Mary Meeker's 2017 Internet Trends Report

July 15, 2017 | Author: Josh Constine | Category: Pinterest, Advertising, Facebook, Google, Smartphone
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INTERNET TRENDS 2017 – CODE CONFERENCE Mary Meeker May 31, 2017 kpcb.com/InternetTrends

Internet Trends 2017 1)

Global Internet Trends = Solid…Slowing Smartphone Growth

2)

Online Advertising (+ Commerce) = Increasingly Measurable + Actionable

3)

Interactive Games = Motherlode of Tech Product Innovation + Modern Learning

4)

Media = Distribution Disruption @ Torrid Pace

151-177

5)

The Cloud = Accelerating Change Across Enterprises

178-192

6)

China Internet = Golden Age of Entertainment + Transportation

193-231

4-9 10-79 80-150

(Provided by Hillhouse Capital)

7)

India Internet = Competition Continues to Intensify…Consumers Winning

232-287

8)

Healthcare @ Digital Inflection Point

288-319

9)

Global Public / Private Internet Companies…

320-333

10) Some Macro Thoughts…

334-351

11) Closing Thoughts…

352-353

KP INTERNET TRENDS 2017 | PAGE 2

Thanks... Kleiner Perkins Partners Alexander Krey & Ansel Parikh - who were fearless and sometimes sleepless - helped steer the ideas / presentation we hope you find useful / learn from / improve on. Key contributors to specific content include: Noah Knauf & Nina Lu (Healthcare), Bing Gordon (Interactive Games), Alex Tran & Anjney Midha (India), Daegwon Chae (Ads + Commerce) and Alex Kurland & Lucas Swisher (Enterprise). In addition, Eric Feng, Daniel Axelsen, Dino Becirovic and Shabih Rizvi were more than on call with help. Hillhouse Capital Especially Liang Wu…his / their contribution of the China sector of Internet Trends provides an especially thoughtful overview of the largest market of Internet users in the world… Participants in Evolution of Internet Connectivity From creators to consumers who keep us on our toes 24x7...and the people who directly help us prepare this presentation... Kara & Walt For continuing to do what you do so well...

KP INTERNET TRENDS 2017 | PAGE 3

GLOBAL INTERNET TRENDS = SOLID USER GROWTH… SLOWING SMARTPHONE GROWTH

KP INTERNET TRENDS 2017 | PAGE 4

Global Internet Trends = Solid User Growth…Slowing Smartphone Growth

1) Global Internet Users = 3.4B…Flat Growth +10% vs. 10% Y/Y… +8% vs. 8% Y/Y (ex. India) 2) Global Smartphone Shipments = Slowing +3% vs. +10% Y/Y 3) Global Smartphone Installed Base = Slowing +12% vs. +25% Y/Y 4) USA Internet Usage (Engagement) = Solid +4% Y/Y

KP INTERNET TRENDS 2017 | PAGE 5

Global Internet Users = 3.4B @ 46% Penetration... +10% Y/Y vs. +10%...+8% Y/Y vs. +8% (Ex-India)

4,000

35%

3,500

30%

3,000

25%

2,500 20% 2,000 15% 1,500

Y/Y % Growth

Global Internet Users (MM)

Global Internet Users (MM), 2009 – 2016

10%

1,000 500

5%

0

0% 2009

2010

2011

2012

Global Internet Users (MM)

2013

2014

2015

2016

Y/Y Growth (%)

Source: United Nations / International Telecommunications Union, US Census Bureau. Internet user data is as of mid-year. Internet user data for: USA from Pew Research, China from CNNIC, Iran from Islamic Republic News Agency / InternetWorldStats / KPCB estimates, India from KPCB estimates based on IAMAI data, Indonesia from APJII.

KP INTERNET TRENDS 2017 | PAGE 6

Global Smartphone Unit Shipments = Continue to Slow... @ +3% Y/Y vs. +10% (2015) / +28% (2014)

1,500

100%

1,200

80%

900

60%

600

40%

300

20%

0

Y/Y Growth (%)

Global Smartphone Unit Shipments (MM)

Smartphone Unit Shipments by Operating System (MM), Global, 2009 – 2016

0% 2009

2010

2011

Android

2012 iOS

2013 Other

2014

2015

2016

Y/Y Growth

Source: Morgan Stanley Research (5/17)

KP INTERNET TRENDS 2017 | PAGE 7

Global Smartphone Installed Base = 2.8B… +12% Y/Y vs. +25% (2015) / +37% (2014)

3,500

70%

3,000

60%

2,500

50%

2,000

40%

1,500

30%

1,000

20%

500

10%

0

Y/Y % Growth

Global Smartphone Installed Base (MM)

Global Smartphone Installed Base (MM), 2009 – 2016

0% 2009

2010

2011

2012

2013

Global Smartphone Installed Base (MM)

2014

2015

2016

Y/Y Growth (%)

Source: Morgan Stanley Research (5/17) Note: Owing to use of different source, prior period data may have slight adjustments vs prior reports. Smartphone installed base based on preceding 8 quarters of smartphone shipments.

KP INTERNET TRENDS 2017 | PAGE 8

Internet Usage (Engagement) = Solid Growth…+4% Y/Y… Mobile >3 Hours / Day per User vs. Desktop (2016) on Higher Growth, USA USA Internet Advertising ($B), 2009 – 2016 $80

40%

$70

35% $60

$60

30% $50

$50

25%

$43 $37

$40 $26

$30

20%

$32 15%

% Y/Y Growth

USA Internet Advertising ($B)

$73

$23 $20

10%

$10

5%

$0

0% 2009

2010

2011

Desktop Advertising

2012

2013

2014

Mobile Advertising

2015

2016

Y/Y Growth

Source: IAB / PWC Internet Advertising Report (2016)

KP INTERNET TRENDS 2017 | PAGE 12

Advertising $ = Shift to Usage (Mobile) Continues % of Time Spent in Media vs. % of Advertising Spending, USA, 2016

% of Total Media Consumption Time or Advertising Spending

Time Spent

Ad Spend

50% Total Of Which Internet Ad Mobile Ad = $73B

40%

= $37B

38% 38% 30% 28%

~$16B

20%

20% 20%

10%

Opportunity in USA

12% 9%

0%

21%

9%

4% Print

Radio

TV

Internet

Source: Internet and Mobile advertising spend based on IAB and PwC data for full year 2016. Print, Radio, and TV advertising spend based on Magna Global estimates for full year 2016. Print includes newspaper and magazine. Internet (IAB) includes desktop + laptop + other connected devices. ~$16B opportunity calculated assuming Mobile (IAB) ad spend share equal its respective time spent share. Time spent share data based on eMarketer (4/17). Arrows denote Y/Y shift in percent share. Excludes out-of-home, video game, and cinema advertising.

Mobile

KP INTERNET TRENDS 2017 | PAGE 13

Advertising $ = Internet > TV Within 6 Months, Global Internet vs. TV Ad Spend ($B), Global, 1995-2017E

Global Advertising Spend ($B)

$250

$200

$150

$100

$50

$0

Global Internet Ad Spend

Global TV Ad Spend

Source: Zenith Advertising Expenditure Forecasts (3/17)

KP INTERNET TRENDS 2017 | PAGE 14

Google + Facebook = 85% (& Rising) Share of Internet Advertising Growth, USA Advertising Revenue ($B) and Growth Rates (%) of Google vs. Facebook vs. Other, USA, 2015 – 2016

50,000

$50

45,000

$45

40,000

$40

35,000

30,000

25,000

20,000

15,000

USA Advertising Revenue ($B)

+20% Y/Y $35 $30

+9% Y/Y $25

+62% Y/Y

$20 $15

10,000

$10

$5,000

$5

$0

$

2015 2016 Google

2015 2016 Facebook

2015

Source: IAB / PWC Advertising Report (2016), Facebook, Morgan Stanley Research Note: Facebook revenue includes Canada. Google USA ad revenue per Morgan Stanley estimates as company only discloses total ad revenue and total USA revenue. “Others” includes all other USA internet (mobile + desktop) advertising revenue ex-Google / Facebook.

2016 Others KP INTERNET TRENDS 2017 | PAGE 15

Ad Measurability = Can Be Triple-Edged… When Things Are Measured = People Don’t Always Like What They See… Users Don’t Always Like Data Collected

KP INTERNET TRENDS 2017 | PAGE 16

Advertisers = Like Measurable Engagement Metrics But… Some Find Measuring ROI Challenging (as with Offline) Social Advertisers

Social Media Marketing

Metrics Used to Measure Success, 6/16

Top Challenges, 6/16

70%

70% 61% 60%

56%

50%

50%

% of Respondents

% of Respondents

60%

40%

30% 21% 20%

15%

34% 30% 20%

10%

10%

0%

0% Engagement Conversion Amplification & Revenue & Brand Awareness Source: SimplyMeasured State of Social Marketing Annual Report (6/16) Note: Based on a survey of social media advertisers, n=350.

38%

40%

Measuring ROI

Securing Tying Social Budget & Campaigns Resources to Business Goals KP INTERNET TRENDS 2017 | PAGE 17

Ad Blocking = Growth Continues…Especially in Developing Markets… Users Increasingly Opt Out of Stuff They Don’t Want Adblocking Users on Web (Mobile + Desktop), Global, 4/09 – 12/16

Adblocking Penetration (Mobile + Desktop), Selected Countries, 12/16

400

Global Adblocking Users (MM)

Country

300

200

100

0 2009 2010 2011 2012 2013 2014 2015 2016 Desktop Adblocking Software Users Mobile Adblocking Browser Users

Desktop

Mobile

China

1%

13%

India

1%

28%

USA

18%

1%

Brazil

6%

1%

Japan

3%

--

Russia

6%

3%

Germany

28%

1%

Indonesia

8%

58%

UK

16%

1%

France

11%

1%

Canada

24%

--

Source: PageFair 2015, 2017 reports. These two data sets have not been de-duplicated. The number of desktop adblockers after 1/16 are estimates based on the observed trend in desktop adblocking and provided by PageFair. Note that mobile adblocking refers to web / browser-based adblocking and not in-app adblocking. Desktop adblocking estimates are for global monthly active users of desktop adblocking software between 4/09 – 12/16, as calculated in the PageFair’s 2015 and 2017 reports. Mobile adblocking estimates are for global monthly active users of mobile browsers that block ads by default between 9/14 – 12/16, including the number of Digicel subscribers in the Caribbean (added 10/15), as calculated in the PageFair & Priori Data 2016 and PageFair 2017 Adblocking Report.

KP INTERNET TRENDS 2017 | PAGE 18

Leading Platform Ad Offerings = Rapidly Improving with Back-End Data + Front-End Measurement Tools + Targeted Delivery of Ads Users Increasingly Want KP INTERNET TRENDS 2017 | PAGE 19

Leading Online Ad Platforms = Providing More Ways to Target + Measure Ads Facebook (Delivery Insights)

Google (AdWords)

Snap (Snap Ads)

Source: Facebook, Google, Snap

KP INTERNET TRENDS 2017 | PAGE 20

Product Listing Ads (Google) = Driving Clicks to Product Pages Google Product Listing Ads (PLAs) Share of Retail Paid Clicks on Google, USA, 2014-2016

Google PLA on Mobile Web, 12/16

PLA Share of Retail Paid Clicks on Google (%)

60% 52% 50%

40%

30%

29%

20%

10%

0%

Source: Merkle Digital Marketing Report (Q1:14-Q1:17), Right image: Search Engine Land

KP INTERNET TRENDS 2017 | PAGE 21

Targeted Pins (Pinterest) = Driving Product Discovery + Purchase Pinterest

Shop the Look

Browsing Turning into Buying, 4/17

Inspired Purchases, 2/17

Which of these services is a great place to browse for things you might want to buy?

Which of these services is a great place to buy things online?

50% 44%

45%

% of Respondents

40% 35%

33%

30% 24%

25% 20% 15%

12%

10% 5% 0% Browse

Buy 4/15

4/17

Source: Pinterest Note: Based on an internal survey of global internet users, n=12K. Other answers to the questions include Facebook, Instagram, Twitter, Snap, YouTube, and Google with each respondent only allowed to choose one option.

KP INTERNET TRENDS 2017 | PAGE 22

Contextual Ads (Facebook) = Driving Direct Purchases Facebook Users

Facebook Messenger

26% that Click Ads Make Purchase, USA, 3/17

Conversational Transactions, 9/16

In past 30 days, have you clicked an ad on Facebook? In past 30 days, have you purchased a product you saw on Facebook? 100% 90%

% of Respondents

80% 70% 60%

74% 93%

90%

7%

10%

Didn’t Click on Ad

Not Sure

50% 40% 30% 20% 10%

26%

0% Clicked on an Ad

Made a Purchase

Did Not Make a Purchase

Source: Survata (4/17), Messenger Image: Facebook Blog (9/16) Note: Based on survey of USA internet users, n=1,500 (3/17).

