Non deduped defined as time spent with each medium individually, regardless of multitasking.

41

Usage Drivers

Internet Trends
2019

42

Global Internet / Technology Businesses =Investment Remains Robust

Internet Trends
2019

43

Investment (Public + Private) Into Technology Companies =High for Two Decades

$200B

9,000

$100B

4,500

$0

0
2019YTD*

1990

1996

2002

Technology Private Financing

Internet Trends
2019

2008
Technology IPO

2014**

NASDAQ Composite

Technology IPO & Private Financing, Global

Global USA-Listed Technology IPO Issuance &Global Technology Venture Capital Financing

NASDAQ

Source: Morgan Stanley Equity Capital Markets, *2019YTD figure as of 6/7/19, Thomson ONE. All global USA-listed technology IPOs
over $30MM, data per Dealogic, Bloomberg, & CapitalIQ. 2012: Facebook ($16B IPO) = 75% of 2012 IPO $ value. 2014: Alibaba ($25B
IPO) = 69% of 2014 IPO $ value. 2017: Snap ($4B IPO) = 34% of 2017 $ value. 2019: Uber ($8B IPO) = 56% of 2019YTD $ value.

44Internet / Technology Businesses =USA-BasedInnovation Remains Robust…

Internet Trends
2019

45

Device Time =Mobile > TV
Television & Mobile Daily Time Spent (Non-Deduped), USA
300

Average Daily Time Spent (Minutes)

266
226
216

150

0

20
2009

2010

2011

2012

2013
MobileInternet Trends
2019

2014

2015

2016

2017

2018

2019E

Television

Source: eMarketer (10/18). Usage includes both home & work for consumers 18+.
Non-deduped defined as time spent with each medium individually, regardless of multitasking. Updated from original 4/18 release in 10/18 by eMarketer

46

Online Platform Time =YouTube + Instagram Gaining Most
% Internet Users Using Select Platforms > 1x per Day, Global*
32%

31%

30%
27%

25%

25%

23%

23%

22%

19%

15%

14%
13%

11%

9%

5%

4%
3%
0%

1%
Q2:17

Internet Trends
2019

4%
2%
Q3:17

Q4:17

Q1:18

Q2:18

Q3:18

Facebook
YouTubeWhatsApp
WeChatInstagram
Facebook
Messenger
Twitter

Snapchat
Pinterest
Twitch

Q4:18

Source: Global Web Index Survey of 50K+ Global Internet users aged 16-64 (3/2017-12/2018). Note: WeChat is displayed as "Weixin" in China. *Countries surveyed include major Internet
populations – Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Denmark, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico,
Netherlands, New Zealand, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, UK,
USA, United Arab Emirates, Vietnam. Toutiao estimate = ~4% of Internet users using Douyin in 2018….Not included owing to lack of trend data & regulatory action in period.

47Video Time =Digital +2x in Five Years @ 28% of Total (vs. TV)
Video Watching Daily Minutes – Digital vs. TV, USA

Average Daily Time Spent (Minutes), USA

400

200

0

4%

7%

20104%

2011

11%

14%

17%

2012

2013

2014

Digital Video

20%

23%

25%

28%

2015

2016

2017

2018

Television

Source: eMarketer (10/18). Usage includes both home & work for consumers 18+. Non de-duplicated defined as time spent with each medium individually, regardless of multitasking.

Internet Trends
2019

48

Video Time (Short-Form – Facebook Platform) =1.5B DAUs + ~2x in One Year
Facebook Stories

Daily Active Users, Global*

Daily Active Users, Global

1.6B

0.8B

0
4/17

10/17

4/18

10/18

4/19

Instagram Stories

WhatsApp Status
Facebook / Messenger Stories

Internet Trends
2019

Source: Facebook (8/18,12/18). Daily Active Users (DAU) = Users that interact with a Story daily.
Vertical segments of chart = owing to first reported DAU metric for each product. *Not de-duped across platforms.

49

Voice =70MM Podcast Listener MAUs + ~2x in Four Years…
Podcasts – Most Downloaded
Apple Podcasts, 2018, USA

Monthly Podcast Listeners, USA

Millions

Podcast Listener MAUs, USA

80MM
70MM

40MM

1)

The Daily The New York Times

2)

The Joe Rogan Experience Joe Rogan

3)

Stuff You Should Know iHeartMedia

4)Fresh Air National Public Radio

5)

The Dave Ramsey Show Dave Ramsey

6)

My Favorite Murder Exactly Right

7)

TED Talks Daily TED

8)

Up First National Public Radio

9)The Ben Shapiro Show The Daily Wire

22MM

0
2008

Internet Trends
2019

2010

2012

2014

2016

2018

10) Pod Save America Crooked Media

Source: The Infinite Dial 2019 by Edison Research & Triton (2/19). National survey of 1,500 people ages 12+. The estimated share of
USA respondents is the n multiplied by USA population over the age 13, per USA Census Bureau. Apple.

50

…Voice =47MM Amazon Echo Base + ~2x in One Year
Amazon Echo Installed Base

Amazon Echo Skills
100K

Number of Skills

Installed Base, USA

60MM

30MM

0

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015

Internet Trends
2019

2016

2017

2018

50K

0

2015

2016

Source: Consumer Intelligence Research Partners LLC (Echo install base, 2/18), Various
media outlets including Geekwire, TechCrunch, & Wired (Echo skills, 4/19)

2017

2018

2019 YTD

51

Wearables =52MM Users + ~2x in Four Years
Wearable Users, USA
60MM

Wearable Users, USA

52MM

30MM

25MM

0
2014

Internet Trends
2019

2015

2016

2017

2018

Source: eMarketer (11/18). Users = Monthly Active adults 18+ years old who wear accessories or clothing embeddedwith electronics, software, or sensors that have the ability to connect to the Internet (via built-in connectivity or tethering),
which in turn collects & exchanges data with a manufacturer, operator, or other connected devices.

52

On-Demand =56MM Consumers + ~2x in Two Years
On-Demand Consumers, USA

On-Demand Consumers, USA

60MM

56MM

On-Demand Products / Services –Consumer Spend, 2017, USA

Online Marketplaces

Transportation

Housing
30MM
25MM

Food Delivery

Health & Beauty

Other
0
2016

2017

2018

$0

$15B

$30B

Consumer Spend, 2017, USA

Internet Trends
2019

Source: National Technology Readiness Survey (4/18). Note: authored by Rockbridge Associates, Inc. & A. Parasuraman, & is cosponsored by the Center for Excellence in Service, Robert H. Smith School of Business, University of Maryland. The study is conducted
online among a representative sample of consumers in a national panel, & represents the views of U.S. adults ages 18 & older. The
sample size was 1,032 in 2016 & 1,004 in 2017. The margin of error is +/- 3 percentage points. 2018 figures are estimates.

53

Local =236K Nextdoor Active Neighborhoods + ~2x in Two Years
Local Business Recommendations =29MM, +71% Y/Y

Active Neighborhoods, Global

Active Neighborhoods, Global

250K

125K

0
2011

2013

2015

2017

2019

Source: Nextdoor (5/19). 29MM = Cumulative local business recommendations on the platform, up 71% Y/Y vs. 17MM in 5/18.

Internet Trends
2019

54

Underserved Population = Square Seller Base Growing…
28% Points Faster in Lowest vs. Highest Income MSAs, USA*
Square Capital Data

Growth in Number of Active Square Sellers
Difference Between 25 Lowest Income &25 Highest Income USA MSAs*$4.5B = Loans (2014-Q1:19)
58% = Women-Owned Businesses% Point Difference in Growth Rate

30%

15%

35% = Minority-Owned Businesses$6K = Average Loan Size(~18x Smaller Than Average Small Business Administration Loans)*

Internet Trends
2019

0%
2015

2016

2017

Source: Square (5/19). * Per Federal Reserve’s “Survey of Terms of Business Lending”, Aug 2017 Note: MSA = Metropolitan Statistical Areas. Active sellers aredefined as those who have accepted five or more payments within the last 12 months. Square Capital Loans only available to Active Square Sellers. Data sourced
from the Bureau of Economic Analysis’s 2017 report on “Annual Personal Income by Metropolitan Statistical Areas”. From 2014-2018, the adoption growth rate of
the bottom 25 MSAs was on average 1.22x that of the top, demonstrating the utility & relevance of payment technology in less traditional areas.

2018

55

…Internet / Technology Businesses =Non-USA-Based
Innovation Remains Robust…
Data-Driven / Direct
Fulfillment
Growing Rapidly…

Internet Trends
2019

56

China (Pinduoduo) = Connecting Consumer Preferences & Manufacturers…
443MM Buyers + ~2x in Five Quarters
Pinduoduo
Group Discovery / Buying

Active Buyers, China

We call it consumer-to-manufacturer, where weunderstand the users' needs first & enable upstream
providers, be it farmers, manufacturers, etc. toproduce appropriate products for our users.
This is different from how the current system works,
where upstream producers design, manufacture &sell without necessarily being in tune with thechanging needs of their targeted users.
As we add more users to the network & also gain more data
points through their increasing interaction with our platform,
we can further refine our engine to deliver an even better user
experience that keeps up with our users' evolving preferences.
Pinduoduo – Q4:18 Earnings Call, 3/19

Internet Trends
2019

Pinduoduo Active Buyers, China

500MM

250MM

0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017
2018
2019

Source: Pinduoduo SEC filings (2018), Q4:18 Earnings Call (3/19) & Morgan Stanley.
Note: An active buyer is a buyer who has completed at least one transaction in the past 12 months.

57

China (Meituan Dianping) = Connecting Consumers & Local Businesses…
~6MM Merchants + ~2x in Two Years
Meituan Dianping
Active Merchants, China

Traditionally, local merchants in China – mostly micro & small
businesses – have very few marketing channels available tothem. We have become the go-to platform for
local search & consumer service discovery.
Based on our data analytics, we leveraged user search
queries to connect them with high-quality local merchants
who match their preference. We are able to help merchantsreach a vast quantity of potential consumers witha low upfront cost & high conversion rates.
Xing Wang – Co-Founder, Chairman & CEO, Meituan Dianping, 3/19

Internet Trends
2019

Meituan Dianping Active Merchants

Thousands

Fulfillment
6MM

3MM

0
2015

2016

2017

2018

Source: Meituan Dianping Releases (2018-2019) Note: An active merchant is a merchant who has completed at least one transaction, purchased online marketing services,
processed a payment through Meituan Dianping’s service, or generated an order through Meituan Dianping’s ERP system.

58

Latin America (Rappi) = Digitizing Delivery…
8MM Orders + ~2x in Four Months
Rappi
Monthly Orders, Latin America

Latin America has a great delivery culture.
Cities are chaotic, delivery was super manual &not all stores offered it — there was plentyof inefficiency & high costs.

Monthly Rappi Orders, Latin America

Millions

Digital Delivery Platform

We thought: what if we digitized this ecosystem& started to deliver anything in under
30 minutes for less than a dollar?

10MM

5MM

0
5/15

5/16

5/17

5/18

5/19

Simon Borrero, Sebastian Meija, Felipe Villanmarin, Andres Bilbao, Guillermo Plaza –Co-Founders, 6/19

Source: Rappi (6/19).

Internet Trends
2019

59

Indonesia (Tokopedia) = Improving Product Delivery Across 17K Islands…
~6MM Merchants + ~2x in One Year
Tokopedia

We thought – what if we can [give] every business thatjoins us…a warehouse everywhere in Indonesia –every product bought on Tokopedia[could] be delivered same-day.
William Tanuwijaya – Co-Founder & CEO, Tokopedia, 2/19

Internet Trends
2019

6MM

70%

3MM

35%

0
2015

2016

Source: Nikkei Asian Review (2/19). Tokopedia (4/19). *2019YTD = As of 4/19. Note: A registeredmerchant defined as an enterprise with listing on Tokopedia. 2

2017Same / Next Day Deliveries % of Total (Red Line)

When we look at sales data...
people from [one island] sometimes don’t want tobuy products from sellers on [other islands].

Merchants vs. Same / Next Day Deliveries, Indonesia

Registered Merchants, Indonesia (Blue Bar)

Same-Day Delivery0%
2018 2019YTD*
2019

60

Southeast Asia (Shopee) = Mobile-First Social Commerce…
$10B in Gross Merchandise Value + ~2x in One Year
Sea Limited / Shopee
Mobile / Social Shopping

Gross Merchandise Value, Southeast Asia

Shopee's ability to grow rapidly over a short periodof time is a testament to its focus on building amobile-centric, socially engaging marketplacewith emphasis on high margin products from ahighly diverse seller base.
…Shopee has combined its marketplace offeringwith integrated payments, logistics infrastructure &a comprehensive set of services.

Gross E-Commerce Merchandise Value

$12B

$6B

$0
2016

2017

2018

Forrest Li – CEO, SEA Limited, 2/19

Source: Sea Limited Q1:19 Earnings (2/19). Goldman Sachs Investment Research . Sea Limited operates commerce in Malaysia, Singapore, The Philippines, Thailand, Taiwan, Indonesia & Vietnam.

Internet Trends
2019

61

India (Reliance Jio) = Expanding Offline Access to E-Commerce…
307MM Subscribers + ~2x in One Year…
Reliance Jio
Connectivity + RetailThis platform will bring together 350MM customer footfalls at
Reliance Retail stores, 307MM Jio connectivity customers &30MM small merchants all over India who provide thelast-mile physical market connectivity.
Mukesh Ambani – Chairman, Reliance, 7/18

500MM

12K

250MM

6K

0

Physical Retail Locations (Red Line)
Thousands

We are creating a hybrid, online-to-offline commerce platform byintegrating Reliance Retail's physical marketplacewith Jio's digital infrastructure & services.

Jio Wireless Internet Subscribers (Blue Bar)

Wireless Subscribers + Offline Stores, India

0
FY17

FY18

FY19

FY = March

Source: Reliance Annual Report & Shareholder Meeting (7/18)

Internet Trends
2019

62

…India (Reliance Jio) = Broad Base of Jio Services for Consumers…
Data Usage + ~2x in One Year
Reliance Jio
Data Usage, India
Annual Data Usage of Jio Network (Exabytes)
Thousands

Full Suite Apps

Music…Movies…Television…News…
Chat…Finance…Fashion...Security…
Storage…Data Transfer

18EB

9EB

0
FY14

FY15

Source: Jio Releases & Morgan Stanley. Note: 1 petabyte = 1MM gigabytes. 1 Exabyte = 1,000 Petabytes.

Internet Trends
2019

FY16

FY17

FY18

FY = March

63

…Internet / Technology Businesses =Non-USA-Based
Innovation Remains Robust…
Data-Driven / Direct
Financial Services
Growing RapidlyInternet Trends
2019

64

China (Alipay) = Broad Online / Offline Financial Services...
1B Users + ~2x in Two Years
AlipayAnnual Active Users, Global

Payments / Financial Services

Alibaba has the most comprehensive ecosystem ofcommerce platforms, logistics & payment to support thedigital transformation of the retail sector.
Ant Financial / Alipay is not only China's #1 mobile payments
platform, but it is also a provider of financial services such asloans, wealth management & insurance products to hundreds ofmillions of consumers & millions of small businesses on the
Alibaba platform.

Alipay Payment Annual Active Users

1,200MM

600MM

0

2/16

2/17

2/18

2/19

Joe Tsai – Executive Vice Chairman, Alibaba, 2/18

Source: Alibaba Releases. Alibaba Earnings Call transcript (2/18)

Internet Trends
2019

65

South Korea (Toss) = Digital Payments / Financial Services…
~12MM Users + ~2x in One Year
Toss
Payments / Financial Services

Users, South Korea

A persistent problem in Korea has been the lackof mid-level interest-rate loans.
The reason for this is because there hasn’t beenadequate credit evaluation on filers with mid-level
credit scores or small business owners.
Data from the Toss mobile payment platform & its
partners will help make better credit judgments on
those filers when they are seeking loans.
SG Lee – Co-Founder & CEO, Toss, 3/19

Toss Users, South Korea

12MM

6MM

0
2/17

8/17

2/18

8/18

2/19

Source: Toss. Korea JoongAng Daily Interview with SG Lee (3/19)

Internet Trends
2019

66

Europe (Revolut) = Personalized Banking…
4MM Users + ~2x in Ten Months
Revolut
Users, Global

Revolut Users, Global

Thousands

Money Transfer / Banking
5.0MM

2.5MM

Personalization with the help of data / technology
will allow people to have all their [financial]needs covered & what’s more – they will beable to choose all those setting themselves.
We’re also heavily investing in data science &engineering to automate, accelerate &increase the quality of these decisions.

0
10/15 4/16 10/16 4/17 10/17 4/18 10/18 4/19

Nikolay Storonsky – Co-Founder & CEO, Revolut, 11/18

Source: Revolut Releases (2015-2019). Mobile Industry Eye Interview (7/18)

Internet Trends
2019

67

Brazil (Nubank) = Banking / Consumer Credit…
~9MM Unique Customers + ~2x in One Year
NubankBanking / Credit

Total Unique Customers, Brazil

Nubank is the largest purely digital bank offering
financial services for Brazil, including no fee credit
cards, savings accounts (NuConta), P2P moneytransfer, bill payment, debit cards, salary accountportability & a rewards program with real-time benefits.

Nubank Unique Customers, Brazil

10MM

Nubank also offers highly personalized loans at low
prices owing to Nubank’s data-driven direct
customer relationship.

5MM

0
4/15

Nubank – 5/19

4/16

4/17

4/18

4/19

Source: Nubank (5/19)

Internet Trends
2019

68

Latin America (MercadoLibre) = E-Commerce-Driven Digital Payments…
389MM Transactions + ~2x in Two Years
MercadoLibre
Marketplace / MercadoPago Payments

Annual Transactions, Latin America

We continue to grow strongly & see tremendous potential
in MercadoPago. Off-marketplace transactions
already surpassed marketplace transactions.
This trend is compounded by our strong offline initiatives:
building out our mobile POS network &MercadoPago’s wallet-enabled payments services.
Beyond payments, we are also seeing great adoptionof our Asset Management & Credits products.
These products facilitate access to financial
services to millions of Latin Americans
who are either unbanked or underbanked.

MercadoPago Transactions, Latin America

400MM

200MM

0
2010

2012

2014

2016

2018

Pedro Arnt – CFO, MercadoLibre, 5/19
Source: MercadoLibre (5/19), Goldman Sachs Investment Research.

Internet Trends
2019

69

Southeast Asia (Grab) = Ride Share-Driven Digital Payments…
Transaction Value + ~4x in One Year
Grab
GrabPay

GrabPay Transaction Value, Southeast Asia

Only 27% of adults in Southeast Asia
have bank accounts.
Not having a banking history means that a consumer isinvisible to traditional financial institutions - no access tocapital to grow businesses or pay for houses.
By launching GrabPay on top of Grab’s ride-sharing
platform, Grab’s millions of users have access tofinancial services that they could not access via
traditional banks & lenders.
Reuben Lai – Senior Managing Director, Grab Financial Group, 5/19

GrabPay Transaction Value Indexed to Q1:18, Southeast Asia

4.0x

2.5x

1.0x
Q1:18

Q2:18

Q3:18

Q4:18

Q1:19

Source: Grab Financial Group (3/18-5/19).

Internet Trends
2019

70

Usage =Images…
Increasingly Relevant Way to Communicate

Internet Trends
2019

71

Images =Oldest Form of Transportable Communication
40K Years Ago =5K Years Ago =131 Years Ago =Oldest Known Image…
Painting, Indonesia

Oldest Known Text…
Cuneiform, Mesopotamia

Oldest Known Moving Image…
Video, United Kingdom

Source: Maxime Aubert, Griffith University, Wikimedia, National Science Museum, London.

Internet Trends
2019

72

For Centuries…
People Have Learned toWrite & Share Words…
Offline & One-to-One / Some…

Internet Trends
2019

73

Communication via Text (+ Numbers) =Foundational
Makes Ideas
Transportable…

…Simplifies
Concepts…

…EnablesLearning

Martin Luther’s
95 Theses(1500s)Robert Recorde’s
invention of ‘=’(1500s)Modern ‘Public’Primary Schools(1800s – Present)Internet Trends
2019

Source: Wikimedia Commons, Google For Education, Boston City Archives
Note: 1800s chosen as date of ’Modern Public Schools’ based on Byrk et al.’s ‘Catholic Schools in the Common Good.’ Though public funds had been previously used to fund primaryeducation, reforms in USA cities during the 1800s were the first to establish open, secular education, similar to contemporary ‘public schools’

74

…For Two Decades…
People Ramping
Image + Video Creation / Sharing…
Online & Often One-to-ManyInternet Trends
2019

75

Image Creation =Foundations Continue to Ramp
…Smartphone Power…

Active Smartphones

Flagship iPhone Power / Storage
6,000

2B

0
2010

2014

2018

600GB
XS
X
7

3,000
5S

4S

0
2010

6

5

WiFi Networks

30EB

600MM
WiFi Networks, Global

Monthly Uplink + Downlink
Traffic, Global, Per Ericsson

Storage…WiFi Reach

Cellular Data Traffic

15EB

0
2014

Internet Trends
2019

0
2018

2014
Processing Power…Cellular Data Use…

300GB

6S

Maximum Storage

4B
GeekBench Processing
Power Benchmark

Smartphone Install Base, Global

Smartphone / Camera Base…

2016

2018

300MM

0
2000

2009

2018

Source: Smartphone Installed Base Per Morgan Stanley (3/19). iPhone Power / Storage Per. GeekBench Browser, Apple. Note: Geekbench is a multi-platform benchmarking tool intended
to compare the power of computer processors across generation, platform & workload. Maximum storage refers to largest storage capacity offered, as advertised. WiFi Data = WiGLE.net
as of 5/29/18. Note: WiGLE.net is a submission-based catalog of wireless networks that has collected >6B data points since launch in 2001. Submissions are not paired with actual people,
rather name / password identities which people use to associate their data. Ericsson Q4:18 Mobility Report.

76

Image Sharing =Foundations Continue to Ramp
Image Creation

Image Sharing

Annual New Photos Taken, Global

Instagram Monthly Active Users, Global
1.0B

MAUs, Global

Photos Taken, Global

1.4T

0.7T

0
2013

2015

2017

0.5B

0
2010

2014

2018

Source: Photo Creation Per InfoTrends Digital Imaging Reporter’s State of the Industry 2018. Instagram releases.

