 So that was a great introduction. I'm obviously I'm exciting anyway, but the laser light show makes it even more exciting I'm conscious that I'm the only thing standing between you and finding out who won the competition and then going to a bar So I will try and keep this as brief as possible and hopefully hopefully some of it will be interesting But I was asked to explain everything that's happening in technology Which is obviously like a nice easy short presentation But I thought I would talk about a couple of things that seem to be interesting or at least ways of thinking about what's going on And so three things to think about firstly We are in some kind of a new cycle although we don't know what that looks like and secondly I thought I would talk about gatekeepers and then thirdly think about what might be going to happen next And so first of all This is not a macroeconomic presentation and I'm not an economist, but I think we all kind of know We are in a new macro moment we've had ten years of zero interest rates and now interest rates are going up and The economy is shifting and mattering to the tech industry for the first time in ten years, maybe 20 years and One consequence of that is that we're seeing a slowdown in online ad revenue both at Google and at Facebook And we will so Meanwhile seen something with a version to the trend line in e-commerce Which shot up during the pandemic and now is everybody has gone back to work and gone back into the city It's kind of moving back towards the long-term trend line that we had before Now it has to be a little bit careful about that chart because if you look at the absolute numbers It looks a little bit different and there's obviously a lot of inflation in this chart as well But in general What's happened in e-commerce is most markets pulled forward sort of two three four years of growth grew between 25 and 50 percent maybe more in the pandemic and are now sort of holding At something like that new level and kind of reverting back to the long-term trend line fairly obvious consequence of that is that during the pandemic a lot of people were using this phrase the COVID rotation is Everything shifted into what was going to grow because of the pandemic and of course rotations tend to rotate both ways I'm not going to do the whole peloton story, but I thought this was a great illustration of that There was a brief moment in 2020 when zooms market cap was higher than exon and even at the time That didn't seem very sensible and it's now kind of gone back the other way All of these kinds of conversations flow through into venture and flow through into startups And so we had this kind of pretty unprecedented surge in investment in startups in the course of 2020 and 2021 And that's now kind of unwinding as everyone tries to work out what's going to happen next This is a relatively long-term chart this goes back to March 2010 But I thought it would be fun to go back a little bit longer back to 1980 now for the young people in the room that very Small blip in the middle of the chart was something called the dot-com bubble. So ask your parents or your older colleagues what that was We've now gone a little bit beyond that left that behind And so there's fairly obviously some consequences for some companies the end of free money would be a good way of thinking about this and so companies that were predicated on free money and Buying growth instead of buying earnings and I'm gonna have to change their model get bought or go out of business And we also see that flowing through into the tech industry itself I think we all noticed paid attention to meta doing an 11,000 pit person layoff Earlier this month, although it is kind of worth putting that into context pointing out that doesn't even take them back to their head Count this time last year It's only about 11 months of a hiring that they've just cut and if one zooms that out a little bit more These four companies fired hired almost half a million people in the last decade Really dramatic acceleration and hiring even compared to the previous period where where those companies had a previous period And of course if we add Amazon to this chart, which of course is a different business model That's all people working in warehouses Amazon is now America's second biggest employer. Well, I'm only Walmart is bigger with about two and a half million people Amazon of course has grown in all sorts of ways and got a little bit of a head of itself doubling its warehouse space between what 2019 and 2021 and has now been kind of pulling back sub-leasing cutting people and as again itself just announced to lay off yesterday But if one assumes out to look at the overall industry We've all been building an enormous amount of warehousing in the last five to ten years So this is American construction spending there was a period when it was fairly obvious that US retail was over invested now That's obviously inverted, but I do think it's pretty symbolic that we're now spending substantially more money building E-commerce fulfillment space than we are building shopping malls So there's a kind of there's a kind of a glass half empty glass half full Whether you can think about all of this one of them is interest rates are going up mortgages are getting more expensive Lose people are losing their jobs. The economy is slowing down We don't really know what the macro environment