DAILY DISRUPTION FEATURE
Mary Meeker’s latest annual “Internet Trends” report is out today, the 22nd installment of the world’s most famous analyst marketing deck. We remember the first ones back in the 1990s, and their breadth and depth led to Mary’s “Queen of the Internet” title when she was at Morgan Stanley. Now at her new VC shop, Bond Capital, the presentation is every bit as hefty (333 pages) as the 1995 original (322 pages).
Here are the highlights from the report, with page citations and a link to the full deck at the end of the section:
#1: Last year was a global milestone for Internet usage with 51% of the world now online as compared to 49% in 2017, but... User growth is slowing – down to 6% from +10% growth as recently as 2016 (p 7) and smartphone shipment growth has actually turned negative (-4%, p 8).
#2: This slowing trend is also hitting US ecommerce revenues (+12.4% now, +15% in 2017), but that’s still better than physical store comps (+2%). Ecommerce share of total retail was 15% in 2018 vs. 14% in 2017 (pp 18/19).
#3) Internet ad spending is still growing at a health clip (+22% last year, p 23), but… Customer acquisitions costs are now often higher than long-term customer value (page 28) and user privacy concerns may make more productive targeting harder (p 37).
#4) Daily hours spent with digital media in the US continues to grow, standing at 6.3 hours in 2018 vs. 5.9 hours in 2017. Mobile is the most popular platform at 3.6 hours/day (p 41) and now exceeds time spent watching television (p 46).
#5) The Internet is powering a variety of business models around the world. For example:
- China’s Pinduoduo connects consumers to farmers for fresh produce (p 57).
- Latin America’s Rappi delivers goods in under an hour less than a dollar (p 59).
- Indonesia’s Tokopedia offers small merchants warehouse/fulfillment services (p 60).
- Payment systems in China, South Korea, Europe, Brazil and other counties/regions are also leveraging mobile platforms (pp 65 – 70).
#6) Internet companies are leveraging the power of images/video thanks to more powerful smartphones, better onboard cameras, and greater Wifi penetration (pp 73 – 76). On a related front, gaming leverages social media with images to create compelling content (pp 88 – 98).
#7) Freemium business models – where users pay nothing up front but then upgrade to a paid-for service – are early in their evolution and enabled by the growth of cloud computing and efficient digital payments (pp 99 – 120).
#8) How companies use data has evolved since World War II:
- Pre-1995, information came from sales “boots on the ground” and consumer surveys (pp 123 – 127).
- In the 1990s – 2000s it was all about the Internet, mobile and cloud computing (pp 128 – 145).
- Going forward, the challenge will be to manage the complexity/size of new data sources (pp 150 – 156).
#9) Rising Internet usage has its societal benefits and challenges, but Meeker advocates for an open system with sensible regulation (pp 158 – 211).
#10) Technology can help make labor markets more flexible and online education assists in giving workers relevant skills more cost-efficiently than existing structures (pp 212 – 258). One stat we haven’t seen before: users of online education have much higher completion rates when they are going for a degree (89%) vs. a one-off class (50%) or are taking an enterprise-sponsored class (44%) (p 256).
#11: Immigration is especially important to the Tech community (pp 259 – 262), and the US Federal budget is a mess, with entitlement spending a large and growing problem (pp 263 – 258).
#12: Technology can play a role in reducing health care expenses (p 269 – 292). One interesting slide (p 287) showed the results of a consumer survey that asked, “With which tech company would you share your health data?” Apple, Microsoft, Amazon and Google all scored 49% or higher.
#13: A long final section on Chinese technology, prepared by Asian VC Hillhouse Capital, had a few interesting data points and observations:
- There are 817 million Chinese mobile Internet users, up 9% from last year (p 303)
- Data usage is skyrocketing, up 162% year-on-year (p 304)
- Gaming is driving the transformation of payments, ecommerce, retail and education (p 307 – 312)
- Apps grow from single use products to multi-use “super apps” (pp 318 – 321)
Sources:
Full presentation: https://www.bondcap.com/report/itr19/#view/1
Vox/Recode’s summary: https://www.vox.com/recode/2019/6/11/18651010/mary-meeker-internet-trends-report-slides-2019