Internet Trends
2019

77

Image Creation + Sharing =Engagement Continues to Ramp…
Twitter (2006) = Text-Only

Twitter (2019) = Text + Images + Video>50% of Tweet Impressions =Images / Video / Other Media

Source: Twitter. Note: Other media includes GIFs, Audio & other non image / video media types

Internet Trends
2019

78

…Image Creation + Sharing =Platform Functionality + Usage Continues to Ramp…
Instagram Image Sharing Enhancement Evolution
Image Editing /Sharing

Data-Driven
Discovery

Image + Video
StoriesCommerce

2011

2015

2016

2019

Source: Instagram Releases (2011 / 2015 / 2016 / 2019)

Internet Trends
2019

79

…Image Creation + Sharing =Platform Functionality + Usage Continues to Ramp
Pinterest Image Sharing Enhancement Evolution
Image
Organization /SharingVideo
Organization /Sharing

ImagePowered
SearchImage-Driven
Discovery /Commerce

2011

2012

2015

2019

Source: Pinterest Releases (2011 / 2012 / 2015 / 2019)

Internet Trends
2019

80

Image-Based Communication =Enabled by Computer Vision + Artificial Intelligence
Google Lens + AR Image Analysis / Communication Evolution
Visual Text
Identification /Processing

Image
Identification /Context

Contextual
Augmented
Reality

Real-Time
Visual Text
Translation

2017

2017

2018

2019

Source: Google (2017-2019)

Internet Trends
2019

81

People =Increasingly Telling Stories via
Edited Images / Videos

Internet Trends
2019

82

Edited Images =Growing Rapidly
Snap Lens Studio

Snap Community Lens Views

User Generated / Custom Augmented Reality

Views of User Generated Lenses

40B

20B

0

12/17

3/18

6/18

9/18

12/18

3/19

Source: Snap Inc. Q4:17 Earnings Call (2/18), Snapchat Blog Post (7/18), Adweek (11/18), Engadget (2/19)

Internet Trends
2019

83

Image-Based Design Fluency + Story-Telling =Increasingly Self-Taught + Collaborative…
Still Early Innings

Internet Trends
2019

84

Design Fluency + Story-Telling (Canva) =Simple / Collaborative / Feedback-Driven Design
Choose Template

Publish Anywhere
Customize Design

Collaborate in Teams

Source: Canva (6/19)

Internet Trends
2019

85

People have always been visual – our brains are
wired for images. Writing was a hack, a detour.
Pictorial languages are how we all started tocommunicate – we are coming full circle.
We are reverting to what is most natural.
Instagram has always been acommunication platform, not an image sharing tool.
Instagram challenges the notion that beautycomes in a traditional, artsy form…
it’s not about beauty, it’s about the story you tell.

Instagram’s inherent feedback systems help users
continuously improve communication skills.
Kevin Systrom – Instagram Co-Founder, 5/19

Internet Trends
2019

86

Picture or 1,000 Words?

Mallard Duckling making a running leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common &recognizable wild ducks in the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes)
where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater forfood—head down, feet and tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake,
sports a glossy green head, a white ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because ofan oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching,ducklings can run, swim, and forage for food on their own. They stay in the nest for less than a month. A group of ducklings is called a brood. Outside thenest, the brood sticks close by the mother for safety, often following behind her in a neat, single-file line. Mallard Duckling making a running leap into thewater from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in the Northern
Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants, invertebrates,
fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake, sports a glossy green head, a white ringaround its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from a gland near
the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, and forage forfood on their own. They stay in the nest for less than a month. A group of ducklings is called a brood. Outside the nest, the brood sticks close by themother for safety, often following behind her in a neat, single-file line. Mallard Duckling making a running leap into the water from the rock ledge at Argyle
Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in the Northern Hemisphere. They spend most of their timenear natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or
surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and tail in the air—rather than diving. Mallards also forage andgraze for food on land. The male mallard duck, called a drake, sports a glossy green head, a white ring around its neck and a rich, chestnut-brownbreast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called
ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, and forage for food on their own. They stay in the nest forless than a month. A group of ducklings is called a brood. Outside the nest, the brood sticks close by the mother for safety, often following behind her in aneat, single-file line. Mallard Duckling making a running leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are
the most common & recognizable wild ducks in the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes,
streams, & lakes) where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat bytipping underwater for food—head down, feet and tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard
duck, called a drake, sports a glossy green head, a white ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers arewaterproof, because of an oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more thana day after hatching, ducklings can run, swim, and forage for food on their own. They stay in the nest for less than a month. A group of ducklings is calleda brood. Outside the nest, the brood sticks close by the mother for safety, often following behind her in a neat, single-file line. Mallard Duckling making arunning leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in
the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants,
invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and
tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake, sports a glossy green head, awhite ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from agland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, andforage for food on their own. They stay in the nest for less than a month. A group of ducklings is called a brood. Outside the nest, the brood sticks close

Source: Photo Credit = Beth A Keiser, AP

Internet Trends
2019

87

Usage =Interactive Gaming…
Increasingly Relevant Way to Communicate

Internet Trends
2019

88

Interactive Gaming Players =Accelerating @ 2.4B +6% vs. +5% Y/YInteractive Game Players, Global

Interactive Game Players, Global

3.0B

1.5B

0
2014

Internet Trends
2019

2015

2016

2017

2018

Source: Newzoo Global Games Market Reports (2016-2018).
Interactive Game Players = People who have played a game across console / PC / mobile platforms in the past year.

89Interactive Gaming Innovation =Rising…Across Platforms
Game Engine Innovation…

...Frequent Major Updates To Fortnite
100

Unreal Engine 4.21 continues our relentless pursuitof greater efficiency, performance & stability
for every project on any platform.
We made it easier to create faster…
We are always looking for ways to streamline everyday
tasks so developers can focus on creating meaningful,exciting & engaging experiences...Iterate faster
thanks to optimizations, run automated tests tofind issues using the new Gauntlet automation framework,& speed up your day-to-day workflows...
Jeff Wilson – Unreal Engine Release Notes, Epic Games, 11/18

Named / Numbered Updates to Fortnite~1 Major Update
per Week

50

0
9/17

7/18

5/19

Source: Epic Games. (11/18). Note: Major update = named / numbered update to Fortnite.

Internet Trends
2019

90

Interactive Gaming =Real-TimePlay + Talk / Text + Watch…

Social in Nearly All Ways

Internet Trends
2019

91

Interactive Gaming (Play) =Fortnite @ 250MM+ Users + ~2x Y/Y Across Seven Platforms
Epic Fortnite Cross-Platform Evolution vs. Registered Users
1

2

September 2017
Fortnite Battle Royale
Launches on PC /Mac / PS4 / Xbox One
With Limited Cross
Platform Support

3

March 2018
V3.4 Patch is
Released Allowing
Users to Send &Receive Squad
Invites Cross-Platform

4

April 2018
Fortnite Launches to
Public in iOS AppStore, Allowing CrossPlatform Mobile Play

5

June 2018
Fortnite Launches on
Nintendo Switch…
Available on All Major
Current Generation
ConsolesOctober 2018
Fortnite for Android
Launches to Public

Registered Users, Global

300MM

5

150MM
4

3
2

0

1

10/17

4/18

10/18

4/19

Source: Epic Games (9/17-3/19)

Internet Trends
2019

92

Interactive Gaming (Text / Talk) =Discord @ 250MM Users + ~2x Y/Y
Discord Text / Voice Chat

Discord Registered Users

Registered Users, Global

300MM

150MM

0
5/17

5/18

5/19

Source: Discord (5/17-4/19).

Internet Trends
2019

93

Interactive Gaming (Watch) =Twitch…Time + Viewers + ~2x in Two Years

4.2MM

80%

15MM

60%

2.1MM

40%

0

Internet Trends
20192012 2013 2014 2015 2016 2017 2018

0%

0

2014

2015

2016

2017

2018

0%

1.2MM

80%

0.6MM

40%

0

2013 2014 2015 2016 2017 2018

Source: TwitchTracker (4/19). Note: *Active broadcasters at year end refers to the number of broadcasters who have streamed in the month ofDecember for a given year. **Average concurrent users refers to the average daily peak of users viewing content on Twitch across a year.

Y/Y Growth (Red Line)

120%

Average Peak Concurrent Daily Users, Global (Blue Bar)

30MM

Peak Concurrent Viewers**

Y/Y Growth (Red Line)

Active Broadcasters*

Average Broadcasters at Year-End, Global (Blue Bar)

Daily Streaming Hours

Y/Y Growth (Red Line)

Average Daily Streaming Hours, Global (Blue Bar)

Twitch0%94Fortnite = Battle Royale…
Game Environment Capped @ 100 Person Groups…

100MM

60%

51%

50MM

30%
26%

0

0%
2014

2015

2016

2017

Subscribers Share of Total Console Install Base (Red Line)

100 Players in Shared World

Consoles – Multiplayer Subscribers*

Xbox / Playstation Online Multiplayer Subscribers (Blue Bar)

Multiplayer / Cross-Platform Battle Royale

Players Win via Discovering Items & Outlasting Others

Internet Trends
2019

Source: Morgan Stanley Research (10/18) Brian Nowak / IDC. Note: *For game consoles only (i.e. Xbox Live & Playstation Plus).
Subscription required to play online multiplayer Fortnite games on Xbox platform, but not Playstation (Fortnite is available even to non-subscribers).

95

…Fortnite = Events…
Shared Experiences Capped @ 100 Person Groups…
In-Game Events / Experiences

SurveyMonkey / Common Sense Media
Teen Fortnite Player Survey

Has Fortnite Helped You _______?

50% = Learn Teamwork Skills
Marshmello Concert (2/19)
11MM Player-Viewers

44% = Make a Friend Online
40% = Improve Communication Skills
39% = Bond with Siblings

Cube Opening (11/18)
8MM Player-Viewers

Internet Trends
2019

Source: Fortnite. Common Sense Media / SurveyMonkey Survey of 766 USA Teens (13-19) who play Fortnite.
Survey conducted online via SurveyMonkey Survey portal (10/18).

96

…Fortnite = Voice Chat…
Collaborative Communication Capped @ 16 Squadmates
To truly see the future of collaborative gameplay & social experiences,
you need a large-scale community to help that happen.
We work really, really hard on Fortnite to maintain a safe experience online –for example, there's only chat between you & your squadmates.
There's no proximity-based chat, so it's not possible forone person to grief another person they don't know.
Kim Libreri – CTO, Epic Games, 3/19

Strategize / Bond With Team in
Pre-Game Lobby via Voice

Real-Time In-Game Collaboration With
Team via Voice
Source: Wired (3/19). Epic Games.

Internet Trends
2019

97

Interactive Gaming…
Shared Environments
With Collective Purpose / Goals =The New Social / Friend Networks?
Recreating Reality Around
Play + Problem Solving

Internet Trends
2019

98

FREEMIUM BUSINESS MODELS =GROWING & SCALING…
STILL EARLY DAYS IN ENTERPRISE / CONSUMER’Freemium’ coined by Fred Wilson (Union Square Ventures) & Jarid Lukin in 2006

Internet Trends
2019

99

Freemium Businesses =Free User Experience Enables
More Usage / Engagement /Social Sharing / Network Effects…
…Premium User Experience Drives
Monetization / Product Innovation

Internet Trends
2019

100

Freemium Business Model Evolution =Gaming → Enterprise → Consumer

Internet Trends
2019

101

Freemium Gaming (2001) =Runescape…
Free

Premium

Play With Others…

…Improve User Experience

This is how the member [subscription] came about...
once we had people paying, we were able to reinvest
back into the game.
The more we invested, the faster it grew.
Andrew Gower – Runescape / Jagex, Creator, 5/07

1.6MM

12%

0.8MM

6%

0

0%
2003

Internet Trends
2019

Paid User % of Total (Red Line)I launched [Runescape] in 2001.
The basic plan was to run it for free, but to pay for myhobby through advertising. However, when the dot
com bubble began to collapse, advertising dried up &there was no way to pay for the game's server.

Paid Users (Blue Bar)

Millions

Paid Users + Share of Total

Source: Jagex releases, as compiled by The Guardian (12/03), Gameindustry.biz (2/05),
Runescape Blog (5/07) & GigaOM (6/07). Andrew Gower Interview first appeared on gamasutra.com (5/07).
Note: Users refer to monthly active users. Total Users refers to active users (free + paid) in relevant period.

2005

2007

102

…Freemium Gaming (2017) =Epic Fortnite
Free

Premium

Play With Others…

…Improve User Experience
Epic Fortnite Revenue Growth, per Nielsen Superdata*

I think it’s a very positive trend that people are
spending time in social experiences. That’s the thing you haveto appreciate with Fortnite. Most people are playing together insquads with their friends, they’re on voice chat.
They’re playing a video game, but what they’re really doingis spending time with their friends & chatting all night.

Revenue Growth (2017 = 1x)

20x

10x

It can last as long as the developers cankeep games fresh & fun – we’re at that point where we’reable to do it & there’s a business model with free-to-play.
Tim Sweeney - Epic Games, Founder / CEO, 3/19

0
2017Internet Trends
2019

Source: Epic Games Releases (2017-2019) The Hollywood Reporter (3/19). Nielsen Superdata (6/18 +1/19)
Note: *Revenue growth estimate based on Superdata’s 3rd party estimate of ~$150MM in Epic Fortnite Revenue in2017 & $2.4B in 2018 revenue. Fortnite launched in September 2017.

2018

103

Freemium Gaming =Social / Often Mobile / Can Be Transient

20%

5MM

10%

0%

0

2016

2017

2018

30%

3MM

15%

0

0%

2015

3.0%

1MM

1.5%

0

0.0%
2016

2017

2018

2018

1.0MM

2%

0.5MM

1%

0

0%
2015

Paid Users

Internet Trends
2019

Paid Users (Blue Bar)

2MM

2015

2017

Rovio
Paid User % of Total (Red Line)

Paid Users (Blue Bar)

Zynga

2016

2016

2017

2018

Paid User % of Total (Red Line)

2015

6MM

Paid User % of Total (Red Line)

10MM

Paid Users (Blue Bar)

HearthStone
Paid User % of Total (Red Line)

Paid Users (Blue Bar)

Nexon

Paid % of Total Users

Source: Nexon = Annual Company Filings. HearthStone = Activision Blizzard Filings + Morgan Stanley estimates. Zynga = Zynga Annual Filings.
Rovio = Rovio Annual Reporting. Note Paid users refers to users who upgrade to unlock premium features such as ad-free game play.
Paid Users % of Total = share of payers in a period divided by total active users in the same period.

104Freemium Business Model Evolution =Gaming → Enterprise → Consumer

Internet Trends
2019

105

Freemium Enterprise (2006) =Google G Suite…
Free

Premium

Communicate With Others…

…Enterprise User Experience

Paid Customers*

Google’s many successful products deliver magicaluser experiences [for free] & when I joined Google,
I was inspired to bring that same magic to theworkplace with G Suite...
Building [free] products that are loved by billions ofusers has driven a discipline in the G Suite team for
simplicity of design & we are bringing that billionuser experience to the workplace…you’re actuallyseeing that workplace users are demanding it.
Prabhakar Raghavan – Google, SVP of Engineering, 7/18

G Suite Customers *

6MM

3MM

0
2007 2009 2011 2013 2015 2017 2019

Internet Trends
2019

Source: Google Cloud Disclosures (2019) for G Suite Users. Google Next Conference for quote (7/18). Note: *Customers
refers to the number of paying businesses using G Suite, not the number of paid users (e.g., one company with 10K
employees would be counted as one customer. Google does not disclose the average G Suite customer size.)106

…Freemium Enterprise (2013) =
Zoom
Free

Paid

Communicate With Others…

…Enterprise User Experience

Paid Customers*

Our rapid adoption is driven by a virtuous cycle ofpositive user experiences.
Individuals typically begin using our platform
when a colleague or associate invites them to a
Zoom meeting.

Paid Customers*

300K

150K

When attendees experience our platform & realize thebenefits, they often become paying customers to
unlock additional functionality.
Zoom – S-1 Filing, 3/19

0

FQ1 FQ2 FQ3 FQ4 FQ1 FQ2 FQ3 FQ4 FQ1

FY18

FY19

FY20

FY = January 31
Source: Zoom. Note: *Goldman Sachs Investment Research estimate of Zoom Customers with 1-10 employees plus Zoom annual disclosure of customers with 11+ employees (5/19).

Internet Trends
2019

107

18MM

3.0%

9MM

1.5%

0

0%

2017

2018

4MM

50%

2MM

25%

0

4%

2MM

2%

0

0%

2018

Paid Users

Internet Trends
2019

Paid Users (Blue Bar)

4MM

2017

2016

2017

SurveyMonkey
Paid User % of Total (Red Line)

Paid Users (Blue Bar)

Wix

2016

0%

2015

0.8MM

4%

0.4MM

2%

0

0%

2016

2017

2018

Paid User % of Total (Red Line)

2016

Paid Users (Blue Bar)

Slack
Paid User % of Total (Red Line)

Paid Users (Blue Bar)

DropboxPaid User % of Total (Red Line)

Freemium Enterprise =Collaborative / Business-Critical / Annuity-Like

Paid % of Total Users

Source: Dropbox = Public releases & Goldman Sachs Investment Research estimates. Slack = Public press release (05/18), SurveyMonkey =Company releases. Wix = Company presentation (3/19). Wix total users represent those with an account. Note: Paid users refers to subscribers topremium products. Paid user % of total = share of payers in a period divided by total active users in the same period.

108Freemium Business Model Evolution =Gaming → Enterprise → Consumer

Internet Trends
2019

109

Freemium Consumer (2008) =Spotify…
Free

Paid

Share Music / Playlists With Others…

…Premium User Experience

Paid Users + Share of Total

Our users share with their friends thejoy of exploring music through Spotify,
which creates incredible word-of-mouth for our business.

50%

50MM

25%

Paid User % of Total (Red Line)[Spotify] worked because we recognized…
fans wanted all the world's music for free, immediately.

Paid Users (Blue Bar)

100MM

…Our free product drives premium subscription growth,that leads to better personalization & drives use among
younger demographics with greater potential lifetime value.
0

0%
2015

Daniel Ek – Spotify, Founder / CEO, 3/18

2016

2017

2018

Source: Spotify Analyst Day Presentation (3/18). Spotify.

Internet Trends
2019

110

…Freemium Consumer (2015) =
Canva
Free

Paid

Design With Others…

…Premium User Experience

Rather than being stuck with complicated desktop based tools, wewant everyone in the world to be able to create incredible designs
that look professional and make them proud.

20MM

120MM

10MM

60MM

Monthly Designs Created (Red Line)
Millions

We want everyone in the world to be able to design, whether you arein marketing, sales, a teacher or student - design has become acritical part of most professions to communicate ideas.

Monthly Active Users (Blue Bar)

Monthly Active Users + Designs Created

Giving people legitimate value before asking them to pay can be areally useful strategy for any company wanting widespread adoption.
Melanie Perkins – Canva, Co-Founder / CEO, 6/19

0

0
5/16

5/17

5/18

5/19

Source: Canva (6/19).

Internet Trends
2019

111

Freemium Consumer =Personalized / Efficient / Often Social / Annuity-Like

140MM

40%

70MM

20%

0

0%

2016

2017

4MM

40%

2MM

20%

0

2018

0%

2015

15%

0%

2017

2018
Paid % of Total UsersStored Funds in Cash App (Blue Bar)

2MM

0Internet Trends
2019

2018

Cash App30%

Paying User % of Total ( Red Line)

Paid Users (Blue Bar)

Chegg
4MM

Paid Users

2017

Paid % of Total Users

Paid Users

2016

2016

$400MM$4B$200MM

$2B

$0

$0

Q4:16

Q2:17

Stored Funds

Q4:17

Q2:18

Q4:18

Annualized Cash Card Spend (Red Line)2015

Paid Users (Blue Bar)

TwitchPaying User % of Total ( Red Line)

Paid Users (Blue Bar)

Amazon Prime

Annualized Card Spend

Source: Amazon Prime = Morgan Stanley estimates. Twitch = Morgan Stanley estimates. Chegg = Goldman Sachs Investment Research
estimates. Cash App = Square public disclosures. Note: Paying users = subscribers for Amazon Prime / Twitch / Chegg. For Cash App, stored
funds represent aggregate customer balances in the app as of the last day of the quarter. For all except Cash App, paid user % of total = shareof payers in a period divided by total active users in the same period. Active users for Amazon = Active Paid accounts per MS estimates.

112

Freemium Business Evolution =Started in Gaming
Evolving / Emerging inEnterprise + Consumer…
All In…Just Getting Started

Internet Trends
2019

113

Freemium Business Models =All In…Just Getting Started
Select Publicly Traded Pure-Play Freemium Businesses*>10MM Paid Subscribers (3/19)

GamingEpic Games

27MM**(Private Company)

Enterprise
Consumer

DropboxSpotify

13MM**
100MM**>$1B Annual Revenue (2018)$1B+
Revenue
1st YearPrimary
Monetization
Drivers

2011

Paid Items / Ads /Subscriptions

2013

Paid Items / Ads /Subscriptions

2014

Paid Items /Subscriptions

2015

Paid Items

2016

Paid Items

2018

Paid Items /Subscriptions

Enterprise Dropbox

2017

Subscriptions

Consumer Spotify

2014

Subscription /
Ads

2015

Subscription /
Ads

2016

Subscription /Ads

GamingNexon
King Digital
Supercell
Mixi
Netmarble
Epic Games(Private Company)

PandoraMatch GroupInternet Trends
2019*Excluding China companies where Freemium business models are more mature owing to higher maturity of digital payments, parti cularly microtransactions / Excludes diversified
companies (such as Apple / Amazon / Microsoft ) owing to significant revenue contribution from non-freemium businesses / Includes private company Epic owing to scale.
**Epic = Midpoint of 23-31MM estimate for Battle Pass subscribers per Timothy O’Shea @ Jeffries (3/19)…not confirmed by Epic Games. Source: CapitalIQ (including currency
conversion) = Nexon / King (2018 Revenue as part of Activision) / Pandora / Mixi / Match Group / Dropbox / Netmarble. Spotify = Wall Street Journal / Company reports. Supercell =Venture Beat.

114

Freemium Business Model
Enabler =Cloud Deployment…

Internet Trends
2019

115

Cloud Deployment =Revenue +58% Y/Y…

$14B

100%

$7B

50%

$0

Y/Y Growth (Red Line)

Global Revenue

Cloud Service Revenue – Amazon + Microsoft + Google

0%Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2016
2015
2017
2018
2019
Amazon AWS

Internet Trends
2019

Microsoft Azure

Google Cloud

Source: Amazon AWS = Company filings, Microsoft Azure = Keith Weiss @ Morgan Stanley (4/18), Google Cloud = Brian Nowak @Morgan Stanley (5/18). Note: Google Cloud revenue based on MS annual estimate, applied to quarters using the seasonality trends
on 2018. Google only included in 2019 growth rates owing to lack of estimates before 2018.

116

…Cloud Deployment =22% of Workloads +2x vs. Five Years Ago
Technology Adoption Rates, Global per Morgan Stanley

Technology Penetration / Adoption (%)

100%

50%

22%

0%
1998

Internet Trends
2019

2000

2002

2004

2006

2008

2010

2012

2014

2016

Cloud
Cloud(%(%ofofWorkloads)
Enterprise Workloads)

Laptop (% of PC Sales)

Smartphone (% of Handset Sales)

Online Music (% of Total Sales)

Source: Morgan Stanley (5/18-3/19). Note: Estimate of Cloud workload
penetration based on Morgan Stanley CIO survey in Q4 of each year.

