Through the Labyrinth

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• Through the Labyrinth
• Presented by Julie Meyer for CIO Connect
• London, UK
• 5 March 2008

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AGENDA FOR THIS MORNING The CIO in 2008

• Who is Ariadne?
• Who was Ariadne?
• Follow the Entrepreneur
• What did we learn from Skype
• MA as the new RD
• The role of the CIO/CTO in a Start-up
• Key Lessons Learned
• Critical Success Factors
• Game Changers

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The Ariadne Capital Story Built by Entrepreneurs
for Entrepreneurs

• Founded in December 2000 to create a new model
  for financing entrepreneurship in Europe
• My background
• Founded First Tuesday largest network of
  entrepreneurs which launched Internet generation
  in Europe sold for 50m to Jerusalem Global
• VC experience with NewMediaInvestors now Spark
  Ventures
• Raised more than 200 m for start-ups and advised
  more than 100 companies over 10 years
• Ariadnes initial funding was secured from 45
  founding investors who are leading entrepreneurs
  founders of BetFair, lastminute.com, SES Astra,
  Hotmail, WorldPay
• Team of 12
• Weve backed advised some significant
  game-changers in our history so far
• Skype
• Espotting

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ARIADNE CAPITAL Whats in a Name?

• Ariadne was the Greek princess who helped Theseus
  get through the labyrinth with the golden thread
• Thats what we do with our companies we help
  them navigate and negotiate their labyrinth

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FOLLOW THE ENTREPRENEUR The credit belongs to
the man who is actually in the arena

• It is not the critic who counts, not the man who
  points out how the strong man stumbled or how the
  doer of deeds could have done better. The credit
  belongs to the man who is actually in the arena,
  whose face is marred by dust and sweat and blood,
  who strives valiantly, who errs and comes short
  again and again, who knows the great enthusiasm,
  the great venture and spends himself in a worthy
  cause, who at the best knows in the end the
  triumph of high achievement, and who at the
  worst, if he fails, at least fails while daring
  greatly so that his place shall never be with
  those cold and timid souls who know neither
  victory nor defeat.  - Theodore Roosevelt

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ENABLING BUSINESS 2.0 What did we learn from
SKYPE?

• New Products and Services gain traction through
  Consumer Adoption first and then get picked up in
  the Enterprise
• Smart entrepreneurs segment their potential
  customer base and their addressable market by
  characteristics other than geography ie early
  adopters of broadband, high mobile penetration
  etc
• People are living more and more of their lives
  online
• Giving people a more frictionless, efficient way
  to communicate matters.
• Initial free services establish consumer behavior
  and then can lead to a business model
• Great marketing trumps great technology

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Assume Innovation Occurs Elsewhere

• BILL JOY
• Co-Founder Sun Microsystems

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Innovation is Difficult to Sell- ISAAC
NEWTONPhysicist Mathematician
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WHAT WILL THE FUTURE BRING Entrepreneurship as
Engine of Growth

• The next wave of large European-founded companies
  will be built by serial European entrepreneurs
• Cycle of innovation is increasing and shortening
• Globalisation is softening the edges of economic
  cycles
• Start-ups will be acquired earlier and remain
  more autonomous inside firms
• EMAP/WGSN
• Yahoo/Answers.com
• NewsCorp/MySpace
• Last.fm/CBS
• ROI for MA will be recalculated and rethought

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THE OPPORTUNITY FOR LEADERSHIP Entrepreneurship,
Internet and Capitalism

• Capitalism was about empowered authority which
  didnt necessarily activate the citizenry the
  Internet stands that on its head, and shifts the
  power to the Individual making Individual
  Capitalism the force of the 21st Century
• - Iqbal Quadir, one of the founders of Grameen
  Phone

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WHAT ENTREPRENEURS DO INSIDE COMPANIES They Get
Out and Create a Market Storm

• Entrepreneurs, if they're good, have the best
  insight into how particular markets are
  developing. They are in the "eye of the storm,"
  dealing every day with how markets are
  dynamically evolving.
• Entrepreneurs also think differently. They see
  things that others don't. They feel compelled to
  make stuff happen, often simply because they see
  something that doesn't exist yetand should.
• Sometimes that blind faith leads to catastrophe,
  but more often, entrepreneurial insights
  eventually turn into step changes in how
  industries operate.

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IS MA THE NEW RD? probably

• If a large company acquires an entrepreneur's
  insight and innovation, it has the opportunity to
  get ahead of rivals and own the step change.
• Time and time again we have seen that the
  benefits of market disruption and dislocation
  accrue to the first few players who embrace it.
• Put another way, if a market disrupter is
  acquired by the entity he or she has the most
  potential to disruptand the acquirer embraces,
  rather than smothers, the disruptionit can be
  extremely value-enhancing.
• Especially compared with the alternative.