looks like We don't even really know what the kind of geopolitical environment is going to look like And so it's so you can kind of feel a little bit depressed and upset and pessimistic about this But you can also say well, yes, but nobody's going to go back To chopping the way they shopped in 2000 five billion people have a smartphone the pandemic broke all of our habits And everything is still happening just as it was happening in 2000 And so I think this is probably the real kind of long-term trend line to think about Which is just to think about how many people are online now Compared to where they were where we were in the dot-com bubble or even when kind of something like Facebook or YouTube launched And think about what it means that all of these people are online and what kind of businesses get built as a consequence of that That kind of takes me on I think to thinking about the kind of broader environment beyond just looking at that cycle And so this I think is a good Amazon chart a good sense of seeing that scale Amazon is now the world's largest retailer by revenue It's now selling more than Walmart and obviously that curve has slowed down a little bit in the last couple of months But it's not going to go in the other direction So Amazon is a giant company Then if we look at the ad business, which is where a lot of other tech companies who are operating software is eating advertising This is a 700 billion dollar industry and it's now 60 to 70 percent online Depending on how you count it and if you look in and see who the players are I think it's really interesting that alphabet and meta are now by far the biggest global media owners And in fact also interesting that there's only two actual media companies on a chart of global media owners Everyone else is a technology company in some form And so you see here another view of the growth that we had in the pandemic But what do you also see? I think it's some interesting companies breaking in One of these is bite dance, which is the parent company for tick tock So this is showing you both that Chinese business and then the to the international business tick tock and the other is Amazon and so tick tock Apparently is quite a big thing with the young people if you go and ask them and so this is now America's favorite social network Kind of think we should have YouTube on this chart as well, but you know Whether tick tock will be allowed to stay in business in the USA in the next 12 months is another slightly more interesting question But let's go back and look at Amazon again because this is a company that's built an ad business This is a retailer that has an ad business The end of last year they started disclosing the numbers Amazon did about 36 billion dollars of advertising in the last 12 months And this kind of reflects a trend across a whole bunch of retailers Which is to suddenly discover that they could be a media company and make money from advertising Which is something that doesn't work in a store, but works very well online And so you've got a whole bunch of companies from Walmart to Target to uber deciding to try and build an online ad business Well looks at the consequences of that for Amazon though Amazon is now making more and more money more revenue from advertising than it is from Prime And it's almost certainly producing as much operating income from ads as it is from AWS And definitely producing more cash flow than ads that it is from AWS It is also incidentally now Producing more money from advertising than the entire global newspaper business, which is kind of an unfair comparison But also I think kind of a relevant one So we've had this sort of shift in the nature of advertising and even a shift in what does it even mean to say an Advertiser or a media owner. What is this? Is this advertising? Is it retail? It's certainly not what Don Draper would have recognized. We're seeing a similar I think set of changes in the TV business This is a version of a chart I showed last year US pay TV subscription pay TV subscription in general is now kind of in freefall in the US It's down by about a half from the peak and But a kind of an interesting thing that's happening happening in that as everyone switches from linear to streaming is which platform Are we using and so, you know I'm old enough to remember when Apple the Apple TV and the Google TV and then Chromecast were a big deal In fact Apple announced Apple TV before it announced the iPhone in late 2006 and yet both the Google and the Apple platform have basically completely missed the switch to streaming Instead, it's to some extent on Amazon Also Samsung But then this company Roku kind of snuck past them when they weren't looking and built a giant business there Which of course is now becoming an advertising business And so as we shift to streaming as we shift to a new channel Every new channel produces a gold rush and so the growth of cable in the product past produces huge surge in TV production And now the shift to streaming has produced another huge survey at your surge in TV production and the streaming players are now producing more TV shows than the entire legacy TV industry combined And of course that results in a surge in the budgets so Netflix and Amazon are spending as much as any of the legacy TV companies But there's a couple of interesting things about this chart One of them is that you know Facebook isn't