INTERNET TRENDS D10 CONFERENCE 5/30/2012 Mary Meeker

Outline 1)Basic Stats Internet Growth Remains Robust, Rapid Mobile Adoption Still in Early Stages 2)Re-Imagination of Nearly Everything 3)Economy Mixed Trends, With Negative Bias 4) USA, Inc. A Lot to be Excited About in Tech, A Lot to be Worried about in Other Areas 5)Bubble or Not?

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BASIC STATS INTERNET GROWTH REMAINS ROBUST, RAPID MOBILE ADOPTION STILL IN EARLY STAGES 3

INTERNET USERS 4 .

Source: United Natio ns / International Telecommunications Union. 2. internetworldstats. some as of 12/10).Note: *Nigeria / Iran data as of 12/10.18912%32 % World6632. Driven by Emerging Markets RankCountry2008-2011 Internet User Adds (MMs) 2011 Internet Users (MMs)Y/Y GrowthPopulation Penetration1China21551312%38% 2India6912138103Indonesia375522234Philippines283444355Nigeria2145--*286Mexico194 219377Russia16613438USA152451799Iran1437--*4810Turkey11362649Top 104441.3B Global Internet Users in 2011* 8% Growth*. 2.3B global Internet users and 8% Y/Y growth rate based on the latest available data (most as of 12/11.2508%32% 5 .com. Other 8 countries data as of 12/11.

MOBILE USERS 6 .

1B Global Mobile 3G Subscribers.098MM Penetration = 18% Growth = 37% 1. HSPA. Global 3G Stats: Subscribers = 1. Source: Informa WCIS+. 37% Growth. Q4 @ Only 18% of Mobile Subscribers 7 RankCountryCQ4:11 3G Subs (MM) 3G Penetration3G Sub Y/Y GrowthRankCountryCQ4:11 3G Subs (MM) 3G Penetration3G Sub Y/Y Growth1USA20864%31%16Canada1662%34% 2Japan12295917Taiwan1448173China57611518South Africa1321494Korea45851019Turkey13 20625Italy44512520Portugal1378196UK42532521Vietnam12113587Brazil41179922Mexico11 11558India39484123Malaysia102779Germany38362324Sweden10732510Spain33572125Philip pines10114511France30453526Saudi Arabia10191712Indonesia29112727Netherlands94434 13Poland28571728Egypt8106014Australia22762129Austria7582415Russia1784530Nigeria6 651 . WCDMA.Note: *3G includes CDMA 1x EV-DO and Rev. One user may have mu ltiple mobile subscriptions and may be counted as multiple subscriber. A/B.

MODERN MOBILE DEVICE EVOLUTION 8 .

000 1.200 1.400 0 1 2 3 4 5 6 7 8 Global Unit Shipments ( 000) Quarters After Launch .iPods Changed Media Industry iPhones Ramped Even Faster iPad Growth (3x iPhone) Leaves Siblings in Dust 0 200 400 600 800 1.

000 15.000 0 1 2 3 4 5 6 7 8 Global Unit Shipments ( 000) Quarters After Launch iPad .000 20.000 10.iPad iPhone iPod 0 5.

iPhone iPod 0 10.000 40.000 30.000 20.000 70.000 0 1 2 3 4 5 6 7 8 Global Unit Shipments .000 50.000 60.

9 . iPad Source: Apple. iPod vs. iPhone vs. as of CQ1:12 (8 quarters post iPad launch).( 000) Quarters After Launch iPad iPhone iPod First 8 Quarters Cumulative Unit Shipments.

Android Phone Adoption Has Ramped Even Faster 4x iPhone 0 50 100 150 200 250 300 0 1 2 3 4 5 6 7 8 9 10 11 .

12 13 Global Cumulative Unit Shipments ( MM) Quarters After Launch Android iPhone 0 50 100 150 200 250 300 0 1 2 3 4 5 6 .

10 . Morgan Stanley Research.7 8 9 10 11 12 13 Global Cumulative Unit Shipments ( MM) Quarters After Launch Android iPhone First 13 Quarters Cumulative Global Android & iPhone Unit Shipments Source: Gartner. as of Q4:11.

therefore actual user #s may be lower than subscriber #s.000 5.000 3. Note: While there are 1B global 3G subscribers as of Q4:11.000 7. not all of them were smartphone users.1B Mobile Phone Subscriptions 11 .Despite Tremendous Ramp So Far.000 6. One user may have multiple mobile subscriptions. Smartphone subscri ptions estimate based on Morgan Stanley Research s estimated smartphone user as % of total mobile user at the end of 2011 (16%). Q4:11 Source: Mobile phone subscriptions per Informa (as of Q4:11). Smartphone User Adoption Has Huge Upside 0 1.000 4. 953MM Smartphone Subscriptions 6.000 2. Mobile Phone Subscriptions.000 Smartphone Mobile Phone Global Subscriptions ( MM) Global Smartphone vs.

1/12.Impressive 29% of USA Adults Own Tablet / eReader. Up from 2% Less Than Three Years Ago % of USA Adults Who Own Tablet Computers or eReaders. 4/09 Source: Pew Research Center. 0% 5% 10% 15% 20% 25% 30% 35% 4/09 9/09 5/10 9/10 11/10 5/11 8/11 12/11 1/12 USA Adults that own tablet 1/12 .

computers or eReaders ( %) 29% 2% 12 .

MOBILE MONETIZATION TRANSITION 13 .

Good News = Global Mobile Traffic Growing Rapidly to 10% of Internet Traffic 0% 5% 10% 15% 12/08 4/09 8/09 12/09 4/10 8/10 12/10 4/11 8/11 12/11 4/12 % of Internet Traffic Global Mobile Traffic as % of Total Internet Traffic. 14 5/12 . 12/08 1% in 12/09 4% in 12/10 10% in 5/12 Source: StatCounter Global Stats.

Good News = Mobile @ 8% of USA eCommerce & Helping Accelerate Growth 0% 5% 10% 15% 20% 0% 5% 10% 15% 20% Q1:10 Q2:10 Q3:10 Q4:10 Q1:11 Q2:11 Q3:11 Q4:11 Q1:12 .

Mobile Commerce as % of Total eCommerce. 15 .Mobile Commerce as % of Total eCommerce eCommerce Y/Y Growth Rate USA eCommerce Y/Y Growth USA Mobile Commerce as % of eCommerce USA eCommerce Y/Y Growth vs. Q1:10 Q1:12 Source: comScore.