2018

117

…Cloud Deployment =Interest Continues to Rise
Cloud Usage – CIO Survey, USA / EU per Morgan Stanley

49%

50%

39%

% Respondents

37%
27%
25%

0%

PlatformPaaS
as a Service(PaaS)
Q1:18

Internet Trends
2019

Iaasas a Service
Infrastructure(IaaS)
Q1:19

Source: Morgan Stanley Q1:19 CIO Survey. N= 100 USA / EU CIOs of major companies. Infrastructure as a service defined as
cloud computing that uses virtualized resources in the cloud (i.e. processing, storage, etc.), but not software or other value add
services. Platform as a service defined as cloud based hardware / software platforms, such as managed middleware.

118

…Freemium / Subscription Business Model
Enabler =Efficient Digital Payments

Internet Trends
2019

119

Digital Payments =>50% of Day-to-Day Transactions
Transactions by Payment Channel
Thinking of your past 10 everyday transactions, how many were made in each of the following ways?
In-Store
In-Store

41%

Other Online

59% =Digital14%

Buy Buttons

9%

Other Mobile Payments

8%

P2P Transfer

7%

Mobile Messenger Apps

7%

Other In-App Payments

4%

QR Codes5%

Smart Home Device

2%

Wearables / Contactless

2%

Other

2%
0%

25%

50%

% of Global Responses (6/18)

Internet Trends
2019

Source: Visa Global Commerce Unbound 2018 (2/19). Note: Full question was ‘Please think about the payments you make for everyday transactions (excluding rent,
mortgage, or other larger, infrequent payments). Thinking of your past 10 everyday transactions, how many were made in each of the following ways?’, GfK Research
conducted the survey with n = 8,127 across 20 countries (USA, Canada, UK, France, Poland, Germany, Sweden, Mexico, Brazil, Argentina, Colombia, Australia, China,
India, Japan, South Korea, Russia, UAE, Kenya), between 5/31/18 – 6/29/18. All respondents do not work in Financial Services, Marketing, Marketing Research,
Advertising, or Public Relations, own & currently use a smartphone, have a savings or checking account; own/use a computer or tablet, & own a credit or debit card.

120

DATA GROWTH =CHANGING WAYS THINGS WORK…
RAPIDLY & GLOBALLYInternet Trends
2019

121

Data
Collection + Analysis + Utilization =Evolving From
Humans to Humans / Computers

Internet Trends
2019

122

Pre-1995
Winning Businesses =Use Human Data / Insights
To Improve Customer Experiences…

Internet Trends
2019

123

Product Development (1890s-1950s)…
IBM = Feet-on-Street Customer Input
Sales Force + Customers

IBM
Annual Revenue

IBM developed a sales force that became deeply
knowledgeable about their customers’ operations & could
explain benefits specific to each organization.
Customers became highly engaged with IBM
employees to explain what product innovations theyneeded to better use these [tabulation machines] that had
become so essential to their operations.

Revenue$2B$1B

Research & development at IBM depended on thisinteraction between engineers & customers.
James Cortada – Change & Continuity at IBM, 3/18

Internet Trends
2019

$0
1910

1935

Source: IBM Revenue per IBM Online History Archives (Collected 2019). James W. Cortada’s ‘Change & Continuity’ at IBM: Key Themes in Histories ofIBM (Cambridge Press, Spring 2018 edition). Cimarron City Library Digital Archives. Note: Image contains a mixture of IBM sales people, engineers &customers gathered @ IBM Corporation School for collaborative working sessions. Photo taken 1951.

1960

124

Product Development (1970s)…
Nike = Employee / User Input
Employee / User

Nike
Annual Revenue

All our employees were runners,
we understood the consumer very well…
We & the consumer were one & the same.

Revenue$500MM$250MM

We got to know the players at the top of the game & did
everything we could to understand what they needed,both from a technological & a design perspective.
Our engineers & designers spent a lot of timetalking to the athletes about what they neededboth functionally & aesthetically.
Phil Knight – Nike, Founder, 7/92

$0
1977

1979

Source: Nike revenue from 1981 Nike Annual Report Quote: High-Performance Marketing: An Interview with Nike’s Phil Knight (HBR July/August 1992 issue)
Image: Nike. Note: Image Depicts Oregon Track Coach / Trainer Using Nike Shoes in Training & Improving New Models Using His Learnings.

Internet Trends
2019

1981

125

Product Development (1980s)…
Chrysler = Focus Group Research
Focus Groups

Chrysler
Annual Revenue

1978 clinics in Atlanta, Denver & San Diego
showed that customers wanted –Revenue

$28B

$14B

1984: Chrysler
Launches Dodge
Caravan & Plymouth
Voyager Minivans

The ability to park in a standard garage,a side door opening at least 30 inches wide…
seating for 3 people across, a flat interior floor,
removable seats & the ability towalk from one end of the van to another.
David Zatz – Hemmings Magazine / ‘Mopar Minivans,’ 2/19

Internet Trends
2019

$0
1981

1984

Source: Chrysler revenue as reported in The New York Times in each year. Data does not include pro-forma revenue fromacquisition of American Motors Corp. Quote: David Zatz’s ‘Mopar Minivans: Creating the first 20 years of Dodge, Chrysler, &Plymouth “magic wagons’ as excerpted in Hemming’s Magazine (2019) Image: New York Times Digital Archives (1984)

1987

126

Product Development (1980s)…
Intuit = All-In Focus on Customer Testing
User / Usability Testing

IntuitAnnual Revenue

Kwik-Chek User Testing @ Palo Alto Junior League(Inside Intuit, Taken 1984)

We recruited people off the streets & timed theirKwik-Chek (Quicken) usage with a stopwatch.
After every test, programmers worked
to improve the program.
We did usability testing in 1984, five years before
anyone else, there’s a big difference between doing
it & having marketing people doing it as part of theirdesign…a very big difference between doing it &having it be the core of what engineers focus on.
Scott Cook – Intuit, Co-Founder, 9/03

Revenue$300MM$150MM

$0
1984

1989

Source: Inside Intuit, Suzanne Taylor, 2003 Photo courtesy of Virginia Boyd as presented by Inside Intuit. Revenue as reported in ‘Inside
Intuit’ for 1988-1990 & as reported to the SEC for 1993/1994. Intuit released its first revenue-generating product, Kwik-Chek in 1984.

Internet Trends
2019

1994

127

…1990s-2000s…
Internet + Mobile Devices + Cloud
Netscape Web Browser – 1994
Amazon Web Services (AWS) – 2006
Apple iPhone – 2007
Apple App Store – 2008

Internet Trends
2019

128

…Post-1995
Winning Businesses =Use Digital Data / Insights
To Improve Customer Experiences…

Internet Trends
2019

129

Marketing Optimization (Post-1995)…
Capital One = Customer Data
Digital Information Capture

Capital One
Annual Revenue…the technology & information revolution had
transformed the credit card business into an
information business…allowing the capture of
information on every customer
interaction & transaction.

Revenue$4B$2B

With this information, we can conduct scientific tests;
build actuarially-based models of consumer behavior &tailor products, pricing, credit lines & account management
to meet the individual needs & wants of each customer.
By exploiting this insight, we have transformed theone-size-fits-all credit card industry & created
one of the fastest growing companies in America.

$0
1991

1994

1997

2000

Capital One Annual Report – 1996
Source: Capital One Revenue From CapitalIQ (Collected 2019) Quote: 1996 Capital One Annual Report Image: 1998 Capital One Annual Report

Internet Trends
2019

130

User Experience + Sales Optimization (Post-1995)…
Amazon = Customer Data
Real-Time
Digital Information Capture

AmazonAnnual Revenue

This is Day 1 for The Internet –& if we execute well – for Amazon.com.

Revenue

$250B

$125B

Today, online commerce saves customers money &precious time. Tomorrow, through personalization, online
commerce will accelerate the very process of discovery.
Amazon.com uses the Internet to create
real value for its customers &, by doing so,hopes to create an enduring franchise.
This year, we maintained a dogged focus on improving the
shopping experience…we now offer...vastly more reviews,
content, browsing options & recommendation features.

$0
1994

2006

2018

Amazon Annual Report – 1997

Source: Amazon Revenue from CapitalIQ (Collected 2019) Quote: 1997 Amazon Annual Report Image: Amazon.com (2019)

Internet Trends
2019

131

…2000s
Winning Businesses =Build / Use
Data Plumbing Tools
To Use Digital Data / Insights
To Improve Customer Experiences

Internet Trends
2019

132

Data Plumbing Tools =Helping Businesses Real-Time…
Collect Data…
Understand Customer Wants & Improve Business Processes
Increase Customer Input / Improve ProductsManage Direct Customer / Subscriber Relationships
Improve Consumer Decision Making…Manage Connections…
Organize Internal + External Communication
Communicate with Customers via Multiple Channels
Organize Customer Data Across IT Systems…Optimize Data
Improve Analytics / Recommendations / Personalization
Respond To Customer Events at Scale
Discover Business Insights + Optimize Fulfillment
Manage Data Growth & Eliminate Inefficiencies

Internet Trends
2019

133

Qualtrics + FabFitFun = Collect Data to…
Understand Customer Wants & Improve Business Processes
Qualtrics = Experience Management

Qualtrics
Revenue

Every organization in the world needs to collectexperience data to close the massive gaps between theexperiences they think they are delivering & what is really
happening, both internally & externally.
RevenueCollecting experience data through Qualtrics allows
companies to make adjustments in real time & adapt
to fast-paced, changing circumstances. This allows
those companies to quickly close experience gaps
with their customers & enables employees to work
more efficiently to serve those customers.

$500MM$250MM$02016

Ryan Smith – Qualtrics, Co-Founder, 6/19

FabFitFun = Community Input

2017

2018

FabFitFun
Subscribers

We’ve aggregated millions of data points about
consumer product & brand preferences allowing us toprecisely forecast satisfaction with personalized
curations & enable a flywheel between deeper
understanding & an improved member experience.
Daniel Broukhim– FabFitFun, Co-Founder / Co-CEO, 6/19

1.4MM

Subscribers

We’re constantly tapping our members for realtime feedback to better understand the products &trends they like, the ingredients & formulations that
get them excited, & the categories that connect
them back to the FabFitFun brand & community.

0.7MM

0
2016

2017

2018

Source: Qualtrics S-1 Filing (10/18). Morgan Stanley Estimate of 2018 Revenue (as part of SAP). FabFitFun (6/19)

Internet Trends
2019

134

Salesforce + Adidas = Collect Data to…
Increase Customer Input / Improve Products
Salesforce

Salesforce = Customer Engagement

Annual Revenue$16B

They're connecting with their customers in awhole new way. They're building incredible newintelligent 360-degree views of their customers, &they're using extraordinary new tools to getfaster, more informed decisions & at the heart of
all this transformation is Salesforce.

Revenue…as every company transforms their relationships
with their customers…they're fundamentallychanging how they sell & how they service,
how they market & innovate.

$8B$0FY2001

Marc Benioff – Salesforce, Co-Founder / Co-CEO, 8/18

Adidas = Customer Co-Creation

FY2010FY = January

FY2019Adidas
E-Commerce Sales

We need to be able to respond to consumer
expectations immediately. The relationshipbetween Adidas & Salesforce allows us to beproactive in our designs – our ability to roll out
new products & influence trends is amazing...

Our direct connection with customers throughSalesforce basically makes it happen overnight.
Kasper Rorsted – Adidas, CEO, 6/18

E-Commerce Sales

€2B

€1B

€0
2014

Internet Trends
2019

2016

Source: Salesforce SEC Filing. Goldman Sachs Investment Research. Marc Benioff @ FQ2:19 Salesforce.com Earnings
Call (8/18). Salesforce Connections 2018 Keynote Address, Adidas Annual Report (2018)

2018

135

Stripe + Slack = Collect Data to…
Manage Direct Customer / Subscriber Relationships
StripeStripe = Transaction Management

Stripe Billing…the most innovative companies are establishingrecurring relationships with their customers.
As these businesses iterate to find the best pricing &sales strategy, they’re often unnecessarily constrained bywhat their billing system allows.
[Customers] needed to do more than just simple
subscription management. Based on feedback from manyof our customers & others, we built Stripe Billing toprovide fast-growing businesses the tools to move quickly& design billing around customer experience.

6.0x

3.5x

1.0x
2016

Noah Pepper – Stripe, Engineering & Product Management, 4/18

Slack = Effective Billing of Users

2017

2018

2019YTD

Slack
Paying Share of Total Users

Slack recently launched Fair Billing Policy & it
makes our customers say 'Wow, that's amazing.‘
They'll tweet about it, tell their friends about it.
They'll be very happy with us. They'll be much more
likely to renew. They have a positive impression.
That positive impression, obviously,
makes a huge difference.
Stewart Butterfield – Founder / CEO, Slack, 7/15

Paying Share of Total Users

50%

25%

0%
2015

2016

2017

2018

Source: Stripe blog post (4/18). Stripe (6/19). Slack public disclosures (2015-2018). Stewart Butterfield Interview with SaaStr (7/15).

Internet Trends
2019

136

Plaid + Betterment = Collect Data to…
Improve Consumer Decision Making
Plaid = Financial Data AccessOur goal at Plaid is to build the infrastructure thatenables consumers to easily & securely share theirfinancial data with any financial services app thathelps them live healthier financial lives.
Zach Perret – Plaid, Co-Founder / CEO, 6/19

Bank Accounts Connected with Plaid

In the past, financial services were organizedgeographically – a bank would serve a local population& offer whatever services it thought that area needed –which often meant many consumers were underserved.
Today, a new class of user-centric financial services
companies are emerging that use data to tailor theirservices to the specific needs of individual consumers.

PlaidBank Accounts Connected
180MM

90MM

0
2015

2016

Betterment = Automated Financial Management

2017

2018

2019

Betterment
Assets Under Management

Emotions drive human behavior, especially when it
comes to money – people often engage in sub-optimal
behaviors like trying to time the market.
Delivering high quality automated financial advice
in real-time at scale requires access to consumers’
financial data. We’re able to use data from Plaidand other sources to deliver personalized, low-costfinancial advice to more than 450,000 customers.
Jon Stein – Betterment, CEO, 6/19

Assets Under Management

$20B

$10B

$0
12/15

9/16

Source: Plaid (6/19). Betterment disclosures and press releases (3/16-6/19).
Bank accounts connected refers to accounts connected to 3rd party services via Plaid.

Internet Trends
2019

6/17

3/18

12/18

137

Slack + HelloFresh = Manage Connections to…
Organize Internal + External Communication
Slack = Communication Channels

Slack

What Google is doing for the web,
we’re trying to structure by channel.
Team-first, organization-first approach tomessages as opposed to individual first.

As individual productivity increases, it's the handoff
between people that gets more complicated.
The talking to other people is the actual work.
Stewart Butterfield – Slack, Founder / CEO, 5/18

Daily Active Users, End of Year

Daily Active Users
12MM

6MM

0
2014

HelloFresh = Feedback Mentoring

2016

2018

HelloFresh
Annual Orders
30MM

Whenever someone mentions HelloFresh,the bot pushes these notices into a Slackchannel. They’re similarly alerted wheneverthey get a review of their app on theApple Store or Google Play.

Annual Orders

HelloFresh uses Slack bots tomonitor social media.

15MM

HelloFresh – 9/17

0
2016

2017

2018

Source: Slack Public Press Releases, Stewart Butterfield Interview With Inc. (5/18). Slack Public Case Study, Twitter (4/19) Hello Fresh Annual Reports.

Internet Trends
2019

138

Twilio + Shopify = Manage Connections to…
Communicate with Customers via Multiple Channels
TwilioTwilio = Customer Communication

Customers

We want to provide one system that allows
companies to keep up with this rapidly changing
landscape & constantly iterating on those customer
experiences with easy to use tools & infrastructurethat they don’t have to worry about scaling.

Customers, End of Year

15 years ago, talking to customers meant you
had a phone number & customers could call it.
Now, you’ve got text messaging, chat,mobile apps with push notifications, WeChat,
WhatsApp, Facebook Messenger.

80K

Jeff Lawson – Twilio, Founder / CEO. 11/17

40K

0
2014

2016

Shopify = Multi-Channel Dialog

2018

Shopify
Active Merchants

We want to create an easy experience for ourcustomers…we want to establish trust &form a human relationship with our customers[merchants] when they reach out for
support on our platform.
It is essential to give our team the tools to cultivate
those relationships from anywhere in the world on
the channels that our customers want to use.
Chris Wilson – Shopify, Merchant Operations, 11/18

Active Merchants, Global

900K

450K

0
2014

Source: Twilio Releases / Case Study (11/18). Jeff Lawson interview with BlogGeek.me (11/17).
Shopify active merchants per Brian Essex @ Morgan Stanley.

Internet Trends
2019

2016

2018

139

Segment + Meredith = Manage Connections to…
Organize Customer Data Across IT Systems
Segment = Customer Data Infrastructure

Segment
Annual Recurring Revenue

Today’s customers expect highly relevant,contextualized experiences wherever they interact witha business. However, this is an extremely difficult
technology problem to solve.
Businesses are interacting with customers acrossdozens of digital channels, leading to a tangled messof data that is siloed throughout their organization.

Customer Data Infrastructure solves this problem.
It allows companies to collect, manage & easilyroute their first-party data to whichever application
requires it, ensuring customer experiences are
consistent and relevant.
Peter Reinhardt – Segment, Co-Founder / CEO, 6/19

Meredith = Content Recommendation

Before adopting Segment, we were spending far too
much money on disjointed analytics & we had
no way to look at the entire network at scale…
We now look across the entire organization to make sure
we’re best serving all of these groups.
Grace Preyapongpisan & Kerry-Anne Doyle –Meredith, Business Intelligence, 1/18

Digital Advertising Revenue (% of Total)

Segment has enabled us to streamline
the customer data capture process,while maintaining flexibility to customize
for each of our 36+ magazine brands as needed.

Meredith
Digital Advertising Share of Total
40%

20%

0%
2012

2015

2018

Source: Segment, Peter Reinhardt Blog Post (9/18). Segment Release (2018) Meredith Annual Reports (2012-2018). Note: Meredith digital advertising reflects National Media segment.

Internet Trends
2019

140

Snowflake + Instacart = Optimize Data to…
Improve Analytics / Recommendations / Personalization
Snowflake = Broad Data AccessSnowflake
Monthly Active Customers

There's a lot of value in business data, but mostcompanies struggle to extract that value.

~2,000The issue is with existing technology. The list ofchallenges we hear from our customers is consistent:
Data is segregated into separate silos,
significant energy goes into managing
infrastructure, concurrency & resource
limitations get in the way of business needs &overall the tools are hard to work with.
Snowflake's unique architecture solves these problems
being built from the ground up to leverage the scale,performance & elasticity of the cloud.
Frank Slootman – Snowflake, CEO, 6/19

2014

2015

2016

Instacart = Product Replacements

2017

2018

2019

Instacart
Households Covered

Every time an Instacart shopper scans an item into
their cart or marks an item as “not found,” we get
information that helps us make granular predictions ofan item’s in-store availability. This helps us
recommend appropriate replacements foritems likely to be out-of-stock.
Among other improvements, performing
complicated feature engineering in our
Snowflake data warehouse instead of python,
this new [item replacement] tool, which scores
15x more items than previous tools, was builtwith 1/5 of the resources in 1/4 of the time.

100MM+

<20MM
2016

2017

2018

Instacart – 12/18

Source: Snowflake (5/19). Instacart (12/18).

Internet Trends
2019

141

Confluent + Accor = Optimize Data to…
Respond to Customer Events at Scale
Confluent = Data / Event / Response

ConfluentAnnual Bookings

Companies are still running on tech from batch-processera, yet their customers expect experiences withreal-time, contextual information.
Companies are now re-architecting their businesses
around real-time data with a new kind of data
infrastructure called event streaming platforms.

6x

3xWith Confluent, companies can connect all of theirsystems & power applications with live data sources.
Now, they can engage their customers
based on real-time events.

0x
Jay Kreps – Confluent, CEO, 6/19

2014

2015

Accor = Availability Request Processing

2016

2017

2018

Accor
Monthly Requests for Lodging Availability

Accor’s augmented hospitality offerings include 4,800
hotels, resorts, & residences across 100 countries.
As part of a shift to a more connected, real-time
future, Confluent is helping simplify & transformthe booking lifecycle, connecting the data & event
streams that are triggered the second a customer
clicks ‘book,’ from processing the payment & fraud
detection to adding dietary requirements & room
preferences from previous bookings.
Julien Ramakichenin – VP Distributed & Intelligent Systems, Accor, 6/19

6B

3B

0
1/16

1/17

1/18

1/19

Source: Confluent (6/19), Accor (6/19)

Internet Trends
2019

142

Looker + FarFetch = Optimize Data to…
Discover Business Insights + Optimize Fulfillment
Looker = Business Intelligence

LookerCustomers

Looker helps companies better understandall the data they have & I think this has
been a holy grail for a long time.
Companies want to be data-driven. They want
their employees to be able to ask questions& get factual answers.
When we started out, companies didn’t understandthe lifetime value of their customers
completely, & there was this chaos going –we wanted to bring data into the reach of any
company so it could use it more effectively.
Frank Bien – Looker, President & CEO, 8/18

2012

2013

FarFetch = Optimize Order Fulfillment
supply & demand...Emerging brands typically haveno route to the global market & their distribution is limited.
Farfetch has more supply / demand data thananyone else in the luxury fashion industry & is now
supplementing it with even more market data.
Over time, Farfetch will turn that data into strategiccommercial insights to form the basis of advisory for the
fashion industry (starting with the luxury brands) throughthe development of a disruptive insights platform.

2015

2016

2017

2018

FarFetch
Annual Orders (Net Cancellations)

In luxury fashion, there is often a mismatch between

2014

Annual Net Orders

4MM

2MM

0
2015

2016

2017

2018

Farfetch – 3/19

Source: Looker (6/19) San Jose Mercury News (8/18). Farfetch release (3/19).

Internet Trends
2019

143

UiPath + Sumitomo Mitsui = Optimize Data to…
Manage Data Growth & Eliminate Inefficiencies
UiPathUiPath = Data-Driven Process Automation

Customers

UiPath Computer
Vision Training

This leads to greater employee satisfaction &more productive staff who deliver better customer
service experience & positive feedback from
customers.

3.0K
Customers, End Of Year…[Robotic Process Automation’s (RPA)] benefits
compound as employees are freed from theburden of routine, monotonous manual work,
enabling them to focus on high-value tasks suchas improving customer service, enabling front-line
staff to retrieve more data at a faster rate &enhancing every aspect, from the booking
experience to customer service support.