there at all another is how small Apple is another is that Google isn't buying TV shows It's doing YouTube instead which isn't on this chart But where YouTube is changing the nature of TV Netflix and Amazon on they just buy in TV shows and all the questions that matter Matter for Netflix a TV industry questions, so they've used tech as a channel to enter TV, but they're just a TV company They're not a technology company Meanwhile over here on the right. I've used this comparison with the BBC from the UK Which is one of the Europe's biggest broadcasting budgets, and this is again an unfair but relevant comparison of course It's a smaller budget. It's a smaller country than America, but the American media companies were suppliers They would sell the BBC they would sell European They would sell their shows to the European broadcasters now they compete with them And so this is what viewing looks like in the UK UK to 16 to 34s now watch more subscription videos They say basically more Netflix and Amazon than everything from the all of the linear broadcasters combined So companies that were once suppliers are now competitors and companies that were big fish in a small pond are now swimming Competing with much bigger companies and kind of facing the kind of a shift in the nature of their industry as it's not just that You've kind of unbundled the cable, but you've also unbundled the geographic distribution model Meanwhile, if we go back and look at Netflix again Netflix has got lots of subscribers although that slowed down in the last couple of quarters Because there's probably too much to watch But Disney has done pretty well as well Disney now has more subscribers to its D2C products The Netflix does you have to be a little bit careful about that because that includes a whole bunch of hot star subscribers in India Who aren't paying very much and the kind of core Disney plus product is a bit smaller But at the interesting thing about it to me about this is how many people in tech used to say Oh legacy media companies will never be able to build software. They'll never be able to compete with Disney They'll never be able to compete with Netflix and the mistake in that was thinking that the software was what mattered Instead of realizing that the software is just a channel the software is a condition of entry And what matters is the product and the product is a TV show and Disney has lots of good TV shows And so here really that troll phrase the content is king is actually true It's not the software. These are not software companies. These are TV companies Of course, that doesn't mean that there aren't a whole bunch. There isn't a whole bunch of pain in doing that This is kind of the innovators dilemma made real Disney's D to C business is losing a lot of money and in a sense This is why all the media companies waited so long to do it because turning off your old business model and creating an entirely new one on an Entirely new channel can actually get quite expensive Especially if you're not Mark Zuckerberg and you don't have a dual share class structure to stop anybody complaining Or at least stop anyone complaining from being able to do anything about it If we go back to this question of what is software The only thing on this chart in the in this model that is actually changing what TV is is YouTube And if one looks at something like mr. Beast Who is probably one of the most popular probably the most popular youtuber at the moment this week anyway If you make some guesses about what his view count translates into Into ours and map that against Netflix's numbers then this one guy and his team are now basically a top 10 top 15 Netflix show Depending on what estimates you take so that is actually changing what TV is Netflix isn't changing what TV is Netflix is just using Software as a channel to enter TV One more example of a company that is using a new channel to enter a market is she in and I've actually Confirmed with the company. That's how you pronounce it So we spent 15 years trying to work out how you pronounce Huawei and then another one comes along And so she in has now passed Zara and H&M in Google search volume and it's doing that with a new bundle So it adds 5 to 10,000 new schools to the site every single day But it only orders 50 or 100 of them so it acclaims it actually has lower wastage than traditional fashion brands It has direct shipment direct ordering distributed predictive manufacturing And then creates a whole new buying experience And so it creates a new bundle a new way of using a new channel with retail and advertising and logistics Assembled in a different way and the result of that is that she and is now bigger than H&M and will probably be bigger than Zara Sometime in the next couple of months. They've built basically a 30 billion dollar fast fashion company from nothing without having any stores at all Chipping direct from China and changing what that model looks like Of course, you don't have to be a 30 billion dollar Chinese company to do this either Shop if I which now powers hundreds if not thousands of online retailers Shopify's platform did I think 175 billion dollars of GMV in 2021 and looks to be on track to do more like 200 billion dollars this year which makes it about 45 maybe 50% of the size of Amazon marketplace So this is a not a consumer-facing brand not from Silicon Valley Nobody had heard of it three or