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This Venn Diagram encompasses the themes that we see as important drivers of growth and productivity in the world economy for years to come. It is laid out so that each theme intersects with every other theme, in any combination. While there are compelling “pure play” stories in every theme, it is the intersections between these big ideas that are intriguing. By filtering a company through these themes, a clearer picture is formed of how that company relates to the evolving global marketplace.
Energy
Connectivity
Resources
Efficiency
Mobility
Demand
Food
The Connectivity theme continues to drive grass roots, as well as global growth and innovation with no signs of slowing, by redefining and reshaping how we manage our daily lives. Connectivity is instant and ubiquitous. It envelops nearly every aspect of our daily lives -- from the way we manage relationships, to the way we manufacture goods and research, and shop for products and services.
Connectivity enables relationships, industries, currencies, and communities to form at warp speed, along with global security issues, border disputes and trade wars. Summit Creek Capital would never underestimate the influence and impact of The Connectivity theme. Neither should you.
e
New IndustryIn 2010, 3 million tablets were connected to the
mobile network, and each tablet generated 5 times more traffic than the average smartphone.
www.cisco.com
InternetDatingThe online dating industry
is now worth $4 billion worldwide.
of us are already in the cloud
picasa, facebook, salesforce.com
http://computinginthecloud.files.wordpress.com/2008/09/pip_cloudmemo.pdf
69%
The Daily Deal
$6 Billion by 2015 **
Spending on U.S. daily deals could soar as much as $3.9 billion in the next four years, which seems a little conservative based on the figures known about the largest players in the space.
Source: emoney.allthingsd.com
Before the Global Financial Crisis spawned buzzwords like the ‘new normal,’ there was an entire subset of buzzwords regarding the shifting economic paradigm. Acronyms, new words, and phrases such as ‘BRIC,’ ‘Chindia,’ ‘emerging markets,’ ‘developing economies,’ and ‘globalization’ were tossed around in the media with increasing frequency. The phenomena that these terms refer to is the economic growth of a group of countries that were once considered ‘third world.’ Countries such as Brazil, China, India, Indonesia, Malaysia, and Russia, are experiencing growth rates that are far in excess of their larger counterparts in the ‘developed’ world. A generational shift is occurring as the developed world hands off the baton of the world’s consumer to the developing, global middle class. Investing in newly minted consumers is a theme that will drive growth for the foreseeable future.
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New Economies = DEMAND
BET WEEN
2007 & 2009 consumption in emerging m a r k e t s
SURPASSED U. S . c o n s u m p t i o n FOR THE FIRST TIME*
Corporations become more efficient, doing more with fewer employees. Consumers become more efficient, ditching landlines, computers, TVs, and video game consoles for smartphones. When smartphones met e-commerce, the excitement spawned m-commerce, the global marketplace in your pocket. Price checking has never been easier. Nor has growing a small business: start from the ground up, and extend to the cloud. Cloud computing has created operational efficiencies for companies of all sizes, but as server farms grow larger, their proprietors are seeking to become more energy efficient. Energy efficiency discussions extend to appliances, buildings, power grids, server farms,vehicles and pretty much all corners of the physical world.
Investing in efficiency will continue to be one of Summit Creek’s focal points in years to come.
Efficiencies are created as all the themes interact with one another.
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Food + ResouRces: center pivot irrigation increases water efficiency 40-90% versus flood irrigation, yet 90% of the world’s farmland is flood irrigated.
Food + eneRgy + ResouRces:
LED lights and temperature-controlled
rooms allow for agricultural products to be grown in cities,
reducing transportation costs and water usage.
eneRgy + ResouRces + connectivity:
Smart Grid: Monitoring and Metering consumption of electricity, fuel, and water
to better balance usage and define chokepoints.
eneRgy + connectivity + RESouRcES + MobiLity
+ Food: Allows farmers to turn
off irrigation pumps during peak hours from a
smartphone; reducing their energy bill and reducing peak power prices. (m2m
communications)
MobiLity + connectivity: making a 1 click purchase from the ski lift of the book that was recommended by the guy sitting next to you on the lift chair.
From mitosis to manufacturing, our world is shaped by energy. Oil has had a good run as the king of energy, and though its reign will continue for decades more, the realization that it is a finite resource with some severe social and environmental side effects has spurred research into alternatives. Charlie Munger once said “I never miss an opportunity to NOT install solar systems, because I think they’re going to get cheaper. I’m not worried about what comes after oil, because solutions are on the horizon.”
References to a paradigm shift have become common in mainstream media; have you heard of the United States referred to as the ‘Saudi Arabia of Wind’ or the ‘Saudi Arabia of Natural Gas?’
From our food supply to our transportation network, from the way we communicate to the clothes we wear, energy is the common theme. And, as a theme, it will continue to drive investment and innovation.
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oil
coal
Nat
ural
Gas
Nuc
lear
Hyd
ro
34.30%
30.46%
23.41%
5.36%6.47%
Global Energy Use by Source 2010 (estimate) www.gregor.us
Wind was the 2nd largest US energy resource added for the 5th straight year.