Note: Apple has paid >$3B $ s to developers as of 9/11. 29% Ads) Source: Gartner. 2008 vs.5B mobile ad revenue in 2011E $0 $5 $10 $15 2008 2009 2010 2011E Mobile Ad + Apps Spending ($ B) Mobile Apps Mobile Advertising Global Mobile App + Advertising Revenue.7B 16 . CAGR is compound annual growth rate. Google indicated during CQ3 earnings call that it expects $2. implying gross app market revenue of $4B in 3 years. 2011E 153% CAGR $12B $0.Good News = Mobile Monetization Growing Rapidly (71% Apps.

Mobile Usage 7% 15% 43% 26% 10% 25% 11% 42% 22% 1% 0% 10% 20% 30% 40% 50% Print Radio TV Internet Mobile % of Total Media Consumption Time or Advertising Spending Time Spent Ad Spend .Good News = Material Upside for Mobile Ad Spend vs.

$20B opportunity calculated assuming Internet and Mobile ad spend share equal their respective time spent share. Mobile advertising reached $1.6B per IAB. Print includes newspaper and magazine.6B* 17 . % of Advertising Spending. USA 2011 ~$20B+ Opportunity in USA Note: *Internet (excl. Internet and mobile ad dollar spent amount per IAB. Source: Time spent and ad spend share data eMarketer. mobile) advertising reached $30B in USA in 2011 per IAB.% of Time Spent in Media vs. 12/11. Internet Ad = $30B* Mobile Ad = $1.

2012.Good / Bad News Rapidly Growing Mobile Internet Usage Surpassed More Highly Monetized Desktop Internet Usage in May. in India 0% 20% 40% 60% 80% 100% 12/08 4/09 8/09 12/09 4/10 8/10 12/10 4/11 8/11 12/11 4/12 % of Internet Traffic Desktop Internet .

Desktop vs. Mobile. 18 5/12 .Mobile Internet India Internet Traffic by Type. 12/08 Source: StatCounter Global Stats.

68 $0.50 $$1 $2 $3 $4 Navigation Games Reference Medical Entertainment Health & Fitness Utilities Lifestyle Education .55 $0.49 $0.68 $0.63 $0.Bad News = eCPMs 5x Lower on Mobile than Desktop $0.17 $1.75 $3.89 $1.68 $0.24 $0.51 $0.

Weather Mobile Internet** Desktop Internet* Effective CPM, Desktop Internet* vs. Mobile Internet** Note: * Desktop Internet is a weighted average CPM calculation based on comScore Display ad share data and Vivaki CPM by category data as of Q3:11. **Mobile Internet is a simple average eCPM calculation based on Mobcli x Exchange USA data as of 3/12. Mobile eCPM by Category 19

Bad News = ARPU (Average Revenue per User) 1.7-5x Lower on Mobile than Desktop Company ARPU Definition Desktop ARPU Mobile ARPU Desktop ARPU / Mobile ARPU Pandora Ad Revenue per User (Trailing 12-Month) $6.62 $3.87 1.7x Tencent Revenue per Paying User (Annualized) $58.95 $17.61 3.3x Zynga Bookings per Daily Active User (Annualized) $25.00 $5.00* 5.0x

Note: *Zynga data are estimates. All data as of 5/12. Source: Pandora, Tencent, Zynga.

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Google Mobile Growth Helping Boost Clicks but Reducing Cost per Click thus Constraining Revenue Growth Q1:11 Q2:11 Q3:11 Q4:11 Q1:12 Gross Advertising Revenue ($MM) $8.335 $10.661 21.116 Y/Y Growth 17% 18% 28% 35% .225 Y/Y Growth 28% 33% 33% 25% 23% Aggregate Paid Clicks (MM) 15.876 19.245 15.004 16.306 $8.716 $9.174 $10.

58 $0.39% Cost per Click (CPC .52 $0.55 $0. 21 .48 Y/Y Growth 10% 12% 4% (8%) (12%) Q/Q Growth (3%) 7% (5%) (8%) (6%) Source: Google.$) $0.54 $0.

Facebook Mobile Growth Helping Drive Users but Containing ARPU thus Constraining Revenue Growth Q1:11 Q2:11 Q3:11 Q4:11 Q1:12 Ad Revenue ($MM) $637 $776 $798 $943 $872 Y/Y Growth 87% 83% 77% 44% 37% Mobile Active Users (MAUs) (MM) 288 325 376 432 488 Y/Y Growth 123% 110% 92% 76% 69% .

59 $4.15 $4. 22 .00 Y/Y Growth 15% 18% 19% 1% 1% Q/Q Growth (13%) 11% (5%) 11% (13%) Source: Facebook S-1.96 $4.37 $4.% of Total MAUs 42% 44% 47% 51% 54% Annualized Ad ARPU ($) $3.

as Evinced by Japan Mobile Game Maker GREE $6 $7 $7 $8 $8 $9 $10 $12 $17 $23 $24 $0 $10 $20 $30 Q3:09 Q4:09 Q1:10 Q2:10 Q3:10 Q4:10 Q1:11 Q2:11 Q3:11 Q4:11 Q1:12 .Good News = Mobile ARPU Can Rise Rapidly.

Mia Nagas aka. Q3:09 Q1:12 Note: GREE is a Japanese social / mobile gaming company.Annualized ARPU ($ ) GREE Annualized Mobile ARPU (per Registered Member). 7/11 New Game Tanken Driland Introduced 23 . Morgan Stanley Research. Source: GREE.

*Users can purcha se 1 AmeGold for 1 Japanese Yen. Source: CyberAgen t. Users could also earn a small amount of AmeGold from completing certain in-game tasks.Good News = Mobile ARPU Should Surpass Desktop ARPU. $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 6/09 9/09 12/09 3/10 6/10 9/10 12/10 . as Evinced by Japan Mobile Game Maker CyberAgent Note: CyberAgent is a Japanese social / mobile gaming company.

3/11 6/11 9/11 12/11 Average Revenue per Paying User ( $) Desktop ARPU Mobile ARPU CyberAgent Ameba Annualized ARPU* (Per Paying User). Mobile. 12/11 Desktop vs. 6/09 12/11 Mobile ARPU = $418 8/09 Mobile ARPU = $60 .

56% of apps priced at $3. it Just Takes Time Mobile Monetization has More Going for It than Early Desktop Monetization Had: -Very Rapid User Growth -App + In-App Monetization (44% of apps are free.5B Source: Global online ad revenue per Jupiter Communications (1995).Essential Utility / Ultra Useful Apps Being Created -Lessons from Developed Mobile Markets like Japan Using Japanese Market Pattern Recognition. ZenithOptime dia (2011). 25 . Internet users per Morgan Stanley estimate (1995) and comScore (2011). Mobile Monetization Levels in USA Could Surpass Desktop Within 1-3 Years 1995E 2011E Global Internet Ad Revenue $55MM $73B Ad Revenue per User $9 $49 Global Internet Users 6MM 1. App price data per 148apps / AppBrain.77 av erage) -Rapid Growth of Mobile Commerce + Payment Systems -Large Number of Innovative Developers -Broad Base of Sophisticated Advertisers + Marketers -Highly Engaged Consumers Assisted by Social + Curation Tools -Rapid Acceptance of Two Device Platforms Smartphones + Tablets . We note that comScore reports a lower global Interne t user # than International Telecommunications Union.Mobile Monetization Good News = Desktop Internet Proved Ad $ Follow Eyeballs.