four years ago And now it's one of Amazon's biggest competitive questions And so one of the dynamics here is this kind of classic cliched quote and of course it's cliched because it's so useful It's the line from Jim bulk sale that there's two ways to make money You can bundle or you can unbundle and of course what's happening is that everybody now is unbundling the old models And of course Amazon is an old model now and creating new bundles in different ways That if one kind of zooms out and think about who it is that's spending the money Who is it that's actually doing the e-commerce or buying the ads think about the big brands that model is getting unbundled as well And so you have this kind of classic model of the exploitation of scale and efficiency and leverage and optimization Scale at every part of this of this value chain Right down to selling to big segments of consumers And now all of those parts of that model are being broken apart whether that she in or Shopify or Netflix You break apart how you would do that and you address it in different ways And so if we think about what anybody who is doing commerce or retail anybody who's touching a consumer anyone who's doing Advertising or e-commerce there's all sort of always sort of two fundamental questions There's a logistics question, which is how do I get it and there's a discovery question Which is how would I know what I want and in the past and and you have all of these different budgets Whether that's advertising or shipping or software or rent or pricing or returns and in the past those are all separate budgets But now they all blow into one budget They all become one question and so you can ask should we open stores in that country or just advertise there and that wasn't a question You could have asked 20 years ago But one thinks about what that means for creating a company You've kind of got this blank canvas because you now have effectively infinite product all the filter on how many things You could buy were based around how much space there was in a store and that is gone now Amazon has 500 million scoos There is infinite product. There's also also infinite media the other filter was well How many TV slots are there? How many people can buy a nationwide TV campaign? How many people can buy the back page of Vogue? Well again, there isn't all of those filters have gone as well So you have this infinite canvas is infinite possibility of course as a consumer this nightmare of you open Amazon And there's 500 million scoos and well which one should I buy and so you have this blank canvas for creating new businesses now One sort of simple outcome for this is you just give all your money to Google or Facebook And so both booking and Expedia famously spend 40 to 50 percent of their revenue buying traffic from Google The money there basically sort of highly optimized machines for shipping money from you to Google sort of passing through their bank account for five minutes on the way But there's a little lot more interesting ways of looking at it in this and I think kind of a really kind of useful long-term trend It's just to think about how much the internet is moving up the funnel And so this is a chart of search interest for best versus cheap when you search for cheap You're using the internet as a price comparison engine You know what you want you go to Google to find the cheap place to get it when you search for best Now you're using the internet further up the funnel You're using it for recommendation discovery Suggestion curation expertise you go to Google and say what should I buy you don't go to Google and say I know what I want Thank you Just tell me where to get it and I think this is a trend that sort of sits right across all of these charts Which is how much the internet's role is shifting as it moves further up our kind of all of our decisions And all the ways we think about this stuff And if one looks at what that funnel actually is if we use I say on the slide if we're talking about gatekeepers Well, what's the gate? Well, here we have the growth of digital advertising and then the growth of e-commerce And so these are sort of the Tams if you're doing an ad business or if you're doing E-commerce, this is the time for Amazon. It's the time for for Google maybe But actually that's the time the time is well, what are people actually buying how much money are they spending at retail? How much money are they spending when they go to a restaurant or they buy something and in fact You can zoom out again lose how much money are people spending and In fact, if you zoom down at the bottom there like how big is advertising now How big is e-commerce as a percentage of actually everything that's everybody's building still very very small So I think this is what we got to ten years ago when my old boss Mark Andreessen had this phrase software is eating the world The what he was trying to get at what that phrase is trying to get at is that sort of the first 20 years of the internet is Information arbitrage around physics the physical world. It's booking.com and Expedia. It's Yelp It's Tripadvisor It's doing tickets and price comparisons and listings and search and recommendation Around the existing products in the actual real economy and what happens now of course more and more is that you create products Companies that actually change how that those markets would work or change what