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What is needed in this world of fast
innovation by the CIO and his/her team?

• The Knowledge of how to manage risk in working
  with and deploying applications from companies
  who may not have 5 m on their balance sheet
• The Ability to explain the enabling side of the
  business for the CEO so that it isnt a black
  hole
• Strategy without technology cannot be world-class
• The CIO interprets the companys strategy with
  technology a technology architect just as the
  CFO interprets the companys strategy from a
  financial point of view the financial architect
  
• The Reach into Best Practices so that the CEO
  knows they are not reinventing the wheel
• The Ability to build community in a changing
  organisation

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Morse as Strategic Weapon Managing Risk

• Mid-size Systems Integrator
• Previously Known for being a Sun Reseller
• Work well with Hyper-growth companies
• Partnership of Entrepreneurs

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Key Lessons Learned

• From Business 1.0/2.0

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Lesson One Ecosystem Business Models win

• Technology being used to redistribute the
  economics of content industries
• Not so different to the Screen Writers Guild
  Strike in Hollywood
• Why Monitise will be the mobile banking solution
  for the next generation they take care of all
  parties in the transaction

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Lesson Two Were in an Attention Economy

• This is why Curation Matters
• And why subscription services may play a role
• But most likely content will be free, and
  contextual advertising will be the business model
• Acute Transparency trumps anything else
• Now Public
• You have to work with peoples interest so align
  your business model to consumer behavior not
  protecting old industries

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Lesson Three Long Tail of Social Media is Long

• No shortage of bandwidth
• Explosion of new economies of production
• Community and UGC based content being interwoven
  in our lives, ranging from music to videos
• Social networking and microblogging sites will
  jockey for your attention
• Mobile Advertising will continue to struggle
  go/slow approach due to tiny, low-resolution
  screens of mass-market handsets and operators
  fear of alienating subscribers
• Contextual Advertising makes the Long Tail of
  Social Media viable

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Lesson Four SME as a Channel to Market and a
Market

• The consumerisation of technology which hit a
  peak with SKYPE, yields the B2C2B Go to Market
  Strategy trend
• Managed Services dominate SaaS is not just a
  buzz word
• Critical Success Factor for SpinVox
• The move to hosted applications for the majority
  of organisations now seems to be a case of when
  and not if
• The SME's day has finally come
• SaaS will have the greatest impact on companies
  and vendors alike in the SME space
• SME has always been tough for the IT and telco
  industries
• Advent of relevant, inexpensive, easy to use
  business applications that work with very little
  IT knowledge or support cost will result in the
  computerisation of the SME
• SME IT spend is expected to be up 8 to 10 over
  the coming years

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Critical Success Factors

• For Business 2.0/3.0

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CRITICAL SUCCESS FACTOR 1 Be as Unreasonable
About Success as an Entrepreneur

• Entrepreneurs have a view of the market and/or a
  consumer behavior, which drives them to bring an
  innovation to life.
• Like becoming a Parent, if they knew what it
  would REALLY entail, they would think twice.
• That leads them to be paranoid, and feel that
  they are in a race against time.
• Which makes them learn how to
• Act with Imperfect Information
• Never assume they control time
• Never give up tied to their identity
• Expect Success

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CRITICAL SUCCESS FACTOR 2 You Know More Than
You Think You Do

• Dont just trust your instincts but listen, hone
  and refine your instincts
• Determine what your Unfair Advantage is and Do
  More Of That

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FACTOR 3 INVEST IN THE SUCCESS OF
OTHERS Todays World is an Ecosystem

• The Businesses with Business Models which enhance
  and grow the ecosystem will win
• Abundance Mentality
• Focus on being a Net Contributor to the System
  rather than a Net Taker, and what you find is
  that your Sphere of Influence over the System
  increases
• Focus on Long-Term Relationships

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FACTOR 4 BE RADICALLY OPEN TO THE WORLD

• Bill Joy, the former CTO and guru from Sun
  Microsystems, assume innovation occurs
  elsewhere.
• Build reliable means to continually pull in
  whats relevant and potentially threatening to
  your business
• We have to be in many places and get signals
  sooner, Henning Kagerman, SAP CEO in the WSJ
• Were not in the dialogue Nokia Senior
  Executive
• Small things can indicate that large change is
  about to happen

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FACTOR 5 EXACT ACCOUNTABILITY

• Management is the search for accountability. Who
  is doing what, by when, why, and how, and most
  importantly, what happens if they dont?
• The best entrepreneurs and executives are both
  leaders and good managers.
• There are no bad Lieutenants, Sergeants, Captains
  there are only bad Generals
• Trust is Efficient Trust but Verify
• Economies who trust spontaneously develop and
  progress more rapidly Francis Fukuyama

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FACTOR 6 CREATE THE CONDITIONS OF TRUST SO
THAT GREAT THINGS CAN HAPPEN

• Trust is efficient leadership is about
• creating the conditions of trust, and the
  combination of
• building counter-cyclically,
• paying attention to small change which indicates
  that large structural change is about to happen,
• seeking out inefficient markets, and
• investing in the success of others,
• leads to businesses that are both valuable and
  sustainable.