KP INTERNET TRENDS 2017 | PAGE 23

Goal Based Bidding Ads (Snap) = Driving User Action Snap / Gatorade Ad Campaign Users Swipe Through Ad to Web Game, 8/16 Users Spend Average of 196 Seconds Playing Game

Source: Snap Case Study: Gatorade (8/16)

KP INTERNET TRENDS 2017 | PAGE 24

Geo-Targeted Local Ads (Google) = Driving Foot Traffic to Stores Google Location-Tagged Ads 99% Accuracy Tracking Visits to 200MM Stores Globally, 9/16 5B Cumulative Tracked Store Visits, Up 5x Y/Y*, 5/17

Source: Google Adwords Blog (5/16, 9/16, 5/17), Image: Google Adwords Blog (9/16) * 5B (5/17) vs. 1B cumulative tracked (5/16).

KP INTERNET TRENDS 2017 | PAGE 25

Incentive-Based + Skippable Video Ads = Driving Positive Interactions Incentive-Based + Skippable Video Ads More Likely to be Viewed Positively, 5/16 How would you characterize your attitude towards the following formats of online video advertising? Mobile App Reward

32%

68%

Social Click-to-Play

52%

48%

Skippable Pre-Roll

51%

49%

Skippable Mobile Pop-up

46%

54%

In-Banner Click-to-Play

45%

55%

Social Auto-Play

26%

74%

In-Banner Auto-Play

21%

79%

Pre-Roll

20%

80%

Mobile App Pop-Up

19%

81%

Positive

Negative

% of Respondents

Source: MillwardBrown AdReaction Video Creative in a Digital World (5/16) Note: Survey of people from Argentina, Australia, Brazil, France, Germany, Mexico, UK, and USA who watched 20 ads (at least 100 per ad) and answered positive or negative, n=10.739. The survey included TV, YouTube skippable pre-roll, Facebook auto-play, Facebook click-to-play, and mobile video ad formats.

KP INTERNET TRENDS 2017 | PAGE 26

Vungle Dynamic Creative Ads

Video + Images

Improving Conversion Rates, 5/17

Dynamic Creative Variations Source: Vungle (5/17) Note: “Dynamic creative” is any creative ad that changes automatically based on information about the user (behavior, location, or context). A dynamic tab ad includes multiple interactive promotional modules alongside a video ad.

4/17

3/17

0.00% 2/17

0 1/17

0.10%

12/16

100

11/16

0.20%

10/16

200

9/16

0.30%

8/16

300

7/16

0.40%

6/16

400

5/16

0.50%

4/16

500

3/16

0.60%

2/16

600

1/16

Dynamic Creative Variations (K)

Dynamic Tab Ad

Conversion Rate (%)

In-App Ads + Dynamic Creative (Vungle) = Driving Higher In-App Install Performance

Conversion Rate KP INTERNET TRENDS 2017 | PAGE 27

In-Ride / In-Hand Recommendations (Uber + Foursquare) = Location + Route + Destination + Time of Day (+ an Offer) Uber / Foursquare Partnership In-App Recommendations for Nearby Businesses, 4/17

Source: Uber (4/17)

KP INTERNET TRENDS 2017 | PAGE 28

Hyperlocal Targeting (Nextdoor…xAd) = From Home (Neighborhood) to Work (Commute) Nextdoor

xAd

Neighbors Drive Word of Mouth

Tracking Where / When Purchases Likely to be Made

+8% Engagement Lift for Ring

Source: Nextdoor, xAd

KP INTERNET TRENDS 2017 | PAGE 29

Advertising Inefficiency = Increasingly Exposed by Data… Right ‘Ad’ @ Right Place / Time

KP INTERNET TRENDS 2017 | PAGE 30

Right Ad @ Right Place / Time (Driven by Algorithms)… User-Typed Input (Words)… Linked to Relevant Ad = Google AdWords (Launched 2000)

Source: Historyofinformation.com, Google

KP INTERNET TRENDS 2017 | PAGE 31

…Right Ad @ Right Place / Time… Based on User-Typed Input (Words) = Big Business for Google Google = $679B Market Capitalization +30x vs. IPO $1,200

$1,000

$600

$400

$200

2/17

8/16

2/16

8/15

2/15

8/14

2/14

8/13

2/13

8/12

2/12

8/11

2/11

8/10

2/10

8/09

2/09

8/08

2/08

8/07

2/07

8/06

2/06

8/05

2/05

$0 8/04

Share Price ($)

$800

Source: Yahoo Finance Note: Priced as of 5/26/17 market close. Google IPO’ed @ $85 / share on 8/19/04.

KP INTERNET TRENDS 2017 | PAGE 32

Right Ad @ Right Place / Time (Driven by Algorithms)… User-Uploaded Input (Real-Time Images)… Linked to Relevant Ad = SnapAds (Launched 2014)

Source: Image: Adweek (10/14)

KP INTERNET TRENDS 2017 | PAGE 33

…Right Ad @ Right Place / Time… Based on User-Uploaded Input (Images) = Big Business for Snap

$180

180

$160

160

$140

140

$120

120

$100

100

$80

80

$60

60

$40

40

$20

20

DAU (MM)

Net Revenue ($MM)

Snap = $25B Market Capitalization

0

$0 Q1:15

Q2:15

Q3:15

Q4:15

Q1:16

Q2:16

Net Revenue

DAU

Q3:16

Q4:16

Q1:17

Source: Snap Filings Note: Priced as of 5/26/17 market close. Snap IPO’ed @ $17 / share on 3/2/17.

KP INTERNET TRENDS 2017 | PAGE 34

A lot of the future of search is going to be about pictures instead of keywords. - Ben Silbermann, Pinterest Founder / CEO, 4/17

Source: CNBC interview (4/3/17)

KP INTERNET TRENDS 2017 | PAGE 35

Ads Evolving Rapidly = Often Organic + Data @ Core

KP INTERNET TRENDS 2017 | PAGE 36

Emerging Retailers + Crafty Big Brands = Finding Ways to Make Collaborative Ad Creation (Social + UGC) Work for Them…

KP INTERNET TRENDS 2017 | PAGE 37

Brands + Consumers = Re-Distribution Driving Engagement… Effective UGC can generate 6.9x higher engagement than brand generated content on Facebook, per Mavrck, 2/17 Ben & Jerry’s / UGC on Instagram, 5/17

Source: Mavrck Facebook UGC Benchmark Report (2/17), Image: benandjerrys Instagram featuring mistress_spice (4/17) Note: Study based on 536,238 micro-influencer brand activations completed via Mavrck Platform from 1/1/16-12/13/16.

KP INTERNET TRENDS 2017 | PAGE 38

…Brands + Consumers = Brands Sourcing Content from Fans… Brands = Leveraging UGC on Instagram Qatar Airways Red Bull BMW Wayfair Sephora Netflix Starbucks Cathay Pacific Turkish Airlines Emirates Amazon Video 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Instagram Content Regrammed Source: SimplyMeasured (11/16) Note: Data collected from each company’s Instagram page from 7/16-10/16. Posts were manually tagged for regrams based on mentions on ‘regram’ in the post or the camera emojis.

KP INTERNET TRENDS 2017 | PAGE 39

…Brands + Influencers = Re-Distribution Driving Engagement Influencers = Can Impact Followers

Source: Stance

KP INTERNET TRENDS 2017 | PAGE 40

…Emerging Retailers + Crafty Big Brands = Finding Ways to Make Images (+ Video) + Data + Algorithms + Voice Work for Them

KP INTERNET TRENDS 2017 | PAGE 41

Image-Based Platform Front-Ends = Tap + Augment Can Replace Typing… ‘Front-End’ User-Generated Real-Time Geolocated Images

Source: Left Image: Snap, Right Image: Instagram blog (3/17)

KP INTERNET TRENDS 2017 | PAGE 42

…Image-Based Platform Front-Ends = Taking Pictures Can Replace Typing… ‘Front-End’ Google Lens Will Provide Greater Context to Images

Source: Google I/O (5/17)

KP INTERNET TRENDS 2017 | PAGE 43

…Image-Based Platform Back-Ends = Algorithms Infer User Context from Images… ‘Back-End’ Algorithms Infer Images / Project AR Objects into Scenes

Source: Images: CB Insights, Seene Patents (acquired by Snap in 6/16) and Looksery Patents (acquired by Snap in 9/15)

KP INTERNET TRENDS 2017 | PAGE 44

…Image Recognition Back-Ends = Can Provide Contextual Relevance for Advertisers Snap Image Recognition

Google Visual Positioning Service

Potential Ad Targeting Tool

Tracking Path to Purchase…In-Store

Source: Left Image : Snap Patent (7/16), Right Image: Google I/O (5/17)

KP INTERNET TRENDS 2017 | PAGE 45

Voice-Based Mobile Platform Front-Ends = Voice Can Replace Typing… Google Assistant Nearly 70% of Requests are Natural / Conversational Language, 5/17 20% of Mobile Queries Made via Voice, 5/16

Source: Google I/O (5/16), Image: Macrumors (2/17)

KP INTERNET TRENDS 2017 | PAGE 46

…Voice-Based In-Home Platform Front-Ends = Voice Can Replace Typing… Amazon Echo Evolution, 11/14 – 5/17 Echo = Shopping + Media Echo Look = Shopping + Recommendations Echo Show = Video + Voice Calls

Amazon Echo Skills Broadening Use Cases

12

14,000

10

12,000

8 6 4

Number of Skills

Echo Installed Base (MM)

Amazon Echo Device Installed Base, USA

10,000 8,000 6,000 4,000

2

2,000

0

0

Source: Image: Amazon, Consumer Intelligence Research Partners LLC, Geekwire, Technology Review, Wired, Fast Company

KP INTERNET TRENDS 2017 | PAGE 47

…Voice-Based Platform Back-Ends = Voice Recognition Accuracy Continues to Improve Google Machine Learning Achieving Higher Word Accuracy, 2013-2017 100%

95%

Word Accuracy Rate (%)

95%

90%

80%

Google

Threshold for Human Accuracy

70% 2013

2014

2015

2016

Source: Google (5/17) Note: Data as of 5/17/17 and refers to recognition accuracy for English language. Word error rate is evaluated using real world search data which is extremely diverse and more error prone than typical human dialogue.

2017 KP INTERNET TRENDS 2017 | PAGE 48

Ads = Becoming Targeted Storefronts

KP INTERNET TRENDS 2017 | PAGE 49

Ads / Content / Products / Transactions = Lines Blurring. Fast… The Content = The Store Facebook Feed

Emails

Browsable Storefronts

Curated Storefronts

Source: Left Image: Facebook, Right Image: Stitch Fix

KP INTERNET TRENDS 2017 | PAGE 50

…Ads / Content / Products / Transactions = Lines Blurring. Fast. The Ad = The Transaction Instagram Feed

Snap eCommerce Ad

Tap to Book, 4/17

Swipe Up to Buy, 5/16

Source: Left Image: Instagram, Right Image: Snap

KP INTERNET TRENDS 2017 | PAGE 51

Product Quality + Customer Support + Transparency Bars Rising = Owing to Social Media KP INTERNET TRENDS 2017 | PAGE 52

Social Media = Can Provide Opportunity to Improve Customer Service… If you could choose two things for organizations to improve in customer service, what would they be? (Select two), 8/16 70%

60%

60% 53%

% of Responses

50%

40% 29%

30%

21% 20%

10%

0% Easier Access to Online Faster Agent Reponse Support Channels Times

Consistent Customer Experience Across Channels

Faster Access to Live Support

Source: Ovum Get It Right: Deliver the Omni-Channel Support Customers Want (8/16) Note: Survey of consumers ages 18-80 in Australia, Europe, New Zealand, and USA, n=400.

KP INTERNET TRENDS 2017 | PAGE 53

…Social Media = Can Drive Accountability… 82% of Customers Stopped Doing Business with a Company After Bad Experience vs. 76% in 2014, 8/16

Source: Image: Allbirds, Ovum Get It Right: Deliver the Omni-Channel Support Customers Want (8/16) Note: Survey based on consumers ages 18-80 in Australia, Europe, New Zealand, and USA; n=400.

KP INTERNET TRENDS 2017 | PAGE 54

…Real-Time Online Customer Conversations = Rising Rapidly… Intercom Conversations Started, Global, 12/13-12/16

Intercom Simple + Engaging UI

Conversations Started (MM)

400

300

200

100

0

Source: Intercom Note: Conversations include messages initiated by businesses & consumers.

