Audaces fortuna iuvat.

BAML MegaTrends European Conference

Technology and Beyond

Andy Brown November 2014

Audaces fortuna iuvat.

Audaces fortuna iuvat.

“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.”

— Niccolò Machiavelli, The Prince

1

Audaces fortuna iuvat.

• Andy is currently CEO of Sand Hill East Ventures (www.sandhilleast.net)• Andy is lead independent director on the board of Moogsoft, and an

independent director on the board of Guidewire (GWRE)• Andy was a Director at ServiceMesh - sold to CSC in November 2013• A founder of Desktone - sold to VMware also in November 2013• Advisor to Cyvera - sold to Palo Alto Networks in March 2014• Andy currently advises Wickr, Lastline, Zscaler & StreetScale IT

• In a prior life Andy was o Group CTO @ UBS 2010-2013o Head of Strategy, Architecture & Innovation @BofA 2008-2010o CTO Infrastructure Credit Suisse 2006-2008o Chief Architect (& Various) Merrill Lynch 1996-2006o Chief Architect Paribas Capital Markets 1994-1996o Senior Engineering Advisor, British Telecom 1988-1994o Stints @Shell Oil and ICI Pharmaceuticals 1984-1988

• Andy holds a BSc. Honors degree in Chemical Physics from University College London

Who Am I?

2

Audaces fortuna iuvat.

Our Key Investment ThesesAt Sand Hill East, we have specific investment themes that guide most of our investments as follows:

• Machine-based learning is the best way to automate analytics, provide insights and surface anomalies

• Mobile is not a verb, it is a state of being• BigData is not inherently useful, as it has to be used in a context people care

about to be monetized• Standardization (in FinTech in particular) is not only a great commoditizer

but also a requirement for the next wave of innovation• People are at the center of many processes and it is equally important to

understand the human aspects as well as the technical ones• Privacy, security and, in particular, encryption are a requirement for data

inside or outside the enterprise• Disruption in FinTech is going to happen because large banks are not focused

on it

3

Audaces fortuna iuvat.

Our Portfolio Has A Strong Security Focus

4

Enterprise/FinTech Enterprise/B2B/B2C Mobile/Social

Audaces fortuna iuvat.

Key Tech Mega-Trends

• Software wins “All the World’s an App”• Mobile wins “Always Connected”• The 5Ws “Analytic Data Trails”• Social wins “Always Informed”• My Device My Life “Wearing the brand”• Human-as-a-Service “Virtualize Expertise”• Integration “Plug ‘n’ Play, not Plug ‘n’

Pray”• Security “Encrypt to Survive”

5

Audaces fortuna iuvat.

All The World’s An App(and we are merely the players)

• Apps are the unit of measure for software• App integration with devices, people and

each other is expected behavior• Apps provide decision support • Open Source is a clear winner• Full Function Multi Device Development • Containers (Docker) become the unit of

measure for server side “Cloud” Functionality– IaaS

• Solutions (SaaS) beat pure products• Information Protection is driven from Apps• Many new verticals emerge (Life Science,

Wellness etc)

Key Sub Trends

6

Audaces fortuna iuvat.

Transition To Cloud Forces SAP To Slash Earnings Projections

• German software maker SAP cut its earnings outlook because more customers are switching to its cloud services

• Taken together, the latest update highlights the tricky balancing act that legacy companies like SAP face as big customers move away from the traditional packaged software business toward cloud-based services

• Cloud services operate on a subscription model, which means less money up front but more regular revenue over time

• SAP is confident that the cloud deals being made today will bolster earnings in future quarters

7

Image Credit: Shutterstock/Pavelk

Source: News360.com; Chris O’Brien

Audaces fortuna iuvat.

All The World’s An App(and we are merely the players)

Key Investment Takeaways

8

IAAS

PAAS

SaaS

vSaaS

Device

iWear

Audaces fortuna iuvat.

Mobile Wins – “We Are Always Connected”

• nG/LTE, NFC, WiFi, Bluetooth and iBeacon define Mobile Ecosystem (ME)

• Large CRE’s (Mall, Tenant buildings) adopt ME

• Applications adapt to guide business process– People are connected & identified everywhere

– Bricks and Clicks deliver “integrated experience”

• Life Science, Wellness and Healthcare processes revolutionized. vHealth emerges

• iWear solutions (contact lens, Watch etc.) will rapidly overtake #s of devices

• Enterprise Services will be delivered on consumer devices & iWear (Voice, Video, Presence, Productivity, etc, etc)

• mPayment = transaction

Key Mega Trends

9

Photo credit: Forbes

Audaces fortuna iuvat.

