theme_binder

Demand

Efficiency

Mobility

This Venn Diagram encompasses the themes that we see as important drivers of growth and productivity in the world economy for years to come. It is laid out so that each theme intersects with every other theme, in any combination.

While there are compelling “pure play” stories in every theme, it is the intersections between these big ideas that are intriguing. By filtering a company through these themes, a clearer picture is formed of how that company relates to the evolving global marketplace.

Food

Energy

Resources

Connectivity

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summit creek capital Demand - A generational shift is occurring as the developed world

hands off the baton of the world’s consumer to the developing, global middle class. Investing in newly minted consumers is a theme that will drive investments for the foreseeable future.

Efficiency - Necessity is a mother, it has been said. Take a global financial

crisis, add some technology and BAM! Efficiencies are created. Corporations and consumers both do more with less. Energy efficiency is discussed in every corner of the physical world. Investing in efficiency will continue to be one of Summit Creek’s focal points in years to come.

Connectivity - From the moment a renowned politician invented the interwebs, the planet has become more and more connected. As such, we expect the connectivity theme to accelerate future growth. The possibility for business, customers and clients to interact in a connected world creates opportunities at every level of society and economic development.

Energy - From our food supply to our transportation network,

from the way we communicate to the clothes we wear, energy is the common theme. And, as a theme, it will continue to drive investment and innovation.

Food - As demand for protein products like meat and dairy increases,

there is an even larger increase in demand for grains and arable land.

In that light, feeding an ever larger global population is one of the themes that we believe will be more important in years to come.

Mobility - We now have internet access available on mobile devices with more computing power than PCs during Y2K; combined with connectivity, it is truly a game-changer. Mobility and connectivity allows for rapid decision making, accelerated product development, and a consumer base that can shop from anywhere.

Resources - Humans have always been dependent on the Earth’s

resources. There will be enormous opportunities in the way we account for and use our resources, especially as essential resource needs become scarce and new resources see increased demand.

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Demand 100 Years ago less than 5% of the world’s population lived in Cities

NOW 50.5%

live in Cities

****

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Africa & Asia’s

of urban population growth will take place in the developing world***

New Economies = DEMAND

BeT Ween 2007 & 2009

consumption in emerging m a r k e t s

SURPaSSed

U. S . c o n s u m p t i o n

FOR THe FIRST TIme*

Women account for 85% of all consumer

purchases - everything from autos to health care.**

urban population is expected to double between 2000 & 2030***

Before the Global Financial Crisis spawned buzzwords like the ‘new normal,’ there was an entire subset of buzzwords regarding the shifting economic paradigm. Acronyms, new words, and phrases such as ‘BRIC,’ ‘Chindia,’ ‘emerging markets,’ ‘developing economies,’ and ‘globalization’ were tossed around in the media with increasing frequency. The phenomena that these terms refer to is the economic growth of a group of countries that were once considered ‘third world.’ Countries such as Brazil, China, India, Indonesia, Malaysia, and Russia, are experiencing growth rates that are far in excess of their larger counterparts in the ‘developed’ world. A generational shift is occurring as the developed world hands off the baton of the world’s consumer to the developing, global middle class. Investing in newly minted consumers is a theme that will drive growth for the foreseeable future.

China overtook the U.S. as the largest buyer of cars in 2009* A key factor behind runaway consumer growth is the rise of the middle class in emerging countries* Sources: *http://www.dailyfinance.com/story/ company-news/u-s-consumer-nolonger-king-china-india-ascend-tothrone/19411572/ **http://she-conomy.com/report/ facts-on-women/ ***www.worldwaterday2011.org ****http://www.ethz.ch/about/ publications/globe/archive/eth_ globe_10_02_futurecities_en.pdf

Efficiency Efficiencies are created as all the themes interact with one another.

Corporations become more efficient, doing more with fewer employees. Consumers become more efficient, ditching landlines, computers, mobility + connectivity: TVs, and video game making a 1 click purchase consoles for smartphones. from the ski lift of the book When smartphones met that was recommended by e-commerce, the excitement the guy sitting next to you spawned m-commerce, the on the lift chair. global marketplace in your pocket. Price checking has never been easier. Nor has growing a small business: start from the ground up, and extend to the cloud. Cloud computing has created operational efficiencies for companies of all sizes, but as server farms grow larger, their proprietors are seeking to become more energy efficient. Energy efficiency discussions extend to appliances, buildings, power grids, server farms,vehicles and pretty much all corners of the physical world.