1.5K

0
2016

2017

2018

Daniel Dines – UiPath, Founder / CEO, 4/18

Sumitomo Mitsui

Our key areas of RPA implementation include –information gathering processes used to enhancesales & planning capabilities (customer transaction /industry data) & supporting branch operations(customer performance reports / mortgage loanbrochures).
The anticipated 3MM person-hours of productivity
to be generated over the next 3 years [by using
RPA] will be used to expand value-add operations,like enhancement of sales capacity throughimproved customer proposals.
Sumitomo Mitsui Financial GroupInternet Trends
2019

Share of Customers Using Digital Services

Sumitomo Mitsui = Increase Support Capacity

Digital Customer Penetration*
30%

15%

0%
2016

2017

Source: UiPath. Daniel Dines interview with Aviation & Defense Universe (4/18). Sumitomo Mitsui Banking Corporation press release (11/17) & 2017
annual report (5/18). Digital penetration defined as share of customers using any digital channel to conduct banking operations.

2018

144

…Data Plumbing Tools =Helping Businesses Real-Time
Collect Data…
Understand Customer Wants & Improve Business Processes
Increase Customer Input / Improve ProductsManage Direct Customer / Subscriber Relationships
Improve Consumer Decision Making…Manage Connections…
Organize Internal + External Communication
Communicate with Customers via Multiple Channels
Organize Customer Data Across IT Systems…Optimize Data
Improve Analytics / Recommendations / Personalization
Respond To Customer Events at Scale
Discover Business Insights + Optimize Fulfillment
Manage Data Growth & Eliminate Inefficiencies

Internet Trends
2019

145

Data is now fundamental to how people work &the most successful companies have intelligently
integrated it into everyone's daily workflow…
Data is the new application.
Frank Bien – CEO & President, Looker, 6/19

Internet Trends
2019

146

Data / Artificial Intelligence– Used Properly –Can Improve Customer Satisfaction

Internet Trends
2019

147

Retail Customer Satisfaction =Can Rise With Data + Personalization
Survey of Retail Customers
91%
Prefer Brands that Provide
Personalized Offers / Recommendations

83%
Willing to Passively Share Data in
Exchange for Personalized Experiences

74%
Willing to Actively Share Data in
Exchange for Personalized Experiences
Accenture (Global*)Internet Trends
2019

Source: *Accenture survey of 8,000 consumers in Canada, France, Germany, Italy, Spain, Sweden, The UK, & USA (2018).
Note: Passively sharing data includes things like purchase history, etc. Active sharing data would include brand preference, favorite fabrics, etc.

148

People around the world have called for comprehensive
privacy regulation in line with the European Union’s
General Data Protection Regulation, & I agree…
…[New Regulation] should protect your rightto choose how your information is used —while enabling companies to use information forsafety purposes & to provide services.
Mark Zuckerberg – Co-Founder / CEO, Facebook, 3/19

Internet Trends
2019

149

Data Volume + Utilization =Evolving Rapidly / BroadlyInternet Trends
2019

150

Data Volume = Extraordinary Growth…
~13% Structured / Tagged & Rising Rapidly
New Data Captured / Created / Replicated, per IDC

Data Volume, Annual, Global (ZB)

200ZB

32%

100ZB
16%

Replicated
Data

13%
10%
9% Structured
0ZB
2005

2010

Original
Data
2015

2020E

2025E

2018

Internet Trends
2019

Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere. Note:
1 petabyte = 1MM gigabytes, 1 zeta byte = 1MM petabytes of new data created / captured each year. The grey area in the graph represents
data generated, not stored. Structured data indicates data that has been organized so that it is easily searchable & includes metadata &machine-to-machine (M2M) data. Replicated data = data that is a copy of the original..

151

Data Propagation = Expanding…
Endpoints ⇋ Edge ⇋ Core
ENDPOINT
PeopleEDGE
Branch Offices
CORE
Large
Datacenters,
Including Public &Private Cloud

Connected
Processes

Source: Adapted from Graphics presented in IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere.

Internet Trends
2019

152

Data Stewardship = Evolving…
Enterprise Surpassed Consumer…Cloud Overtaking Both
Data Stored by Manager, per IDC

Share of Total, Global (%)

70%

35%

0%
2010

2012

2014

2016

ConsumerInternet Trends
2019

2018
Enterprise

2020

2022

2024

Cloud

Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere.
Note: Consumer refers to devices owned by end users, such as smartphones, computers, external hard drives, etc. Enterprise refers to datastored by businesses, often in on-premise data centers. Public cloud refers to services such as Amazon Web Services, Microsoft Azure,
Google Cloud, etc. Note: 2018 = last full year before release of report. 2019-2025 are estimated from current trends.

153

Data Volume Share = EMEA Leads…
Followed by Fast Rising China…USA Falling
New Data Captured / Created / Replicated by Region, per IDC

Share of Total, Global (%)

40%

20%

0%
2010

Internet Trends
2019

2012

2014

EMEA

China

2016
USA

2018

2020

2022

Asia (Ex-China)

2024
ROW

Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere. IDC estimatesthat China’s Data captured / created / replicated will grow 30% annually for next 7 years owing to more Internet users creating more data in China &China’s above average usage of video surveillance – video is by far the most data-intensive type of data commonly captured / created / replicated today.
EMEA’s datasphere is the largest in the world today owing, in part, to their mature use of video surveillance technology. Note: EMEA = Europe, Middle
East & Africa. ROW = Rest of World. Note: 2018 = last full year before release of report. 2019-2025 are estimated from current trends.

154

The data-driven world will be always on, always tracking, always monitoring,always listening & always watching – because it will be always learning.
What we perceive to be randomness will be bounded into
patterns of normality by sophisticated artificial intelligence algorithms
that will deliver the future in new & personalized ways.
Artificial intelligence will drive even more automation into businesses & feed
processes & engagements that will deliver new levels of efficiency & productsthat are tailored to business outcomes & individual customer preferences.

Today, companies are leveraging data to improve customer experiences,
open new markets, make employees & processes more productive &create new sources of competitive advantage…
Traditional paradigms will be redefined (like vehicle or white goods ownership)& ethical, moral & societal norms will be challenged…
David Reinsel / John Gantz / John Rydning – IDC, The Digitization of the World – From Edge to Core, 11/18

Internet Trends
2019

155

Data Volume + Utilization…
Technology Change > Human Adaptability

Humans’ ability to adapt totechnological change is increasing,but it is not keeping pace with the speedof scientific & technological innovation.

14

To overcome the resulting friction,
humans can adapt by developing
skills that enable faster learning &quicker iteration & experimentation.

10

Astro Teller – X, The Moonshot Factory
Adapted from Thomas Friedman’s Thank You For Being Late, 2016

Rate of Change

Developing these skills is particularly importantfor policy makers & regulators who are looking
to protect the public interest. They need to beready to try new approaches, iterate &change with the times so tech progressgoes hand in hand with public benefit.

Technology

128

We AreHere
Potential Human
Adaptability Acceleration
Owing to Faster Learning &Smarter Regulation

6

Human
Adaptability

4
2
0

Time

Source: Adapted from quotes originally appearing in ‘Thank you For Being Late’ by Thomas Friedman, 2016. Updated in June 2019 by Astro Teller.

Internet Trends
2019

156

Consumers + Businesses + Regulators =Increasingly Drinking from Data Firehose

Source: The Canadian Press

Internet Trends
2019

157

…INTERNET USAGE =THERE ARE CONCERNS…THERE IS GOODNESSInternet Trends
2019

158

Usage Concern =Overload…

Internet Trends
2019

159

Adults ‘Almost Constantly’ Online =26% vs. 21% Three Years Ago% of Adults Online ‘Almost Constantly’
Overall

By Age Group30%% of Respondents, USA

26%

18-29

36%

2015

39%

2018

21%
28%

30-49

36%

15%
12%

50-64

17%

6%

65+
0%

2015

2018

All Adults
Pew Survey (USA)

8%
0%

25%

50%

% of Respondents in Pew Survey, USA

Source: Pew Research (7/15 + 1/18)

Internet Trends
2019

160

Social Media =Positive & Negative
Do Social Media Platforms You Use Make These
Health-Related Factors Better or Worse?

Self-Expression
Self-Identity

Better /Positive

Community Building
Emotional Support
Awareness of Others
Access To Health Info
Real-World Relationships
Loneliness
Average
Depression
Anxiety

Worse /
Negative

Body Image
Bullying
Fear of Missing Out
Sleep Quality / AmountMore Negative

Internet Trends
2019

More Positive

Source: Royal Society For Public Health Survey of 1,479 British teens in ‘early-2017’ Each teen was asked to rate 5 of the most popular social
networks (YouTube, Facebook, Twitter, Snapchat & Instagram) on each dimension. Data presented = average of scores for each social network.
.

161

Digital Media =Users Taking Action to Reduce Usage
Parent Actions to Regulate Children’s
Internet / Phone Usage% of Adults Trying to Limit Personal
Smartphone Use, USA

60%

63%

47%

35%

39%

30%

16%

0%

0%
2017

2018

57%
52%

% of Parent Respondents, USA% of Respondents, USA

70%

Used Digital
Used Used
ParentalDigital
Controls For Used Parental
Controls For
Websites
PhoneControls
Use
Parental
Controls
Parentalfor Websites
2015

for Phone Use
2018

Pew Survey (USA)
Source: Deloitte Mobile Consumer Survey, US (11/18) Pew Research (7/15 + 1/18)

Internet Trends
2019

162

Digital Media =Businesses Taking Action to Help Users Monitor Usage
2018
Major Platforms Launched Wellness / Time Tracking Features
Apple
Screen Time

GoogleDigital Wellbeing

Facebook

YouTubeYour Time on Facebook

Time Watched

Source: Apple, YouTube, Google, Facebook

Internet Trends
2019

163

Social Media Usage = Decelerating…
+1% vs. 6% Y/Y

2.4

16%

1.2

8%

0
1/14

1/15

1/16

1/17

1/18

1/19

Growth, Y/Y (Red Line)

Daily Hours Spent (Blue Bar)

Daily Time Spent on Social Media, Global

0%

Source: Hootsuite & WeAreSocial Digital 2019 report (1/19). Note: 2019 Estimate owing to the fact that users were surveyed in January 2019, before they have completed the year 2019.

Internet Trends
2019

164

…Usage Concern =Privacy…

Internet Trends
2019

165

Digital Media =Privacy Concerns High But Moderating
People More Concerned About Internet Privacy vs. One Year Ago, Global
80%

64%

% of Respondents

52%

40%

2015 – Anthem Health announces that
80MM personal healthrecords were stolen in a
‘sophisticated attack’

2017 – Equifax reveals the personal
financial records ofover 145MM Americans owing to an
unsecured web portal

2016 – Yahoo! reveals that 3B
Customer records, including names,
address & encrypted passwords werebreached

2014 – The New York Times reports on
NSA documents showcasing government
tracking of USA smartphone use

2018 – The New York Times reveals
Cambridge Analytica improperly
accesses 87MM Facebook profiles

0%
2014

Internet Trends
2019

2015

2016

2017

Source: CIGI-IPSOS Global Survey on Internet Security & Trust 2014, 2016, 2017, 2018. 2018 =
24,750 Internet users from 12/29/17-3/5/18. 2017 = 24,225, 2016 = 24,143, 2014 = 23,376.

2018

166

Regulators / Businesses =Improving Consumer Privacy Control
Regulators Mandating
Privacy Rules / Policies

Businesses Improving
Privacy Management

EU - GDPR

California State

Facebook

GooglePassed – 2016
Effective – 2018

Passed – 2018
Effective – 2020

2018

2019

Source: Facebook (5/18). Google (4/18). EU – (3/18) State of California (6/18)

Internet Trends
2019

167

Digital Media =Encrypted Messaging / Traffic Rising Rapidly
Select Messenger MAUs

% of Web Traffic Encrypted

8B
100%

% of Web Traffic, Global

Monthly Active Users

87%

4B

0
2014

2015

2016

2017

53%
50%

0%
Q1:16 Q3:16 Q1:17 Q3:17 Q1:18 Q3:18 Q1:19

Default End-to-End Encryption
Optional / Announced End-to-End Encryption
No End-to-End Encryption

Internet Trends
2019

Source: Google, Tencent, Twitter, Facebook, Apple, Telegram releases & Morgan Stanley estimates. Note: *iMessage2 MAUs calculated by install base of Apple iPhones, asestimated by Credit Suisse (2014-2017). WhatsApp employs end-to-end encryption by default. Facebook Messenger has end-to-end encryption capabilities but users have to
manually enable them. Instagram does not have end-to-end encryption but Facebook is planning to add that feature & make Facebook Messenger encrypted by default (1/19). All
Gmail messages are encrypted at rest and in transit. Fortinet Q3:18 Quarterly Threat Landscape Report (11/18). HTTPS = Hyper Text Transfer Protocol Secure is the secure

168

…Usage Concern =Problematic Content / Activity

Internet Trends
2019

169

More Than Half of Humanity (& Rising) =OnlineInternet Penetration, 2018
60%

Internet Penetration, Global

51%

30%
24%

0%
2009

Internet Trends
2019

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: CIA World Factbook, United Nations / International Telecommunications Union, USA Census Bureau. Internet user data is as of mid-year.
Internet user data: Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency / InternetWorldStats/ Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII / GlobalWebIndex (Indonesia).

170

Media Maxim =People Prefer Negative News (2014)…

We use a lab experiment to capture participants’news selection biases, alongside a survey
capturing their stated news preferences…
regardless of what participants say, they
exhibit a preference for negative news content.
Marc Trussler & Stuart Soroka – Consumer Demand for Cynical & Negative News Frames, 3/14

Source: The Journal of Media Economics (11/14) & The International Journal of Press / Politics (12/15).

Internet Trends
2019

171

…Media Maxim =People Prefer Negative News (1909)

No one attempting to derive an estimate of thepresent conditions in New York from thefront page contents of our many newspapers
could be blamed for concluding that society
is on the verge of deplorable anarchy.
James E. Rogers – University of Chicago Press, Quoting The Evening Post in The American Newspaper, 1909

Internet Trends
2019

172

Problematic Content on Internet =Can Be Less Filtered + More Amplified

Internet Trends
2019

173

Images / Streaming =Can Be More Powerful Than Text
Then
News via Edited Text

Now
News via Live Images

Source: The Library of Congress, The New York Times, Pixabay, Ring

Internet Trends
2019

174

Algorithms =Can Amplify Users Own Patterns
Newsfeeds Curated Using…
SearchHistory

Reading
History

Followed
Accounts

AppInteractions

Followed
Interests

GoogleApple

Twitter

Toutiao

RedditSource: Google, Apple, Twitter, ByteDance, Reddit

Internet Trends
2019

175

Social Media =Can Amplify Trending Topics
Do You Ever Get News or News Headlines from ____ ?
50%

Share of Respondents (%)

43% Facebook

25%

21% YouTube

12% Twitter

0%

2013

2014

2015

2016

2017

2018

Pew Survey (USA)
Source: Pew Research (9/18). Note Survey = 4,581 respondents interviewed between 7/30/18 & 8/12/18 vs. historical data from 2016 & 2013.
Note: Instagram / LinkedIn / Reddit / Snapchat / WhatsApp / Tumblr not shown owing to less than 10% of respondents using them to get news in 2018.

Internet Trends
2019

176

Traditional Media Platforms =Can Amplify Social Media Trending Topics% Articles Citing Content Originally
Posted To Facebook / Twitter (Leading Newspapers*)% Articles Citing Facebook / Twitter

6%

The topics for which
Facebook & Twitter are most commonly
sourced [in newspaper articles] aresimilar across all countries –among them are soft news topics aswell as hard news topics such as
domestic & international politics,
breaking-news events or reportingon movements, the last of whichhighlights the relative advantages ofsocial media as asource for journalists.

3%

Gerret von Nordheim et al. – Sourcing the Sources, 6/18

0%
2010

Internet Trends
2019

2012

2014

2016

Source: Sourcing the Sources – Bournemouth University. *An analysis of the use of Twitter & Facebook as a journalistic source over 10 years in The New York Times, The Guardian,& Süddeutsche Zeitung (leading newspapers in USA / UK / Germany). Analysis conducted by collecting articles from 2006-2016 across all 3 newspapers & running natural language
processing models on the text to identify articles that mention Facebook or Twitter as sources177Social Media =Can Amplify Bad Behavior

I Have Experienced _____ Online

42% = Offensive Name-Calling
32% = Spreading of False Rumors
16% = Physical Threats

Pew Survey (USA Teens)

Source: Pew Research (9/18). Note: survey = 731 respondents age 13-17 interviewed between 3/7/18 & 4/10/18

Internet Trends
2019

178

Motivated Bad Actors =Can Amplify Ideologies

The main terrorist problem in the
United States today is one of individuals
radicalized by a diverse array ofideologies absorbed from the Internet.
Peter Bergen & David Sterman – The Real Terrorist Threat in America - Foreign Affairs, 10/18

Internet Trends
2019

179

Unintended Bad Actors =Can Amplify Misinformation

The Internet plays a role in fostering distinct & polarized
online communities among conspiracy theory believers...
Believers share their opinions & ‘evidence’with other believers but are less willing toshare with people who are criticalof conspiracy theories –with the Internet, conspiracy groups
become more homogeneous & theirbeliefs become stronger over time.
Karen Douglas – Professor of Social Psychology, The University of Kent Writing for The Conversation, 6/18

Internet Trends
2019

180

Extreme Views =Can Amplify Polarization
Polarization has been abetted by many factors. Americans are sorting themselves out
geographically, living in increasingly politically homogeneous neighborhoods.
Social media & the proliferation of media channels via the Internet & TV has played
a role, allowing people to communicate exclusively with people like themselves.
Identity & the growth of identity politics have also played a role – People have gravitatedtoward groups that feel they are in a zero-sum competition against one another.
Francis Fukuyama – Stanford University, Professor of Political Science, 12/18

Distribution of Democrats & Republicans
On 10-item Scale of Political Values, per Pew Research, USA

Pew Survey (USA)Internet Trends
2019

Note: Ideological consistency based on a scale of 10 political values questions (see methodology).The blue area in this chart represents theideological distribution of Democrats & Democratic-leaning independents; the red area of Republicans & Republican-leaning independents. The
overlap of these two distributions is shaded purple. Source: Pew Surveys conducted 1994-2017. Stanford release.

181

Internet Platforms =Driving Efforts to Reduce Problematic Content

90MM

80%

45MM

40%

0

Internet Trends
2019

Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19

0%

10MM

80%

5MM

40%

0

Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19% Videos Removed Before First View (Red Line )Videos Removed for Community Guideline Violations vs.
Share Flagged / Removed Before First View

Videos Removed Owing To Community Guideline Violations

Content Items Removed vs.
% Hate Speech Identified / Removed Before User Report% Hate Speech Removed Before User Reporting (Red Line )YouTubePieces of Content Removed, Excluding Spam (Blue Bar)

Facebook

0%

Source: Facebook Community Standards Enforcement Report (5/19). Pieces of content include posts, photos, videos or comments that were taken down due to violation ofcommunity guidelines. Taking action could include removing a piece of content from Facebook, covering photos or videos that may be disturbing to some audiences with awarning, or disabling accounts. Spam not included due to the scale (Billions of pieces of content removed quarterly. YouTube Community Guidelines enforcement Report (5/19).
YouTube Community Guideline Violations can include sexual content, graphic / violent content, harassment, etc.

182Consumers + Businesses =Driving Efforts to Moderate Problematic Content
Global Independent Fact-Checking Organizations

Independent Fact Checking Organizations, Global

200

The number of media outlets focusedon fact-checking & politicalaccountability reporting has grown
rapidly. Bolstered by new partnerships& technology, more fact-checking took
place during the 2016 election
than in previous elections.
100

Media organizations including NPR& The Washington Post report
record-breaking readershipof their fact-checking work.
Alan Greenblatt – The American Press Institute, 4/17
0
2014Internet Trends
2019

2015

2016

2017

2018

Source: Duke Reporter’s Lab Research (8/18). The Future of Fact-Checking: Moving Ahead in Political
Accountability Journalism, published by the American Press Institute (4/17)

183

We can definitely continue to improve how we manage the YouTube platform…
I see how much improvement we've already made…If you look back 2 years,
there were a lot of articles about how we handled violent extremism…
if you talk to experts in this field today, you can see we've made tremendous progress.
We are an information company - we committed last year to having >10,000 people moderating content…
I see how much progress we've already made. We just made changes to ourrecommendation algorithms for borderline content & we've announced we've seen a
50% reduction in the views coming from recommendations on that content.
If you combine much better policies with technology to do that at scale,I think you can be at a much better place.
Susan Wojcicki – CEO, YouTube, Interview @ Code Conference, 6/19

The Department of Homeland Security has engaged with majorsocial media companies to encourage them to continue to police their websites…
We do see that those efforts are bearing some fruit –I think we have a long way to go & we look forward to continue
to engage with social media companies in that environment.
Brian Murphy – Principal Deputy Undersecretary, Department of Homeland Security, Testimony to USA Congress, 5/19

Internet Trends
2019

184

Perception of Internet (USA) =Largely Positive for Individuals + Society
When You Add Up Internet Advantages & Disadvantages of
The Internet, It Has Been _____ for Me / Society

Share of Respondents

100%

90%

88%
76%

70%

50%

0%

For Me =Mostly GoodFor Society =Mostly Good
2014

2018

Pew Survey (USA)
Source: Pew Research. Poll of 1,785 USA Internet users from 1/3/18-1/10/18 & 2015, released on 4/30/18.

Internet Trends
2019

185

Age-Old Challenge of
Amplifying Good + Minimizing Bad =Taking Rapid Twists & Turns

Internet Trends
2019

186

Global Relationships
Related toInformation + Data =Evolving Differently / RapidlyInternet Trends
2019

187

In a sense, the World Wide Web as we know it is over…
in its place is something altogether different:a Balkanized ‘splinternet’…where your experience
online is determined by local regulation.
Mark Scott – Chief Technology Correspondent, Politico, 12/17 & 2/18

We need a new generation of laws
to govern a new generation of tech.
Brad Smith – President & Chief Legal Officer, Microsoft, 2/18

There’s a paradigm shift going on…
Governments are moving from a position of
non-interference to a realization that
if we want to keep a cross-border Internet going,
then we [need] a new system of governance.
Paul Fehlinger – Co-Founder, Internet & Jurisdiction Policy Network, 2/18
Note: ‘Splinternet’ originated by Clyde Wayne Crews Jr. writing for the Cato Institute in 2001.