PLATFORM FIRE HOSES 26 .

27 0 10 20 30 40 3/31 4/7 4/14 4/21 4/28 5/5 5/12 5/19 5/26 Viddy Monthly & Daily Active Users on Facebook (MM) Monthly Active Users Days*! Active Users (DAU) on users between 4/24 (when Facebook beg 5/1. . 3/31/12 5/29/12 Note:* Viddy added 17MM new monthly active an highlighting Viddy in the newsfeed) and Source: AppData.Facebook Open Graph Distribution Examples of Onboarding 17MM New Users in 7 Viddy Monthly Active Users (MAU) and Daily Facebook Platform.

Daily Active Users 4/24 Facebook Begins Highlighting Viddy in News Feed .

000 1.500 0 1 2 3 4 5 6 7 8 9 10 11 12 .Apple App Store Distribution iTunes App Store Driving 46MM+* Downloads per Day 0 500 1.500 2.000 2.

000 0 1 2 3 4 .000 20.000 15.000 30.000 10.000 25.13 14 15 Cumulative # of Songs / Apps Downloaded (MM) Quarters After Launch Apps Downloaded iTunes Songs Downloaded 0 5.

as of CQ1:12. Source: KPCB estimates based on Apple data. App Store launched in CQ3:08. iTunes Music vs.5 6 7 8 9 10 11 12 13 14 15 Cumulative # of Songs / Apps Downloaded (MM) Quarters After Launch Apps Downloaded iTunes Songs Downloaded 28 First 15 Quarters Cumulative # of Downloads. iTunes Music store launched in CQ 2:03. . Apps Note: * 46MM daily app downloads calculation based on days between Apple announc ed milestones (18B downloads as of 10/4/11 and 25B downloads as of 3/5/12).

2012.RE-IMAGINATION OF NEARLY EVERYTHING* POWERED BY NEW DEVICES + CONNECTIVITY + UI + BEAUTY WHERE WE ARE NOW 29 *Note that this section includes more slides than were presented at D10 Conferen ce. May 30. .

Mobile Subscriptions.000 5.2009 Source: International Telecommunications Union.After 125 Years.First Generation of Re-Imagination . 1994 . Landlines Were Surpassed by Mobiles in 2002 0 1.000 1994 1996 1998 2000 2002 2004 2006 2008 Global Installed Base ( MMs) Fixed Telephone Lines Mobile Subscriptions Global Fixed Telephone Lines vs.000 2. 2002: Inflection Point Mobiles > Landlines .000 4.000 3.

3B 30 .2009 4.7B Mobile Subscribers 2006 Landlines Peaked at 1.

1990 1990 Sales Peaked at 120K/year 1993 Microsoft Introduced Encarta Encyclopedia for PC @ $99 2001 Wikipedia Founded. 2011 . Encyclopedia Britannica is Going Out of Print in 2012 0 50 100 150 1990 1993 1996 1999 2002 2005 2008 2011 Annual Hard Copy Sales ( 000) Encyclopedia Britannica Hard Copy Sales.First Generation of Re-Imagination After 244 Years. per comScore global data. Today* Wikipedia Has 470MM Monthly Unique Users 2008 Microsoft Shut Down Encarta 2012 Encyclopedia Britannica Announced End of Print Editions Note: *as of 4/12.

Shane Greenstein and Michelle Devereux. Crisis at Encyclopedia Britannica. 31 The .Source: Kellog School of Management.

Internet Advertising Spending. S. Newspaper (Print) Advertising vs. 1995 . per AdAge. Advertising Spend ( $ MM) Newspaper (Print) .First Generation of Re-Imagination After 305 Years.201 0 Note: *America s first newspaper ad appeared in 1704 in a Boston local newspaper. Internet ad spending per Interactive Advertising Bureau (IAB). Internet advertising includes online newspaper advertising.S. Source: Print newspaper ad spending per Newspaper Associa tion of America (NAA). $ $10 $20 $30 $40 $50 1995 1997 1999 2001 2003 2005 2007 2009 U.* Newspaper Ad Revenue Was Surpassed by Internet in 2010 U.

Internet Newspaper Trendline (2006-2010) Internet Trendline (2006-2010) 32

Re-Imagination of Computing Devices THEN (Desktops / Notebooks) NOW (Tablets / Smartphones) http://1.bp.blogspot.com/_gFyq4zP7ENI/TOdOuZX97mI/AAAAAAAAAFg/2fsEPwgChLM/s1600/ laptop.jpg http://www.aeonity.com/images/store/free-desktop-pc-dimension.jpg http://4.bp.blogspot.com/-vZ7x70sdh-0/T40AtopuJ3I/AAAAAAAAIFg/BqO8l4U_H6o/s1600/ galaxy-nexus-product-image-1.jpg ipad 3 hand alternative 640x353 New iPad : Buy Now or Never? 33

Re-Imagination of Connectivity THEN NOW http://0.tqn.com/d/geography/1/0/_/x/London17.jpg 34 http://factsanddetails.com/media/2/20080313-Monk-Using-Cell-Phone-in-QiangbalinTemple-Chamdo-Tibet-Chin.jpg

Founder / CEO. May 2012 35 . Facebook Letter to Potential Shareholders. -Mark Zuckerberg.Re-Imagination of Connectivity We hope to rewire the way people spread and consume information We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.

jpg 36 .Re-Imagination of Life Stories THEN Biographies / Item Exhibitions For Famous People or Loved Ones NOW (Facebook Timeline) Broad Personalized Media Discovery Feed / Automatically Created / Widely Accessible http://heritagemuseum-falfurrias.com/legends1/DSC00358.

blogspot.bp.jpg http://4.com/_4Zv_DtKsoQk/TQOO8OOzRyI/AAAAAAAAFY8/AQ-vExPIU0c/s1600/ 5565913-breaking-news-headline-on-a-mock-up-newspaper.co.uk/multimedia/archive/01240/twitpic_1240335c.jpg http://t0.gstatic.com/images?q=tbn:ANd9GcRFEd0fm6vzQ9LoQ4K4ruVGRtHieA0TciVgYF9Si gVAUiXyQ9TAzGySBbnKvA http://www.telegraph.com/wp-content/uploads/2010/02/twitter-hudson.Re-Imagination of News + Information Flow THEN Delayed / Dedicated Reporters + Cameramen / Regional or National Reach NOW (Twitter) Real-Time / Citizen Reporting via Mobile Devices / Global Reach http://i.jpg 37 .sciencetext.