KP INTERNET TRENDS 2017 | PAGE 55

Customers = Increasingly Expect to Understand How Things Work SoFi ‘How It Works’

SoFi Member Dashboard

Most Viewed Content, After Home Page

Send Questions Directly to CEO

Source: SoFi

KP INTERNET TRENDS 2017 | PAGE 56

Retailers Emerging With Especially Effective Strategies…

KP INTERNET TRENDS 2017 | PAGE 57

Chewy.com = Pet Treats / Food / Supplies… Strong User Community + Great Target Market Engaged Community + High Customer Satisfaction

Strong Revenue Growth $1,000 $900

Revenue ($MM)

$800 $700 $600 $500 $400

Dynamic Customer Service $300 $200 $100 $0 2015

2016

Source: Chewy.com

KP INTERNET TRENDS 2017 | PAGE 58

Glossier = Skincare & Beauty Products... Content Marketing User Generated Content = Influencers

Accelerating Active Customer Growth

‘Into the Gloss’ = Content Marketing

Active Customer % Y/Y Growth

600%

550%

500%

450%

400%

350%

300% 2015

2016

Source: Glossier, Top Left Image: Instagram user genius_hotel, Bottom Left Image: Glossier

KP INTERNET TRENDS 2017 | PAGE 59

UNTUCKit = Shirts… Online-Offline Synergies in Marketing + Merchandising Online Sessions Up >2.5x Y/Y

Digital-Physical Feedback Loop Deliberate Branding + Clear Messaging @ Core

Offline Engagement

8

Direct Touchpoints in Physical World 7

Sessions (MM)

6 5 4 3 2

In-Store Interactions Intimacy + Active Dialogue

Online Storefront Digital Merchandising Insights

1 0 2015

Source: UNTUCKit Note: Online session defined as website visit.

2016

KP INTERNET TRENDS 2017 | PAGE 60

Allbirds = Shoes… Innovative Product + Simple Choice (Less Selection = More) Two Comfortable, High Quality Styles

Growing eCommerce Sessions 6

Product Changes Based on Customer Input 3x adjustments to U-throat opening Tongue Tongue lace loop reinforcement reworked layer added New internal toe reinforcement added Tongue base – double row stitch implemented

Alternative insole cover material developed

New process/ material logo tabs developed

eCommerce Sessions (MM)

5

4

3

2

1 New vamp lining wool textile introduced

Outsole durometer reduced

Insole geometry modified

Source: Allbirds * 3/16-6/16, H1:17 data from 1/17-5/17.

Outsole redesigned

0 H1:16*

H2:16

H1:17

KP INTERNET TRENDS 2017 | PAGE 61

Trendyol = Apparel... Private Label + Local Sourcing for Local Consumers (Middle East) Private Label + Local Sourcing

High Purchase Re-Engagement

Low Prices + Short Lead Times

Items Purchased per Shopper Continue to Rise 12

Fast Replenishment (7-10 days)

10

Private Label @ 38% of Revenue Other Fashion Brands

Average Units per Active Shopper

~1K Suppliers 50km from Trendyol HQ

8

6

4

2

0 2014

2015

2016

2017 YTD

Source: Trendyol Note: Average units per active shopper calculated over the course of shopper lifetime.

KP INTERNET TRENDS 2017 | PAGE 62

MM.LaFleur = Women’s Professional Wardrobe… Relationship-Driven Experience (Online & Offline) Wardrobe Survey

High Growth + Retention

Algorithmic Optimization $35

$30

Bento Box Curated Impressions

Online Shopping

In-Store Stylist Appointments

Ongoing Customer Engagement

Human Touch + Active Dialogue

Revenue ($MM)

$25

$20

$15

$10

$5

$0 2015 Source: MM.LaFleur

Returning Customers

2016 New Customers KP INTERNET TRENDS 2017 | PAGE 63

eCommerce A-Ha’s

KP INTERNET TRENDS 2017 | PAGE 64

If It Seems Like Package / Parcel Growth is Accelerating… It’s Because It Is, +9% Y/Y…

12

12%

10

10%

8

8%

6

6%

4

4%

2

2%

0

0% 2010

2011

2012

2013

2014

2015

Source: USPS, Fedex, UPS Filings *Combines USPS's Domestic Shipping and Package Services volumes, Fedex's calendar year Domestic Package volumes, and UPS's Domestic Package volumes.

Y/Y Growth (%)

Parcel Volume* (B)

Parcel Volume*, USA, 2010-2016

2016

KP INTERNET TRENDS 2017 | PAGE 65

…Apartment Building Lobbies Becoming Warehouses… Doormen Becoming Foremen… Landlords Expanding Package Rooms to Accommodate Rising Online Order Delivery

Source: Image: NYTimes Photographer Tony Cenicola

KP INTERNET TRENDS 2017 | PAGE 66

…Unwrapping Boxes… Becoming Entertainment… Unboxing YouTube Top 5 Channels = 33MM+ Subscribers, 5/17

Source: YouTube: Ryan’s Toy Review, Fun Toys Collector Disney Toys Review, Disney Car Toys, Toys AndMe, Blu Toys Club Surprise, Images: CKN Toys

KP INTERNET TRENDS 2017 | PAGE 67

…Eating Out is… Increasingly Eating In… Top 10 DoorDash San Francisco Bay Area Restaurants Delivery as % of Revenue = 7% vs. 2% (2015) Revenue Growth = +45% Y/Y vs. 10% (2015) Eating Out

Eating In

Source: DoorDash, Left image: Pexels, Right image: DoorDash

KP INTERNET TRENDS 2017 | PAGE 68

…Grocery Shopping… Getting Personal / Fast / Easy… Instacart = Personalized Grocery Recommendations 8x More Likely to Buy

85% of In-Store Replacements...

When Prompted with ‘Buy It Again’ Option

Chosen Based on Algorithmic Recommendations

Source: Instacart

KP INTERNET TRENDS 2017 | PAGE 69

…Lowe’s Doing Augmented Reality… Helping Consumers Find Products In-Store… Lowe’s / Google Partnership Guides Customers to In-Store Items via Augmented Reality on Mobiles, 3/17

Source: Google, Lowe’s

KP INTERNET TRENDS 2017 | PAGE 70

…Stitch Fix Launching Another Private-Label Clothing Brand &… It’s Computer-Generated (1% of Products for Now)... Product Attributes + Customer Feedback + Data Science / Testing New Style, 5/17

Cassie Crochet Detail Top Lace Feature

Sleeve

Silhouette Print

Hem Type

Source: Stitch Fix, Left Image: Stitch Fix Algorithms Tour, Right Image: Stitch Fix

KP INTERNET TRENDS 2017 | PAGE 71

…Retail Store Closings May Break 20 Year Record While... Amazon Opens Retail Stores… Retail Unit Closings, USA, 1995-2017 YTD

Amazon Looks to Expand its Physical Footprint

8,000 Average 7,000

5,000 4,000 3,000 2,000 1,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E

Unit Closings

6,000

Source: Credit Suisse, Amazon Note: 2017 is YTD as of 4/6/17. 2017 estimate per Credit Suisse.

KP INTERNET TRENDS 2017 | PAGE 72

…Digitally Native Brands = Go Offline… I don't think retail is dead. Mediocre retail experiences are dead. - Neil Blumenthal, Co-CEO @ Warby Parker, 1/17

Warby Parker

Bonobos Guide Shops

Schedule Eye Exams…Buy Glasses

Try On In-Store…Ship to Home

Source: WSJ interview 1/23/17, Left image: Pinterest, Right image: Fashion Trends Daily

KP INTERNET TRENDS 2017 | PAGE 73

…World’s Largest Offline Retailer (Wal-Mart)… Getting Aggressive Online… 90% of Americans Live Within 10 Miles of a Wal-Mart Wal-Mart eCommerce Revenue Y/Y Growth, Global 18%

Organic + Inorganic Growth FQ1:18 eCommerce Revenue Growth @ 63% Y/Y vs. 29% FQ4:17, USA

16% 14%

% Y/Y Growth

12%

Recent Acquisitions & Investments

10% 8% 6% 4%

Acquired Jet.com, 8/16

2% 0%

Modcloth.com, 3/17 Moosejaw, 2/17 JD.com (Increased to 12%), 2/17 Shoebuy, 1/17

Source: Wal-Mart Note: Fiscal year ends January. Wal-Mart stopped disclosing global eCommerce revenue growth after FQ4:17 and began disclosing USA eCommerce revenue growth.

KP INTERNET TRENDS 2017 | PAGE 74

…Amazon Becoming a Leading Private-Label Supplier of… Baby Wipes + Batteries, USA… Amazon Basics Market Share, 8/16 USA 35% Online Battery Market Share (%)

Online Baby Wipes Market Share (%)

35% 30% 25% 20% 15% 10% 5%

30% 25% 20% 15% 10% 5% 0%

0%

Source: Images: Amazon, 1010 Data Note: Data collected from 9/15-8/16

KP INTERNET TRENDS 2017 | PAGE 75

…eCommerce Growth = +15% Y/Y… Accelerating, Again, USA…

$450

20%

$400

18% 16%

$350

14%

$300

12% $250 10% $200 8%

% Y/Y Growth

USA Online Retail Sales ($B)

Online Retail Sales vs. Y/Y Growth, USA 2010-2016

$150 6% $100

4%

$50

2%

$0

0% 2010

2011

2012

2013

2014

2015

2016

Source: St. Louis Federal Reserve FRED Database

KP INTERNET TRENDS 2017 | PAGE 76

…And Now We Have a New Kind of Store = A Subscription Store Amazon Subscription Store = Central Hub for Monthly Services, 4/17 News Entertainment

Education

Cloud Storage

Professional Services

Source: Amazon

KP INTERNET TRENDS 2017 | PAGE 77

More / Faster Than Ever = Great Products Find Customers… Customers Find Great Products… Process + Data Collection + Intermediaries = Changing @ Torrid Pace…

KP INTERNET TRENDS 2017 | PAGE 78

Online Advertising (+ Commerce) = Increasingly Measurable + Actionable

1) Ad Growth = Driven by Mobile 2) Ad Measurability = Can Be Triple-Edged 3) Ads Evolving Rapidly = Often Organic + Data @ Core 4) Ads = Becoming Targeted Storefronts 5) eCommerce Growth = Accelerating, Again 6) eCommerce A-Ha’s…

KP INTERNET TRENDS 2017 | PAGE 79

INTERACTIVE GAMES = MOTHERLODE OF… TECH PRODUCT INNOVATION / EVOLUTION + MODERN LEARNING WITH THANKS TO BING GORDON FOR INSIGHT + INSPIRATION

KP INTERNET TRENDS 2017 | PAGE 80

Global Interactive Gaming = Mainstream / Evolving Rapidly / Still Early Days… 2.6B Gamers* vs. 100MM in 1995

Source: Unity Q1:17 estimate (5/17), Electronic Arts 2016 estimate (12/16), Electronic Arts 1995 estimate (5/17) *Unity estimates reflect the total number of users seen playing mobile games (at least once every three months) powered by both proprietary and leading 3rd party game engines. This number assumes all PC or Console gamers also play at least 1 mobile game.

KP INTERNET TRENDS 2017 | PAGE 81

Gaming Evolution = Individual Play  Global Collaborative Play (1967-2017)… Zuckerberg’s Law* (Sharing)

Moore’s Law (Processing) 1 Player = Arcade

2 Players = Consoles

2+ Players = Consoles + LAN

Millions of Players = Online Network

Millions of Players + Spectators = eSports

…Many – Arena (Thousands)… Online (Millions)

Solo – Living Room…

45 Years

Source: Images: National Museum of American History (Brown Box), Wikipedia Creative Commons (Pac-Man, Atari 2600, SG-1000, SNES, N64, PS1, Xbox, PS2), Flickr user Sham Hardy (World of Warcraft), Flickr user coneybeare (Words with Friends), ESL (ESL Logo), Twitch (Twitch Logo), Major League Gaming (MLG Logo), Wikimedia Creative Commons (Pong), Flickr user BagoGames (eSports Stadium) Note: In 1967 TV Game Unit #7, also known as the “Brown Box” was launched as a prototype and is considered the father of video game consoles per the National Museum of American History. *Zuckerberg’s Law describes the exponential growth of online social networks as per Saul Hansell in NY Times, 11/6/08.

KP INTERNET TRENDS 2017 | PAGE 82

…Gen X + Millennials = Gamified Since Birth Gen X

1970

1980

Millennials

1990

2000

Source: Images: Wikimedia Creative Commons (Pong, Asteroids, Space Invaders, Pac-Man), Flickr user BagoGames (Mario Bros), Mobygames (John Madden Football), Electronic Arts (FIFA), Pokémon (Pokémon Red and Blue versions), World of Warcraft (Warcraft), Supercell (Clash of Clans), Minecraft (Minecraft Logo), Riot Games (League of Legends), King (Candy Crush Saga), Activision Blizzard (Overwatch), Pokémon Go (Pokémon Go)

2010 KP INTERNET TRENDS 2017 | PAGE 83

Gaming = Large + Broad + Growing Business… Revenue @ $100B, +9% Y/Y Interactive Gaming Revenue Estimates per Newzoo, Global, 2016 Asia Pacific

$47

North America

$25

Western Europe

Latin America

$17

$4

Eastern Europe

$3

Middle East & Africa

$3

Revenue ($B) Source: Newzoo Global Games Market Report (2016) Note: Excludes console / gaming PC hardware revenue.