those products might be And so I thought I would break the habit of a lifetime and have four bullet points instead of three on this slide And so so there were companies on the left here These are the companies where software is eating the world. We are actually changing the market So uber does not sell software to taxis. It doesn't provide a taxi. It changes what taxi means the same for YouTube YouTube isn't TV. Mr. Beast isn't TV. He's something else And then you have companies that I think are quite distinct as I've said a number of times where Netflix or she and are not Tenology companies rather they are using the internet as a channel to break into TV or break into apparel This of course is the fundamental question for Tesla, which is it? Tesla bears would say it's a car company Tesla Bulls would say it's a software company And that in that is the difference between a $50 billion company and a trillion dollar company Which of those is right? But then you also have people like Disney who are the incumbents who are in fact riding the wave and making the Shift to this new channel and becoming dominant in the new channel just as they were dominant in the old channel Because what matters in TV is actually the TV shows not the software So a final set of things to think about while all everything that I've just been talking about really is the deployment of ideas from 2019-95 maybe people will buy stuff on the internet is an idea from 1995 Maybe people will watch TV on the internet is an idea from 20 years ago And what I've been talking about so far is really the deployment of those ideas But also of course the tech industry has lots of ideas about what might happen next Now again, I use this slide last year as a sort of a way of thinking about everything that was being discussed for what might happen in 2030 and on the one side you've got all sorts of kind of deep narrow specific technologies like kind of quantum and 3d printing and Computational biology and so on and on the left you have these visions for universal platforms things that you might use to replace How smartphones work meta versus the next smartphone VR is the next smartphone and web 3 a new universal software layer For writing applications you could build YouTube you could build Instagram or Dropbox on a blockchain instead of building them Building them the way that we do them today do today. So those are the visions of course in the last 12 months We've had an awful lot of yes, but problems around this We've had a bunch of crashes in crypto a bunch of people getting very disillusioned or backlash against VR and AR and meta there's also I think a sense of a sort of a buzzword explosion around these ideas I honestly think if somebody says metaverse nobody else knows what they mean because they might mean 10 or 20 different things Do you mean VR? Do you mean games? Do you mean NFTs? Do you mean online fashion? I have no idea what somebody means when they say metaverse I have very little idea what somebody means when they say web 3 because they might mean that this is a universal Substrate for writing software. They also might mean this is digital gold and it's going to replace central banks So there's a kind of a whole lot of difficulty in just knowing what people are talking about I Probably don't have to tell people in this room That there's been a little bit of volatility in the crypto markets lately It turns out that if you reward your early adopters by giving them equity then you also turn them into speculators And you get speculated bubbles like go figure We got another rerun of the dot-com bubble and we kind of had a microcosm of this I think in NFTs which is sort of a bubble within a bubble and kind of a layers of bullshit within layers of bullshit There was a very brief moment when people were theoretically trading five billion dollars of monkey jpegs and even at the time It's like are they really is that really what people are doing? Like I have absolutely no problem with the idea that people would express their identity in digital forms And that you might buy digital goods to do that and that placing them on a blockchain and making them unique Might be interesting and valuable. I just don't think that was actually what anybody was doing in this chart They were doing they were just speculating on another speculative asset Meanwhile, of course, we have this kind of slightly entertaining spectacle that every smart contract is now a self-administering administering bug bounty So you don't actually have to phone up the company and say hey, I found a bug you can just take the money and so we've had these sort of multiple waves of Theft and hacks and so on happening within crypto. I haven't obviously updated this chart to include FTX, but I actually don't think FTX constitutes Somebody hacking into a system. It just consists of people wiring the money somewhere They weren't supposed to wire which sounds like a slightly simpler form of fraud I think that's covered by the Glass-Steagall Act if it's covered by anything else Meanwhile, of course, we have a backlash against metaverse Mainly focused on just the sense of how far away it is and how much it's going to cost so this is what Facebook is investing in reality labs versus what Apple was investing in building the iPhone and of course again This isn't a comparison that is unfair but relevant because there was actually a lot