png http://dailyiphoneblog.com/assets/images/original/0002/1161/21161v1.crunchbase.com/wp-content/uploads/2011/03/evernote_iphone.jpg http://blog.Re-Imagination of Note Taking http://www.com/wp-content/uploads/2010/04/ipad-singlenote.evernote.jpg THEN Pencil + Notepad NOW (Evernote) Always Synced / Multi-Device / Picture + Audio Enabled / Searchable Notepad Pencil Clip Art 38 .

com/images/louvre_sorrel.jpg http://media.smithsonianmag.blessthisstuff.com/imagens/stuff/fifty-three-paper-app-5.jpg http://www.com/imagens/stuff/fifty-three-paper-app.Re-Imagination of Drawing THEN Dedicated Canvas / Paint Supplies / Studios / Limited Distribution NOW (Paper by Fiftythree ) Reusable Canvas (Screen) / Creating Art Anywhere Anytime / Digitally Enhanced Creation Tools / Instant Sharing http://www.jpg 39 .blessthisstuff.

iphoneography.jpg http://www.jpg?__SQUARESPACE_ CACHEVERSION=1295382617380 40 .Re-Imagination of Photography THEN Dedicated Camera / Manually Transfer Digital Files / Develop Films NOW (Instagr.jpg http://www.org/ark:/13030/tf6r29p2qr/hi-res.techdigest.am / Camera+ / Hipstamatic ) Always With You Camera (Smartphone) / Instant Digital Effects / Share / Sync / Discover http://content.com/storage/_glyn/Instagram_1_180111.tv/instagram-2.cdlib.

files.pjjppdhm.com/2010/08/1989_diary.com/us/r1000/085/Purple/ac/52/c9/mzl.jpg THEN Hand-Written / Drawn NOW (Path) One-Tap to Add Entry / Multimedia / Location-Aware / Share / Search http://lynleystace.wordpress.jpg 41 .mzstatic.Re-Imagination of Diaries http://a1.320x480-75.

com/image/F1FQROQG79DOPQN/Scrapbooking-for-Beginners.jp g 42 .Re-Imagination of Scrapbooking / Aspiration THEN Paper / Scissors / Glue NOW (Pinterest) One-Click to Pin / Share / Follow / Always Accessible http://www.instructables.

com/wp-content/uploads/2011/03/1-2g.jpg 43 .jpg http://inside.flipboard.wordpress.Re-Imagination of Magazines THEN Piles of Print Copies NOW (Flipboard) More Content / Always Up-To-Date / Personalized / Access Everywhere / Interactive (Video + Audio) / Share http://topmagazines.files.com/2011/07/magazine-australia.

com/wp-content/uploads/2010/09/learning.gadgetvenue.com/wp-content/uploads/2010/08/Amazon-Kindle1.brasstackthinking.jpg .Re-Imagination of Books THEN NOW (Amazon Kindle / Apple iBooks) http://www.jpg 44 http://www.

com/2011/01/record_player.Re-Imagination of Music THEN Buy Albums + CDs in Stores / Playback via Dedicated Players NOW (Spotify ) Discovery of Music Through Friends + Experts / Instant On-Demand Streaming on InternetEnabled Devices http://a.wordpress.jpg http://cf.com/images/Business/apg_record_store_ll_110610_wg.abcnews.co/i/wp/what-is-spotify/whatisspotify_client_and_phones.scdn.files.jpg 45 .jpg http://perfectlylonelysoul.

Re-Imagination of Sound THEN Tape Recorder / Hard to Edit / Share NOW (SoundCloud) Record / Edit / Upload / Playback Anywhere / Anytime / On Any Device / Playlist sharing / Discovery 46 http://www.martelelectronics.com/wp-content/uploads/2012/01/Top-10-Facebook-Timeline-Open-gr aph-applications1.png .com/Merchant2/graphics/00000001/500LP_large.jpg http://fbupdates.

Re-Imagination of Artists / Concerts THEN Big Screen Tributes NOW (Tupac @ Coachella ) 3D / Life-Like / Programmable Hologram / Bringing Past Icons Back to Life http://www.jpg http://www.jpg http://www.feelnumb.png 47 .38-PM.com/photos/stylus/1952499-snoop-dogg-tupac-hologram-coachel la-2012-617-409.com/uploads/assets/article_photos/snoop-dogg-tupac-shakur467.com/wp-content/uploads/2010/12/Screen-shot-2010-12-08-at-8.usmagazine.billboard.4 4.

com/wp-content/uploads/2010/04/ipad_netflix1.thomasfals.com/blog/wp-content/uploads/2011/04/blockbuster-store-interior .jpg http://www.Re-Imagination of Video THEN Physical Retail / Rental Stores NOW (YouTube / Netflix ) On-Demand / Instant Streaming / Accessible Everywhere http://simplykari.jpg 48 .

com/wp-content/uploads/2010/11/Video_Production.jpg 49 .gvulhbtm.com/us/r1000/117/Purple/04/f3/a3/mzl.nytimes.jpg http://graphics8.jpg http://www.j pg http://a4.320x480-75.Re-Imagination of Video Creation / Production THEN Dedicated Set / Camera / Lighting / Editing Equipment NOW (SocialCam / Viddy / GoPro ) Live Digital Effects / Wearable Recording Device / Real-Time Upload / Discovery http://gopro.globalvideohq.com/images/2012/04/23/technology/23bits-viddy/23bits-vi ddy-custom1.com/wp-content/uploads/2012/03/wallischupsdwn_copy-e1331935662941.mzstatic.

com/wordpress-engine/files/2011/04/gb05-1.Re-Imagination of Distribution + Monetization for Talent THEN (Glenn Beck on Fox News) NOW (GBTV . GB Making Materially More Money 50 http://themoderatevoice.Digital) With 300K Subscribers + Lower Production Costs.jpg .

jpg http://jeremyrue.net/wp-content/uploads/2009/02/fatkid.Re-Imagination of Home Entertainment THEN Lean Back / Lean Forward NOW (Chill ) Curl Up Visual Layout / Social Discovery / Distribution / Interaction http://synthesis.com/wp-content/uploads/2010/05/lean-forward.jpg 51 .

gif http://images.au/story_media/339300632/apple-ipad_2.jpg http://tctechcrunch2011.ientrymail.files.Re-Imagination of TV THEN Linear Programming / Pre-Set Channels / Little Control Over Content NOW (YouTube Channels / Bleacher Team Stream ) On Demand Personalized Content on Big Screen http://cdn.jpg 52 .deswalsh.cnet.jpg?w=288 http://www.com/webpronews/article_pics/machinimasports.com/2012/01/bleacherreport.wordpress.com.com/blogimages/tvremote490.