KP INTERNET TRENDS 2017 | PAGE 84

Gamers = All Ages… 35 Year-Old Average, USA Gamer Demographics vs. Average Age, USA, 2003-2016 40

100% 90%

35

80% 30 25

60%

20

50% 40%

15

Average Age

% of Gamers

70%

30% 10 20% 5

10%

0

0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Under 18

18-50

50+

Average Age

Source: Entertainment Software Association (ESA) Essential Facts About the Computer and Video Game Industry 2003-2016 Note: Based on a survey of 4,000 U.S. households.

KP INTERNET TRENDS 2017 | PAGE 85

Female Gamers = Players Since Early Days But Genres Vary… 2000 (Year) Marked Rise of Casual Female Gamer Match 3

% of Female Players by Game Genre, Global, 1/17

Pioneered by Diamond Mine / Bejeweled, 2000

Match 3

69%

Family / Farm Sim

69%

Casual Puzzle

42%

MMOs (Fantasy)

36%

Action Adventure

18%

Family / Farm Sim Pioneered by Sims, 2000

MMOs (Sci-Fi)

16%

First-Person Shooter

7%

Racing

6%

Sports

2%

Source: Quantic Foundry, Top Right Image: Popcap, Bottom Left Image: MoMA Note: Each genre analyzed contained between 3-5 game titles. The median sample size for each game title was 1,184. And the median sample size for each genre was 4,657.

KP INTERNET TRENDS 2017 | PAGE 86

Gaming Tools = Pervasive Online… Can Optimize Learning + Engagement… Foundational for Internet Services

KP INTERNET TRENDS 2017 | PAGE 87

Gaming Tools = Can Optimize Learning + Engagement… Foundational for Internet Services Repetition Dynamic Difficulty Adjustment Solving Puzzles Planning Workflows Completing Projects Leveling Up Competing Exploring / Discovering Following Rules Collaborating – Social Connection / Leadership Observing Interacting With / Analyzing Data Self Optimizing Creative Story Telling KP INTERNET TRENDS 2017 | PAGE 88

Repetition = Learn from Losing… Trial & Error Gaming Lifecycle

Play

Respawn

Try again, with experience

Test Tactics

Fail

Source: Center quote from Len Schlesinger: “Failure doesn’t mean the game is over, it means try again with experience,” Global Leadership Summit (8/11/11), Images: Playpacmanonline.net

KP INTERNET TRENDS 2017 | PAGE 89

…Dynamic Difficulty Adjustment = Ultimate Trial & Error Experience… Engaging Learning Process Machine-Learning Fine-Tunes Gaming Mechanics

Source: Image: Games for Learning Institute

KP INTERNET TRENDS 2017 | PAGE 90

…Solving Puzzles = Pattern Recognition + Critical Thinking… Defined Rules + Strategy (Short-Form)

Unstructured Puzzles (Long-Form)

Minesweeper

L.A. Noire Detective Cases

Source: Left image: Game Set Watch, Right image: L.A. Noire (Rockstar Games)

KP INTERNET TRENDS 2017 | PAGE 91

…Planning Workflows = Manage Time + Resource Efficiency… Time Management

Resource Management

Legend of Zelda: Majora’s Mask Quest Progress Resets Periodically

Starcraft II ‘Require More Minerals’

Source: Left image: Zelda Informer, Right image: Activision Blizzard Battle.net

KP INTERNET TRENDS 2017 | PAGE 92

…Completing Projects = Track Finish Line from Start… Focus on End Goal

Track Experience

Pokémon ‘Gotta catch ‘em all!’

Skyrim

Source: Left Images: Logos Wikia, Bulbapedia, Right Images: Skyrim, YouTube user HighlandMarker, Portforward.com, metagamebook, Stack Exchange

KP INTERNET TRENDS 2017 | PAGE 93

…Leveling Up = On-Going Progress Measurement… Leveling Up

Quantified Mastery

Candy Crush Saga

Max Level in World of Warcraft

Gain Experience Completing Puzzles

Source: Left Images: Apptipper, King, Right Image: Blizzardwatch

KP INTERNET TRENDS 2017 | PAGE 94

…Competing = Play Against Self + Others Sharpens Skills… Competing Against Yourself

Competing Against Others

Time Trials in Mario Kart 64

Scoring Goals Online in Rocket League

Source: Left Image: YouTube user Drew Weatherton, Right Image: GameSpot

KP INTERNET TRENDS 2017 | PAGE 95

…Exploring / Discovering = Open Closed Doors…Hack to Improvement… Discovering Glitches

Discovering Easter Eggs

Secret Level in Super Mario Bros

Silent Hill 2 + Tony Hawk’s Pro Skater 2

Source: Left Images: Nintendo, Right Images: Digital Trends, Games Radar

KP INTERNET TRENDS 2017 | PAGE 96

…Following Rules = Structured Play… A game is a system in which players engage in an artificial conflict, defined by rules, that results in a quantifiable outcome. - Salen & Zimmerman, Rules of Play: Game Design Fundamentals, 9/03

Players = Free to Break Rules…

…But = Consequences

Source: Salen & Zimmerman, Rules of Play: Game Design Fundamentals, Left image: YouTube user Ross Campbell, Right image: YouTube user x Pepper

KP INTERNET TRENDS 2017 | PAGE 97

…Collaborating – Social Connection / Leadership = Learn From / Work With Others… Blizzard = Millions Playing Together Online, Global Key Multiplayer Franchises = World of Warcraft + Diablo + Starcraft + Overwatch 45

42

41

41

Q4:16

Q1:17

40 35

33 29

MAU (MM)

30

28 26

26

Q4:15

Q1:16

25 21 20 15 10 5 0 Q1:15

Q2:15

Q3:15

Q2:16

Q3:16

Source: Activision, Morgan Stanley Note: Graph emphasizes Blizzard over Activision and King users due to the multiplayer nature of most Blizzard franchises.

KP INTERNET TRENDS 2017 | PAGE 98

…Observing = Learn From Watching Others Perform… Twitch Hours Streamed vs. Unique Monthly Streamers

10MM DAU, 2/17 Live Streamed Gameplay

2.5

6

Subscribe to Streamer

5

Hours Streamed (B)

4.9 4

4.0

3

1.5

3.2 2.4 1.0

2 1.2

0.5

1

0.0

0 Live Streamed Player Reactions

Live Chat Interaction with Player

2.0 Unique Monthly Streamers (MM)

Twitch Streaming

2012

2013

Hours Streamed

2014

2015

2016

Unique Monthly Streamers

Source: Left image: Twitch Streamer: cherrysamora, Twitch Annual Reports 2013-2016

KP INTERNET TRENDS 2017 | PAGE 99

…Interacting With / Analyzing Data = Many Games Have Strong Math Underpinnings… Live Stats

Fantasy Sports

Feed Into Video Games + Fantasy Sports

Fans Engaged in Analytics, USA, 1988-2016

70

25%

50 15%

40 30

John Madden Football Released

10%

20 5% 10 0

0%

USA Fantasy Sports Players

Source: FSTA, Left image: Flickr user We Are Social, U.S. Census Bureau *Fantasy Sports Players are defined as U.S. individuals aged 18+ having played fantasy sports in the past year. Based on survey of USA individuals aged 18+, n=1,000.

% of USA Population Over 18

20%

1988 1991 1994 2003 2004 2005 2006 2007 2008 2009 2010 2011 2014 2015 2016

Fantasy Sports Players* (MM)

60

% of USA Population

KP INTERNET TRENDS 2017 | PAGE 100

…Self-Optimizing = Driven by Math (Statistics / Metrics / Rankings)… In-Game Player Analytics / Dashboards Increasingly Found in Enterprise / Consumer Products / Services

Madden 2017 Player Stats

Looker Business Intelligence Dashboard

Source: Top left image: YouTube user Brian Mazique, Bottom left image: Uproxx, Right Image: Looker

KP INTERNET TRENDS 2017 | PAGE 101

…Creative Story Telling = Can Be Master of a Universe Choosing Gameplay Experience

Laying Building Blocks of a Virtual World

Mass Effect 3

Minecraft

Source: Left image: Gamepedia blog, Right image: Kotaku Minecraft

KP INTERNET TRENDS 2017 | PAGE 102

Gaming Tools = Can Optimize Learning + Engagement… Foundational for Internet Services Reputation / Rankings Digital Recognition Interactive Storytelling Interactive Learning Upgrades + Downloadable Content Secondary Markets Messaging Live Camera Angles Graphics Computation

KP INTERNET TRENDS 2017 | PAGE 103

Reputation / Rankings = Deep Roots in Gaming… Early Gaming (1978)

Mainstream Internet (Now)

Space Invaders

Airbnb

First Arcade Game to Record High Scores

Superhost Program Recognizes Top Performing Hosts

Source: Left image: Codexdex, Right image: Airbnb, Probnb

KP INTERNET TRENDS 2017 | PAGE 104

…Digital Recognition = Deep Roots in Gaming… Early Gaming (1980)

Mainstream Internet (Now)

Activision 2600 Games

Facebook

Physical Badges for In-Game Achievements

Give Digital Badges to Others

Source: Left image: Atari Age, Right image: Facebook

KP INTERNET TRENDS 2017 | PAGE 105

…Interactive Storytelling = Deep Roots in Gaming… Early Gaming (1980)

Mainstream Internet (Now)

Atari

Netflix + Amazon / Twitch

First Role Playing Game

Experimenting with Interactive Shows

Source: Left image: mprd.se, Right images: Netflix, Amazon

KP INTERNET TRENDS 2017 | PAGE 106

…Interactive Learning = Deep Roots in Gaming… Early Gaming (1979)

Mainstream Internet (Now)

Lemonade Stand

Duolingo

Teaching Economics 101

Leveling Up in Languages

Source: Left Image: Archive.org, Right Image: Duolingo,

KP INTERNET TRENDS 2017 | PAGE 107

…Upgrades + Downloadable Content = Deep Roots in Gaming… Early Gaming (1993)

Mainstream Internet (Now)

Sega

Tesla

Downloadable Content via Cable

Over-the-Air Software Updates

Source: Left image: Gamecrate, Right image: Tesla

KP INTERNET TRENDS 2017 | PAGE 108

…Secondary Markets = Deep Roots in Gaming… Early Gaming (2001)

Mainstream Internet (Now)

Runescape

Apple iMessage

Secondary Markets for Items / Currency

3rd Parties Offer Sticker Packs

Source: Left image: RPGStash, Right image: Macstories

KP INTERNET TRENDS 2017 | PAGE 109

…Messaging = Deep Roots in Gaming… Early Gaming

Mainstream Internet (Now)

1999 768MM DAU 12/16

2009 5MM DAU 1/17

2013 9MM DAU 5/17

Source: WeChat 2016 Year End Report (12/16), Ali Rayl Interview (Head of Global Customer Experience at Slack) (1/17), Venture Beat (5/17), Top left image: Pingwest, Top right images: Tencent, Middle images: SiteProNews, Bottom left image: ifeng, Bottom right image: Corsair

KP INTERNET TRENDS 2017 | PAGE 110

…Live Camera Angles = Deep Roots in Gaming… Early Gaming (1996)

Mainstream Media (Now)

Madden Football

Cable TV Cameras

Unique Game Perspectives

Unique Angles of Live Games

Source: Left image: Electronic Arts, Right image: Giants NFL

KP INTERNET TRENDS 2017 | PAGE 111

…Graphics Computation = Deep Roots in Gaming Early Gaming (1999)

Mainstream Internet (Now)

NVIDIA

Many Companies

Launches GeForce 256 GPU

GPUs Used for Artificial Intelligence

Source: Left Images: NVIDIA, VGA Museum, Right images: Google Deepmind, Amazon, IBM

KP INTERNET TRENDS 2017 | PAGE 112

In Era of Perceived Disengagement = ‘Engagement’ Rising…

KP INTERNET TRENDS 2017 | PAGE 113

Video Gaming = Most Engaging Form of Social Media Daily Minutes Spent per User Across Select Digital Media Platforms

Average Daily Minutes Spent by Active Users

60 51 50

50

40 35 30

30

21 20

10

0 Video Gaming (Consoles, 9/16)

Facebook Ecosystem (4/16)

King (Mobile Games, 5/17)

Snapchat (5/17)

Source: Global Web Index (9/16), Facebook Q1:16 Earnings Call (4/16) & Q3:14 Earnings Call (10/14), Activision Q1:17 Earnings Call (5/17), Snapchat Q1:17 Earnings Call (5/17) Note: Video Gaming (Consoles): Global survey, n=17,990, of console users aged 16-64 asking “Roughly how many hours do you spend playing on game consoles during a typical day.” Includes Xbox One, Nintendo Wii U, PS4, Xbox 360, PS3, Nintendo Wii King: Average time spent per DAU. King used to illustrate mobile gaming time spent given the global nature of the platform and large base of daily active users (peaked at 158MM as of Q1:15, 128MM in Q4:15 was last disclosure). Snapchat: Average of the 25-30 minutes of daily usage found in the S-1 filing.