Internet Trends
2019

188

Global Internet Freedom…
Partly-Free = Rising…Free / Not-Free = Falling
Freedom House – Freedom on the Net (Global, 2018)
Internet Users Live in a Country Where ______

Internet Population ‘Internet Freedom Status’
40%

55%

35%

Political, social, or religious content
is censored / blocked

Government Internet surveillance
powers have increased over past year

47%
Access to certain social media /messaging platforms have been blocked
42%
Government has disconnected Internet /mobile networks often for political reasons

Share of Population, Global (%)

47%

33%
29%
24%
20%

20%

0%
Free

Partly-Free
2016

Internet Trends
2019

34%

Not-Free2018

Source: Freedom on The Net Reports 2016 + 2018. Note: Freedom on the Net measures the level of Internet & digital media freedom in 65 countries. Each country receives a numerical score from 0 (the most free) to 100(the least free), which serves as the basis for an Internet freedom status designation of FREE (0-30 points), PARTLY FREE (31-60 points), or NOT FREE (61-100 points). Ratings are determined through an examination of
three broad categories – Access (Assesses infrastructural & economic barriers to access). Content Limits (Examines filtering & blocking of websites) & User Rights (Measures legal protections & restrictions on online
activity; surveillance; privacy; & repercussions for online activity, such as legal prosecution, imprisonment, physical attacks, or other forms of harassment. Scores do not add to 100 owing to non-analyzed countries.

189

Global Internet Freedom Framework (Freedom House)
Freedom House Freedom on The Net Index
Measures a country’s level of Internet / digital media freedom, using questions
derived from Article 19 of UN’s Universal Declaration of Human Rights:
Everyone has the right to freedom of opinion & expression; this rightincludes freedom to hold opinions without interference & to seek, receive &impart information & ideas through any media regardless of frontiers.
Countries are given points for: 1) Obstacles to Access; 2) Limits on Content; 3) Violations of User Rights
Free
Countries with low economic / infrastructural / regulatory barriers to Internet access…
minimal blocking / filtering of content / information…strong privacy protections
Partly-FreeCountries with some barriers to Internet access (like state-owned providers handicapping competition)…
some blocking of content / information (like news sites or temporary blocks on social media)…
some privacy violations (like data collection requirements with weak judicial oversight)
Not-FreeCountries with strong barriers to Internet access (like cutting off the internet to certain regions)…strong blocking of content (news sites, opposition figures, permanent blocks on social media)…
rampant privacy violations (like data localization requirements with low judicial independence, unchecked surveillance)

Internet Trends
2019

Source: Freedom House’s Freedom on The Net Reports 2016-2018. Note: Freedom on the Net is a collaborative effort between a small team of Freedom House staff & an
extensive network of local researchers & advisors in 65 countries. Freedom on the Net’s in-country researchers have diverse backgrounds—academia, blogging, traditional
journalism, & tech— & track developments from their country of expertise. In the most repressive environments, Freedom House takes care to ensure researchers’
anonymity or, in exceptional cases, works with foreign nationals living outside their home country.

190

World Wide Web =Webs of Worlds Driven by Local Regulation…
Internet Regulation

Low

Global Internet User %Internet
AccessContent
Regulation

User
Regulation

High

USA

7 Largest EU
Economies*

India

China

8%

8%*

12%

21%

• Diverse regulatory
bodies with varied /distinct powers• Diverse regulatory
bodies with varied /distinct powers• Diverse regulatory
bodies, many with power
to regulate access• Central government
bodies with strong
regulatory power• Privately-owned
telecom infrastructureaccessible to nearly all
residents• Privately-owned
telecom infrastructureaccessible to nearly all
residents• Government initiative toincrease Internet access& usage as a‘public good’• High government
ownership / control of
network infrastructure withability to regulate access• Virtually no content
filtering & strong freespeech protections• Limited content
filtering & free speechprotections• Strong content regulation& no expectation of
speech protection• No political censorship,strong protection for
hosts of user-generated
content• Limited political
censorship, someliability for hosts ofuser-generated content• Event-driven content
filtering often without
direct public input withsome speech protection• Some censorship,
generally to remove‘insulting content’• Regulation to ‘create amore harmonious
digital society’• Some legal privacy
protections related togovernment collectionof user data

• Strong legal privacy
protections related to
any collection of userdata

• Some legal privacy
protections related togovernment collection ofuser data• Ability to collect user
data for regulatory
purposes• Limited regulation on
encryption / securecommunication• Limited regulation on
encryption / securecommunication• Required government
approval for encryption /secure communication• Required government
approval for encryption /secure communication

LegendLimited Regulation

Internet Trends
2019

Moderate Regulation

Strong Regulation

Note: *Based on analysis of Germany / UK / France / Italy / Spain / The Netherlands / Sweden – 7 largest economies in The European Union, representing >70% of The EU GDP in 2018 & a majorityof votes in the EU Parliament…Individual policies vary across The EU, in particular, some eastern European Union countries (e.g., Hungary) significantly limit Internet freedom in stark contrast to
more open EU nations. Analysis also takes into account EU-wide directives, such as GDPR. Source: Adapted from Freedom House 2018 Freedom on the Net Report. Global Internet User % as of2018 per CIA World Factbook, United Nations / International Telecommunications Union, USA Census Bureau. Internet user data is as of mid-year. Internet user data: Pew Research (USA), China
Internet Network Information Center (China), estimates based on IAMAI data (India).

191

…World Wide Web =Webs of Worlds Driven by Local Regulation
Global Internet Regulatory Observations per Foreign Affairs (9/18)
USA

European Union

In 1997, USA negotiated an agreement through the World Trade
Organization that committed 67 signatory countries to‘procompetitive regulatory telecommunications principles’…

The GDPR has…created a blueprint that other states &organizations will study closely as they, too, seek to properly
balance individuals’ rights to data protection with their otherrights & with the legitimate interests of business & government.

As the Internet grew more centralized & as its role expanded,
policymakers failed to keep up. When it came to updating
regulations for online activities…the Internet was treated as a
special realm that did not need regulation & the bad guys took notice.
Karen Kornbluh – Senior Fellow for Digital Policy, Council on Foreign Relations

The law’s main innovation is to establish a bedrock principle ofaccountability. It places responsibility for properly collecting &processing personal data squarely on organizations &extends to individuals the right to prevent their data frombeing collected or processed. The GDPR also gives
individuals the right to insist that their data be deleted.
Helen Dixon – Data Protection Commissioner, Ireland

India

China

When a service provider sends an authentication request to
Aadhaar (India’s National Identity System), the purpose of theauthentication is not revealed; all the government knows is whensomeone uses his Aadhaar number, not where or why.

Chinese leaders want to ensure a harmonious Internet – one thatguides public opinion, supports good governance & fosters
economic growth but also is tightly controlled…

[Aadahaar shows] India’s approach to the Internet
is simple – empower users with the technical &legal tools required to take back control of their data.
Nandan Nilekani – Founding Chair of Unique Identification Authority of India

China has promoted ‘cyber-sovereignty’ as an organizing
principle of Internet governance…China envisions
a world of national Internets, with government control
justified by the sovereign rights of states.
Adam Segal – Chair, Emerging Technologies & National Security, Council on Foreign Relations

Source: ’World War Web,’ Foreign Affairs, September / October Edition 2018

Internet Trends
2019

192

Open Internet =Can Benefit All ConstituentsInternet Trends
2019

193

Open Internet =Core Constituent Motivations

Consumers

Want to Get What They Want Efficiently & Inexpensively
Businesses
Want to Sell Products & Services Profitably
Regulators
Want to Protect Consumers / Businesses / Social Institutions

Internet Trends
2019

194

Open Internet =Online Reviews Can Boost Multi-Sided Accountability…
Do Online Consumer Reviews / Government
Oversight Help ‘A Lot’ to _________
41%

Ensure Safety of
Products & Services

Ensure Safety of Products / Services

33%

Make Companies
Accountable to Consumers

45%

Make Companies Accountable to Consumers

30%

46%

Consumers
Feel
Make Consumers Make
Feel Confident
About Purchases

Confident About Purchases

25%

0%

Consumer Reviews

25%

50%

Government OversightPew Survey (USA)
Source: Pew Research Survey (12/15). N = 4,787 USA Consumers.

Internet Trends
2019

195

…Open Internet =Online Reviews Can Boost Multi-Sided Accountability
Airbnb
Total Host / Guest Reviews on Airbnb

Safety is our number one principle atAirbnb, the whole thing only works if
you feel safe – we have a few hundred
people on our Trust & Safety Team
who really work with the
Airbnb community to facilitate that.
70% of guests – when they stay on
Airbnb – leave a review, whichmeans we’ve built a system thatallows the community to review
properties on Airbnb & build trust.

Total Host Account & Booking Guest Reviews

90MM

45MM

Brian Chesky – CEO, Airbnb, 4/19

0
2013

Internet Trends
2019

2014

2015

2016

2017

2018

Source: Total host / guest reviews per Airbnb (6/19). Each booked trip taken on Airbnb can have 0-2 reviews depending on if the host account and/or booking guest writes a review.
Brian Chesky quote per interview on CBS News (4/19)

196

Reveals / Actions / Reactions
Amplified on Internet =Can Drive Transparency + Rapid Change forConsumers / Businesses / Regulators

Internet Trends
2019

197

Reveal / Action / Reaction…
Twitter = Communication Tool for Citizens…
Humanitarian Concerns
JJ Watt Hurricane
Harvey Relief

Blood
Donors India

Emergency
Rescue$42MM Raised…
1 Year…11K Donations…
1 Year(2017)(2017)…Accident -> Safety<3 Hours(2010)

Source: Twitter (7/10-8/17)

Internet Trends
2019

198

…Reveal / Action / Reaction…
Twitter = Communication Tool for Consumers + Businesses
Consumer / Business Concerns
Starbucks

Glossier

Under Armour

Starbucks Security Policy…
<2 Days…New Packaging…
<1 Day…New Steph Curry Shoe Sizes<1 Week(2019)(2018)(2018)

Source: Twitter (4/18-4/19) Note: Under Armour included ‘Curry 5’ shoes in the ‘Girl’s Shoes’ section of their website & updated sizing nomenclature to “Grade School” rather than ‘Boys.’

Internet Trends
2019

199

Reveal / Action / Reaction…
Social Media = Communication Tool for Citizens + Regulators
Social Media is Important For _________
69%
Getting Government Officials to Pay Attention to Issues
67%
Creating Sustained Movements for Social Change
58%
Influencing Government Policy Decisions
Pew Survey (USA)

Source: Pew Survey of 4,594 USA adults (6/18). Note: Percentages = respondents who responded ‘very important’ or ‘somewhat important’Internet Trends
2019

200

Open Internet =Can Be Messy, But Effective…
Consumer / Business / Regulators =Key to Work Together to
Amplify Good + Minimize Bad

Internet Trends
2019

201

During the first two-decades of the Internet’s growth,
too much faith was put in the technology itself.
Not enough was done to address challenges
such as the spread of surveillance technologies,
abuse of online platforms & the general undermining of trust.
…[governments] should work to establish better baselines &metrics to assess the Internet’s true impact, as well as thekinds of actions that enable the good & mitigate the bad.

Advocates for the open Internet should acknowledge that regulation
can help, while remaining vigilant to unintended consequences.
…all of these stakeholders should continue to forge coalitions
that work across borders in support of flexible, focused &rights-compliant efforts to improve freedom online.
Jason Pielemeier – Policy Director, The Global Network Initiative, Council on Foreign Relations Blog, 7/18

Internet Trends
2019

202

First Step in Long Journey =An Algorithmic Bill of Rights?
Crowdsourced Algorithmic Bill of Rights, per Sigal Samuel @ Vox
1) Transparency
2) Explanation
3) Consent

4) Freedom from Bias
5) Feedback Mechanisms
6) Data Portability
7) Redress8) Algorithmic Literacy9) Independent Oversight10) Federal / Global GovernanceInternet Trends
2019

Source: In early 2019, Vox reached out to 10 experts (including Kartik Hosanagar – original proposer of an Algorithmic Bill of Rights) at theforefront of investigating how Artificial Intelligence risk is creeping into multiple aspects of life. Vox reporter Sigal Samuel asked them each toname a protection the public needs enshrined in law, resulting in a crowdsourced, proposed Algorithmic Bill of Rights.
Full detail available - https://www.vox.com/the-highlight/2019/5/22/18273284/ai-algorithmic-bill-of-rights-accountability-transparency-consent-bias

203

Highly Regulated Internet =Can Favor State Control

Internet Trends
2019

204

A fundamental First Amendment principle is that all persons have access to places
where they can speak & listen & then, after reflection, speak & listen once more.
Today, one of the most important places to exchange views is cyberspace, particularly social
media, which offers relatively unlimited, low-cost capacity for communication of all kinds.
Anthony Kennedy – Former USA Supreme Court Justice – Majority Opinion, Packingham v. North Carolina, 6/2017

If there be time to expose through discussion the falsehood & fallacies,
to avert the evil by the processes of education,
the remedy to be applied is more speech, not enforced silence.
Louis Brandeis – Former USA Supreme Court Justice – Concurring Opinion, Whitney v. California, 5/1927

I urge improving the governance capacity in cyberspace & developinga governing network led by the [Communist Party of China].
Internet media should spread positive information, uphold the correct
political direction & guide public opinion & values towards the right direction.
Internet service providers should take responsibility to prevent cyberspacefrom degrading into a platform full of harmful, false & provocative information.
Xi Jinping – President of The People’s Republic of China, As Translated by Xinhua, 4/2018

Source: USA Supreme Court (6/17). As translated to English by official China State media (Xinhua, 4/18)

Internet Trends
2019

205

Cyber Attacks =Sophistication + Scope Continue to RiseInternet Trends
2019

206

Cyber Attacks =Evolving Sponsors / Targets / Asks / Detection

1) State-Sponsored Actor Attacks = Rising
USA / UK / The Netherlands / Germany Have Publicly Indicted State-Actors2) Large-Scale Data Provider Attacks = Rising
Cloud Providers / Telecoms / Data Brokers Seeing Elevated Attack Activity

3) Monetary Extortion Cases = Rising
Non-Attributable Currencies (e.g., Crypto) Enabling Anonymous Ransom Payments

4) Attack-to-Detection Dwell Time = Continues To Fall
Average Days = 78 (2018)…101 (2017)…416 (2011)

Source: FireEye M-Trends Report 2019

Internet Trends
2019

207

Cyber Attacks =Opportunities Created by Online System Weaknesses
Data Center Operators –Downtime Experienced in Past Year
per Uptime Institute40%

A financial services firm engaged a Mandiant Red
Team to evaluate the effectiveness of its information
security team’s detection, prevention & response
capabilities. The team was able to obtain full
administrative control of the company domain &compromise all critical business applications without
any software or operating system exploits.

Share of Respondents (%)

31%

25%

20%

Instead, the team focused on identifying
system misconfigurations, conducting social
engineering attacks & using the client’s
internal tools & documentation.
FireEye Threat Research, 4/19

0%
2017

Internet Trends
2019

2018

Source: Uptime Institute 2018 Report. FireEye Note: Uptime Institute is a professional services organization best known for its data center tier standards for data
center uptime. Each year, it conducts a survey of 900 data center operators on a variety of topics, including data center outages.

208

2-Factor Authentication =Incomplete Adoption Limits Effectiveness% Sites Supporting 2-Factor Authentication, Global*
60%
54%

52%

30%

Security experts have seen a significant uptick in thenumber of clients securing their VPN or remote accessinfrastructure with multi-factor authentication.
However, there is frequently a lack of multi-factor
authentication for applications being accessedfrom within the internal corporate network.
FireEye Threat Research, 4/19

0%
2014

2015

2016

2017

2018

Source: Elie Bursztein (Security & Anti-Abuse Lead @ Google). analysis of dongleauth.info database data (12/18). FireEye (4/19)

Internet Trends
2019

209

Cyber Attacks =Increasingly Focused on Sensitive Data
Sensitive Records Exposed in Security Breaches

As more & more customers move tosoftware as a service & cloud,attackers are following data.
Attacks against cloud providers,
telecoms & other organizations
with access to large
amounts of data…
increased in 2018.
FireEye M-Trends Report 2018

Annual Records Exposed in Security Breaches, Global

500MM
447MM

250MM
198MM

178MM

37MM
0
2015

Internet Trends
2019

2016

2017

2018

Source: Identity Theft Resource Center (2014-2018). MalwareBytes 2019 State of Malware Report. Note: Trojan malware = malware specifically designed to evade detection by security software.
Observed volume calculated as an average of monthly observations for a quarter. A sensitive record defined as personal information that could be used to commit a crime against a victim exposed 210
due to an online security breach (e.g., bank credentials being accessed illicitly). Variation in number of records often driven by large individual breaches. In 2015, Anthem Health revealed 78MM
personal records via breach. In 2017 Equifax exposed ~150MM personal records via breach. In 2018, Marriott International exposed ~383MM records via breach.

Cyber Attacks =Effects Amplified by State SponsorshipStates are using the tools of cyberwarfare
to undermine the very foundation of the Internet: trust.
They are hacking into banks, meddling in elections, stealing
intellectual property & bringing private companies to a standstill.
The result is that an arena that the world relies on foreconomic & informational exchange has turned into an active battlefield.

Cyber-operations are emblematic of a new style of competition…
In operation after operation, many of them hardly registeredby the wider world, states are weaponizing the Internet.
All these incidents occurred in a gray zone of conflict –below the threshold of outright war
but above that of purely peacetime behavior.
Michèle Flournoy & Michael Sulmeyer – Co-Founders, WestExec Advisors, Foreign Affairs, 9/18

Internet Trends
2019

211

WORK =STRONG ECONOMIC INDICATORS…
INTERNET-ENABLED SERVICES / JOBS HELPINGInternet Trends
2019

212

Global Relative GDP (Current $) =China + USA + India Rising…Europe Falling
Global GDP Contribution (Current $)% of Global GDP

40%

40%

26%

25%
22%

20%

15%

6%
4%
3%
0%
1960

7%
3%
1970
USA

1980
Europe

1990
China

India

2000

2017

Latin America

Source: World Bank (GDP in current $). Other countries account for ~30% of global GDP.

Internet Trends
2019

2010

213

Cross-Border Trade = 29% of Global GDP…
Foundational to Global Economy
Trade as % of Global GDP% of Global GDP

40%

20%

0%
1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015 2017

Source: World Bank. Note: ‘World Trade’ refers to the average of Imports & Exports (to account for goods in-transit between years) for all nations.

Internet Trends
2019

214

Global Relative Unemployment Concern = High…
USA = Low…
Are unemployment & jobs among top three worries for your home country?
Ipsos / Reuters Surveys% Respondents Answering Positively

40%

38%
34%

33%

24%
20%

17%
11%

0%

2/17

3/18

3/19

World Average

Internet Trends
2019

2/17

3/18

3/19

USA

Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative sample of >1K
people in 28 representative countries. February 2017 included owing to lack of published March 2017 report. World average reflects average of Germany, Israel, UK, USA, Belgium,
Japan, Poland, Sweden, China, Hungary, Peru, Turkey, India, Australia, Canada, Mexico, Brazil, Russia, France, Argentina, Saudi Arabia, South Africa, South Korea, Italy & Spain.

215

…Global Relative Unemployment Concern…
USA = Materially Below Other Countries…
Are unemployment & jobs among top three worries for your home country?
Ipsos / Reuters Survey (3/19)

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13

Country
ItalySouth Korea
Spain
South Africa
Argentina
India
TurkeyMexicoBrazilSaudi Arabia
RussiaFranceAustralia

Share
69%
66%
61%
57%
49%
44%
44%
38%
35%
34%
33%
32%
30%

Rank
14
15
16
17
18
19
20
21
22
23
24
25

Country
China
CanadaBelgium
Peru
Japan
IsraelHungary
SwedenPolandUK
Germany
USA

Share
29%
27%
24%
22%
19%
18%
17%
15%
15%
14%
11%
11%

Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative
sample of >1K people in USA & other countries. Note: Percentages do not add to 100% because respondents were allowed to pick 3 choices. . .’Internet Trends
2019

216

…USA Relative Unemployment Concern =Low & Falling
Which of following are top three worries for your home country (USA)?
Ipsos / Reuters Surveys

February 2017
Rank Concern
1 Healthcare
2 Crime & Violence
3 Terrorism
4 Unemployment & Jobs
5 Financial/Political Corruption
6 Immigration
7 Moral Decline
8 Poverty & Social Inequality
9 Taxes
10 Education
11 Climate Change
12 Extremism
13 Environmental Threats
14 Maintaining Social Programs
15 Inflation
16 Childhood Obesity
17 Access To Credit

March 2018
Share
36%
33%
31%
24%
22%
21%
20%
19%
17%
16%
13%
12%
9%
7%
6%
3%
2%

Rank Concern
1 Crime & Violence
2 Healthcare
3 Terrorism
4 Financial/Political Corruption
5 Immigration
6 Moral Decline
7 Poverty & Social Inequality
8 Unemployment & Jobs
9 Extremism
10 Education
11 Taxes
12 Climate Change
13 Environmental Threats
14 Inflation
15 Maintaining Social Programs
16 Childhood Obesity
17 Access To Credit

March 2019
Share
35%
33%
29%
23%
23%
23%
19%
17%
15%
15%
14%
12%
10%
7%
5%
2%
2%

Rank Concern
1 Healthcare
2 Financial/Political Corruption
3 Immigration
4 Moral Decline
5 Crime & Violence
6 Poverty & Social Inequality
7 Climate Change
8 Extremism
9 Terrorism
10 Education
11 Taxes
12 Unemployment & Jobs
13 Environmental Threats
14 Inflation
15 Maintaining Social Programs
16 Childhood Obesity
17 Access To Credit

Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative sample of >1K
people in USA. Note: Percentages do not add to 100% because respondents were allowed to pick 3 choices.

Internet Trends
2019

Share
39%
28%
28%
26%
22%
21%
21%
19%
18%
15%
15%
11%
10%
6%
6%
4%
0%

217

Consumer Confidence Index (USA) = High & Rising…
@ 97 vs. 88 Sixty-Five Year Average
Consumer Confidence Index (CCI)

CCI (Indexed to 1966), USA

120

88 =
65-Year Average
60

01954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019

Internet Trends
2019

Source: St. Louis Federal Reserve FRED Database. Note: Indexed to Q1:66 = 100. Consumer Confidence Index (Michigan Consumer Sentiment Index) is abroad measure of American consumer sentiment, as measured through a 50-question telephone survey of at least 500 USA residents each month.

218

Economy / Employment (USA) = Unemployment @ 19 Year Low…
Job Openings @ All-Time High…Wages Rising

$12T

15%

$0
1928

1958

1988

0%
2018

$360

10MM

Median Usual Weekly Wage30%

Job Openings*$24T

Median Real Weekly Earnings,
All Workers Over 16, USA

Job Openings, USA

Unemployment Rate

Real GDP

Real GDP vs.
Unemployment Rate, USA

5MM

0
2000

2006

2012

2018

$340

$320
2000

2006

2012

2018

Civilian Unemployment
Real GDP

Internet Trends
2019

Source: St. Louis Federal Reserve FRED Database, Bureau of Economic Analysis, BLS. Note: Real GDP based on chained 2012 dollars. Unemployment rate = annual average. *A job opening
is defined as a non-farm specific position of employment to be filled at an establishment. Conditions include the following: there is work available for that position, the job could start within 30
days & the employer is actively recruiting for the position. Wages refers to usual weekly earnings of wage & salary workers. Usual weekly earnings represent earnings before taxes & otherdeductions & include any overtime pay, commissions, or tips usually received (at the main job in the case of multiple jobholders). Usual definition per discretion of interviewee.