Re-Imagination of Communication THEN Dedicated Devices / Limited Function & Range / Intrusive NOW (Voxer ) Push-To-Talk / Voice Message / Picture / Text / Location / Group Chat http://cdn1.spygadgets4u.freedownloadbuzz.jpg 53 .co.jpg http://www.org/wp-content/uploads/2011/12/Voxer-Walkie-Talkieandroid-apps.jpg http://www.uk/user/products/large/phone.org/wp-content/uploads/2011/07/Walkie-Talkie.walkingand.

jpg iPhone Screenshot 1 iPhone Screenshot 4 54 .com/image/416694/large/F0040152-Couple_looking_at_map_in _car_by_sea-SPL.com/images/KIRO7JenniHoganTalksBeatTheTraffic.beatthetraffic. Radio Reporting of Traffic Info NOW (Waze) User-Generated Digital Map / Live Crowd-Sourced Traffic Data http://www.jpg http://blog.sciencephoto.Re-Imagination of Navigation + Live Traffic Info THEN Physical Copies of Map in Car / TV.

com/assets/mndaily_040503pgb01_w360.jpg 55 .Re-Imagination of Sports Info THEN Professional Commentators / Reporters / Limited Coverage & Reach NOW (Bleacher Report) Anyone Can Be a Contributor / Opinion-Oriented Analysis / Multimedia / Social & Mobile Enabled http://bencharboneau.

jpg https://encrypted-tbn1.org/wp-content/uploads/2011/04/main12.com/wp-content/uploads/2012/04/Favorite-Things-Magazin es3.budgetwisehome.com/images?q=tbn:ANd9GcRDfYxWcPhrV6SrnTcunGH_8QBsl ojmPEc86-LQSNiEEMiOOKzS http://www.jp g http://klbg.jpg 56 .google.israel-interactive-designers.Re-Imagination of Home Improvement THEN Magazines / Cable TV Channels / Limited Interaction With Consumers NOW (Houzz / One Kings Lane ) Communication Platform for Designers & Consumers / Share / Discover & Click-And-Buy http://www.us/wp-content/uploads/2011/01/EGC-Custom-Homes-Home-Improvement-Maga zine-Article-January-2011-Cover-Page.

Re-Imagination of Calling a Cab THEN Long Lines During Rush Hours / Rain / Some Areas May Not Have Taxis Roaming on Streets NOW (Uber) One-Tap Taxi Call / Location-Aware / Electronic Payment http://2.blogspot.com/-RPoB4JBBEvY/TVjco7Blv5I/AAAAAAAAGdM/T0eolR5ux5o/s1600/ uber+taxi.bp.jpg 57 .jpg http://farm3.com/2460/3951400107_65559d9251.staticflickr.

Re-Imagination of Cars THEN Gasoline / Diesel Powered Internal Combustion Engine With Exhaust NOW (Hybrid / Electric Cars) Plug-in Electrical Powertrain / Regenerative Break / Solar Panel Roof / Little-to-Zero Emission http://sharing.com/images?q=tbn:ANd9GcTGGa-ipbfPTnhtQnFsZK9kF0Yzn4HI66K4-TT2z a3HDNY9Vxvg7u4eSpAYvg http://www.wdtn.csmonitor.chevrolet.JPG http://townipproject.jpg 58 .wikispaces.jpg http://www.jpg http://t1.com/var/ezflow_site/storage/images/media/images/0426_prius/ 7780443-1-eng-US/0426_prius_full_600.com/file/view/more_exhaust.com/sharewlin/photo/2010/02/05/Oil-Prices_Gree_2010020508284 3_320_240.gstatic.roadandtrack.com/var/ezflow_site/storage_RT_NEW/storage/images/media/ images/fisker-karma-embed-1/2344058-1-eng-US/fisker-karma-embed-1.jpg http://www.com/assets/en/images/model/2011/volt/overview/overlay/m_unc hargedBattery.

jpg http://www.ipadngravy.jpg 59 .immyellowpages.Re-Imagination of Yellow Pages THEN Big Heavy Printed Business Listings / No Reviews / No Easy Search Feature NOW (Yelp ) User Reviews / Pictures / Recommendations / Location-Aware / Easily Searchable http://www.com/images/phonebook.com/wp-content/uploads/2010/12/yelp-ipad-search-grid.

blissful-savings.com/wp-content/uploads/2011/08/groupon-mobile-app.jpg http://www.pocketyourdollars.p ng 60 .Re-Imagination of Coupons + Local Services THEN Non-Personalized / Smaller Discounts / Easily Lost or Forgotten NOW (Groupon ) Personalized / Location-Aware / Instant Deals / Group-buying Discount http://www.com/wp-content/uploads/2012/01/coupons.

static.com/94/240659904_b098c2464a.blogspot.jpg 61 .com/_dQw-YGPnkuU/Sf6GnBbE4EI/AAAAAAAABSM/fszvBfaP_lQ/s400/k ogi_truck_light.com/articles/features/138/graphics/chipotle.jpg http://farm1.Re-Imagination of Getting Food Quickly THEN Permanent Store Locations NOW (Kogi Food Truck ) ~100K Twitter Followers / Real-Time Location Updates http://1.flickr.bp.jpg http://www2.qsrmagazine.

com/photo/v0/11414261/POS_Cash_Register.aliimg.i.Re-Imagination of Cash Registers THEN Big + Odd Looking Machines / Receipt Printers Cash Drawers NOW (Square) Simple + Elegant Tablet + Square Reader / Email Receipts / Touch Signing http://i01.mzstatic.com/us/r1000/083/Purple/v4/7b/b3/65/7bb36575-808c-549d-c595-4 1d3ef1695bf/mzl.jpg 62 .480x480-75.jpg http://a2.beoectzz.

JPG?a=28 63 .quickblogcast.com/3/6/1/4/3/143317-134163/windowshopping_nyc_soho_ vincecamuto_art.Re-Imagination of Window Shopping THEN NOW (One Kings Lane / Fab) Click & Buy http://images.

static.jpg 64 .flickr.com/81/214701915_68ec7bc621.Re-Imagination of Marketplaces THEN Tent + Pickup Truck @ Street Fairs NOW (Etsy) Integrated Platform For Listings / Advertising / Payment / Inventory Management http://farm1.

Re-Imagination of Manufacturing THEN Mass Production of High-Volume Standardized Items NOW (Zazzle / Shapeways) Customized / Personalized Design / 3D Printing Process 65 .