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Game Changers
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I. Mobile Broadband is real

• Momail and Monitise

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Themes from Mobile World Congress

• The themes from MWC were definitely that mobile
  broadband is here at last and that email and
  location based services are to the big drivers
  (as well as simplicity) in the handset.
• So if youre in the mass market for your own
  personal tech like me, and a big fan of
  cost-effective plans, youll approve of Momail's
  mission free mobile email.
• The addressable market is the hundreds of
  millions of phones in the world

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What is Momail?

• Momail is a unique mobile email solution
• affordable
• free, low priced
• easy-to-use
• no client
• auto configuration
• auto collect of emails from other accounts
• lean
• optimizes attachments
• drastically reduces data charges
• works with any connected mobile device!

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About Momail

• Founded in 2005
• Head office in Limhamn, Sweden
• First product beta released in July 2006
• Funded by venture and private capital
• Patent pending technology
• Mobile Message Optimization and Protection Engine
  (MMOPE)
• Developed for mobile email, mobile communication
  and more
• Initial focus on consumer mobile email
• Additional releases will include ehancements to
  ease the delivery of digital media to mobile
  devices

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Momail The time is now

• Launched in Europé Q3 2007
• Scandinavia, UK, Germany and Poland now live
• Additional European and Asian countries to follow
  throughout 2008
• Momail supports 80 of mobile handsets available
  in the global market
• Momail functions on over 1000 models, no other
  mobile email provider comes close
• User statistics prove Momail meets an untapped
  consumer demand
• Overall registrations growing by 1500 / week
• Over 40 of registered users become active
• Average of over 90 data saved by Momail
  customers

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Why Partner with Momail?

• Current Market Conditions
• Mobile handset penetration greatly outstrips PC
  penetration in Asia
• Asia will account for 60 of new mobile
  subscriber growth in the next five years
• Momail provides email capabilities to users who
  do not have PCs
• Increasing data usage beginning to clog 3G
  networks
• Momails patent pending technology minimizes the
  data traffic by up to 99, thus both reducing
  data load on operator networks and increasing
  speed

• Global Insight report, 19 April 2007

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SpinVox

• Voice to Screen

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SpinVox does one thing - really well

• Convert any voice message into meaningful text
• Experience - reliable, fast, high quality

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Vision mission
Vision Imagine a world where messaging is as
simple, natural and intuitive as speaking your
message or glancing at your phones screen
to read voice messages youve received
Mission Simple revolution enable all existing
messaging products with voice Make everyday
communication simpler and more effective Lead the
3rd most important form of communication
Tomorrow Mass market range of Voice-to-ScreenMes
saging for web, Carrier, VoIP cable channels
Today Enable SpinVox Voicemail within global
carriers Branded standard for Voicemail-to-Text
service
Any Voice Any Message Anywhere
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SpinVox Vital Statistics and History

• 2003 Founders hit upon idea
• VMCS designed - patents filed - SpinVox
  incorporated
• 2005 UK Nationwide Retail
• gt100k subscribers, 80 retention, brand
  marketing success
• 2006 Carrier contract
• Investment in Carrier Grade Platform, Management
  Team and N.Am expansion
• Multi-lingual, multi-market
• Vendor partnerships
• 2007 Land-grab strategy bites
• 12 Carrier contracts 100m base 200m
  contracted revenue 100 market share
• 4 languages 4 continents
• 100m (50m) funding
• 2008 Scale
• 26 Carrier contracts
• 6 languages 5 continents
• 3 new products, 5 new markets/channels
• 2010 100m users, 250m annual revenue

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Worldwide footprint

• 2007 - 12 deals
• 10 Deployments
• En, Sp, Fr, Ge
• N.America, Europe, S.Africa, Australia

• 2008 - 26 Deals
• Tier 1
• LatAm, AsiaPac
• Language
• New Italian, Portuguese
• 3 new products
• Unified Communications
• Speak-a-Message
• Social Networks

Spinvox Offices
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THANK YOUjulie_at_ariadnecapital.com