219

On-Demand Work =Creating Internet-Enabled
Opportunities + Efficiencies

Internet Trends
2019

220

Small Business Enabling Payment Processors =Strong Growth
Square Gross Payment Volume, Global

Stripe Connect – Marketplace Volume Impact*
Per Forrester

$100B

120%

Square Gross Payment Volume

+6.7%

$50B

110%

$0

2014

Internet Trends
2019

2015

2016

2017

2018

100%
Year 0Year 1

Year 2

Year 3

Source: Square SEC filings. Forrester Total Economic Impact Survey on Stripe Connect (Stripe’s Marketplace Product) (7/18). Note: A Total Economic Impact Study is a framework to identify the cost, benefit, flexibility &risk factors for an investment decision. Forrester took a multistep approach to evaluate the impact that Stripe Connect can have on an organization, including stakeholder interviews, customer interviews, the development of acomposite organization based on the characteristics of interviewed Stripe customers & a financial model that incorporates the effects / risks of Stripe Connect, as identified by Stripe’s customers. Based on interview feedback,Forrester determined that a composite organizations would likely have $475MM in annual transaction volume prior to using Stri pe Connect & that Stripe Connect’s features (e.g., improved seller settlement) would result inincreased volume of $47.7MM in Year 1, $66.1MM in Year 2 & $90.6MM in Year 3.

221

On-Demand Services =Growing Rapidly…Benefitting Local Merchants~5% of [USA] restaurant business’s $800B in annual sales is delivered –we’re still in the very early innings ofthe development of on-demand delivery & services.
We started DoorDash to help local businesses…
‘local’ has long been the promise of E-Commerce but no one has found a way
to help local merchants thrive online – that is the space we focus on.
We do this by enabling local merchants to participate in selling convenience.
There are a lot of merchants who are ready to make the transition from selling
experiences to also selling convenience, which can often reduce their costs.
I think this is the biggest business model change in commerce.

Tony Xu – Founder / CEO, DoorDash, 6/19

Internet Trends
2019

222

On-Demand Consumers =56MM + ~2x in Two Years
On-Demand Consumers, USA

60MM

56MM

On-Demand Products / Services –Consumer Spend, 2017, USA

Online Marketplaces

On-Demand Consumers

Transportation

Housing
30MM
25MM

Food Delivery

Health & Beauty

Other
0
2016

2017

2018

$0

$15B

$30B

Consumer Spend, 2017, USA

Internet Trends
2019

Source: National Technology Readiness Survey (4/18). Note: authored by Rockbridge Associates, Inc. & A. Parasuraman & is cosponsored by the Center for Excellence in Service, Robert H. Smith School of Business, University of Maryland. The study isconducted online among a representative sample of consumers in a national panel & represents the views of U.S. adults ages 18 &older. The sample size was 1,032 in 2016 & 1,004 in 2017. The margin of error is +/- 3 percentage points. 2018 figures are estimates.

223

On-Demand Workers =~7MM +22% Y/Y
On-Demand Platform Workers, USA
8MM

6.6MM

On-Demand Workers

5.4MM

3.9MM

4MM

2.4MM

0
2015

Internet Trends
2019

2016

2017

2018

Source: Emergent Research (2015-2018) + Intuit (2017). Note: On-demand workers defined as online marketplace workers including transportation and/or
logistics for people or products, online talent marketplaces, renting out space. Providing other miscellaneous consumer & business services (e.g. TaskRabbit,
Gigwalk, Wonolo, etc.). Workers defined as ‘active’ employees that have done ’significant’ on-demand work within the preceding 6 months.

224

On-Demand Workers =>20MM Applicants on Checkr Platform Since 2015, USA
Checkr On-Demand Platform Applicants, USA

As the on-demand economy continues to
evolve & transform the world around us,
we're seeing a rapid increase in new &supplemental job creation.
Increasingly, this type of work has
become a key driver of economic growth.
Checkr has a front row seat in the on-demand
economy, not only to watch the changes unfold,
but also to provide solutions that shape &strengthen it. Our technology is designed togive employers the information they need tomake informed decisions about their candidates,
while helping them scale & grow their business.

Annual Checkr Applicants, USA

10MM

5MM

Daniel Yanisse – Co-Founder / CEO, Checkr, 6/19
02015

Source: Checkr (2019)

Internet Trends
2019

2016

2017

2018

225

On-Demand Work =Creating Internet-Enabled Benefits
On-Demand Work – Motivations, USA
Previously Unemployed

47%

Learn New Skills

29%

Previously Underemployed27%

Flexible Work Hours

24%

Additional Income

22%

Want to Work with Others

18%

Take Care of Parents

14%
0%

25%

50%

% of Respondents

Source: Wonolo (7/18). N = 1,400 survey respondents

Internet Trends
2019

226

On-Demand Platforms =Big Numbers + High Growth
Real-Time
Platforms

Internet-Enabled
Marketplaces

$0

$2B

2MM

$0

0
Driver-Partners

2014
GMS

1.4MM

250K

0
2014 2015 2016 2017 2018 2019
Lifetime Dashers

Internet Trends
2019

3MM

0

125K

0
2010 2012 2014 2016 2018

Guest Arrivals

Active Listings

VIPKid @ 70K Teachers

Students, Global

Wonolo @ 230K Workers

0.7MM

125MM

2016 2018
Sellers

DoorDash @ 1.3MM Dashers
Onboarded Workers, Global

Lifetime Dashers, Global

Gross Bookings

6MM

0
2012

2014 2015 2016 2017 2018

250MM

900K

110K

450K

55K

0

0
2014 2015 2016 2017 2018

Onboarded Workers

Active Listings, Global

4MM

Teachers, Global

3MM

$4B

Guest Arrivals, Global$30B

Airbnb @ 6MM Listings

Sellers, Global

6MM

Etsy @ 2MM Sellers
Gross Merchandise Sales(GMS), Global$60B

Driver-Partners, Global

Gross Bookings, Global

Uber @ 4MM Driver-Partners

0
2017

2018

Teachers

2019
Students

Uber Source: Uber DoorDash Source: DoorDash. Note: Lifetime Dashers defined as the total number of people that have dashed on the platform through the end of eachyear. 2019 figures are as of 5/19. Etsy Source: Etsy. Airbnb Source: Airbnb, Note: Airbnb 2017 & 2018 Guest arrivals based on estimates from total guest arrivals disclosuresin 2018 & 2019. 500MM guest arrivals have occurred via Airbnb as of 2019. VIPKid Source: Company Press Releases (3/19). Wonolo Source: Wonolo.

227

Remote Work =Creating Internet-Enabled Work
Opportunities + Efficiencies

Internet Trends
2019

228

Remote Workers = Rising…
~5% of Americans vs. ~3% in 2000
% Total – Remote Workers
6%% Workers Working Remotely, USA

5%

3%
3%

0%
2000

Internet Trends
2019

2002

2004

2006

2008

2010

2012

2014

2016

Source: USA census Bureau American Community Survey (ACS) (2000-2017). Note: The US Census releases the ACS survey results in
September for the previous year. ACS = Survey of ~3.5MM Americans over the course of a year.

229Remote Workers =Enabled by Online Collaboration Tools
Remote Workforce (Zapier)Highest-Use Apps on Zapier
By Remote Teams

At Zapier, we’ve found that by using a stack ofcollaboration tools that work well together,our 100% remote team is able to work more
efficiently, regardless of where they’re located.

Y/Y Growth
1/18-1/19

1) Slack+42%2) Google Sheets+59%3) Airtable+37%4) Help Scout+101%

It’s important for us to have the ability to
instantly access a folder, collaborate on ashared document, or chat in real time.
With well-connected tools & processes,
any remote employee can feel more focused,productive & in control of their time.
Wade Foster – Co-Founder / CEO, Zapier, 6/19

Internet Trends
2019

Source: Zapier (6/19). Note Y/Y growth refers to growth in engagement with productivity tools fromJanuary 2018 to January 2019 specifically at remote teams who use Zapier for automation.

230

Remote Work =Creating Internet-Enabled Benefits
Remote Work – Benefits
Flexible Work Hours

47%

Ability to Travel

30%

More Time with Family

14%

Able to Work from Home

13%

Other

3%

0%

25%

50%

% of Respondents

Internet Trends
2019

Source: Buffer in partnership with Doist, Hubstaff, Remote-How, RemoteYear, Trello, Workfrom &We Work Remotely, State of Remote Work 2019. N = 2,471 respondents globally.

231

Zoom by Day…Fortnite by Night?
…Play (via Fortnite)

Work (via Zoom)…

Source: Canva (Pixabay). Nintendo.

Internet Trends
2019

232

ONLINE EDUCATION =BIG NUMBERS + BIG GROWTH

Internet Trends
2019

233

Education Costs (USA)Internet Trends
2019

234

Education Costs =RisingStudent Loan Debt

Undergraduate Tuition & Fees
$2T

Student Loan Debt, USA

Annual Undergraduate Tuition & Fees, USA

$40K

$20K

0
1973

1982

1991

Private Non-Profit 4-Year

Internet Trends
2019

2000

2009

2018

$1T

0
2003

2008

2013

2018

Public 4-Year

Source: Tuition & Fees = College Board, Annual Survey of Colleges; NCES, IPEDS Fall Enrollment data. Average tuition & fee prices reflect in-district charges for public two-year
institutions & in-state charges for public four-year institutions. All figures in 2018 dollars. Debt = College Board, Annual Survey of Colleges; NCES, IPEDS Fall Enrollment data.
Average tuition & fee prices reflect in-district charges for public two-year institutions & in-state charges for public four-year institutions. All figures in 2018 dollars.

235

Post-Secondary Education Enrollment (USA)Internet Trends
2019

236

Offline Education Enrollment =Slowing
Post-Secondary Education – Enrollments*

Post-Secondary Students – % in Only Offline Courses
100%% Students Taking Only Offline Courses, USA

Undergraduate Enrollments, USA

26MM

13MM

0
1970

67%
50%

0%
1986

2002

2 Year Undergraduate

2018

4 Year Undergraduate

Any Graduate

Internet Trends
2019

74%

2012

2013

2014

2015

2016

2017

Year = School Year Beginning in Fall

Source: National Center for Education Statistics (3/18). 2017-2018 are estimates supplied by Chegg. *Note: Decline in Post-Secondary Students only taking offline courses partly driven by student
demographics (e.g., an older student base more likely to be employed while at school). Data through 1995 are for institutions of higher education, while later data are for degree-granting institutions.
Degree-granting institutions grant associate’s or higher degrees & participate in Title IV federal financial aid programs. The degree-granting classification is very similar to the earlier higher education
classification, but it includes more 2-year colleges & excludes a few higher education institutions that did not grant degrees. Some data have been revised from previously published figures.

237

Online Education / Learning =Offline Institutions Expanding Reach

Internet Trends
2019

238

Online Education Enrollment =High Across Diverse Base of Universities
Top 50 USA Post-Secondary Online Enrollment Leaders (2017)
PublicInstitution
University of Maryland
University of Central Florida
Ivy Tech Community College
Arizona State University
University of Florida
Florida International University
Lone Star College System
University of South Florida
University of Texas Arlington
Houston Community College
Valencia College
California State – Northridge
St Petersburg College
Texas Tech University
Penn State University – Main
College of Southern Nevada
Kent State University
Florida State University
University of Houston
University of Cincinnati
University of Illinois at U-C
Ohio State University – Main
Penn State University – World
University of North Texas
Utah State University
N. Virginia Community College
University of ArizonaNorthern Arizona University
California State – Fullerton

Total Enrollment

Private – For Profit
Enrollment
51K
36
35
31
31
30
23
22
21
19
18
17
16
16
16
15
15
15
15
14
14
14
13
13
13
13
13
13
13

Institution
University of Phoenix – Arizona
Grand Canyon University
Walden University
American Public University System
Ashford University
Capella University
Kaplan University – Davenport
Colorado Technical University
Chamberlain College of Nursing
Columbia Southern University
Full Sail University
DeVry University-Illinois

Total Enrollment

Private – Not For Profit
Enrollment
129K
69
53
49
41
38
37
25
24
23
21
19

Institution
Western Governors University
Liberty University
Southern New Hampshire U.
Excelsior College
Brigham Young University
Ultimate Medical Academy
Embry-Riddle
National University California

Total Enrollment

336K

528K

576K

Source: Babson Survey Research Group Grade Increase: Tracking Distance Education in the United States (2018)

Internet Trends
2019

Enrollment
84K
68
64
42
36
16
13
13

239

Online Education Courses =Top Offline Institutions Ramping Online Offerings
Degree Programs @ Top Institutions Moving Online via Coursera
2016

2017

2018

2019

University of Illinois

HEC Paris

Arizona State University

University of Pennsylvania

Master of Business Administration
Master of Computer ScienceMSc of Innovation &Entrepreneurship

Master of Computer Science

Master of Computer
Information & Technology

University of Illinois

University of London

Master of Science in Accountancy

Bachelor of Science in
Computer Science

Macquarie University
Global MBA

University of Michigan
Master of Public Health
Master of Applied Data Science

Imperial College London
Master of Public Health
Master of Applied Data Science

University of Colorado Boulder
Master of Science inElectrical Engineering
Source: Coursera (6/19). Note: Data reflects first year of program offering of active programs on Coursera.

Internet Trends
2019

240

…Online Education / Learning Platforms =Scaling…Different Shapes & Sizes

Internet Trends
2019

241

Online Education Program Managers =2U
2U – Post-Secondary (USA)Why should you pick up your life, quit your job & move toattend school if you can get everything you would receive
normally from that experience over the Internet…
but not sacrifice either quality or the level of relationships –between students & faculty or students & fellow students.
[You can] become a full member of that community,
getting the same degree & the same level of access.

Thousands

Cumulative Classes Broadcast

Live / Real-Time University Classes Broadcast on 2U

Online Graduate Programs

600K

300K

0
2015

2016

2017

2018

2019

Christopher Paucek – Co-Founder & CEO 2U, 11/18

Source: Goldman Sachs Investment Research (5/18). Christopher Paucek Interview with Code (11/18).

Internet Trends
2019

242

Online Education Marketplaces =Coursera…
Coursera – Post-Secondary (Global)
Top Courses, 2018

Learners
40MM

Machine Learning

Stanford

Registered Learners

Learning How to Learn: Powerful Mental Tools to
Help You Master Tough Subjects UC San Diego
The Science of Well-Being Yale
Bitcoin & Cryptocurrency Technologies Princeton
Algorithms, Part I Princeton

20MM

English for Career Development University of Pennsylvania
Financial Markets Yale
Introduction to Psychology University of Toronto
Cómo Hacer una Tesis Universidad Nacional Autónoma de México
02014

Chinese for Beginners Peking University

2015

2016

2017

2018

Learners by Geography
30%
0%

20%
North America

28%
40%
Asia

Europe

20%

11%

60%

80%

South America

AfricaSource: Coursera. Note: Course popularity based on average daily enrollments. Graph shows learners as of 12/18.

Internet Trends
2019

5%
100%

243

…Online Education Marketplaces =Udemy
Udemy – Continuing Education (Global)
Education Marketplace

Instructors + Students

Since most of our students learn in order to advanceat work, we have also focused on building anenterprise solution with over 3,000 curated coursesthat focus on business-relevant skills. This has been
one of the fastest-growing portions of our business,with customers growing +13x since 2015.

32MM

50K

16MM

25K

0

Instructors (Red Line)

From day one, we wanted to create a destination
where anyone could learn skills to improve theirlife at an affordable price.

Students (Blue Bar)

200MM+ Enrollments in 100K+ Courses

0
2015

2016

2017

2018

Eren Bali – Co-Founder, Udemy, 5/19

Source: Udemy (5/19).

Internet Trends
2019

244

Online Education (Post-Graduation Income Sharing) =Lambda School
Lambda School – Post-Secondary (Global)
Income Share Agreements

Students

Active Lambda School Students

2K

The traditional higher education model downloads thefinancial risks to the students. Universities aren’t
incentivized to help students succeed because tuitionis paid up front. Not at Lambda School.
We only succeed when our students do – with our ISA model,
students pay no tuition until they have landed a job earning$50K or more. By aligning the incentives of Lambda Schoolwith those of the student, we eliminate the financial risk.
Ultimately, we help people with raw talent refine their skills &match them with great, high-paying careers they love.

1K

0
1/18

4/18

7/18

10/18

1/19

4/19

Austen Allred – Co-Founder & CEO, Lambda School, 6/19
Source: Lambda School (6/19).

Internet Trends
2019

245

Online Education Learning Tools =Chegg…
Chegg – Post-Secondary (USA)
Subscription Education Support

Services Subscribers

If you learn better by just walking through the steps,
if you learn better by asking questions, if you learn betterby watching videos, we teach you that way.
We are constantly expanding the way we canteach you & the subjects that we're available for,the speed in which we can get you the answer back,the format in which you can consume it.
Dan Rosensweig – CEO, Chegg, 2/19

Services Subscribers

4MM

2MM

0
2015

2016

Source: Chegg, Dan Rosensweig presenting @ Morgan Stanley Technology, Media, Telecom Conference (2/19).

Internet Trends
2019

2017

2018

246

…Online Education Learning Tools =Quizlet…
Quizlet – Consumer Learning (Global)
Customizable Learning Tools

Monthly Active Users

We recognize that technological innovation will continue to
evolve jobs of the future. Educators have the power to equip
students with evergreen skills that will always be necessary ina career, like learning how to learn & fostering a sense of
curiosity to take throughout life. Students can really benefit
from teachers setting a precedent that ongoing learning isnormal & healthy so that incoming employees areagile & able to take on whatever comes their way.

Monthly Active Users

60MM

30MM

Matthew Glotzbach – CEO, Quizlet, 4/19

Source: Quizlet eCampus News Interview (4/19).

Internet Trends
2019

0
2014

2015

2016

2017

2018

247

…Online Education Learning Tools =RemindRemind – K-12 + Post-Secondary (North America)
Teacher-Student-Parent Communication

Monthly Active Users

Monthly Active Users

40MM

20MM

0
2014

2015

Source: Remind (6/19). Peak total monthly active users. Consists primarily of USA + Canada users.

Internet Trends
2019

2016

2017

2018

248

Online Education (Remote Video Chat) =VIPKidVIPKid – Students Age 4-15 (China) + Teachers (North America)
Remote Language Instruction

Students + Teachers
700K

VIPKid Students & Teachers

600K Students

350K

200K

70K Teachers
30K
0
2017

Source: VIPKid (3/19).

Internet Trends
2019

2018

2019

249

Online Education (Virtual Classrooms) =Byju’s
Byju’s – Students Age 9-17 (India)
Paying Students

Video-Based Classes

Paying Students

2MM

1MM

0
3/16

Source: Byju’s (5/19).

Internet Trends
2019

3/17

3/18

3/19

250

Online Learning (Broad-Based Video) =YouTube Educational Content
YouTubeSelected Education Channel Subscribers

4.5B

10MM

Annual Hours of ‘How-To’ Video Viewership

9MM

Views on Booktuber Content

Subscribers

200MM+
5MM

5MM

59%
Gen Z Users Cite YouTube as
Preferred Learning Tool0
Khan
Smarter
Asap
Academy Every SCIENCE
Day

2013

Internet Trends
2019

TEDEd

Crash
Course2019

Source: Google / YouTube (5/19), Pearson / The Harris Poll Beyond Millennials: the Next Generation of Learners survey (8/18). Survey includes
2,587 USA respondents ages 14-40 years old. Note: Hours of ‘How-To’ videos are for the year 2017 and represent videos with ‘How-To’ in thetitle. Booktubers are content creators that share book reviews & discussion groups on YouTube. Views are cumulative.

251

Online Education (Job-Relevant Skills)…
Google = Certifications for In-Demand Jobs...
‘Grow With Google’ IT Support Professional Certificate
Coursera = Cumulative Program Enrollments
120K

$49
Monthly Cost of Coursera Program Courses

8 Months
Average Time Needed to Complete Program

60K

10K+
Learners Who Have Received
Financial Support from Google

0
3/18
Source: Coursera (6/19).

Internet Trends
2019

6/18

9/18

12/18

3/19

252

…Online Education (Job-Relevant Skills)…
Coursera = ~80% Revenue…Business / Tech / Data Science…
Coursera
Top Specializations, 2018

Consumer Learner Revenue by Course Domain, 2018

Data Science
Technology

31%

25%

Other
Business

21%

23%

Job-Relevant Skills, per Coursera*

Source: Coursera (6/19)

Internet Trends
2019

253

…Online Education (Job-Relevant Skills)…
Skill Building = Increasingly Offered by Employers
Coursera Enterprise Partners

Coursera Enterprise Partners

2K

1K

0
3/18

6/18

9/18

12/18

3/19

Source: Coursera (6/19). Note: a Coursera enterprise partner is a company engaged with Coursera to provide employee skillbuilding programs based on Coursera content

Internet Trends
2019

254

Online Education =High Interest…
Retention / Completion Rates Vary

Internet Trends
2019

255

Online Learning (Massive Open Online Courses – MOOCs) =Strong Growth…Completion / Retention Rates Vary
Coursera – Course Completion Rate, 2018
Non-Degree Consumer

Enterprise
100%

100%

Degree Consumer
100%

89%

50%

50%

50%

44%

50%

4%
0%

UnpaidFree
Learners

Paid
Paid
Learners0%Enterprise
Paid
Learners

0%

PaidPaid
DegreeLearners

Source: Coursera (6/19). Note: Completion rate refers to the number of students that finish a course vs. the number that began the course.