“Never Mind Software – Mobile Is Eating The World”

10

• It has been three years since Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, wrote his influential essay, “Why Software is Eating the World.” Nothing has changed since then to cast doubt on the ideas he presented

• One big change has occurred, though: The rise of mobile

Source: WSJD 10/28/14

Audaces fortuna iuvat.

Never Mind Software - Mobile beats Web!

11Source: WSJD 10/28/14

Audaces fortuna iuvat.

Never Mind Software – “Email is for Grandparents”

12Source: WSJD 10/28/14

Audaces fortuna iuvat.

Mobile Wins – “We Are Always Connected”

• IBM / Apple partnership has strong potential

• Tech/BioTech cross overs create new revenue streams

• IoT supply chain vendors are very interesting

• Mobile TelCo Data usage will continue to rise

• Droid security addressed

• WiFi/Bluetooth/NFC/iBeacon supply chain has a lot to offer the market

• BI Visualization leaders (DATA, QLIK & Others) will grow >> market

• Big Vendors Oracle/SAP seem to be missing this boat!

Key Investment Takeaways

13

+ ?

Telephony“Voice”

Audaces fortuna iuvat.

The 5 Ws – Analytic Data Trails(Who, What, When, Where, Why)

• I was at the dentist in London this morning for a root canal. I posted on facebook and my friends sent me ice cream

• Context is the most important facet of real time marketing & interaction

• Social and Mobile Data Trails define 5Ws ++ use cases

• “Audience of One” is driven from understanding my5Ws

• Data ownership, protection and controls hugely important

• Insight, Analytics & Alerting solutions will grow• Scariest context is MyHumanGenome• Data of every type every where (FB, Gdrive,

SkyDrive, DropBox, Box, UsendME etc) but not policy managed or encrypted by default

• Privacy emerges as an even bigger global topic…

Key Mega Trends

14

Audaces fortuna iuvat.

Consumer Privacy Is Improving …As Device Encryption Enters Stage

Left

15

Your

Privacy

KEY TAKEAWAY – ENCRYPTION OF CLOUD INFORMATION NEXT;

SIMILARLY ENTERPRISE DATA CENTER’s MOVE FROM PERIMETER TO CONTENT

Audaces fortuna iuvat.

The 5Ws – Analytic Data Trails(Who, What, When, Where, Why)

• Integration of data trails is owned by ‘Appgregators’

• Context based marketing and advertising will define the new generation

• Email marketing

• mobile hooked will succeed

• Traditional email marketing will disappear (SaneMail)

• Business Processes will be lightweight, adaptable and value may be delivered through one killer useful orchestration or function

• Management of and entitlement of data trails very important

Key Investment Takeaways

16

…

Audaces fortuna iuvat.

Social Wins – We Are Always Informed

• Continued growth, expansion and incremental enhancement of major brands• New business models being built on major social hubs• Social “owns” “Face time”, advertising, marketing, mobile• Social Commerce becomes the norm

Key Mega Trends

17

Audaces fortuna iuvat.

Social Wins – “We Are Always Informed”

• FB, TWTR, LNKD continue to lead.

• Overlays, feed consumers to close loop around real time sentiment emerging (e.g. Pivit)

• Contextual Social is a Big Threat to GOOG, YHOO, BING

• AAPL Desktop Search starting to threaten Search giants

• Threat to AMZN, eBay et al but integration can be powerful

• New paradigm for regulation emerges as finance moves into this space

• mPayment and CyberCurrency will drive changes

Key Investment Takeaways

18

Audaces fortuna iuvat.

iBeacon Enabled Business Processes = Apps + Mobile + Social + Payments

19

Above: The mobile customer journey, seen by MobileROIImage Credit: MobileROI

Audaces fortuna iuvat.

iBeacon At Auto Dealerships: Context-Aware VIP Experiences

20Image Credit: MobileROI

Audaces fortuna iuvat.

My Device My Life

• Devices persist, but pace of innovation slows

• Wearables that integrate with Devices via cloud drive extremely high growth

• Traditional Desktop PC is as dead as Monty Python’s Parrot

• Wellness & Illness will dramatically transform

• Services businesses will integrate with Wearables and Devices to make life much easier vs 800 ‘n’ wait

Key Mega Trends

21

Audaces fortuna iuvat.