Investing in efficiency will continue to be one of Summit Creek’s focal points in years to come.

Energy + Connectivity + Resources + Mobility + Food:

allowing farmers to turn off irrigation pumps during peak hours from a smartphone; reducing their energy bill and reducing peak power prices. (m2m communications)

Food + Energy + Resources: LED lights and temperature-controlled rooms allow for agricultural products to be grown in cities, reducing transportation costs and water usage.

Energy + Resources + Connectivity: Food + Resources: center pivot irrigation increases water efficiency 40-90% versus flood irrigation, yet 90% of the world’s farmland is flood irrigated.

Smart Grid: Monitoring and Metering consumption of electricity, fuel, and water to better balance usage and define chokepoints.

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Mobility We’ve reached a tipping point in the last few years. We’ve had the internet for awhile now. We’ve also had cell phones for long enough that most of us can remember a briefcase-sized box with a shoulderstrap that you could talk on. And computers have been around since World War II. But, for the first time, internet access is available on a mobile device that has more computing power than PCs during Y2K, weighs less than a quarter-pounder with fries, and you can talk (or video conference) on it to boot. This always available computing power is a modern marvel, but combined with Connectivity, is truly a game-changer.

Being mobile and connected allows for rapid decision making, accelerated product development, and a consumer base that can shop from anywhere.

?

72% I’m sure there’s an app for that

2009 vs 2010

smartphone sales up 72% compared 2009

TOTAL MOBILE DEVICE SALES IN 2010

*Gartner

1.6 Billion

*Gartner

Price checking has never been easier With barcode scanning apps, you can use your phone to instantly compare prices with other merchants while on-the-go. Apps enable you to compare products across physical and ecommerce merchants, optimizing the shopping experience.

S

ULT

RES

9

.9 $16

just ) and ess e away l % l ( 15 ne mi o

Expected Growth of Smartphones in Units

2011

95 million units

2010

*Gartner

67 million units

of purchases are already made using a mobile device. according to ATT, Aug 26,2010

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Food Human beings, when it comes down to it, have few basic necessities: Food, water, shelter, and connectivity with others. Overlay life, liberty, and the pursuit of happiness, and necessities morph into luxuries. Producing enough food to feed an ever increasing population, with ever increasing standards of living, is a necessity. As demand for protein like meat and dairy products increases there is an even larger increase in demand for grains and arable land.

In that light, Agriculture is one of the themes that we believe will be more important in years to come.

8 Billion = 8,000,000,000 With more people, it means we’ll need to produce more food in the next 50 years than we’ve produced in the past 10,000 years combined.****

byglobal 2030 water

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eight billion

seven billion

B

R

I

requirements are likely to rise at least 40% more than the current accessible & reliable supply.***

C

A g ric u l t u r e Brazil leads the The other three BRIC nations

pack, with growth Russia, India & China forecast of more than 40% notching up their growth by through 2019.** 26%, 21% and 26% through 2019**

It’s expected that by 2050, the global population will hit nine billion.*

five billion

Agriculture accounts for about 70% of all global water usage

four billion

three billion

two billion

New Stone Age commences

New Stone Age

Just 13.31% of global land area is considered arable* 2-5 million years

It took only 12 years to go from five billion to six billion people (in 1999).*

Bronze Age

Iron Age

Middle Ages

The Bla ck Dea th - Th e

7000 B.C. 6000 B.C. 5000 B.C. 4000 B.C. 3000 B.C. 2000 B.C. 1000 B.C.

Plague

AD

1000 A.D.

It took 123 years for the world to go from one billion people to two billion (in 1930).*

Modern Age

Billions of People

six billion

sources: * Russian Wildfires Highlight the Global Population Growth-Food Supply Conundrum, by Matthew Weinschenk ** http://www.investmentu.com/2010/June/theworlds-biggest-food-fight.html *** Is Agriculture Depleting Our Water Supply On Purpose? by Tony D’Altorio, Investment U Research **** www.impactus.org

2030 A.D.

Global Population Growth

Connectivity Workers in the Cloud*** 919.4 Million in 2008

New Industry In 2010, 3 million tablets were connected to the mobile network, and each tablet generated 5 times more traffic than the average smartphone.

www.cisco.com

World Wide to Quadruple from 2009-2014

Internet Traffic www.cisco.com

69% of us are already in the cloud picasa, facebook, salesforce.com http://computinginthecloud.files.wordpress.com/2008/09/ pip_cloudmemo.pdf

InternetDating The online dating industry is now worth $4 billion worldwide. http://www.datingsitesreviews.com/article.php?story=Zoosk-new-iPhoneApp-Chat-Feature

The Daily Deal Spending on U.S. daily deals could soar as much as $3.9 billion in the next four years, which seems a little conservative based on the figures known about the largest players in the space.