Internet Trends
2019

256

Online Education =More Growth + More Users + More Choice…
Lower Cost for Consumers

Internet Trends
2019

257

Online Education Costs =Can Be Lower vs. Offline
Arizona State University
Online Education Programs / Tool

Undergraduate Degree Tuition / Fees (4 Years)
$160K
$145K

The key to lowering cost is the introduction of technology& new methods that help student success.
The key to stimulating [this] innovation is to change the focusof the culture at a university from the faculty to the students.
If you change the focus from faculty‐centric to student‐centric,
you realize you need more tools to achieve certain objectives.
At Arizona State, we need tools for active learning,
adaptive learning (advising tools, artificial
intelligence‐based simulation tools & gaming tools)
all in addition to the faculty & advisors that we have.
Innovation is absolutely essential when you start
thinking about the success of every student.
Michael Crow – President, Arizona State University, 6/16

$80K
$65K
$55K

$0

Arizona
NonResident Resident

Arizona
NonResident Resident

OfflineOnlineSource: Arizona State University (5/19). Wiley Online Library Interview (6/16)

Internet Trends
2019

$55K

258

IMMIGRATION =IMPORTANT TO USA TECHNOLOGY LEADERSHIPInternet Trends
2019

259

USA = 60% of Most Highly Valued Tech Companies Founded By…
1st or 2nd Generation Americans…1.9MM Employees, 2018
Immigrant Founders / Co-Founders of Top 25 USA Valued Public Tech
Companies, Ranked by Market Capitalization
Rank

Internet Trends
2019

Company

Mkt Cap($B)$1,007B
888
875
741
495
239
206

LTM Rev
($B)
$122B
242
258
142
59
51
71

Employees
(K)
131K
648
132
99
36
74
107

Founder / Co-Founder(1st or 2nd Gen Immigrant)-Jeff Bezos
Steve Jobs
Sergey Brin
Eduardo Saverin---*
Larry Ellison /Bob Miner--Max Levchin /Luke Nosek /Peter Thiel /Elon Musk***-Herman Hollerith
Cecil Green /J. Erik Jonsson-2nd, Cuba
2nd, Syria
1st, Russia
1st, Brazil--2nd, Russia /2nd, Iran--1st, Ukraine /1st, Poland /1st, Germany /1st, South Africa-2nd, Germany
1st, UK /2nd, Sweden

Generation

1
2
3
4
5
6
7

Microsoft
AmazonApple
Alphabet / Google
Facebook
Cisco
Intel

8

Oracle

182

40

137

9
10

Netflix
Adobe

158
136

17
10

7
21

11

PayPal

134

16

22

12
13

Salesforce
IBM

125
118

14
79

35
351

14

Texas Instruments

104

16

30

15

NVIDIA

89

11

13

Jensen Huang

1st, Taiwan

16

Qualcomm

84

21

35

Andrew Viterbi

1st, Italy

17

Booking.com

77

14

25

--

--

18
19
20
21
22
23
24

Uber
Automatic Data Processing
VMwareIntuitServiceNow
Workday
Micron

75
73
69
67
51
48
38

12
14
9
7
3
3
30

22
57
23
9
8
11
36

25

Cognizant

36

16

282

Garrett CampHenry Taub
Edouard Bugnion--Aneel Bhusri-Francisco D'Souza /Kumar Mahadeva

1st, Canada
2nd, Poland
1st, Switzerland--2nd, India-1st, India** /1st, Sri Lanka

Source: CapIQ as of 6/7/19. *While Andy Grove (from Hungary) is not a co-founder of Intel, he joined as COO on the day it was incorporated. **Francisco D’Souza is aperson of Indian origin born in Kenya. ***Max Levchin / Luke Nosek / Peter Thiel’s startup Confinity merged with Elon Musk’s startup X.com to form PayPal in 3/00.

260

USA = Many Highly Valued Private Tech Companies Founded By…
1st Generation Immigrants
Company

Founder /Co-FounderCountry of
OriginWeWorkAdam Neumann

Israel$47B

Elon Musk

South Africa

31

Crowdstrike
AffirmIreland23

Databricks

SpaceX
StripeJohn Collison
Patrick Collison

Valuation($B)

PalantirPeter Thiel

Germany

21

Epic GamesMark Rein

Canada15

Tony Xu

China

13

Canada9

Apoorva Mehta

India

8

Stewart Butterfield

CanadaSerguei Mourachov

RussiaCal Henderson

UK

DoorDash
Wish
Instacart
Slack

UiPath*TaniumUnity Technologies

RobinhoodPeter Szulczewski
Danny Zhang

RobloxMedallia

Romania7

LimeDavid Hindawi

Iraq

7

David Helgason

Iceland

Zume Pizza
Gusto

Nicholas Francis

Denmark

6

Lemonade

Joachim Ante

Germany

Baiju Bhatt

India

Daniel Dines
Marius Tirca

LegalZoom
6

Bulgaria

Ori Allon

Israel4

Credit Karma

Kenneth Lin

China

4

Israel4

Adi Tatarko
Alon Cohen
Marcin Zukowski

Netherlands

Benoit DagevilleFranceThierry Cruanes

FranceBipul Sinha

India

Arvind Nithrakashyap

India

Arvind Jain

India
India

Zoox

Soham Mazumdar
Tim Kentley-Klay

Australia

3

Oscar Health

Mario Schlosser

Germany

3

RubrikInternet Trends
2019

Automation Anywhere

Confluent

Vlad Tenev

Snowflake

Nuro

7

Compass

Houzz

Company

4

3

Avant
ApttusPostmates
Sprinklr
Cloudflare
Carta
ZocDocWarby Parker
Carbon3D
Pony.ai
ServiceTitan
Segment
Quanergy

Founder /Co-FounderCountry of
OriginValuation($B)

Dmitri Alperovitch
Max Levchin
Ali Ghodsi
Matei Zaharia
Ion Stoica
Jiajun Zhu
Dave Ferguson
Ankur Kothari
Mihir Shukla
Neeti Metha Shukia
Rushabh Parm
Jun Rao
Neha NarkhedeDavid Baszucki
Borge Hald
Toby Sun
Brad BaoAlex Garden
Tomer London
Shai Wininger
Daniel Schreiber
Brian Lee
Al Goldstein
John SunPaul Zhang
Krik Krappe
Bastian Lehmann
Ragy ThomasMichelle Zatlyn
Manu Kumar
Oliver Kharraz
Dave Gilboa
Alex Ermoshkin
James Peng
Tiancheng Lo
Ara Mahdessian
Vahe Kuzoyan
Ilya Volodarsky
Tianyue Yu

RussiaUkraineSwedenRomania
RomaniaChina
New Zealand
India
India
India
India
China
India
CanadaNorway

$3B
3

China

2

CanadaIsrael22Israel2South Korea
Uzbekistan
China
China
UK
Germany
India
CanadaIndia
Germany
SwedenRussia

2

China

2

Iran
Armenia
RussiaChina

Source for Valuation & Founders Backgrounds: Based on analysis by Pitchbook, Wall Street Journal, CB Insights, Forbes, Business Insider, &the National Foundation for American Policy. *UiPath is headquartered in New York, NY but was originally founded in Romania.

3
3

3

3
2
2

2
2
2
2
2
2
2
2
2

2
2
2

261

USA = 14% of Population Foreign-Born & Rising…
Near All-Time High (1910) @ 15%

360MM

16%

180MM

8%

0
1907

1929

Foreign-Born Population

Internet Trends
2019

1951

1973

USA-Born Population

1995

Foreign-Born % of Total (Red Line)

USA Population (Blue + Grey Area)

USA Population vs. Foreign-Born % of Total Population

0%
2017

Foreign % Total

Source: Migration Policy Institute (MPI) tabulation of data from U.S. Census Bureau, 2010-2017 American Community Surveys (ACS) & 1970, 1990 & 2000 Decennial Census. All other data are from Campbell J. Gibson &Emily Lennon, "Historical Census Statistics on the Foreign-Born Population of the United States: 1850 to 1990" (Working Paper no. 29., U.S. Census Bureau, Washington, DC, 1999). Note: The term "immigrants" (alsoknown as the foreign born) refers to people residing in the United States who were not U.S. citizens at birth. This population includes naturalized citizens, lawful permanent residents (LPRs), certain legal nonimmigrants(e.g., persons on student or work visas), those admitted under refugee or asylee status & persons illegally residing in the United States. Population growth figures from St. Louis FRED database.

262

USA INC.* =WHERE YOUR TAX DOLLARS GO*USA, Inc. Full Report – bondcap.com/report/usa/

Internet Trends
2019

263

USA Income Statement =-18% Average Net Margin Over 30 Years
USA Income Statement
F1988

F1993

F1998

F2003

F2008

F2013

F2018

Comments$909
6%$1,154
6%$1,722
9%$1,782(4%)$2,524(2%)$2,77513%$3,330
0%+5% Y/Y average, 1988-2018

Individual Income Taxes*% of Revenue

$401
44%

$510
44%

$829
48%

$794
45%

$1,14645%$1,31647%$1,68451%

Largest driver of revenue

Social Insurance Taxes% of Revenue

$334
37%

$428
37%

$572
33%

$713
40%

$900
36%

$948
34%

$1,17135%

Social Security & Medicare payroll tax

Corporate Income Taxes*% of Revenue

$95
10%

$118
10%

$189
11%

$132
7%

$304
12%

$274
10%

$205
6%

Fluctuates with economic conditions

Other% of Revenue

$79
9%

$99
9%

$133
8%

$144
8%

$174
7%

$237
9%

$271
8%

Estate & gift taxes, duties / fees…

$1,064
6%$1,4092%$1,6523%$2,1607%$2,9839%$3,455(2%)$4,1093%

Entitlement / Mandatory% of Expense

$448
42%

$671
48%

$859
52%

$1,18255%$1,59553%$2,03259%$2,522
61%

Risen owing to rising healthcare costs +aging population

Non-Defense Discretionary% of Expense

$174
16%

$247
18%

$282
17%

$419
19%

$522
18%

$577
17%

$639
16%

Education / law enforcement /transportation / general government…

Defense% of Expense

$291
27%

$292
21%

$270
16%

$405
19%

$612
21%

$626
18%

$623
15%

2008 increase driven by War on Terror

Net Interest on Public Debt
% of Expense

$152
14%

$199
14%

$241
15%

$153
7%

$253
8%

$221
6%

$325
8%

Recent benefit of historic low interest rates($155)(17%)($255)
(22%)

$69
4%

($378)(21%)($459)(18%)($680)(24%)($779)(23%)-18% average net margin, 1988-2018

Revenue ($B)
Y/Y Growth

Expense ($B)
Y/Y Growth

Surplus / Deficit ($B)
Net Margin (%)

Internet Trends
2019

Source: Congressional Budget Office, White House Office of Management & Budget. *Individual & corporate income
taxes include capital gains taxes. Note: USA federal fiscal year ends in September. Non-defense discretionary
includes federal spending on education, infrastructure, law enforcement, judiciary functions.

264

…USA Income Statement =Net Loses in 45 of 50 Years
USA Annual Profits & Losses$500B

USA Annual Net Profit / Loss

$0-$500B-$1,000B-$1,500B
1969

1976

1983

1990

1997

2004

2011

2018

Source: Congressional Budget Office, White House Office of Management & Budget. Note: USA federal fiscal year ends in September.

Internet Trends
2019

265

USA Entitlements =Medicare + Medicaid Driving Most Spending Growth…
USA Entitlements by Category
1988 Entitlements* =$367B / 34% of Expenses

2018 Entitlements* =$2.2T / 54% of Expenses

30%

USA Mandatory Entitlements

24%
20%

14%

15%

9%
7%

7%
4%

3%
0%
Social Security

Medicare
Medicare

1988
1988
1988
Internet Trends
2019

Medicaid
Medicaid

Income Security

2018
2018
2018

Source: Congressional Budget Office, White House Office of Management & Budget. *1988 Income Security programs
defined as Food Stamps + SSI + Family Support + Child Nutrition + Earned Income Tax Credit + Other. 2018 Income
Security defined as Earned Income Tax Credit + SNAP + SSI + Unemployment + Family Support + Child Nutrition. In
2018, there was an additional ~$302B in mandatory spending, including Veterans’ pensions & ~$81B in 1988.

266

…USA Entitlements =61% vs. 42% of Government Spending Thirty Years Ago
USA Expenses by Category
$1.1T

$4.1T
8%

14%

10%

16%

16%

Debt*
+$14T (+668%)

USA Expenses

15%

50%

1988 → 2018
Change

27%

61%

5%

USA 10Y Treasury Yield

100%

Entitlements+$2.1T (+463%)
Non-Defense
Discretionary+$465B (+268%)
Defense+$332B (+114%)

42%

Net Interest Cost:+$173B (+114%)
0%

0%

1988

Internet Trends
2019

2018

Entitlements / Mandatory

DefenseNon-Defense Discretionary

Net Interest Cost

10 Year Treasury Yield

Source: Congressional Budget Office, White House Office of Management & Budget, USA Treasury*Debt reflects net debt (i.e. excludes debt issued by The Treasury & owned by other Government accounts)
Note: Yellow line represents yield on 10-year USA Treasury bill from 12/31/87 to 12/31/18.

267

USA Entitlements Growth Over 30 Years =Looking @ Numbers…Closer to Home
2017…
$61K =Median USA Household Income$17K =
Average Entitlement Payout per Household from Federal Government…
Scale = Equivalent to 28% of Household Income…1987$26K =Median USA Household Income$4K =Average Entitlement Payout per Household from Federal Government…
Scale = Equivalent to 15% of Household Income

Source: Congressional Budget Office, White House Office of Management & Budget, US Census Bureau

Internet Trends
2019

268

HEALTHCARE (USA) =DIGITAL IMPACT EXPANDING ACROSS ECOSYSTEMCREATED BY NOAH KNAUF @ BOND

Internet Trends
2019

269

Healthcare Cost =High + Rising for Government / Consumers
Health Expenditures –% of Government Total, USA

Health Expenditures –% of GDP, 2017, per OECD

30%

USA
USA
SWITZERLAND

SWEDENJAPAN

Health Spend (% of GDP)

Health Expenditure (% of Total Expenditure)

FRANCEGERMANY

15%

CANADA
AUSTRIA
THE NETHERLANDSBELGIUM
GREAT BRITAIN
FINLAND
AUSTRALIANEW ZEALAND
ITALY
SPAIN
GREECECHILE
KOREA
ISRAELHUNGARYIRELANDCZECH REPUBLIC
POLANDMEXICOTURKEY

0%
1987

1992

1997

2002

2007

2012

2017

0%

10%

20%

Government / Compulsory

Voluntary

Total USA Government
Federal Government

Internet Trends
2019State / Local Government

Source: USA Federal + State & Local Healthcare expenditures per the Center for Medicare / Medicaid Studies. Total USA Government
expenditures per USA Bureau of Economic Analysis Data. Total Health expenditure per OECD data includes all public / private healthcare
spend for the year 2017 (some data subject to future revision per OECD).

270

Healthcare Insurance Coverage =Increasingly from Government vs. Employer% of Health-Insured Population, USA
360MM

Enrollees / Beneficiaries, USA

7%
7%
39%
180MM

30%

54%

63%

0
2008

2009

2010

2011
EmployerInternet Trends
2019

2012

2013
Government

2014

2015

2016

2017

Out of Pocket

Source: Kaiser Family Foundation analysis of Census Bureau's American Community Survey (2008-2017). Note: Government = Those
covered by Medicare, Medicaid, or Military / Veteran Coverage. Employer = those covered through a current or former employer or union.
Out of Pocket = Those covered by a policy purchased directly from an insurance company, either as policyholder or as dependent.

271

Healthcare Preventable Deaths / Efficiency =USA Worse vs. Peers
Preventable Deaths per 100K People

Administrative Healthcare Spend % Total, 2016

USA
USA

USA
USA

New ZealandGermany

UK

Switzerland

Germany

Netherlands

CanadaAustralia

Netherlands

CanadaSwedenSwedenNorway

UK
2004
2014

Australia

Denmark

FranceFranceSwitzerland

Japan
0

80

160

0%

3%

6%

Source: Commonwealth Fund Analysis (2017). Preventable deaths defined as deaths due to illnesses that are considered non-fatal with timely formal healthcare treatment, such as
hepatitis, renal failure, thyroid disorder & other chronic illnesses. Administrative spend defined as non-care giving roles, such as billings & collections.

Internet Trends
2019

9%

272

Healthcare =Steadily Digitizing…Driven by Consumers
Consumer Adoption of Digital Health Tools, USA

Online Health Information

Online Provider Reviews

Mobile Tracking

Wearables

Live Video Telemedicine

2015
2018
0%

40%

80%

% of Respondents, USA

Source: Rock Health Digital Health Consumer Adoption Survey. 2018: n = 4,000, 2015: n = 4,017 Americans ages 18+.

Internet Trends
2019

273

Healthcare (USA) =Strong Digital Usage / Adoption

Internet Trends
2019

274

Data Pools =Unlocking Deeper Research Insights
Internet Research = Increasing Accessto Data / Decision-Making Tools

Genomic Testing = Growing Baseof Personal Genetic Data
Annual Consumer Genomics Tests
Conducted on Illumina Equipment, Global

Patient engagement in decision-making has
been associated with increased patientsatisfaction & improved health outcomesInternet use was found to be associated withactive decision-making preference in older
adults. Similarly, health-related Internet use
was positively associated with decisionmaking involvement in older adults.
Cajita, Whitehouse, et al.
Association Between Internet Use & Decision-Making
Preference in Older Adults (2/17)

Genomic Tests

The study analyzed cross-sectional data from1,945 participants of the [USA] National
Health & Aging Trends Study

14MM

7MM

0
2012

2014

2016

Source: Illumina @ JPMorgan Healthcare conference (1/18). National Center for Biotechnology Information (USA, 2/17)

Internet Trends
2019

2018

275

Electronic Health Records (EHR) =Organizing Patient Data
…EHR Usage = Still Early Innings

EHR Adoption = Nearing 100%…

Top Physician ‘Wants’ for Future EHRDevelopment, per Stanford / Harris Poll, 9/18

EHR Adoption, USA
100%

Interoperability

Predictive
Analytics% Using E.H.R. System

67%

43%

Financial / Cost
Data Integration

50%

32%
0%
2004 2006 2008 2010 2012 2014 2016
0%

Internet Trends
2019

40%

80%

Hospitals

Physician’s Offices

Source: Office for National Coordination of Health Information Technology. Stanford / Harris poll of 521 Primary Care physicians in USA (Family
Practice, General Practice, or Internal Medicine) recruited through the American Medical Association. All have been using EHR for at least 1 monthNote: Adoption of EHR refers to any EHR system being used by Office-based physicians or hospitals, does not imply all records are kept electronically.

276

Health Networks =Aligning Provider Teams Across Organizations
Aligned Care Teams =Improving Outcomes @ Lower Cost

Collective Medical =Real-Time Collaborative Health Network

You can either throw a tremendous numberof expensive, scarce bodies at the problem– which isn’t scalable – or you can use
technology. I’m not talking about mere
notifications that an encounter has
occurred, which we also do, but a deeper
level of collaboration.

60MM

1.4MM

30MM

0.7MM

0

Collective Insights, USA (Red Line)

We strive to empower a distributed care teamto act with aligned purpose, aware of what
each individual member is doing –even if representing differing organizations –all united by their shared stewardshipfor the patient.

Collective Acute Visits, USA (Blue Bar)

Network Growth + Patient Impact

0

Chris Klomp – CEO, Collective Medical, 6/19
Acute VisitsInternet Trends
2019

Insights

Source: Collective Medical Technologies Inc. (6/19). *2019E represents annualized data as of 6/19. Note: Acute Visits =Patient-Provider interactions (ED visit, IP stay). Insights = Unique provider-provider actions taken to optimize patient care277

Online Discovery =Improving Accessibility + Availability of Care
Zocdoc =Digital Healthcare Marketplace

Optimizing Perishable Inventory =Accelerating Access to Care

Zocdoc Monthly Patients, USA

While patients who call wait an average of 24days to get in to see a doctor, when booking
online via Zocdoc, the typical appointment
happens within 24-72 hours.
Because of this win/win, in our first market
NYC, one in five new patient-doctor
relationships is established via Zocdoc.
Our other markets are following
the same trajectory.

8MM

Zocdoc Monthly Patients, USA

Healthcare providers partner with
Zocdoc to fill their 20-30% unused,perishable inventory.
This dramatically accelerates access tocare for patients.

4MM

0
2012

2013

2014

2015

2016

2017

Oliver Kharraz M.D. – CEO / Founder, Zocdoc, 6/19

Source: Zocdoc (6/17, 6/19)

Internet Trends
2019

278

On-Demand Urgent Care =Reducing Time to Receive Treatment
On-Demand Access =Combining Convenience + Speed

Solv =
Convenient Care Marketplace
Cumulative Medical Billings Saved, USA

Solv is putting patients in front of aprovider who can treat their
symptoms in as little as 15 minutes.
The benefit this provides
consumers is real.
We’ve already given ~20 years back to
consumers who typically spend 2 hours
between booking an appointment & getting
their issue resolved.
Heather Fernandez – CEO / Co-Founder, Solv, 6/19

Internet Trends
2019

160MM
Solv Cumulative Medical Billings Saved, USA

No longer are patients okay with waiting
as many as 24 days to see a doctor.

80MM

0
2017

2018

2019

Source: Solv (6/19, 6/17-5/19). Note: Medical Bills Saved = Online appointments scheduled through Solv multiplied by 14% (Proportion of patient reported would have gone to the
ER multiplied by $800 net savings…ER $1,000 vs urgent care $200). Savings could either be out of pocket for consumers or split between the consumer and insurance company.

279

Telehealth / Telemedicine =Strengthening Patient <> Practitioner Relationships
Telehealth Systems =Increasing Hospital Implementation

Teladoc =Remote Medical Care

Telehealth System Adoption, USA

Teladoc Visits, Global
3.0MM

Telehealth Visits, Global% of Hospitals with Telehealth Systems, USA

80%

40%

0%

1.5MM

0
2010 2011 2012 2013 2014 2015 2016 2017

2014

2015

Source: American Hospital Association Fact Sheet: Telehealth (2/19), Teladoc SEC Filings.

Internet Trends
2019

2016

2017

2018

280

Prescription Delivery =Improving Convenience + Affordability
Prescription Drug Expenditures =Rapidly Rising

Nurx =
On-Demand Drug Delivery

Prescription Drug Expenditures, USA

Nurx Monthly Medical Interactions, USA
300K

Nurx Medical Interactions, USA

Prescription Drug Expenditures, USA

$400B

$200B

$0
1960

Internet Trends
2019

150K

0
1970

1980

1990

2000

2010 2018

2016

2017

Source: Centers for Medicare & Medicaid Services (CMS) National Health Expenditures(5/19), Nurx (5/19). Note: Medical Interactions = medical questions & ongoing fulfillment

2018

2019

281

Communication / Professional Community =Extending Knowledge Base to Practitioners
Communication = Increasing Ability
to Address Unique Cases

Doximity =Physician Social Network[A patient] was bitten by a Macaquemonkey & as a result, came down with arare form of encephalitis. A potentially fatal
brain inflammation. His physician used
Doximity to find one of the rare specialist
who could treat this condition.

Doximity Registered Members

Most people don’t realize that referring
patients to the appropriate specialist isn’t
always easy for physicians & our network
makes that process seamless,even in the toughest cases.

Doximity Registered Members, Global

There are only about 20 doctors in theentire U.S. that are expert in this area.
The patient was referred & treatedsuccessfully.

1.2MM

0.6MM

0
2011

2013

2015

2017

Jeff Tangney – CEO / Co-Founder, Doximity, 12/17

Source: Doximity (5/19), Thrive Global (12/17). Members include physicians, physician assistants, nurse practitioners & medical students.