10 GW of wind power added in 2009, bringing total to ~35 GW www1.eere.energy.gov
Enough solar energy falls on the earths sruface in twenty minutes to
mee
t the
nee
ds of the European Union for a
year
Olm
edill
a P
hoto
volta
ic P
ark
Spai
n
Lieb
eros
e P
hoto
volta
ic P
ark
Ger
man
y
Pue
rtolla
no P
hoto
volta
ic P
ark
Spai
n
Mou
ra P
hoto
volta
ic P
ark
Port
ugal
Wal
dpol
enz
Sol
ar P
ark
Ger
man
y
Worlds Largest Photovoltaic Power StationsThe top 10 largest solar power
stations are all in Europe
0
10
20
30
40
50
60
(Peak Power, MW)
http://1bog.org/blog/a-world-without-oil/#more-12807
Currently, the world consumes more than 85 million barrels of oil per day. That amounts to nearly 31.6 billion barrels annually.
Human beings, when it comes down to it, have few basic necessities: Food, water, shelter, and connectivity with others. Overlay life, liberty, and the pursuit of happiness, and necessities morph into luxuries. Producing enough food to feed an ever increasing population, with ever increasing standards of living, is a necessity. As demand for protein like meat and dairy products increases there is an even larger increase in demand for grains and arable land. In that light, Agriculture is one of the themes that we believe will be more important in years to come.
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With more people, it means we’ll need to produce more food in the next 50 years than we’ve produced in the past 10,000 years combined.****
8 billion = 8,000,000,000
the other three bRic nations Russia, india & china forecast notching up their growth by 26%, 21% and 26% through 2019**
brazil leads the pack, with growth of more than 40% through 2019.**
A g R i c u l t u R e
B R I C
fivebillion
four billion
three billion
billi
ons
of P
eopl
e
two billion
new stone Age
commences
new stone Age
bronzeAge
ironAge
Mod
ern
Age
Middle Ages
It took 123 years for the world to go from one billion people to two billion (in 1930).*
It took only 12 years to go from five billion to six billion people(in 1999).*
the black Death - the Plague
sixbillion
sevenbillion
eight billion
2-5 million years 7000 b.c. 6000 b.c. 5000 b.c. 4000 b.c. 3000 b.c. 2000 b.c. 1000 b.c. Ad 1000 A.D. 2030 A.D.
Global Population Growth
global water requirements are likely to rise at least 40% more than the current accessible & reliable supply.***
Just 13.31% of global land area is considered arable*
We’ve reached a tipping point in the last few years. We’ve had the internet for awhile now. We’ve also had cell phones for long enough that most of us can remember a briefcase-sized box with a shoulderstrap that you could talk on. And computers have been around since World War II. But, for the first time, internet access is available on a mobile device that has more computing power than PCs during Y2K, weighs less than a quarter-pounder with fries, and you can talk (or video conference) on it to boot. This always available computing power is a modern marvel, but combined with Connectivity, is truly a game-changer. Being mobile and connected allows for rapid decision making, accelerated product development, and a consumer base that can shop from anywhere.
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$16.99
( 15% less and just
one mile away)
Price checking has never been easierWith barcode scanning apps, you can use your phone to instantly compare prices with other merchants while on-the-go. apps enable you to compare products across physical and ecommerce merchants, optimizing the shopping experience.
Results
Humans have always been dependent on the Earth’s resources. Some of those resource dependencies have developed as trade and commerce grew; coal and oil were not extremely useful before the industrial revolution. Others have never been excessively useful, but have captivated our attention for millenia (one shiny yellow metal, in particular, comes to mind). Still others, like water, have been taken for granted; regarded as free, misuse and overuse have been commonplace. Though mispricings are frequent, the laws of supply and demand hold strong for resources. There will be enormous opportunities in the way we account for and use our resources, especially as essential resource needs become scarce and new resources see increased demand. Resources have increasingly become viewed as national security issues: dependence on foreign oil has been cited as a funding source for terrorism; bottlenecks in the supply of rare earth elements threaten developed economies around the world.
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Less than 2% of the Earth’s water supply is fresh water. of that, only 1% is available for drinking water.***
average water use per person per day (liters)***Top 5
2. Australia
3. Italy
4. Japan
1. US
5. Mexico
575
493
386
374
366
copp
er in
mill
ions
of t
ons
year1980 1990 2000 2008
u.S
.A.
Rest
of t
he W
orld
u.S
.A.
u.S
.A.
u.S
.A.
Rest
of t
he W
orld
Rest
of t
he W
orld
Rest
of t
he W
orld
> 2
2 > 2
< 2
>6
<8
>10
>11
onE bARREL of oiL EquALS APPRoxiMAtELy
onE bARREL of oiL EquALS APPRoxiMAtELy
520 pounds of coal
725 pounds of oven dried wood
580 cubic feet of natural gas
19 gallons of motor gaso-line