THEN Mass Production of High-Volume Standardized Items NOW (Zaarly / TaskRabbit / Fiverr) One Click & Delivered to You 66 ..Re-Imagination of Instant Gratification / Personal Services..

buzzle.jpg 67 .Re-Imagination of Idea Building / Funding THEN Flyers / Loudspeakers / Dinners / Checks NOW (KickStarter) Online / Social Distribution / Real-Time Progress http://www.com/img/articleImages/465107-30315-20.

jpg 68 .LoanOfficer.yourdictionary.com/images/articles/lg/1751.Re-Imagination of Personal Borrowing / Lending THEN Borrowers Paper Application / Lengthy Approval Process / High Interest Rates Investors Little Access For Retail Investors / No Customization Based on Risk Tolerance NOW (Lending Club ) Borrowers Online Application / Funded in Days / Lower Interest Rates Investors Easy Customization / Diversification / Better Returns http://www.

com/2011/01/office-meeting.com / Yammer / Jive ) Online Working Groups / Data Sharing / Instant Messages http://old.files.wordpress.com/wp-content/uploads/2010/06/sf. png http://notesfromtheintern.com/2010/06/screen-shot-2010-06-13-at-10-34-28-pm.files.png http://gigaom.wordpress.jpg 69 .Re-Imagination of Business Collaboration THEN Meetings / Whiteboards / Teleconferences NOW (Salesforce.techcrunchit.

Re-Imagination of Recruiting / Hiring THEN Job Fairs / Campus Recruiting Events / Paper Resumes NOW (LinkedIn) Online Resumes / Social Relevancy For Recruiters / Searchable Skill Sets / Endorsements / Recommendations http://careerservices.wordpress.jpg 70 .files.com/career_images/profile_profile1.linkedin.com/2010/08/job-fair1.png http://lauriesjobsearchtidbits.

net/assets/Images/FocusGroupI.strategicresearch.Re-Imagination of Focus Groups THEN Fixed Time / Location / Small Group / No Real-Time Feedback NOW (Affectiva) Real-Time Video Emotion Detection + Analysis / Effortless Participation / Data Capture / Moodometer http://www.jpg 71 .

.png Source: Mike Abbot.Re-Imagination of Data THEN Store Everything Because We Can Do It Inexpensively SOON Data Obesity / Data Quality Issues How To Find a Needle in a Haystack? 72 http://www.jackcreekfarms. KPCB.com/blogImages/needle-20110323-110431.jpg http://boagworld.com/images/haystack.

docusign.com/blog/wp-content/uploads/2010/03/DocuSign_REALTOR_Signatu re_Useb.org/wikipedia/commons/1/12/Fedex-md11-N525FE-051109-21-1 6.com/sites/default/files/images/signing.png http://images.docusign.jpg http://upload.jpg 73 .com/images/us/2011crimages/service_guide/content/Paks.com/wp-content/uploads/2012/04/FedEx-Hybrid-Delivery-Truck.jpg?8 4cd58 https://www.paydayloan90.com/faq/images/signing-documents.fedex.wikimedia.Re-Imagination of Signatures THEN Scan / Fax / Mail to Return Signature Page NOW (DocuSign) Electronic Documents / Secure Audit Trail / Instant E-Signature http://www.png http://www.jpg http://earth911.

20.png http://tctechcrunch.com/2010/01/SF-Screenshot2-630x585.com/wp-content/uploads/2011/08/Screen-Shot-2011-08-02-at-1 0.jpg .Re-Imagination of Healthcare Access THEN Call to Make Appointments / Days or Weeks to See Doctors NOW (ZocDoc / Teladoc) On-Demand Access to Doctors in Minutes or Same Day / In Person or Via Phone Video Call 74 http://mobihealthnews.png?w=498 &h=462 http://s3.com/u/2948418_f260.18-AM.wordpress.files.hubimg.

Re-Imagination of Learning From learning by listening to learning by doing Education and learning will become as much fun as videogames. And we call it full body learning. -Bing Gordon Partner. KPCB image001 image002 THEN NOW 75 .

j pg Re-Imagination of Engagement 76 http://visualraid.jpg .com/wp-content/uploads/2010/07/Xbox-360-kinect.jpg http://blog.THEN Buttons / Joysticks / D-pads / Wires NOW (Xbox Kinect) Camera-Based Gestures / Voice Control http://theplaystationshow.com/wp-content/uploads/2011/11/xbox-kinect.nielsen.com/nielsenwire/wp-content/uploads/2009/02/game-controller.

Re-Imagination of Education THEN Classrooms / Lectures / Reading Materials NOW (Codecademy / Coursera / Khan Academy ) Interactive / Online / Accessible by Anyone Anywhere Anytime http://discountdorm.jpg 77 .com/wp-content/uploads/class_8824.

jpg 78 .net/wp-content/uploads/2011/03/rewardville.com.blogspot.bp.org/wp-content/uploads/2010/07/iphone_badges1.dnv.Re-Imagination of Rewards / Satisfaction THEN NOW (Klout / FourSquare / Zynga ) http://3.sg/binaries/man%20patting%20back%20254x138_tcm163-264800.com/-hE_SI1O3eaw/TfobpLLQwCI/AAAAAAAACxE/LjBcPi3eNqA/s1600/ klout-perks.jpg http://ichristianwoman.png http://farmvillesecretguide.jpg http://www.

jpg Note: There are 90MM Kisan credit card users and 118MM job card users.Re-Imagination of Government Subsidies http://3.org.jpg THEN Gather in Town / Wait in Line to Receive Subsidies NOW 200MM+ Farmers in India Receive Government Subsidies Via Mobile Devices* http://www. per Ministry of R ural Development. Government of India. both of w hich do not require bank accounts but utilize mobile phones as identity verification / payment confirmation. 79 .blogspot.com/_dVMdAhXlrhY/TOE44J0tsTI/AAAAAAAAALA/QTxq1aiVhRI/s1600/ farmer-cell-phone.uk/sites/default/files/images/news/farmersDelhi2009.bp.wdm.

com/media/images/2009-03/photo_verybig_102043.am http://www.novinite.jpg 80 .Re-Imagination of Communication THEN Caveman Drawings NOW Instagr.

com/images/photo-crime_watch_sign.Re-imagination of Crime Awareness THEN Warning Signs / Community Reports NOW (SFPD / CrimeMapping) Centralized Database / Customized Crime Alerts / Mobile Viewing http://walterduke.jpg 81 .

com/blog/images/2011/10/NestLearningThermostat-4x.Re-Imagination of Thermostats THEN On/Off Switch + Temperature Setting NOW (Nest) Wi-Fi Enabled / Auto-Learning / Auto-Sensing / Remote Control / Energy Efficient http://s3files.org/projects/DIY/images/20080326_thermostat/oldPanel.newprotest.core77.jpg http://www.jpg 82 .