Instagram (10/14)

KP INTERNET TRENDS 2017 | PAGE 114

Mobile Daily Gaming Session Duration = +33% (3/17 vs. 7/15), Global, per Unity Games Mobile Average Daily Gaming Session Duration on Unity Games, Global, 7/15 – 3/17

Source: Unity

KP INTERNET TRENDS 2017 | PAGE 115

When I play a video game, it’s the only time I put away the phone and forget it exists. Video games command your attention in a way that nothing else can or will. - Gary Whitta, Screenwriter, Rogue One: A Star Wars Story, 5/17

Source: GamesBeat Summit 2017: How games, sci-fi, and tech create real-world magic (5/12/17)

KP INTERNET TRENDS 2017 | PAGE 116

Perhaps Interactive Gaming Evolution / Growth / Usage… Has Been Helping Prepare Society for Ongoing Rise of Human-Computer Interaction?

KP INTERNET TRENDS 2017 | PAGE 117

Gaming Tools = Improving Human Performance… Virtual + Augmented Reality / Simulations / Real-Time Analytics

KP INTERNET TRENDS 2017 | PAGE 118

Immersive Gaming Tools = Improving Athlete Performance…

KP INTERNET TRENDS 2017 | PAGE 119

Video + Virtual Reality = Mental Reps Can Improve Performance STRIVR Labs + Stanford Football Utilize Video + Virtual Reality to Repeatedly Run Plays / Scenarios

Source: STRIVR Labs, Inc.

CONFIDENTIAL DRAFT KP INTERNET TRENDS 2017 | PAGE 120

Video + Machine Learning = Visuals + Deep Analytics Can Improve Performance Second Spectrum 150K+ Tracked Events per Game,* 5/17

25

10

20

8

15

6

10

4

5

2

0

0

Videos per Team (K)

Teams vs. Video Sessions per Team

Teams

Video Analytics of Key Plays

Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Teams

Source: Second Spectrum Note: Video session is defined as every time a user at a team watches a play using the Second Spectrum system. *Events are data surrounding key in-game actions such as pick-and-roll defenses, off-ball screens, shot probability or rebound probability. This allows players to query specific tactical actions during a game to gain better insight into how individuals / the team played.

Video Sessions per Team

KP INTERNET TRENDS 2017 | PAGE 121

Audio + Guided Meditation = Mental Focus Can Improve Performance Headspace

CJ McCollum, NBA Shooting Guard

Run Streak Reinforce Habits

Uses Headspace to Maintain Focus, 6/16 There’s a lot of stress in my job…and a 10 minute Headspace meditation helps you take care of all of those things and more. - CJ McCollum, 4/17

Source: Headspace

KP INTERNET TRENDS 2017 | PAGE 122

Physically Interactive Media (PIM) = Real-Time Activity / Analytics Can Boost Intensity / Focus for Athletes Peloton 2 Workouts per Week per Subscriber

100K+ Bike Subscribers (95% Retention After 1 Year)…400K+ Home Riders

1MM+ Home Workouts Streamed in 3/17

Source: Peloton

KP INTERNET TRENDS 2017 | PAGE 123

Video Games = Simulations Can Improve Athlete Strategy + Performance… I could go ten hours at a stretch [playing soccer video games] and I’d often spot solutions in the games that I parlayed into real life. – Zlatan Ibrahimovic, I Am Zlatan: My Story On and Off the Field, 6/14

From FIFA Online…

…To the Real Game

Source: I Am Zlatan: My Story On and Off the Field 2014, Left Image: New York Times (10/16), Right Image: The Sun

KP INTERNET TRENDS 2017 | PAGE 124

…Video Games = Stats Can Assist Athletes + Coaches… Players + Coaches View Digital Stats as Important Performance Measure Video Game Player Stats

Hoffenheim Scout Discovers Roberto Firmino…

Real-Time Feedback Offline, 9/16

Using Football Manager Video Game, 11/16

Source: Left Image: Twitter user Michy Batshuay, Right Image: Hardware Zone

KP INTERNET TRENDS 2017 | PAGE 125

…Video Games = Stats Can Be Predictive… Madden Super Bowl Winner Prediction Accuracy @ 71% (14 Years) Madden Football Super Bowl Predictions vs. Actual Results, 2004-2017 Game

Year

Teams

Madden

Actual

Winner

Score

Winner

Score

Super Bowl LI

2017

Patriots vs. Falcons

Patriots

27-24

Patriots

34-28

Super Bowl L

2016

Broncos vs. Panthers

Panthers

24-20

Broncos

24-10

Super Bowl XLIX

2015

Patriots vs. Seahawks

Patriots

25-24

Patriots

28-24

Super Bowl XLVIII

2014

Broncos vs. Seahawks

Broncos

31-28 Seahawks 43-8

Super Bowl XLVII

2013

49ers vs. Ravens

Ravens

27-24

Ravens

34-31

Super Bowl XLVI

2012

Patriots vs. Giants

Giants

27-24

Giants

21-17

Super Bowl XLV

2011

Steelers vs. Packers

Steelers

24-20

Packers

31-25

Super Bowl XLIV

2010

Saints vs. Colts

Saints

35-31

Saints

31-17

Super Bowl XLIII

2009

Steelers vs. Cardinals

Steelers

28-24

Steelers

27-23

Super Bowl XLII

2008

Patriots vs. Giants

Patriots

38-30

Giants

17-14

Super Bowl XLI

2007

Colts vs. Bears

Colts

38-27

Colts

29-17

Super Bowl XL

2006

Steelers vs. Seahawks

Steelers

24-19

Steelers

21-10

Super Bowl XXIX

2005

Patriots vs. Eagles

Patriots

47-31

Patriots

24-21

Super Bowl XXXVIII

2004

Patriots vs. Panthers

Patriots

23-20

Patriots

32-29

Source: Electronic Arts, ESPN, USA Today, Forbes

KP INTERNET TRENDS 2017 | PAGE 126

…Immersive Gaming Tools = Improving Performance Across Disciplines

KP INTERNET TRENDS 2017 | PAGE 127

Gamification = Influencing Multiple Consumer Services… Education

Personal Health

Personal Finance

Energy Conservation

Duolingo

Mango Health

Acorns

Nest

Food

Exercise

Dating

Advertising

Starbucks

myfitnesspal

Bumble

Snapchat

Source: Top Row Images: Duolingo, Mango, Acorns, Nest, Bottom Row: iPhone in Canada (Starbucks), Consumer fitness news (Myfitnesspal), 5why.com (Bumble), Snapchat

KP INTERNET TRENDS 2017 | PAGE 128

…Gamification = Influencing Multiple Businesses… Healthcare Research

Military Training

Foldit

Work Productivity Betterworks

Pilot Training

Healthcare Training

Neuroscience

Boeing

Simulated Surgery

PTSD Therapy

Source: Top Left Image: Fold.it, Top Middle Image: US Army Sgt 1st Class Caleb Barrieau, Top Right Image: Betterworks, Bottom Left Image: Boeing, Bottom Center Image: Simulated Surgical Systems, Bottom Right Image: Archpaper.com

KP INTERNET TRENDS 2017 | PAGE 129

…Gamification = Influencing Complex Virtual Worlds + Real-World Simulations Improbable in Gaming

Improbable in Real World

Simulate Vast Virtual Worlds

Simulate Cities + Power / Web Networks

Source: Worlds Adrift: Bossa Studios, Improbable

KP INTERNET TRENDS 2017 | PAGE 130

As Rapid Data Growth Continues = Gaming Tools / Interfaces / Processors Will Continue to Organize + Drive Usefulness

KP INTERNET TRENDS 2017 | PAGE 131

Data Volume Growth Continues @ Rapid Clip… % Structured / Tagged (~10%) Rising Fast… Information Created Worldwide = Expected to Continue Accelerating

2025E: 163 ZB, 36%

180 % Structured / Tagged 160 140

2020: 47 ZB, 16%

Zetabtytes (ZB)

120 100 80 2015: 12 ZB, 9%

60 40 20

2010: 2 ZB, 9% 2005: 0.1 ZB

0

Source: IDC DataAge 2025 Study, sponsored by Seagate (3/17) Note: 1 petabyte = 1MM gigabytes, 1 zeta byte = 1MM petabytes

KP INTERNET TRENDS 2017 | PAGE 132

…GPU Processing Power Ramp Continues NVIDIA Transistors, 1998-2016 6,000

2007 = 350 GFLOPS Unreal Tournament 3

2002 = 5 GFLOPS Battlefield 1942

2016 = 10K GFLOPS Paragon

Transistors (MM)

5,000

4,000

3,000

2,000

1,000

0 1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Transistors Source: NVIDIA Note: 1 GFLOP = 1B FLOPS, or “floating point operations per second.”

KP INTERNET TRENDS 2017 | PAGE 133

Gaming Platforms = Evolving @ High Speed

KP INTERNET TRENDS 2017 | PAGE 134

New Gaming Development Tools / Platforms = Evolving to Continue to Build Virtual Worlds… Developers

Development Platforms

Explore Virtual Worlds

Build Virtual Worlds / Share Ideas Construct Virtual Worlds with New Dimensions

Build / Share Creations

Players

VR / AR Platforms

In-Game Sandboxes

Have Virtual Experiences

Build / Share / Explore Creations

Gaming Marketplaces Distribute Content

Discover / Buy / Share Content

Source: Unreal, Unity, HTC Vive, Oculus (Facebook) Microsoft, Minecraft, Roblox, Tencent, Steam (Valve), Sony

KP INTERNET TRENDS 2017 | PAGE 135

…New Gaming Development Tools / Platforms = Supporting Rapid Growth Unity = Registered Developers

Roblox = Monthly Active Users 60

7

MAU (MM)

50

5

40 30 20 10 0

4

May-16

Jun-16

Dec-16

Mar-17

Steam = Peak Concurrent Users*

3

2

Peak Concurrent Users (MM)

Registered Developers (MM)

6

1

0

15 10 5 0

Source: Unity, Roblox, Steam (Valve), Forbes, Venturebeat, Bloomberg *Taken on the last available day of each month using waybackmachine.org.

KP INTERNET TRENDS 2017 | PAGE 136

eSports = Expanding Gaming Ecosystem via Fans / Spectators

KP INTERNET TRENDS 2017 | PAGE 137

eSports = 45 Year Evolution to Global Stage 1972

1980

1997

2000

Stanford University AI Lab = First Ever Gaming Tournament (Spacewars)

Atari Space Invader Competition = Early National Gaming Tournament

Red Annihilation Quake Tournament = Early eSports Competition

Electronic Sports League + Korea eSports Assn. = Emerge as First eSports Leagues

Evolution of Global eSports 2006

2009

2012

2016

Justin.tv Founded = Precursor to Twitch.tv

League of Legends Released = Becomes One of Most Played Strategy Games (100MM MAU, 9/16)

OnGameNet Begins Broadcasting League of Legends = First Major Korean Tournament on TV

League of Legends 2016 World Championship = 43MM viewers

Source: Spacewars image: Kokatu, Atari image: Ausretrogamer.com, Red Annihilation image: timetoast, Fortune (7/15), ESL logo: ESL, MLG, KeSPA Logo: Team Liquid, MLG Logo: MLG, Halo 2 Logo: Pinterest, Justin.tv Logo: startupgenome.com, Twitch Logo: Twitch, Riot Games (10/08), League of Legends Logo: League of Legends, Forbes (9/16), na.lolesports, OGN Logo: Twitch, eSports.inquirer.net, eSportsTV logo: mb.cision.com, League of Legends World Championship

KP INTERNET TRENDS 2017 | PAGE 138

eSports = People Watch What They Play… League of Legends Expands from Home to Staples Center, LA (Worlds 2016 Finals = ~20K in Stadium + 43MM Online)

Source: Top left image: Mel Melcon Los Angeles Times, Bottom left image: Dexerto, Top right image: Red Bull, Bottom right image: YouTube

KP INTERNET TRENDS 2017 | PAGE 139

…eSports Trending vs. Traditional Sports = Very Strong with Younger Generations Millennials = 27% ‘Significant Preference’ for eSports vs. 27% for Traditional Sports Non-Millennials = 45% for Traditional Sports vs. 13% for eSports

% of Respondents that indicated at least a slight interest in eSports

Which do you prefer, your favorite traditional sport or favorite eSport? 100% 90% 80%

34%

70% 60%

30%

45% 15%

13%

50% 40%

27%

19%

18%

11%

13%

20%

13%

20% 10%

13% 21%

27%

All Responses

All Millennials

13%

0% Significantly prefer favorite eSport No preference Significantly prefer favorite traditional sport

All Non-Millennials

Slightly prefer favorite eSport Slightly prefer favorite traditional sport

Source: L.E.K. Sports Survey, Digital Engagement Part One: Sports and the “Millennial Problem” (2/17)

KP INTERNET TRENDS 2017 | PAGE 140

eSports Monthly Viewers @ 161MM… +40% Y/Y & Accelerating eSports Monthly Viewers, Global, 2012-2016 180

45% 40%

140

35% 28%

120

30%

28%

100

25%

22% 161

80 60

15%

115 90

40

20%

Y/Y Growth (%)

eSports Viewers (MM)

40% 160

10%

74 58

20

5%

0

0% 2012

2013

2014

eSports Monthly Viewers

2015

2016

Y/Y Growth

Source: Newzoo Global eSports Market Report (2/17), Newzoo press release (1/16), Newzoo Casual Connect Europe Presentation (2/15) *eSports Enthusiasts watch eSports once a month and/or participate in tournaments.