less that Apple had to do But this is also kind of the point It's very very unclear What this would look like and it's unclear how long it would take and it's unclear what it would mean and so I think if one kind of steps back from all of the All of the noise around both of these questions you kind of have to ask well What questions should we be asking and what would you have to believe? So could a blockchain be useful? What would you build with it? Could you build real applications on it if you did how would that work and how long is it going to take before that becomes possible? To build a scaled consumer application the same thing with VR and AR the hardware will get much better That's not an interesting question. It's the interesting question is once the hardware is much better Will anybody care how useful will this be how generalizable will it be or will this just be a subset of games? consoles and I don't think you can kind of You can know these questions you can have opinions But the only way to know is to come back in ten years and find out what happened like the character in the hitchhiker's guide to the galaxy He spends a year dead for tax purposes We should all just sort of spend ten years dead and then come back and see what happened And ten years is kind of a useful number here with this stuff can take a lot longer than you think I started my career in the dot-com bubble Looking at mobile internet and it did take ten years from the point that people were excited about mobile internet for this stuff to Actually start happening at any kind of scale and I think we should probably think about web 3 and indeed VR and AR on that kind of timeline as well Meanwhile something else to think about Which I did mention very briefly in 10-point text on an earlier slide and that's to think about AI And so I always like this kind of image This is kind of the image kind of image it went round in 2013 with the image net moment when machine learning suddenly started working and so you would show people machine learning demos and people would say well That's cool, but so what what's this useful for? Okay, you can do image recognition. So what you can do pattern recognition Oh, like what what patterns? How is this useful and I think we all kind of understand now that machine learning generalized very very broadly beyond Recognizing pictures of Chihuahuas and muffins and it generalized very broadly beyond image recognition They turned it into a kind of an extremely useful general purpose technology That's basically remaking every company in the tech industry It wasn't entirely obvious as that was going to happen in 2013 there's a similar point now I think around generative networks again You show people the demo and they go okay, that's kind of cool I guess but what's that for why is this useful and then you show people demos like this and there you go Oh, okay. This is kind of cool now But what's that for other than making the cover of a young adult sci-fi novel like what else do you do with this? How do you generalize this beyond? This kind of imagery. Can you generalize this beyond imagery at all? Can you generalize it into something else? And so we've got you know some hackers and some creative energy now a lot of the same creative energy actually that you see around Crypto in people actually try thinking well, what could you do with this? It would be useful But I think more interesting you know this is interesting But a more general question is what can you do with this it isn't imaging? What other parts of technology does this expand into in the same way that image net the image net breakthroughs expanded either way? I think it is probably kind of healthy that we've shifted from trading monkey jpegs to making monkey jpegs at least we're making things again So a conclusion with 50 seconds left on the clock I said I wasn't going to talk about everything and there's a lot of other interesting stuff happening in tech that I haven't talked About particularly semiconductors or payment or bio Autonomous driving the least interesting thing in this chart is Twitter which had to put in the smallest bubble except except obviously it didn't fit But I thought it would be kind of interesting to zoom out again and think about the tech industry today Relative to some other big important industries General Motors was 15% of the net income in the entire US stock market back in the 1950s Even IBM was a much bigger company than Microsoft or Apple is today And so we think about if we look at the impact of technology today I often compare this to the impact of cars in the sense of the first 50 years of the car industry was What's a car in the second 50 years was what happens when everybody has a car and that was what General Motors was that was Let's may give everybody a car But that became less important than what happens when everyone has one and no one cares about General Motors today I think the same thing is now is happening with big tech companies There are questions around what we build next there are big tech companies to deploy to today deploying all the ideas We've had in the past But I think what's much more interesting and important is what is everybody else going to build what are all the other Companies that we can create all the new channels we can find and the new businesses that we can use to change all of those channels With that I will say thank you