hubimg.com/u/5948066_f260.Re-Imagination of Pet Care http://s3.telegraph.biz/wp-content/uploads/2007/08/gps-dog-tracking-collar .co.jpg 83 .jp g http://gpstrackingsystems.jpg THEN Flyers on Lamp Posts for Missing Pets NOW Internet-Enabled / GPS Tracking Pet Collars http://i.uk/multimedia/archive/00635/news-graphics-2007-_635724a.

com/cnwk.jpg 84 .com/wp-content/uploads/2011/10/3308239556_c 0f9ec7663. ..com/joomla/images/stories/animal_feed.1d/i/tim/2011/04/20/ht_facebook_news_feed-720_ 320x240.jpg http://www.wordpress-plugin-solution.jpg http://nvonews.cbsistatic..jpg http://wellnessuncovered.) THEN NOW (Facebook News Feed / Ticker / Twitter Feed) http://asset1.Re-Imagination of Feeds.com/wp-content/uploads/2011/09/new-facebook-ticker.

Magnitude of Upcoming Change Will be Stunning We are Still in Spring Training Nearly Ubiquitous High-Speed Wireless Access in Developed Countries Unprecedented Global Technology Innovation Ultra Competitive Markets for Mobile Operating Systems + Devices Broadly Accepted Social Graphs / Information Transparency Fearless (& Connected) Entrepreneurs Difficult What Do I Have to Lose Economic Environment for Many Available (& Experienced) Capital Fearless (& Connected) Consumers Inexpensive Devices / Access / Services (Apps) Ability to Reach Millions of New Users in Record (& Accelerating) Time Social Emerging as Starting Distribution Point for Content. (Brian Norgard. Chill) Aggressive (and Informed) On My Watch Executives at Traditional Companies Unprecedented Combo of Focus on Technology AND Design Nearly Plug & Play Environment For Entrepreneurs Marketplaces / Web Services / Distributed Work / Innovative Productivity Tools / Low Start Up Cost Beautiful / Relevant / Personalized / Curated Content for Consumers 85 .

China Construction Bank.204455Johnso n & Johnson. 86 2012 Market Cap ($B) 2011 Revenue ($B) 2011 EBITDA ($B)Top Companies by Mkt CapFinancials$6.483 . Rio Tinto. IBM. Microsoft.3863. Coca-ColaI nformation Technology3. Pfizer. Telefonica. ValeTelecommunication S ervices2.335$35. Google. tax.com. EDFTotal$36.6521.9662. P&G. Source: Morgan Stanley Research.045699China Mobile. Wells FargoConsumer Staples4.855$4. E. AT&T. Roche.035ICBC. ChevronConsumer Discretionary3.5722.066$6. McDonald's. Walt DisneyHealth Care3.ON.1881. PetroChina.298422Apple.972543Wal-Mart.3802.734624Toyota.607712BHP Billiton. NovartisIndustrials3. UPSMaterials3.5013 15GDF Suez.1984.Addressable Market For Re-Imagination Aggregate Market Cap of Global Public Companies = $36+ Trillion* Note: *Based on 3.000 global publicly traded companies as defined by Morgan Stan ley Research s coverage universe.068Exxon Mobil. Si emens. Data as of 5/23/12.647$1. National Grid. Nestle.407608General Electric. VodafoneUtilities1. Amazon. **EBITDA is earnings before interest.7344 . SamsungEnergy3. Shell.1292. depreciation and amortization. 9266.

LOTS OF STUFF BEING REIMAGINED AND THERE S A LOT MORE 87 .NET.

Morgan Stanley Research estimates..hi.clker.1)Ear (+ Body) ..com/cliparts/0/e/4/1/12187852271457247836tormaroe_BMW_touring. 88 ..owing to better devices (wireless Bluetooth) / services (Siri / Spotify / Soundcloud.com/image-files/cartoon-tv-3.gif Source: *US Census Bureau.png http://www.) / products (Up ) 2)Car 52 minutes per day by 144MM Americans (76% alone)* spent in cars largely untapped 3)TV 3+ hours per day spent in front of TVs** way better devices / interfaces / interfaces coming rapidly.Apple & Google footsteps raising bar 50MM+ Americans have Internet-enabled TVs Consumer Internet White Space https://encrypted-tbn3.how-to-draw-funny-cartoons.google. **BLS.s vg..com/images?q=tbn:ANd9GcQGwDuWKOvmIHv1Jy5mbZZGn9Kt9 2C0hjfOnJNP2R6ZfLo8M_nU http://www.

WITH NEGATIVE BIAS 89 .ECONOMY MIXED TRENDS.

60% 80% 100% 120% 140% 160% 180% 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11 .. Recent 10-Week Trendline Not Encouraging..Stock Markets = Often Leading Indicators of Economic Activity.

Data as of 5/25/12. Source: Bloomberg. FactSet. 90 . Yahoo! Finance. 2010.1/12 3/12 5/12 Index Value ( 1/ 1/ 2010 = 100% ) S&P500 NASDAQ China Shanghai Composite MSCI Europe Oil Gold 5/12 Stock / Commodity Markets Performance (% Change From 1/10). 1/10 Note: All values are indexed to 1 (100%) on Jan 1.

Consumer Confidence = Near Four-Year Highs. Though Still Below 30-Year Average 0 20 40 60 80 100 120 140 160 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 .

Source: The Conference Board. 1978 Note: Index started in 1967 / benchmarked to 1985=100.9 91 . 30 Year Average CCI = 92. 5/12. The Index is calculated e ach month on the basis of a household survey of consumers' opinions on current conditions and future expectations of the econ omy.3 5/12 CCI = 64.2 2/09 Trough CCI = 25.1998 2000 2002 2004 2006 2008 2010 2012 Consumer Confidence Index ( 1985= 100) 2012 YTD The Conference Board Consumer Confidence Index.

How would you rate economic conditions today? 4/12 77% 68% 66% 61% 61% 59% 62% 61% 52% 59% 60% 62% 60% 54% 49% 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11 8/11 10/11 . 1/09 Q.Consumer Sentiment Improving but 49% of Americans View Economy as Poor Percent of USA Consumers Who View The Economy as Poor.

1/12 4/12 92 Source: comScore. .

