1--Confidential

ACG – NYThe Future of Digital Media

Jeff BussgangGeneral Partner

Flybridge Capital Partners

March 30, 2011

2--Confidential

Summary View

• We are in the middle of an unprecedented boom in technology and innovation – A true “Golden Age” for innovation

• Growth opportunity ahead of us is more rapid and global than ever before

• US is well positioned for the future– During an innovation age, we have an innovation

economy that is the envy of the world

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Context for My Perspective

• General Partner at Flybridge Capital Partners, early-stage

VC firm based in Boston, $560M under management 40+ active portfolio companies, investing out of Fund 3 ($280M)

• Entrepreneur-in-Residence at Harvard Business School

• Former entrepreneur Cofounder/President Upromise (acq’d by SallieMae)

VP at Open Market (IPO ‘96)

• Author: Mastering the VC Game

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Today Are Glory Days for Technology

• We have made unprecedented advances in technology over the last 10 years…

• …and we ain’t seen nothing yet!

An explosion in computing power, connectivity and entrepreneurship with an outlook for accelerated growth over the next 10 years

• Social media and networking• The “i” generation, training “Net

Natives – iPod, iPhone, iPad• ‘Cloud computing’• Broadband penetration• Nanotechnology • Synthetic Biology• Completion of the Human

Genome Mapping project• Green consumer• Renewable energy

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Intellectual Capital – academia, innovation, diverse industries and ideas

Venture Capital

Advisors, Angels, Accelerators

Successful Companies – to partner, poach and/or sell to

Why Is This Happening Now?Ingredients for a Vibrant

Start-Up Ecosystem

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Example: MIT – Factory of Innovation

33,600 companies (300

each year) employ 3.3

million people, generate

sales of $2 trillion. 282

patents in 2008

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Venture Capital: Regional Comparison

California: $11.1B

New York: $1.3B

Boston: $2.4B

Total VC Investment 2010

Source: NVCA 2011 Yearbook

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Why Now? Contextual Forces

Lean Start-UpsCloud Computing Moore’s Law

Reduced Cost To Experiment

Opportunity for Angels & VCs

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Technology startup incubator programs are multiplying

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More business plan competitions….….with more resources and record submissions

Source: Robert W. Fairlie using Current Population Survey

$50K

$200k

$225k

$30k

$20k $200

k

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Large tech company market caps have grown 63% in last 2 years

Market Cap ($B) Dow

$ 0.85 T

$1.4 T

Dow grew 11%

63%

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Mid-size tech company market caps have grown 117% in last 2 years

1

10

100

1,000

10,000

100,000

0.0

50.0

100.0

150.0

200.0

250.0

300.0

April 2009 March 2011

Market Cap ($B)Dow

$ 123 B

$268 B

Dow grew 11%

117%

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Tech company balance sheets are strong with tons of cash

Source: Bloomberg BusinessWeek. images.businessweek.com/mz/.../0503_tech_cash_pile.pdf?...technology

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Next Wave of Valuable Internet Properties Emerging

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Bubble-Driven orFundamentals-Driven?

IPO Filed

IPO Filed

$65B valuation $15-25B valuation

$10B valuation

$8-10B valuation

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Still huge opportunities for innovation and growthInternet & Mobile consume many eyeballs, little advertising $’s

Source: Morgan Stanley

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Mobile internet technology

Source: Morgan Stanley

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The “i” generation has arrived

Source: Top Mobile Internet Trends, Matt Murphy/Mary Meeker – 2/10/11; Apple

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Ridiculous growth in data traffic….

Source: Morgan Stanley

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+42%

No of companies

Non-US

Global opportunity: The world is truly flat

The middle class is exploding

The middle class is exploding

Global broadband access is growing exponentially

Global broadband access is growing exponentially

US now home to less than 40% of the top 50 Most innovative companies

US now home to less than 40% of the top 50 Most innovative companies

Source: Goldman Sachs: Innovation 2010 BusinessWeek / BCG Survey Results; Telco 2.0 Mobile and Fixed Future Broadband Business Models

20062010

Million, year-end

Personal/mobileShared/premise

The Expanding World Middle Class

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Cloud computing and the data explosion

Worldwide Cloud Services RevenueWorldwide Cloud Services Revenue

Revenue ($B)

Source: Gartner; Morgan Stanley; IDC

According to Gartner Research:“Cloud Computing will be as influential as E-business”

Cloud computing enabling massive growth in volume of digital data

Cloud computing enabling massive growth in volume of digital data

CAGR28%

Data Volume (ZB)

CAGR43%

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All The New Jobs Are Created By Startups

Excluding jobs from new firms, US net employment growth rate is negative

Without startups, net job creation for the American economy would be negative in all but a handful of years

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Conclusion

• Unique and special time for entrepreneurship

• Unique and special time for technology and innovation

• Digital Media is being transformed by a host of global contextual forces

• For the foreseeable future, US has huge edge in generating these innovations, which will be the engine that will drive our economy