Internet Trends
2019

282

Health Insurance Management =Simplifying + Centralizing User Experience
Modernized Management =Re-Imagining Legacy Systems

Oscar =
Digital Health Management
Oscar Memberships, USA

We have our own claims system we’vebeen building, we have our own clinicalmanagement system, we built our
networks ourselves – pretty much
everything that we do internally to manage
people’s healthcare was reinvented &rebuilt from a technology perspective & sothat’s what we can now go faster toward.

We can hire more engineers, we can hire
more data scientists, more product designers,
more smart clinicians who can think about
health care a different way.
Mario Schlosser – CEO / Co-Founder, Oscar Health, 8/18

Oscar Memberships, USA

300K

150K

0
2014

2015

2016

2017

Source: Oscar Health, Mario Schlosser Interview with Wired (8/18). Note: Oscar data as of the first month of each year based on enrollments timing.

Internet Trends
2019

2018

283

Health Incentive Tools =Driving Positive Choices via Savings + Personalized Rewards
Rewards = Building + Reinforcing
Positive Habits

Rally Health =Incentivizing Healthy Living
Rally Health Cumulative Incentives

Rally Health Cumulative Incentives, USA

$1.6B

$0.8B

$0
2015

Source: Rally Health / UnitedHealth Group (6/19)

Internet Trends
2019

2016

2017

2018

2019

284

Medicare Plan Management =Personalizing Coverage + Costs
Medicare Advantage Enrollments =On the Rise

Clover Health =Matching Plans with Members’ Needs

Medicare Advantage Enrollment, USA

Clover Health Members, USA
40K

Medicare Advantage Members, USA

Medicare Advantage Enrollment, USA

22MM

11MM

0

0
1999

Internet Trends
2019

20K

2004

2009

2014

2018

2015

2016

2017

2018

Source: Kaiser Family Foundation analysis of CMS Medicare Advantage enrollment files (2008-2018) & MPR numbers (1999-2007) from March of
the respective year, with the exception of 2006, which is from April (11/18). Clover Health (3/19). Note: Enrollment includes cost plans & Medicare
Advantage Plans. Approximately 61MM people are enrolled in Medicare in 2018.

2019

285

Healthcare Innovation =Internet Leaders Building Capabilities

Internet Trends
2019

286

Healthcare Innovation =Internet Leaders Poised to Capture Data
Internet Leaders = Increasingly Trusted with Healthcare Data
With which tech company would you share your health data?*
60%

Google53%

Amazon51%

Microsoft

49%

Apple

46%

Samsung

40%

Facebook

34%

IBM
0%

45%

90%

% of Respondents, USA, 2018

Internet Trends
2019

Source: Rock Health Digital Health Consumer Adoption Survey. 2018: n = 4,000. *Note this question was only asked to the 11% of total
respondents that answered ‘yes’ to the question asking whether they’d be willing to share their health data with a tech company.

287

Healthcare Innovation = Apple…
Hardware + App Store Leveraging Research For Consumers
Apple = Democratization of Healthcare

Apple ResearchKit = Medical ResearchTechnology for Consumers

If you zoom out into the future & you
look back, & you ask the question,‘What was Apple’s greatest
contribution to mankind,’
it will be about health.
Because our business has always been aboutenriching people’s lives. We’ve gotten into healthcare
more & more through the Watch, other features
created with ResearchKit & CareKit & including
medical records on the iPhone. This a huge deal.
[Healthcare] is very important for people.
We are democratizing it. We are taking what
has been with the institution & empowering
the individual to manage their health.
We’re just at the front end of this.
Tim Cook – CEO, Apple, 1/19

Source: Apple. Tim Cook Interview with CNBC (1/19). Morgan Stanley estimates that 70MM Apple Watch units have been sold from 4/15-3/19.

Internet Trends
2019

288

Healthcare Innovation = Google / Alphabet…
Artificial Intelligence Unlocking Insights for Practitioners
Google =AI Enabled Healthcare

DeepMind Streams =AI Assistant for Doctors + Nurses

If AI can shape healthcare, it has
to work through the regulations ofhealthcare. In fact I see that as
one of the biggest areas where thebenefits will play out for
the next 10-20 years.
We had recently done work on diabetic
retinopathy, it's a cause for blindness,but using AI machine learning we candetect it much better than humans can.
Sundar Pichai – CEO, Google, 10/17

Source: DeepMind (11/18), Google. Sundar Pichai Interview with NDTV (10/17).

Internet Trends
2019

289

Healthcare Innovation = Microsoft Healthcare…
Enabling Healthcare’s Move to the Cloud with AI Solutions
Microsoft =Intelligent Healthcare

Microsoft Health Bot =Troubleshooting Health Issues

The healthcare industry has made great strides
over the last decade in helping digitize healthcare& so the next ten will be about turning thoseassets into better health insights, experiences &outcomes. This is where we can make a big
contribution. Cloud, AI & research capabilities willplay a fundamental role towards the future.
At Microsoft, we’re continuing to learn & growevery day from the extensive set of partnershipsthat we have had in healthcare: over 168,000
healthcare organizations in 140 countries.
Health & wellbeing are central to ourdaily lives. New inventions developedwith our partners using Microsoft AI &machine learning can create a better
future & make healthcare delivery more
personal, affordable & accessible.
Peter Lee – CVP, Microsoft Healthcare, 4/19

Source: Microsoft Industry Blog (4/19)

Internet Trends
2019

290

Healthcare Innovation = Amazon / PillPack…
Consumer-Centric Approach to Medication Management
PillPack = Consumable Healthcare

Prescription Medicine Usage =Increasingly Common
Prescription Medicine Usage, 2019, USA

1-3 prescription drugs

37%

62% Take
Prescription
Drugs>4 prescription drugs

PillPack is meaningfully improving its
customers’ lives & we want to help themcontinue making it easy for people to savetime, simplify their lives, & feel healthier.
We’re excited to see what we can dotogether on behalf of customers over time.

24%

take
Do not Do
takenotprescription
perscription medicine
medicine38%

0%
Jeff Wilke – CEO, Amazon Worldwide Consumer, 7/18

Internet Trends
2019

Source: Kaiser Family Foundation Health Tracking Poll (2/19). Survey of 1,400 USA adults over the age of 18, including 606
over the age of 65, conducted from 2/14-2/19/19. Respondents were asked the question: ‘Do you currently take any
prescription medicine or not? IF YES: How many different prescription drugs do you take?’. PillPack press release (7/18).

30%

60%

% of Respondents, USA

291

Healthcare Cost =High + Rising for Government / Consumers
Health Expenditures% of Government Total, USA

Health Expenditures,% of GDP, 2017, per OECD

30%

USA
USA
SWITZERLAND

SWEDENJAPAN

Health Spend (% of GDP)

Health Expenditure (% of Total Expenditure)

FRANCEGERMANY

15%

CANADA
AUSTRIA
THE NETHERLANDSBELGIUM
GREAT BRITAIN
FINLAND
AUSTRALIANEW ZEALAND
ITALY
SPAIN
GREECECHILE
KOREA
ISRAELHUNGARYIRELANDCZECH REPUBLIC
POLANDMEXICOTURKEY

0%
1987

1992

1997

2002

2007

2012

2017

0%

10%

20%

Government / Compulsory

Voluntary

Total USA Government
Federal Government

Internet Trends
2019State / Local Government

Source: USA Federal + State & Local Healthcare expenditures per the Center for Medicare / Medicaid Studies. Total USA Government
expenditures per USA Bureau of Economic Analysis Data. Total Health expenditure per OECD data includes all public / private healthcare
spend for the year 2017 (some data subject to future revision per OECD).

292

CHINA INTERNET =INNOVATIVE PRODUCTS + BUSINESSESCONTINUE TO IMPRESSPREPARED BY HILLHOUSE CAPITAL

Internet Trends
2019

Disclaimer – The information provided in the following 39 slides is for informational & illustrative purposes only. No representation or warranty, express or implied, is given & no responsibility or
liability is accepted by any person with respect to the accuracy, reliability, correctness or completeness of this Information or its contents or any oral or written communication in connection with
it. Hillhouse Capital may hold equity stakes in companies mentioned in this section. A business relationship, arrangement, or contract by or among any of the businesses described herein may
not exist at all & should not be implied or assumed from the information provided. The information provided herein by Hillhouse Capital does not constitute an offer to sell or a solicitation of an
offer to buy, & may not be relied upon in connection with the purchase or sale of, any security or interest offered, sponsored, or managed by Hillhouse Capital or its affiliates.

293

China Macro Trends

Internet Trends
2019

294

China Near-Term Business Confidence =Fluctuating…

63

80

55

60

47

PBOC Industrial Survey %PMI: Production & Business Expectation %China PMI Business Index + Enterprise Confidence Index (%)

40
2013

2014

2014

2015

PMI: Production and Business Expectation (LS)

2016

2017

2018

2019

PBOC Industrial Survey: Enterprise Confidence (RS)

Source: CEIC, Morgan Stanley ResearchInternet Trends
2019

295

…China Near-Term Consumer Confidence =Fluctuating
China Consumer Confidence Proxy
Based on Average Z-Score* of Household Loans, Consumer Confidence Index, Passenger Car Sales,
Air Passenger Traffic & Catering Consumption

Consumer Confidence Proxy, China

3

0

-3
12/11

Internet Trends
2019

6/12

12/12

6/13

12/13

6/14

12/14

6/15

12/15

6/16

12/16

6/17

12/17

Source: CEIC, Morgan Stanley Research.
*A z-score measures how many standard deviations above or below the historical average a data point is.

6/18

12/18

296

China Service Sector =Continues to Drive Economic Growth
China Service Sector Output as % of Nominal GDP% of GDP, China

60%

30%

0%
1968

Internet Trends
2019

1973

1978

1983

1988

1993

1998

2003

2008

2013

Source: China National Bureau of Statistics, Morgan Stanley Research
Note: Service sector defined as all industries outside of agriculture, forestry, animal husbandry & fishery industries (except support
services to agriculture, forestry, animal husbandry & fishery industries), mining (except auxiliary activities of mining), manufacturing(except repairs for metal products, machinery & equipment), production & supply of electricity, steam, gas, water, & construction.

2018

297

China Urbanization =Rising Rapidly…Room to Grow
Urban Population – % Total Population% of Total Population

100%

50%

0%
1950

1967
USA

1984
Japan

Korea

2001
India

2018

China

Source: CEIC, UN, Morgan Stanley ResearchInternet Trends
2019

298

China Urban Disposable Income Per Capita =Solid +8% Y/Y$6,00026%$3,000

13%

$0

0%

Urban Disposable Income per Capita

Y/Y Growth (Red Line)

Urban Disposable Income per Capita ($, Blue Bar)

China Urban Disposable Income per Capita + Y/Y Growth

Y/Y Growth

Source: CEIC, assumes constant exchange rate of 1USD = 6.9RMB.

Internet Trends
2019

299

China Trade Balance = Current Account Surplus Narrowing…
Rising Outbound Tourism Offsetting Decreasing Net Exports
China Current Account Balance12%% of GDP, China

8%

4%

0%

-4%
2002

2004

2006

Income & Transfer

2008
Service Balance

2010

2012
Goods Balance

2014

2016

2018

Current Account Balance

Source: SAFE, Morgan Stanley ResearchInternet Trends
2019

300

China Share of World Exports =Declining Since 2016 Due to Rising Wages + Aging Labor Force
China Share of World Exports (%)

Share of World Exports %, China

16%

8%

0%
2000

2001

2003

2004

2006

2007

2009

12M Trailing Sum

2010

2012

2013

2015

2016

2018

3M Trailing Sum

Source: Haver Analytics, Morgan Stanley ResearchInternet Trends
2019

301

China Internet User / Usage Trends =Robust Usage Growth
Primarily Driven by Short-Form Video

Internet Trends
2019

302

China Mobile Internet Users =817MM…+9% vs. +8% Y/Y

1000MM

80%

500MM

40%

0

0%
2008

2009

2010

2011

2012

2013

2014

2015

China Mobile Internet Users

Internet Trends
2019

Growth, Y/Y

Mobile Internet Users, China

China Mobile Internet Users vs. Y/Y Growth

Source: China Internet Network Information Center
Note: Mobile Internet User Data is as of Year-End.

2016

2017

2018

Y/Y Growth303

China Mobile Internet Usage (Data) =Continues to Accelerate +189% vs. +162% Y/Y

80EB

240%

40EB

120%

0

0%
2012

2013

2014

2015

2016

China Mobile Data Consumption

Internet Trends
2019

Growth, Y/Y

Mobile Data Usage, China (EB = Exabyte)

China Cellular Internet Data Usage & Growth Y/Y

Source: China Ministry of Industry & Information Technology.
Note: Cellular Internet Refers to 3G/4G Network data.

2017

2018

Y/Y Growth304

China Short-Form Video =Leading User + Usage Growth Across All App Categories
China Short-Form Video – Daily Time Spent

Leading Short-Form Video Platforms – DAUs
250MM

Daily Active Users

Daily Mobile Hours Spent

600MM

300MM

0
4/17
2017-04

125MM

0
4/18
2018-04

4/19
2019-04

2017-04
4/17

DouyinInternet Trends
2019

Source: QuestMobile (4/19). Note: Short-Form Form Videos are typically <5 Minute in Length &include companies such as Kuaishou, Douyin, Baidu Haokan,etc

2018-04
4/18

Kuaishou2019-04
4/19

Haokan305

China Short-Form Video =Driving Incremental Mobile Time Spent Growth
Average Smartphone Time Spent per MAU per Month150
Mobile Short Form Video
Other

Hours per User per MonthFinance
ReadingMusic
75

Shopping
News
Games
Online Video
Browser, Input Method, App Store
Communication & Social Networking

0

Source: QuestMobile (4/19)

Internet Trends
2019

306

China Innovation =Games Driving Transformation of…
Payments / E-Commerce / Retail / Education

Internet Trends
2019

307

WeChat Jump Jump =Simple Game Helped Create Ecosystem of Mini-Programs
UniqloTiao yi tiao (Jump Jump)

Pinduoduo

Tongcheng-ElongeCommerce
89MM+ MAUs

Travel Booking
169MM+ MAUs

WeSingQR CodeXiaoniangao

Entertainment
73MM+ MAUs

Public Transit
48MM+ MAUs

Photos214MM+ MAUs

Brand
~3x Conversion vs. Industry

First Mini-Program Game
100MM+ DAUs in two weeks

Source: WeChat Open Class PRO 2019(01/19), Tencent Global Digital Ecosystem Summit(05/19), MAU per QuestMobile Mini-Programs 4/19.

Internet Trends
2019

308

Alipay Ant Forest =Gamified Philanthropy Can Drive Consumer Engagement
Ant Forest
Accumulate green energy points bycompleting tasks that reducecarbon emission or paper waste(walking / biking / public transit /online & offline payment /recycling / used goods…)

Protect your virtual tree
green energy points or‘collect’ friends’ points by
waking up early &checking in often

Ant Financial & other charity
partners turn virtual tree
green energy points into
real trees to combat
deforestation

500MM
Cumulative Users of Ant
Forest* within Alipay

100MM
Real Trees Planted*~4x
Average Alipay
Sessions per User per
Day**

Source: *Ant Financial as of 4/19, **QuestMobile as of 4/19.

Internet Trends
2019

309

Pinduoduo = Group Buying…
Social Shopping + Gamified Discounts Drive Growth
Pinduoduo
Trailing 12-Month GMV$100B

Friends Can Play Game &Help Reduce Prices

GMV ($B)

Get Cheaper Price by
Sharing with Friends

$50B

0
Q1:17

Note: Assume FX 1USD=6.9RMB.

Internet Trends
2019

Q3:17

Q1:18

Q3:18

Q1:19

310

Belle / TopSports =Digitization + Gamification Can Drive Same-Store-Sales Lift
Belle / TopSports
Store Associates

Store Managers
Real-time Sales by
Category & SKU

Employee KPIs &Peer Rankings

Gamified Rewards toComplete KPIs

Competitive Sales
Games vs. Peer StoresSource: Belle.

Internet Trends
2019

311

Online Education =Structured Fun Games Drive Learning

TAL (XRS) Online

Coding Cat

Cartoon + Students PK

Turning Math Learning Into Games

Games of Codes

Enhanced Learning Experience

Internet Trends
2019

312

China Innovation =Internet-Based
Products + Business Models

Internet Trends
2019

313

China Chat =Enabler of Transactions & Services

Internet Trends
2019

314

WeChat Innovation =Evolution from Chat to Mini-Programs / Payments

WeChatPublic Account

WeChatMini-Programs

WeChatMini-Programs

WeChatIntegrated Payment

Following

Browsing Items

Placing Order

Finishing Payment

1

2

3

4

Internet Trends
2019

315

Global Rollouts =Kakao / Line / Facebook Incorporate Transaction Features

Kakao

Line

Instagram / WhatsApp

Chat / Music / Payment /Games / Transportation…

Chat / Payment /Food / Coupons…

Chat / Shopping /Money Transfer…

Internet Trends
2019

316

China Local Services =Becoming ‘Super Apps’

Internet Trends
2019

317

Meituan = From Group Buying to Super App…
30+ Services…412MM Annual Transacting Users, +26% Y/Y…
Meituan Mobile App Functions vs. Relevant US Peers

Source: Company Material.

Internet Trends
2019

318

…Meituan Super App…
Growing Consumer Engagement + Transaction Frequency
Meituan # of Transactions per User per Year by Cohort

Source: Meituan IPO prospectus

Internet Trends
2019

319

Alipay = From Payments to Super App…
200K+ Mini-Programs…1B+ Users…70% Use 3+ Financial Services*
AlipayDaily Active Users, China

DAUs, China

300MM

150MM

0

2017-04
4/17

Internet Trends
2019

Source: China DAU per QuestMobile (4/19)，* Categories of financial services provided by
Ant Financial include payment, wealth management, financing, insurance & credit system.

2018-04
4/18

2019-04
4/19

320Global Rollouts =Grab / Rappi / Uber Incorporate ‘Super App’ Features

Internet Trends
2019

Grab

Rappi

Uber

Transport / Food /Payment / Logistics…

Food / Grocery /More…

Transport + Food +e-Bikes + Freight…

321

China Retail =Online / Offline / Omni-Channel

Internet Trends
2019

322

Live-Streaming + E-Commerce = Can Increase…
Transparency + Interactivity + Influencer Engagement
Taobao Live

Kuaishou

MOGU$14B+ Live-Streaming GMV
in 2018

Live-Streaming
Shopping

Live-Streaming = 24% of GMV
4x Repeat Purchase Rate

Internet Trends
2019

Source: Alibaba, MOGU.
Note: MOGU GMV for the year ended March 31, 2019323

Various Online Grocery Retail Formats =Competing For Consumer Wallet Share
Freshippo (Hema) /7Fresh …

Miss Fresh /Dingdong Maicai /Pupu Shengxian…

Xingsheng Youxuan /Songshu Pinpin /Dailuobo…

Meituan /Ele.me / Taoxianda /JD Daojia…

• Owned & operated stores• Pick-up or delivery• Freshippo – 135+ stores• Order in app• 30min delivery to home
• Owned & operated
inventory + fulfillment• Order in app or groupbuy
in WeChat mini-programs• Next day delivery toneighborhood sorting
station + self pick up• Franchised community
partner owner• Order in app• 30min delivery to home
• Fulfilled by partner stores,delivered by Meituan /Ele.me / Taoxianda /JD

Internet Trends
2019

324

Alibaba ‘New Retail’ Strategy =Digitizing Various Offline Retail Verticals
Freshippo / HemaSun Art135+
Grocery Stores

Suning JV

Intime470 Supermarkets
Digitized

ConsumerElectronics

Fashion &Department Stores

Easy Home

Eleme & Koubei

Tmall Store

LingShouTong

Home
Improvement

On-demand Delivery for
2,100+ Starbucks Stores

Rural
Omni-Channel Stores

1MM+ Mom-&-Pop
Stores Digitized

Source: Company Materials

Internet Trends
2019

325

WeChat Groups & Mini-Programs =Improving Customer Relationship Management (CRM) for Retail
Belle / TopSports WeChat Groups & Mini-Programs
Scan QR Code in
Store to Join
WeChat Group

Receive Latest
Product Info via
Sales Associates

Receive Latest
Brand Info via
Public Accounts

Purchase + Checkout
via WeChat
Mini Programs

Source: Belle.
Internet Trends
2019

326

Yonghui Superstores =Creating Digital Grocery Experience @ Offline Stores
Yonghui SuperstoresHome Delivery =~15% of Sales
in Pilot Stores

50% of Home Delivery
Ordered via
WeChat Mini-Program

Red Packets Sharedin Group Chatsto Drive Engagement

Source: Tencent Global Digital Ecosystem Summit (05/19)

Internet Trends
2019

327

China Education =Spreading from Offline to Online

Internet Trends
2019

328

China K-12 Education =Online Augmenting Offline Learning Experience

Xueersi Online (TAL)
K-12 Live-streaming
Group Courses

Internet Trends
2019

Xueersi Shuangshi (TAL)
Online Lecturer +Offline Tutor /Teaching AssistantZuoyebang
K-12 Homework Help(take photos to get answer help)+ Live-streaming Group Courses

329

China Kids (Ages 3-10) Education =Increasing Online Platform Usage Outside of School Hours

VIPKidEnglish 1-on-1 &Small Group Live-Streaming
Online Courses

Internet Trends
2019

Hetao Coding

Code Mao

Coding Recorded
Courses

Coding Live-streaming
Courses330

China Government Services =Online Access RisingInternet Trends
2019

331

WeChat / AliPay = Digitizing Government Services…
500MM+ Consumers

YueShengShi WeChat Mini Program

AliPay Public Services

10MM+ Verified Users in Guangdong Province
500+ Government Services~500MM Cumulative Consumers
Served Across 300+ Cities

Covered
CitiesWait Time
BeforeWait Time
After

Utility Bill Pay

300+~1 Hour~1 MinuteSocial Security
Application240+~1 Hour~1 MinuteTraffic Violation

200+~30 Min~1 Minute

Hospital
Appointment

250+

--

50%
Reduction

Service

Source: Tencent as of 4/19. Ant Financial.

Internet Trends
2019

332

Disclaimer

Bond is a global technology investment firm that supports visionary founders throughout their life
cycle of innovation & growth. Bond’s founding partners have backed industry pioneers such as
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This presentation, including the information contained herein, has been compiled for informational
purposes only & does not constitute an offer to sell or a solicitation of an offer to purchase any
security. Any such offer or solicitation shall only be made pursuant to the final offering documents
related to such security.
The presentation relies on data + insights from a wide range of sources, including public + privatecompanies, market research firms + government agencies. We cite specific sources where data
are public; the presentation is also informed by non-public information + insights. We disclaim any+ all warranties, express or implied, with respect to the presentation. No presentation content
should be construed as professional advice of any kind (including legal or investment advice).
We publish the Internet Trends® report on an annual basis, but on occasion will highlight new
insights. We may post updates, revisions, or clarifications on Bond’s website (www.bondcap.com).
Bond owns significant equity positions in certain of the companies referenced in this presentation.

Internet Trends
2019333