KP INTERNET TRENDS 2017 | PAGE 141

eSports League of Legends Championship Viewers @ 43MM… +19% Y/Y League of Legends World Championship Global Viewership Largest eSports Viewer Base

Total Unique Viewers vs. Peak Concurrent Viewers 50 43

45 40

36

Viewers (MM)

35

32

30

27

25 20 15

15

2015

2016

11 8

10 5 0

14

2

1

2011

2012

9

0 2013

Total Unique Viewers

2014

Peak Concurrent Viewers

Source: Engadget, Polygon, The Verge, eSports Marketing, LoLeSports

KP INTERNET TRENDS 2017 | PAGE 142

eSports Monthly Viewers = 79% Technology Leadership + Innovation?

KP INTERNET TRENDS 2017 | PAGE 146

Ten Years Ago (2007) = A Stanford Professor Said…

If you want to see what business leadership may look like in three to five years, look at what’s happening in online games. - Byron Reeves, Professor of Communication, Stanford University, 6/07

Source: Byron Reeves

KP INTERNET TRENDS 2017 | PAGE 147

…~Ten Years Later = Entrepreneurs Often Fans of Gaming Experience I like video games. In fact, that’s what got me into software engineering when I was a kid. I wanted to make money so I could buy a better computer so I could play better video games. - Elon Musk, CEO Tesla & SpaceX, 10/16 As a child I played a lot of Avalon Hill board games. And each board game is actually a complex set of rules and circumstances… So it was actually in fact my childhood gaming — for being able to build a model of what a game was — that was essentially the fundamental thing that informs my strategic sense. - Reid Hoffman, Co-Founder of LinkedIn, 8/15 I do think this dynamic around kids growing up, building games, and playing games, is an important one because I think this is how a lot of kids get into programming. I definitely wouldn't have gotten into programming if I hadn't played games. - Mark Zuckerberg, CEO Facebook, 5/15 Source: Elon Musk: Forbes Interview (10/1/16), Reid Hoffman: Interview on the Tim Ferris Show (8/31/15), Mark Zuckerberg: Facebook Q&A Session (5/14/15)

KP INTERNET TRENDS 2017 | PAGE 148

Perhaps Interactive Gaming Evolution / Growth / Usage With Related Data Collection / Analytics / Real-Time Simulations + Engagement… Has Been Helping Prepare Society for On-Going Rise of Human-Computer Interaction? KP INTERNET TRENDS 2017 | PAGE 149

Interactive Games = Motherlode of… Tech Product Innovation + Modern Learning

1) Global Gaming = Mainstream / Evolving Rapidly / Still Early Days 2) Gaming Tools = Pervasive Online 3) Gaming Tools = Improving Human Performance 4) Gaming Platforms = Evolving @ High Speed 5) eSports = Expanding Gaming Ecosystem via Fans / Spectators 6) Gaming Experience => Technology Leadership + Innovation?

KP INTERNET TRENDS 2017 | PAGE 150

MEDIA = DISTRIBUTION DISRUPTION @ TORRID PACE

KP INTERNET TRENDS 2017 | PAGE 151

Digital Leaders = Transforming Media With Better User Experiences + Lower Prices…Data + Scale

KP INTERNET TRENDS 2017 | PAGE 152

Music = Why Streaming? Access / Choice / Discovery / Personalization / Mobile / Fewer Ads Reasons for Paying for Music Streaming, 12/15 Free Trial Convert

42%

Get Rid of Ads

29%

Mobile Access

27%

Size of Catalog New Music Discovery Multi-Device Listening Support Artists

Listening Choice

24%

Recs from Friends / Family

22%

Bundled

21%

Offline Listening Viewed Ad

Importance of Streaming Product Features, 12/15

19%

Keep Up with Hits Curation / Recs Simultaneous Music Videos Build Playlists Share Playlists

9% 0% Very

20% Fairly

Source: Goldman Sachs Research, BPI Note: BPI Survey as of 12/15, n=1,000 (UK only). Questions: “Why did you decide to pay for a music streaming subscription?” and “Thinking about music streaming, to you, how important are the following?”

40% 60% 80% Not much Not at all

100%

KP INTERNET TRENDS 2017 | PAGE 153

Video = Why Cord-Cutting? Lower Price + Convenience Reasons for Cutting Pay-TV Service, Q4:16

Too Expensive

80%

Use an Internet Streaming Service

48%

Use Antenna to Get Basic Channels

27%

Like to Binge Entire Seasons via Streaming Dropped Cable Upon Moving / Relocating Bulk of Viewing is Streaming Service Original Content

19%

13%

11%

Source: TiVo Q4 2016 Video Trends Report Note: Survey includes 18+ year olds in USA and Canada, n=3,079. Other categories omitted include “Not My Choice,” “Share SVOD Login,” “Moved In With New Roommate,” “Other.”

KP INTERNET TRENDS 2017 | PAGE 154

Digital Evolution of Music + Video = Ramping Rapidly…

KP INTERNET TRENDS 2017 | PAGE 155

Recorded Music = Revenue +11% After 16 Years of -4% Annual Average Growth… Subscription & Streaming @ 52% of Revenue vs. 0% Thirteen Years Ago, USA Recorded Music Revenues by Format ($B), USA, 1973-2016 $20 Subscription & Streaming

Recorded Music Revenues ($B)

Download & Synchronization Physical $15

$10

$5

$0 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Source: Recording Industry Association of America Note: “Subscription and Sttreaming” includes paid subscriptions (full and limited tier), SoundExchange, ad-supported streaming and other digital. “Download & Synchronization” includes download single / album, kiosk, download music video, ringtone / ringback, and synchronization. “Physical” includes LP / EP, vinyl single, 8-track, cassette (full / single), CD / CD single, music video, DVD audio and SACD.

KP INTERNET TRENDS 2017 | PAGE 156

Spotify = Catalyst for Internet-Driven Evolution of Music Industry… 0  50MM Paid Subscribers / 126MM MAUs in 30% of Home Entertainment Revenue in 10 Years, USA Netflix Subscribers, 2009 – 2017*, Global Q1:17 Streaming ARPU per Month = $9.14 50%

1/07 Streaming Launch 80

9/11 DVD / Streaming Split 40%

60

30%

40

20%

20

10%

0

Share of USA Home Entertainment Revenue (%)

Netflix Paid Subscribers (MM)

100

0% 2007

2008

2009

2010

2011

Netflix Paid Subcribers (MM)

2012

2013

2014

2015

2016

2017*

Share of USA Home Entertainment Revenue (%)

Source: Netflix Note: Share represented by Netflix domestic streaming revenue over total home entertainment revenue in USA. Domestic streaming not broken out as individual segment until 2012. Netflix split streaming subs from DVD subs in Q3 2011; graph shows only streaming subs thereafter. * Q1:17 represents Netflix annualized domestic streaming revenue figure. ARPU shown ex-DVD

KP INTERNET TRENDS 2017 | PAGE 162

Google Pioneered Search / Find / Obtain (SFO) for Content + Products… Netflix + Spotify Pioneered Search / Find / Serve Up (SFS) for Media From Give to Get…With Data + Algorithms 98MM Different Netflixes...

126MM Different Spotifys…

$1B cost savings / year from recommendations (12/15)

~5B Discover Weekly streams in 2x+ since 2006… Pay TV Households (MM), USA, 2010-2016 5%

110

3%

1% 90 (1%) 80

% Y/Y Growth

100

(3%)

70

60

(5%) Q1:10 Q2:10 Q3:10 Q4:10 Q1:11 Q2:11 Q3:11 Q4:11 Q1:12 Q2:12 Q3:12 Q4:12 Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 Q3:15 Q4:15 Q1:16 Q2:16 Q3:16 Q4:16

Total TV Channels Received in USA

120

Pay TV Households (MM)

% Y/Y Growth

Source: Nielsen Total Audience / Cross Platform Reports, US Census Bureau, St. Louis Federal Reserve FRED Database Note: Pay TV households represented by Nielsen “Cable Plus” metric, which includes households who receive television via Wired Cable (No Telco), Telco, or Satellite. “Programming Costs” includes total program and production costs for Cable and Other Subscription Programming firms, 2006-2015, as per US Census Services Annual Survey for Employer Firms ($25B in 2015, up from $12B in 2006).

KP INTERNET TRENDS 2017 | PAGE 173

…# TV Channels Watched Netflix… Average TV Channels Received vs. Watched per Household, USA, 2008-2016 250

Annual ARPU, Selected Platforms, 2016

25%

200

20%

150

15%

100

10%

50

5%

% Watched

Total TV Channels Received in USA

DirecTV

$1,439

Charter

$1,131

Dish

$1,064

Comcast 0

$997

0% Pay TV Netflix

TV Channels Received

$103

Digital Platforms

% Channels Watched

Source: Nielsen, Matthew Ball & Tal Shachar, REDEF Original 3/9/16, DirecTV, AT&T, Charter, Dish Network, Comcast Note: TV channel data as of mid-year. DirecTV ARPU calculated by dividing the 2016 Video Entertainment revenue by the average number of Linear Video Connections during 2016. Charter ARPU calculated by dividing 2016 Video revenue by average Video Residential Primary Service Units during 2016. Dish Network ARPU calculated by multiplying the 2016 Pay-TV Average Monthly Revenue per Subscriber by 12. Comcast ARPU calculated by dividing the 2016 Residential Video revenue by the average Video Customers in 2016. Netflix ARPU is based off the Global Streaming revenue and average subscribers in 2016. All estimates are global.

KP INTERNET TRENDS 2017 | PAGE 174

Digital Subscriptions = Rising Owing to Massive User Experience Improvements… On-Demand / A La Carte Selection + Choice / Personalization / Payment Systems / 2-Way UGC / Mobile... KP INTERNET TRENDS 2017 | PAGE 175

Media Evolution (1950-2017) = Market of Millions  Market of One x Millions Network Era

Cable Era

Digital Era

1950s-1980s

1980s-2010s

Current

Cater to All / High Viewership / No Personalization

Broad Genres / Focus on Programming / Limited Bundle Choices

Cater to Sub-Genres / Power Users / A La Carte + Subscription

Digital Distributors

Digital Studios

Source: Amanda Lotz, The Television Will Be Revolutionized, New York: NYU Press, 2007, Wikimedia Commons, Google Image Commons, Crunchyroll, Shudder, Fandor, Seeso, Cheddar, Fullscreen

KP INTERNET TRENDS 2017 | PAGE 176

Media = Distribution Disruption @ Torrid Pace

1) Digital Leaders = Transforming Media With Better User Experiences + Lower Prices…Data + Scale 2) Generational Media Usage = Chasm Increasing as Shifts to Internet-Enabled Media Continue 3) Traditional Cable Conundrum = Channels + Consumer Prices + Programming Cost Rising…Subscribers Falling 4) Digital Subscriptions = Rising Owing to Massive User Experience Improvements (On-Demand / Selection + Choice / Personalization / Payment Systems / 2-Way UGC / Mobile...)

KP INTERNET TRENDS 2017 | PAGE 177

THE CLOUD = ACCELERATING CHANGE ACROSS ENTERPRISES

ALEX KURLAND @ KLEINER PERKINS

KP INTERNET TRENDS 2017 | PAGE 178

The Cloud = Accelerating Change Across Enterprises

1) Cloud Adoption = Reaching New Heights + Creating New Opportunities 2) Enterprise Software = Customer Expectations  Mirroring Those of Consumer Apps 3) Security = More Applications  More Vulnerabilities

KP INTERNET TRENDS 2017 | PAGE 179

Cloud Adoption = Reaching New Heights + Creating New Opportunities

KP INTERNET TRENDS 2017 | PAGE 180

Public + Private Clouds = Approaching Traditional Data Center Spend… +37% to $36B vs. 2014 IT Infrastructure Spend, Global, 2014-2016 100%

% of Total IT Infrastructure Spend

9%

11%

14%

13%

17%

20%

75%

15%

22%

50% 76%

72%

67%

63%

2015

2016

25%

0% 2013

2014

Traditional Data Center

Public Cloud

Private Cloud

Source: IDC Worldwide Quarterly Cloud IT Infrastructure Tracker; Gartner; CloudHealth estimates

KP INTERNET TRENDS 2017 | PAGE 181

Public Cloud Adoption Trends = AWS Maintains Lead…Azure + Google Rising Public Cloud Adoption, 2016 vs. 2017

Public Cloud Adoption, 2017

% of Respondents Running Applications

% of Respondents Running, Experimenting, or Planning to Use Applications 57%

57% 57%

34%

34%

21%

20% 17%

17%

15%

15%

10% 7%

AWS

Azure 2016

Google Cloud 2017

8%

IBM

10%

AWS Running Apps

12%

13% 8% 9% 8%

Azure

Google Cloud

Experimenting

IBM

Planning to Use

Source: Rightscale 2017 State of the Cloud Report Note: Based on survey of IT Professionals, n=1,002.