My Device My Life

• Supply Chain providers to wearables very interesting; Specialized and high barrier to entry

• Vertical integration (Devices, apps, Cloud) remains very interesting. Positions FB, Goog, AAPL positively

• PC ecosystem very negative

• Enterprises that face consumers have to participate or risk antiquity

Key Investment Takeaways

22

Audaces fortuna iuvat.

Human-As-A-Service

• Global Virtual Enterprises emerge with completely different economics than “The Bricks”

• Expertise is acquired as a service and paid for when it is used • Digital training, and expertise acquisition becomes very

important• Education seen as the vehicle to generate wealth. 2nd and 3rd

world countries will lead because they are hungrier

Key Mega Trends

23

Audaces fortuna iuvat.

Human-As-A-Service

• New Service providers unlike ACC, INFOSYS etc emerging

• Aggregators emerge who can connect buy side and sell side of the market

• Orchestrators emerge who integrate aggregators with buy side on a transaction and longer term basis

• Labor becomes a traded market for commodity labor types (e.g. like TopCoder)

• Traditional strongholds of margin such as ERP programs become fewer as cloud wins

Key Investment Takeaways

24

Big N Integrators Strategic consulting

Audaces fortuna iuvat.

Integration – Plug ‘n’ Play Not Plug ‘n’ Pray

• Integration is all about software protocols

• Software defines everything (Security, Storage, Servers, Network), but requires integration

• New technologies being “cloudified” by the day

• Open Source playing big role in standardization but– Appgregators have an opportunity to

deliver significant value proposition

Key Mega Trends

25

Audaces fortuna iuvat.

Integration – Plug ‘n’ Play Not Plug ‘n’ Pray

Key Investment Takeaways

• Technical integration becomes all about the normalization of content, and automation using standard interfaces

• Delivery is Mobile (Phone or Tablet)

• Normalized Content creates context which is the enabler for marketing advertising and useful services

• Mobile app providers are very well positioned to combine Cloud and Appgregation and win in Integration

26

Audaces fortuna iuvat.

Security – Encrypt To Survive

• Technology proliferates, major successful exploits target human weakness via social exploitation– Social Media Scams and Malware Flourish on

Mobile– Prevalence of scams fail to change behavior on

social media• APT biggest issue is zero-day vulnerabilities and

unpatched websites which facilitate watering-hole attacks

• Ransomware attacks grew by 500 percent in 2013 and turned vicious

• Attackers are turning their attention to IoT• Current approaches are failing - Impossible for

enterprises to stay ahead

Key Mega Trends

Source: Internet Security Threat Report 2014 :: Volume 19; Symantec

27

“Financial services firms need to spend much more on security than they currently are”

Jim Cramer after JPMC hack in October 2014

It seems clear at this point that perimeter defense has failed and Encryption of content is required to secure data

Audaces fortuna iuvat.

Security – Encrypt To Survive

• New York's financial regulator told banks in a letter to tighten their cybersecurity, particularly in terms of third-party service providers they might use (Reuters)

• Federal officials also warned companies that hackers have stolen more than 500 million financial records over the past 12 months, essentially breaking into banks without ever entering a building (USA Today)

• "We're in a day when a person can commit about 15,000 bank robberies sitting in their basement," said Robert Anderson, executive assistant director of the FBI's Criminal Cyber Response and Services Branch

Conclusion : Hackers compromise enterprises daily. Consumer Encrypted, now Enterprise Encryption ESSENTIAL! MSSP's only scaleable model.

28

• JPMorgan Chase & Co. announced in October that a recent cyber attack compromised customer information for about 76 million households and 7 million small businesses

J.P. Morgan CEO: “Cybersecurity Spending to Double”

Audaces fortuna iuvat.

Security – Encrypt To SurviveKey Investment Takeaways

• Companies that are specialists in security defense will win (i.e. Horizon, Accuvant, Symantec and Dell Secure Works + Newcos)

• With so much personal data increasingly being aggregated the need for strong security is increasing

• Combinations of vendors will be needed to fight attackers

• Security spending will continue to increase (double) each year for the forseeable future, because threats are

• Encryption will drive the tipping point for public cloud and signal the end of perimeter based defense

29

Enterprise Encryption Vendors (Dell, Symantec, Voltage)

Enterprise Perimeter Defense Vendors

Enterprise APT Defense Vendors

Traditional AV

Audaces fortuna iuvat.

Sand Hill EastQ&A

Contribute to these ideas:http://www.sandhilleast.net/@sandhilleast