91.319Germany-5.93.84Japan-6.03Brazil-0.56.810. .54Italy-5.34.93Spain-3.7-1.72.10.70.92. 4-1.4-0.80.31.21.08China9.26.49.10.63.67.70.04Developed Markets3.82UK-4.Global GDP Growth Expected to Decelerate in 2012 with Europe Slipping Into Recession 93 Country / Region2009201020112012E% of World Total.34.0%1.33.65France-2.7-0.736World-0.41.7%2.10.92Russia-7.87.5100 GDP Y/Y % Change.4-0.51.73.52. 211India6.61. 4/12.464Emerging Markets2.210.25.28.03.73.61.75. 2011USA-3.34. 2009-2012E Source: IMF World Economic Outlook.1%22% Euro Area-4.67.84.5%3.

USA. A LOT TO BE WORRIED ABOUT IN OTHER AREAS 94 . INC. A LOT TO BE EXCITED ABOUT IN TECH.

Made in USA Smartphone Operating Systems = 64% Share from 5% Five Years Ago 2005 2011E 0% 20% 40% 60% 80% 100% Market Share of Smartphone OS Other OS iOS Android Windows Mobile BlackBerry OS Linux Nokia Symbian Smartphone Operating System Market Share. 2005 vs. Gartner. 2011E Source: Morgan Stanley Research. 95 .

$0 $2 $4 $6 $8 $10 $12 $14 $16 0% 10% 20% 30% 40% 50% 1901 1911 1921 1931 1941 .

Biggest Peace Time Gap Between Revenue & Expenses in USA History . Inc. in 2005 dollars. Revenue & Expenses as % of GDP. 1940-2010 per White House OMB.1951 1961 1971 1981 1991 2001 2011E Real GDP ( in Trillions of 2005 Dollars) Revenue & Expenses as % of GDP Revenue as % of GDP (Left Axis) Expenses as % of GDP (Left Axis) Real GDP (Right Axis) USA Inc. 1901 2011E Source: 1910 1930 per Census Bureau. Biggest Peace Time Gap Between Revenue & Expenses in USA History 96 USA. Real GDP adj usted for inflation.

97

98

America s Debt Level Relative to Other Countries You Do the Math Note: Ranking excludes countries with gross government debt less than $10B in 20 10. Gross government debt includes intragovernment obligations (such as Treasuries held by the Social Security Trust Fund in US case ). Source: The International Monetary Fund (IMF). RankCountry2010 Gross Government Debt ($B)% of GDPRankCountry2010 Gross Government Debt ($B)% of GDP1Japan$12,009220%16Hungary$10580% 2Jamaica1914317Israel168773Greece43614318UK1,699764Lebanon5313419Egypt161745Iraq 9712020Austria272726Italy2,44511921Sudan47727Belgium4529722Brazil1,397678Singapo re2149623Jordan18679Ireland1969524Côte d'Ivoire156710USA13,7079425India1,0466411Po rtugal2139326Netherlands4976412Iceland129227Cyprus146113Germany2,7598428Spain848 6014Canada1,3248429Uruguay235715France2,1108230Pakistan10057 99

png 100 .USA Inc. @ kpcb.com 110K+ Total Views 23K+ YouTube Views 7K+ Facebook Likes 4K+ Retweets book2.com / youtube.com / amazon.

What Can You Do? 101 Engage in Politics Help Others Understand Key Issues Do What You Can To Innovate. Create Jobs & Improve Education .

BUBBLE .OR NOT? 102 .

NOT COMPELLING IN PERFORMANCE 103 .RECENT INTERNET IPOS WHILE COMPELLING IN MARKET VALUE.

50-10 10 10 6 .Public Market Investors = More Skeptical than Private Market Investors Company IPO Date Initial IPO Filing Range ($) IPO Price ($) 1st Day Closing Price ($) Current Price ($) % Change From IPO IPO Market Cap ($B) Current Market Cap ($B) Facebook 5/12 $28-35 $38 $38 $29 (24%) $104 $79 Zynga 12/11 $8.

(40) 7 5 Groupon 11/11 $16-18 20 26 12 (40) 13 8 Pandora 6/11 $10-12 16 17 11 (30) 3 2 LinkedIn 5/11 $32-35 45 94 100 137 4 10 .

. data as of 5/29/12. FactSet. Bloomberg.104 Source: Yahoo Finance.

Recent Internet IPO Standout LinkedIn Averaging 10% Revenue / 2x EBITDA Upside Since IPO. 5% above consensus EBITDA $34MM. 5x consensus 2/12 Q4 Revenue $168MM. +105% Y/Y. 5/11-5/12 5/11 IPO @ $45 Raised $353MM 8/11 Q2 Revenue $121MM. +124% Y/Y. 14% above consensus EBITDA $5MM. Shares +137% $0 $25 $50 $75 $100 $125 5/11 7/11 9/11 11/11 1/12 3/12 5/12 LinkedIn Share Daily Closing Price. .

+129% Y/Y. 31% above consensus 11/11 Follow-on offering @ $71 per share. data as of 5/29/12.62% above consensus 5/12 Q1 Revenue $188MM. Bloomberg. 10% above consensus EBITDA $12MM. 2x consensus Source: Yahoo Finance. 105 . Raised $714MM 11/11 Q3 Revenue $140MM. +101% Y/Y. 5% above consensus EBITDA $38MM.

Rowing in Same Direction Cornell Crew team.A Key to Successful Financings / Wealth Creation All Stakeholders in Same Boat. 1930. Rosenfeld Collection. 106 http://www. ©Mystic Seaport.nytstore.com/assets/images/extralarge/NSAPMY1606_EXTR.jpg .

107 .The Value of a Business is the Present Value of Future Cash Flows The Riddles: 1)Getting the numbers (financials) right for the Discounted Cash Flow (DCF) model. 2)Getting the macro + micro confidence levels + time horizons right for the market.

720 Tech IPOs in USA (19802002). Morgan Stanley 108 .* *The Technology IPO Yearbook: 9th Edition 23 Years of Tech Investing.Historical Wealth Creation in Tech Companies = Concentrated ~2% of companies accounted for ~100% of net wealth creation of 1.

Morgan Stanley. 2001. July 23. .Tech Cycle of Change / Growth Where are We Now? 109 Source: Presentation titled The State of Capital Markets and An Update on Technol ogy Trends .

110 THIS CYCLE OF TECH DISRUPTION IS MATERIALLY FASTER & BROADER THAN PRIOR CYCLES .

A Lot to be Worried about in Other Areas 5)Bubble or Not? 111 . Rapid Mobile Adoption Still in Early Stages 2)Re-Imagination of Nearly Everything 3)Economy Mixed Trends. With Negative Bias 4) USA.Outline 1)Basic Stats Internet Growth Remains Robust. A Lot to be Excited About in Tech. Inc.

Disclosure 112 The information offered in this presentation speaks to industry trends in genera l. . KPCB i s a venture capital firm that owns significant equity positions in certain of the companies referenced in this presentation. and should not be construed as providing any particular recommendations or analysis for any specific company that is mentioned in this presentation.

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