KP INTERNET TRENDS 2017 | PAGE 182

Cloud Concerns = Shifting from Data Security + Cost Uncertainty  Vendor Lock-In + Compliance / Governance Share of Respondents Citing Criteria as Top-Three Concern, USA, 2012-2015 2012

42%

2015

38% 35%

33% 27% 21%

19%

21%

21%

20% 18%

14%

22% 18% 14% 7%

Data Security

Uncertainty of Costs and Savings

Loss of Control (Upgrades, Timing of Backups)

Compliance / Governance

Reliability (SLA Data Portability Requirements) and Ownership

Software Compatability

Lock-In (ability to change vendors)

Source: Bain Cloud Computing Survey, 2015 (n=347); Morgan Stanley AlphaWise Survey of IT Managers (n=304)

KP INTERNET TRENDS 2017 | PAGE 183

Cloud Evolution / Tools = Paving Way for… Innovation Across Infrastructure Landscape… New Methods of Software Delivery = APIs / Browser Extensions…creating new wave of capabilities (+ companies) for both companies and end users Containers / Microservices = Simplify software development process / improve consistency between testing & production environments / reduce complexity of managing & updating apps due to modular approach

Elastic Analytical Databases = Likes of Google BigQuery / Snowflake / AWS Redshift Spectrum nearly infinitely scalable / usage based + have minimal maintenance requirements Edge Computing = Pushing compute away from centralized nodes & closer to sources of data… addresses many IT challenges when running data-centric workloads in cloud – reduces latency / can have security + compliance benefits…

Source: Lloyd Tabb, Looker Founder & CTO; Happiest Minds; Azuqua; TheServerSide; Forbes

KP INTERNET TRENDS 2017 | PAGE 184

…New Cloud Companies Emerging… Providing Elegant + Intuitive Experiences for End Users Rubrik

Stripe

Managing data across cloud & on-prem infrastructure, approaching $100MM in annualized bookings

Processing billions of transactions a year across 100K+ businesses in 100+ countries

Looker

CloudHealth

Empowering data analysis for 40K users across every department, each averaging 2 new queries every day

Actively managing more than 1.3MM policies globally for hybrid & multi-cloud environments

Source: Company-provided & publicly available data; Snipcart

KP INTERNET TRENDS 2017 | PAGE 185

Enterprise Software = Customer Expectations  Mirroring Those of Consumer Apps

KP INTERNET TRENDS 2017 | PAGE 186

Enterprise Software (2000  2017) = Users Expect Products to be as… Well Designed / Easy-to-Use / Reliable as Consumer Apps Perpetual, On-Premise Software  Cloud-Based SaaS Apps  Mobile-First Smart Apps

Delivery Method

Pricing

UX

Intelligence

Growth Engine

Purchase Decision Measure of Engagement & Customer Satisfaction

2000

2017

On-Prem

Cloud-based

Perpetual License

Subscription

Generic

Personalized

Constrained

Unlimited (AI / ML)

Sales

Product

Top-Down

Bottoms-Up

N/A

DAUs / MAUs / NPS

KP INTERNET TRENDS 2017 | PAGE 187

Design = Increasingly Core to Enterprise R&D… End-Users Demanding Consumer-Quality Product Experiences Change in Designer : Developer Ratio, Selected Enterprises, 2010-2017 2010 - 2012

2017

1 designer : 25 developers

1 designer : 9 developers

1 designer : N/A 10 developers

1 designer : 6 developers

1 designer : 72 developers

N/A

1 designer: 11 developers

1 designer : 8 developers On Mobile – 1 designer : 3 developers

1 designer : 5 developers

1 designer : 8 developers

Source: Company data, Figma Note: Ratios for entire orgs, unless noted otherwise. Atlassian historical ratio from 2012; Dropbox data for product org only; IBM historical ratio from 2012, data for product org only; Intercom data for product org only; LinkedIn historical ratio from 2010.

KP INTERNET TRENDS 2017 | PAGE 188

Security = More Applications  More Vulnerabilities

KP INTERNET TRENDS 2017 | PAGE 189

Cloud-Enabled App Use in Enterprises = Rising Rapidly… Cheaper to Build / Easier to Adopt / Harder to Secure… Avg. # of Cloud Apps Used by Vertical, Global, April 2017

Avg. # of Cloud Services used by Category, Global, April 2017

Avg. Cloud Services Used per Enterprise

1,400

1,200

1,206

1,170 1,092

1,000 907

893

800

600

400

200

0

Retail, Restaurants, & Hospitality

Financial Manufacturing Healthcare & Technology Services, Life Sciences & IT services Banking, & Insurance

Category

# Per Enterprise

% Not Enterprise Ready

Marketing

91

97%

HR

90

96%

Collaboration

70

87%

Finance / Accounting

60

95%

CRM / Sales

43

94%

Software Development

41

96%

Productivity

37

95%

Social

30

91%

Cloud Storage

27

72%

IT Service / Application Management

25

98%

This has serious security & compliance implications... 94% of all cloud apps used are not “enterprise-ready,” per Netskope

Source: Netskope April 2017 Note: 461 cloud apps in April 2017, one year ago = average of 917 from Feb-16 report & 935 from Jun-16 report; “Not enterprise ready” = received a rating of “medium” or below in the Netskope Cloud Confidence Index.

KP INTERNET TRENDS 2017 | PAGE 190

…Network Breaches = Increasingly Caused by Email Spam / Phishing… Spam +350% vs. Q1:15 Monthly Average… Change in Amount & Type of Spam, Global, 2015-2016 % Change in Spam (Indexed to Q1:15 Monthly Average)

Indexed to Q1:15 Monthly Average 450% 400% 350% 300% 250% 200% 150% 100% 50% 0%

Spam Without Malicious Attachments

Spam With Malicious Attachments

Source: AntiPhishing Working Group Phishing Activity Trends Report - Q4 2016; IBM X-Force Threat Intelligence Index 2017

KP INTERNET TRENDS 2017 | PAGE 191

…Cyber Threats Severity Rising = 10MM+ Identities Exposed in… 15 Breaches in 2016…vs. 11 in 2014 % of Internet Traffic by Source, Global, 2012-2016

Breaches with 10MM+ Identities Exposed, Global, 2014-2016 16 # Breaches with 10MM+ Identities Exposed

% of Internet Traffic by Source

100%

75%

50%

25%

0%

14 12 10 8 6 4 2 0

2012

2013

2014

% Human

2015

2016

2014

2015

2016

% Bot

Source: Incapsula 2016 Bot Traffic Report (100k Randomly Selected Domains); 2017 Verizon Data Breach Investigations Report

KP INTERNET TRENDS 2017 | PAGE 192

CHINA INTERNET = GOLDEN AGE OF ENTERTAINMENT + TRANSPORTATION

*Disclaimer – The information provided in the following slides is for informational and illustrative purposes only. No representation or warranty, express or implied, is given and 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 and 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, and 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.

下载中文完整版

CONFIDENTIAL DRAFT KP INTERNET TRENDS 2017 | PAGE 193

China Macro = Positive Trends

KP INTERNET TRENDS 2017 | PAGE 194

China Macro = Confidence Improving Since CH2:16

115

53%

110

52%

105

51%

100

50%

95

49%

90

48% 1/14

4/14

7/14

10/14

1/15

4/15

7/15

China Consumer Confidence Index (LHS)

10/15

1/16

4/16

7/16

10/16

Manufacturing PMI Index

Consumer Confidence Index

Consumer Confidence Index & Manufacturing PMI Index, China, 1/14 – 3/17

1/17

China Manufacturing PMI (RHS)

Source: China National Bureau of Statistics, Bernstein Research

KP INTERNET TRENDS 2017 | PAGE 195

China Macro = Service Sector @ 52% GDP Share vs. 23% Thirty-Five Years Ago Service Sector Output as % of Nominal GDP, China, 1961 – 2016 60%

50%

% of GDP

40%

30%

20%

10%

0% 1961

1966

1971

1976

1981

1986

1991

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

1996

2001

2006

2011

2016

KP INTERNET TRENDS 2017 | PAGE 196

China Macro = Private (Non-SOEs) Enterprises… Increasingly Driving Wealth Creation + Economic Growth + Jobs Private Enterprise (Non-SOE*) % Share of MSCI China Weighted Market Cap

% of MSCI China Market Cap

50%

48%

40%

30%

21% 20%

10% 5%

0% 2005

2010

2016

Source: Morgan Stanley Research, MSCI *SOE = State Owned Enterprise.

KP INTERNET TRENDS 2017 | PAGE 197

China Macro = Technology Companies Lead Public Market Wealth Creation Private Enterprise (Non-SOE) % of MSCI China Market Cap by Sector, 2005 vs. 2016 Information Technology Health Care Consumer Discretionary Financials Overall MSCI China 2016

Materials

2005

Consumer Staples Industrials Utilities Energy Telecommunication Services 0%

20%

40%

60%

80%

100%

Source: Morgan Stanley Research, MSCI *SOE = State Owned Enterprise.

KP INTERNET TRENDS 2017 | PAGE 198

China Internet Users + Usage = Healthy User Growth… Usage Outpacing Users

KP INTERNET TRENDS 2017 | PAGE 199

China Mobile Internet Users = @ ~700MM, +12% Y/Y vs. 11% in 2015

700

70%

600

60%

500

50%

400

40%

300

30%

200

20%

100

10%

% Y/Y Growth

China Mobile Internet Users (MM)

Mobile Internet Users & Y/Y Growth, China, 2008 – 2016

0%

0 2008

2009

2010

2011

2012

China Mobile Internet Users

2013

2014

2015

2016

Y/Y Growth

Source: CNNIC Note: Internet user data is as of year-end.

KP INTERNET TRENDS 2017 | PAGE 200

China Mobile Internet Usage Outpacing User Growth = +30% Y/Y for Usage…+12% for Users

3,000

90%

2,500

75%

2,000

60%

1,500

45%

1,000

30%

500

15%

0

% Y/Y Growth

Daily Time Spent (Hours MM)

Estimated Mobile Internet Daily Time Spent, China, 2012 - 2016

0%

2012

2013

Mobile Internet Time Spent

2014

2015

Mobile Internet Time Spent Y/Y

2016 Mobile Internet User Y/Y

Source: Hillhouse estimates based on daily media time spent data from ZenithOptimedia and mobile data from QuestMobile

KP INTERNET TRENDS 2017 | PAGE 201

China Entertainment = Online Innovation Driving Robust User + Usage + Monetization Growth

KP INTERNET TRENDS 2017 | PAGE 202

China Media = Internet @ 55% of Time Spent…Mobile > TV (2016)

350

70%

300

60%

250

50%

200

40%

150

30%

100

20%

50

10%

Radio Internet as % of Media Consumption

Daily Media Consumption (Minutes)

Average Daily Media Consumption Minutes by Medium, China, 2012 - 2016

TV

Magazine

Newspaper

Desktop Internet

Mobile Internet

Internet as % of Total Media 0

0% 2012

2013

2014

2015

2016

Source: Zenith Optimedia

KP INTERNET TRENDS 2017 | PAGE 203

China Entertainment = Key Driver of Mobile Time Spent… eCommerce + Games = Monetize Best Per Time Spent… China Mobile Internet Daily Hours By App, 11/14 – 4/17 WeChat 3,500

QQ Tencent Games

3,000

Tencent

Tencent News Tencent Music Tencent Other

2,000

UC Browser Weibo

1,500

Alibaba

1,000

Baidu

500

Taobao / Tmall Youku Alibaba Other iQiyi Mobile Baidu Baidu Other Toutiao

0 11/14 12/14 1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15 10/15 11/15 12/15 1/16 2/16 3/16 4/16 5/16 6/16 7/16 8/16 9/16 10/16 11/16 12/16 1/17 2/17 3/17 4/17

Average Daily Hours (MM)

2,500

Tencent Video

Source: QuestMobile Note: Only top 100 apps by time spent are categorized by company affiliation. Tencent, Alibaba and Baidu affiliates include strategically invested companies.

NetEase All Other KP INTERNET TRENDS 2017 | PAGE 204

China Online Entertainment = Consumers Increasingly Willing to Pay… Led by Games + Livestreaming + Video Online Entertainment User-Pay Revenue By Vertical, China, 2011-2016

Online Entertainment User-Pay Revenue By Vertical, USA, 2011-2016 $40

Annual Revenue ($B)

Annual Revenue ($B)

$40

$30

$20

$10

$30

$20

$10

$0 2011

$0 2012

2013

2014

2015

2016

2011

2012

2013

2014

2015

Online Game

Online Video

Online / Console Game

Online Video

Online Literature

Livestreaming

eBook

Digital Music

2016

Digital Music Source: Game industry data per per Newzoo and Hillhouse estimates, excludes console or PC hardware related revenue. Online video data per iResearch (China) and Hillhouse estimates (USA), excludes advertising related revenue. Digital music data (excl. advertising) per iResearch (China) and RIAA (USA). Livestreaming (China) data per Hillhouse estimates. eBook data per Hillhouse estimates (China) and AAP and Hillhouse estimate (USA)

KP INTERNET TRENDS 2017 | PAGE 205

Global Interactive Game Revenue = China #1 Market in World* > USA (2016) Interactive Game Software Revenue by Region, Global, 2012 – 2017E

Video Game (excl. Hardware) Revenue ($B)

$30

$25

$20

$15

$10

$5

$0 2012

2013 China

2014 USA

2015 EMEA

2016 Asia (ex. China)

2017E

Source: Newzoo * Excluding console / gaming PC hardware revenue.