$6 Billion by 2015 ** Source: emoney.allthingsd.com

1.19 Bill i by 2 on 013 From the moment a renowned politician invented the interwebs, the planet has become more and more connected. Communication methods vary: broadband, clouds, fiber optics, smartphones, smartgrids, and wireless, but the end result is the same: information surrounds us. Connectivity will continue to redefine and reshape our lives, from the way we meet people to the way we manufacture goods to the way we shop for goods. New industries, currencies, and communities are being developed at an ever quickening pace; as are security issues, border disputes and trade wars. As such, we expect the connectivity theme to drive growth and innovation for the foreseeable future.

SOCIAL MEDIA

47

BILLION INSTANT MESSAGES SENT PER DAY IN 2009 * Data provided by Pingdom.

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Resources

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copper in millions of tons

2000 2008

year

year

2000

U.S.A.

<2

copper in millions of tons

>11 Rest of the World

>10 U.S.A.

>2

Rest of the World

U.S.A.

2

1990

Rest of the World

<8 1980

2008

Average water use per person per day (liters)*** Top 5

575

1. US

19 gallons of motor gasoline

sources: * http://geology.com/usgs/uses-of-copper/ ** http://chinawatch.washingtonpost. com/2010/10/rare-earth-elements-undervalued.php *** http://www.circleofblue.org/ ****http://www.nytimes.com/2010/10/30/ business/global/30rare.html?_r=1

1990

>6 >2

520 pounds of coal

Rest of the World

U.S.A.

One barrel of oil equals approximately

580 cubic feet of natural gas

1980

China is the world’s leading user of refined copper. The booming economy in China contributed to a tripling of its annual refined copper consumption during the 8 years from 1999 to 2007.

The average car contains nearly one mile of copper wire*

725 pounds of oven­dried wood

~.25

~2

~5

COPPER consumption

~.05

Humans have always been dependent on the Earth’s resources. Some of those resource dependencies have developed as trade and commerce grew; coal and oil were not extremely useful before the industrial revolution. Others have never been excessively useful, but have captivated our attention for millenia (one shiny yellow metal, in particular, comes to mind). Still others, like water, have been taken for granted; regarded as free, misuse and overuse have been commonplace. Though mispricings are frequent, the laws of supply and demand hold strong for resources. There will be enormous opportunities in the way we account for and use our resources, especially as essential resource needs become scarce and new resources see increased demand. Resources have increasingly become viewed as national security issues: dependence on foreign oil has been cited as a funding source for terrorism; bottlenecks in the supply of rare earth elements threaten developed economies around the world.

493

2. Australia 3. Italy 4. Japan 5. Mexico

95% China produces & exports 95 % of rare earth elements.****

386 374 366

Less than 2% of the Earth’s water supply is fresh water.

Of that, only 1% is available for drinking water.***

From our food supply to our transportation network, from the way we communicate to the clothes we wear, energy is the common theme. And, as a theme, it will continue to drive investment and innovation.

Enou gh so l

t the need e e or a y

nutes to m mi ty

References to a paradigm shift have become common in mainstream media; have you heard of the United States referred to as the ‘Saudi Arabia of Wind’ or the ‘Saudi Arabia of Natural Gas?’

ion f Un

From mitosis to manufacturing, our world is shaped by energy. Oil has had a good run as the king of energy, and though its reign will continue for decades more, the realization that it is a finite resource with some severe social and environmental side effects has spurred research into alternatives. Charlie Munger once said “I never miss an opportunity to NOT install solar systems, because I think they’re going to get cheaper.

I’m not worried about what comes after oil, because solutions are on the horizon.”

uface in twe s sr n th

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pean ro

Energy

y falls on the e g r ar ne e ar f the Eu o s ear

www.ngpowereu.com

Wind was the 2nd largest US energy resource added for the 5th straight year.

10 GW of wind power added in 2009, bringing total to ~35 GW

www1.eere.energy.gov

34.30% 30.46%

23.41%

oil

coal

5.36% Nuclear

Hydro

6.47%

Natural Gas

http://1bog.org/blog/a-world-without-oil/#more-12807

Global Energy Use by Source 2010 (estimate) www.gregor.us http://1bog.org/blog/a-world-without-oil/#more-12807