KP INTERNET TRENDS 2017 | PAGE 206

China Online Gaming = Tencent + NetEase…Mobile MOBA + MMORPG Game Leaders… Tencent – Honor of Kings

NetEase

Mobile Multiplayer Online Battle Arena (MOBA) Leader… 50MM+ DAU, $3B+ Annualized Bookings Driven by Social + Simple UI + Constant Product Improvement

Portfolio of Leading Mobile Massively Multiplayer Online Role Playing Games (MMORPGs)… Driven by Mobile First Mover Advantage + IP + Social Design + Quality Production

Source: Tencent, NetEase

KP INTERNET TRENDS 2017 | PAGE 207

…China Online Gaming = Tencent + NetEase Driving Mobile Innovation + Revenue NetEase Online Game Revenue, PC vs. Mobile, Q1:14-Q1:17

$4,000

$4,000

$3,500

$3,500

$3,000

$3,000 Revenue ($MM)

Revenue ($MM)

Tencent Online Game Revenue, PC vs. Mobile, Q1:14-Q1:17

$2,500 $2,000 $1,500

$2,500 $2,000 $1,500

$1,000

$1,000

$500

$500

$0

$0

PC

Mobile

PC

Mobile

Source: Tencent, NetEase, Goldman Sachs Investment Research Note: Assuming 1USD = 6.9RMB.

KP INTERNET TRENDS 2017 | PAGE 208

China Livestreaming = High Consumer Engagement + Willingness to Pay… Diverse Live Content Type Singing / Dancing / Talk Show / Game Play…

Interactive / Social / Gamified Like / Chat with Hosts & Audience / Buy Virtual Gifts to Support Performers

Local / Social Nearby Livestreams / Chat & Add Friends

20+ Virtual Gift Categories priced from Rmb0.01

Source: Hillhouse research

KP INTERNET TRENDS 2017 | PAGE 209

…China Livestreaming = Compelling Monetization Estimated Revenue per Hour, China, 2016 Livestreaming

Online Games

TV

Online Video

Radio

Online Music

$0.00

$0.20

$0.40

$0.60

Source: Hillhouse estimates based on Newzoo, iResearch, Questmobile, and select company disclosures Note: Revenue data includes subscription, advertising and paid download revenue streams.

KP INTERNET TRENDS 2017 | PAGE 210

China On-Demand Transportation = #1 Global Market… Cars + Bikes

KP INTERNET TRENDS 2017 | PAGE 211

China On-Demand Transportation (Cars + Bikes) = Global Leader @... ~67% Global Share (10B+ Annualized Trips, + >2x Y/Y) On-Demand Transportation Trip Volume by Region, Global, Q1:13 – Q1:17

Quarterly Completed Trips (MM)

4,000

ROW 3,000 SE Asia India 2,000 EMEA N. America 1,000

China Bike China Car

0 1Q13 Q1:13

1Q14 Q1:14

1Q15 Q1:15

1Q16 Q1:16

1Q17 Q1:17

Source: Hillhouse Capital estimates, include on-demand taxi, private for-hire vehicles, as well as on-demand forhire motorbike and bike trips booked through smartphone apps

KP INTERNET TRENDS 2017 | PAGE 212

China On-Demand Bike Sharing = Mobile Innovation Driving Significant Usage Ramp Mobike Product Innovation In-Bike GPS + Smartphone

QR Code + Mobile Payment

Bike Sharing Without Stations…Location-Based Virtual Red Envelope Drives Utilization

Easy Unlock & Low Friction Payment

Ubiquity + Low Cost (¥1/~$0.15 per 30 min) + Convenience Mass Adoption & Bike Utilization

Source: Mobike

KP INTERNET TRENDS 2017 | PAGE 213

China On-Demand Bike Sharing =… @ 20MM+ MAU…100%+ M/M Accelerating Growth China On-Demand Bike Sharing MAU, 7/16 – 3/17 120%

25

China Bike Sharing MAU (MM)

80% 15 60%

% M/M Growth

100%

20

10 40% 5

20%

0%

0 7/16

8/16

9/16

10/16

11/16

12/16

China On-Demand Bike Sharing MAUs

1/17

2/17

3/17

M/M Growth

Source: TrustData Note: Dip in M/M growth rate in 1/17 was driven by Chinese New Year.

KP INTERNET TRENDS 2017 | PAGE 214

China On-Demand Bike Sharing = High Frequency… 2/3 Users Ride 3+ Times Per Week Highlights from Shenzhen Municipality On-Demand Bike Sharing Study, 5/17 On-Demand Bike Trips per Week

Purpose of On-Demand Bike Trips School 1% Other Business 5% 3%

48K Jobs, 5/17 Immigrant Founder

Country of Origin

Market Value ($B)

Garrett Camp

Canada

$68

Razer

Palantir

Peter Thiel

Germany

20

Unity Technologies

WeWork

Adam Neumann

Israel

17

SpaceX

Elon Musk

South Africa

12

Ireland

9

Canada / Russia / UK

4

China

4

Company Uber

John Collison, Patrick Collison Stewart Butterfield, Serguei Mourachov, Cal Henderson

Stripe Slack Credit Karma

Kenneth Lin

Immigrant Founder

Country of Origin

Market Value ($B)

Min-Liang Tan

Singapore

$2

David Helgason

Iceland

2

FanDuel

Nigel Eccles, Tom Griffiths, Lesley Eccles

UK

1

Medallia

Borge Hald

Norway

1

Apttus

Kirk Krappe

UK

1

Robinhood

Baiju Bhatt, Vlad Tenev

India / Bulgaria

1

Rubrik

Bipul Sinha

India

1

Company

Tanium

David Hindawi

Iraq

4

Infinidat

Moshe Yanai

Israel

1

Instacart

Apoorva Mehta

India

3

Warby Parker

Dave Gilboa

Sweden

1

Peter Szulczewski, Danny Zhang Noubar Afeyan, Derrick Rossi

Canada

3

Actifio

Armenia / Canada

Wish (ContextLogic) Moderna Therapeutics Bloom Energy Oscar Health

KR Sridhar Mario Schlosser

India Germany

Ash Ashutosh

India

1

New Zealand / UK

1

3

Anaplan

Guy Haddleton, Michael Gould

3

Gusto

Tomer London

Israel

1

3

Proteus Digital Health

Andrew Thompson

UK

1

Canada

1

Houzz

Adi Tatarko, Alon Cohen

Israel

2

AppDirect

Avant

Al Goldstein, John Sun, Paul Zhang

Uzbekistan / China / China

Daniel Saks, Nicolas Desmarais

2

Carbon3D

Alex Ermoshkin

Russia

1 1

Zenefits

Laks Srini

India

2

CloudFlare

Michelle Zatlyn

Canada

ZocDoc

Oliver Kharraz

Germany

2

Compass

Ori Allon

Israel

1

Mike Nolet

Holland

2

Eventbrite

Renaud Visage

France

1

Ragy Thomas

India

2

Evernote

Stepan Pachikov, Phil Libin

Azerbaijan / Russia

1

AppNexus Sprinklr The Honest Company

Brian Lee

South Korea

2

Offerup

Arean Van Veelen

Netherlands

1

Zoox

Tim Kentley-Klay

Australia

2

Tango

Uri Raz, Eric Setton

Israel / France

1

Jawbone

Alexander Asseily

UK

2

Udacity

Sebastian Thrun

Germany

1

JetSmarter

Sergey Petrossov

Russia

2

Zscaler

Jay Caudhry

India

1

Quanergy

Louay Eldada, Tianyue Yu

Lebanon / China

2

Zoom Video

Eric Yuan

China

1

Dhiraj Rajaram

India

2

Noga Alon, Hezy Yeshurun, Oded Comay, Doron Skikmoni

Israel

1

Mu Sigma

ForeScout

Source: Based on analysis by National Foundation For American Policy, “Immigrants and Billion Dollar Startups”, Stuart Anderson, 2016, subsequently updated by Aimee Groth, Quartz, 4/17. Valuation data from Wall Street Journal, CB Insights, headcount from LinkedIn (5/17). Note: Due to varying definitions of unicorns, may not align with various unicorn lists. As of 5/17 there are 100 US-based, venture-backed unicorns (including rumored valuations), 50 of which have at least one first-generation immigrant founder.

KP INTERNET TRENDS 2017 | PAGE 348

High Level, For All the Angst, Consider This…

KP INTERNET TRENDS 2017 | PAGE 349

World = Getting Better in Many Ways… Down = Poverty + Child Mortality…Up = Democracy + Literacy % of People in Extreme Poverty, Global, 1820-2015

Child Mortality Rates, Global, 1800-2015

100%

100%

80%

80%

60%

60%

40%

40%

20%

20%

0% 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 Extreme Poverty

0% 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 Mortality Rate by Age 5

Not in Extreme Poverty

% of People Living in Democracy, Global, 1816-2015

Literacy Rate, Global, 1800-2014

100%

100%

80%

80%

60%

60%

40%

40%

20%

20%

0% 1816 1836 1856 1876 1896 1916 1936 1956 1976 1996 No Democracy

Democracy

Survival Rate by Age 5

0% 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 Illiterate Population

Source: Max Roser, Our World in Data; World Bank; Bourguignon and Morrison, “Inequality Among World Citizens”, American Economic Review 92.4, 2002; Gapminder; Polity IV; UN Population Division; Wimmer and Min, “From empire to nation-state: Explaining war in the modern world, 1816-2001,” American Sociological Review 71.6, 2006; OECD; UNESCO Note: Extreme poverty defined as income level below $1.90 (int’l dollars) / day. Child mortality rates measured before and after 5 years old. Democracy based on Polity IV database. Literacy rate based on ages 15+ globally.

Literate Population

KP INTERNET TRENDS 2017 | PAGE 350

Some Macro Thoughts

1) USA, Inc.* = Understanding Where Your Tax Dollars Go 2) Immigration = Important for USA Technology Job Creation 3) High Level = For All the Angst, Consider This… ** USA, Inc. Full Report: http://www.kpcb.com/blog/2011-usa-inc-full-report ** Immigration Full Report: http://www.kpcb.com/blog/immigration-in-america-the-growing-shortage-of-high-skilled-workers

KP INTERNET TRENDS 2017 | PAGE 351

CLOSING THOUGHTS…

KP INTERNET TRENDS 2017 | PAGE 352

Economic Growth Drivers = Evolve Over Time

Century

Economic Growth Drivers

Pre-18th

Cultivation & Extraction

19th-20th

Manufacturing & Industry

21st

Compute Power + Human Potential

KP INTERNET TRENDS 2017 | PAGE 353

Internet Trends 2017 1)

Global Internet Trends = Solid…Slowing Smartphone Growth

2)

Online Advertising (+ Commerce) = Increasingly Measurable + Actionable

3)

Interactive Games = Motherlode of Tech Product Innovation + Modern Learning

4)

Media = Distribution Disruption @ Torrid Pace

151-177

5)

The Cloud = Accelerating Change Across Enterprises

178-192

6)

China Internet = Golden Age of Entertainment + Transportation

193-231

4-9 10-80 80-150

(Provided by Hillhouse Capital)

7)

India Internet = Competition Continues to Intensify…Consumers Winning

232-287

8)

Healthcare @ Digital Inflection Point

288-319

9)

Global Public / Private Internet Companies…

320-333

10) Some Macro Thoughts…

334-351

11) Closing Thoughts…

352-353

KP INTERNET TRENDS 2017 | PAGE 354

Disclaimer This presentation has been compiled for informational purposes only and should not be construed as a solicitation or an offer to buy or sell securities in any entity, or to invest in any KPCB entity or affiliated fund. The presentation relies on data and insights from a wide range of sources, including public and private companies, market research firms and government agencies. We cite specific sources where data are public; the presentation is also informed by non-public information and insights. We disclaim any and 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 the KPCB website. KPCB is a venture capital firm that owns significant equity positions in certain of the companies referenced in this presentation, including those at www.kpcb.com/companies. Any trademarks or service marks used in this report are the marks of their respective owners, who are not participating partners or sponsors of the presentation or of KPCB or its affiliated funds, and such owners do not endorse the presentation or any statements made herein. All rights in such marks are reserved by their respective owners.

KP INTERNET TRENDS 2017 | PAGE 355

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