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General Commentary
April 29, 2018

The Future of the Future

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Market Snapshot

Indices Week YTD
GSV 300 -5.10% -8.70%
S&P 500 -9.90% -2.80%
Dow -8.90% -2.50%
NASDAQ -11.30% 0.10%
Russell 2000 -13.60% -8.10%
MSCI - -
Valuations P/E Fwd P/E/G
GSV 300 23.6x 0.4x
S&P 500 18.1x 1.2x
I-Rates Now YTD
10-Year Note 2.40% 0.80%
3-Month Bill 2.90% 107.90%
Sentiment - Current
Bull-Bear - 20.9-48.9
Put-Call - 1.1
Vix - 21.6
Inflation Now YTD
Gold $1242.30 -4.80%
Oil $51.50 -14.30%
Mutual Funds - Week
Fund Flows (bil) - -$45.20
Growth-Value 00-09 09-Now
Growth -34% 238%
Value 87% 130%

Last week we hosted the ninth annual ASU+GSV Summit in San Diego, a gathering of leaders from across the global innovation economy with the mission of accelerating exponential ideas in education and talent. We welcomed over 4,000 attendees from 40 countries, including 900 speakers and 450 presenting companies.

As I observed in my opening night speech, what makes the Summit so impactful is the unusual “cocktail” of participants we convene, with the common ingredient being a commitment to giving everybody an equal opportunity to participate in the future.

We all go to conferences where there is intellectually stimulating conversations and compelling speakers. This year’s Summit had its fair share, including former heads of state (George W. Bush and Vicente Fox), artists and activists (Matthew McConaughey and John Legend), and leaders across a broad range of issues related to the future of education and talent (Grit author Angela Duckworth, former U.S. Secretary of Commerce Penny Pritzker, and others).

But at most conferences, when you leave, it’s over. At the ASU+GSV Summit, it’s different. This is why the Summit has so much momentum. People come because things happen here. Connections are made. Capital is raised. Ideas are brought to life. People come here to make things happen.



For much of human history, the world has evolved in linear increments. In 1492, for example, Christopher Columbus sailed across the Atlantic with a fleet of wooden ships, navigating with the stars.

If Columbus were to time travel to the present day — approximately 500 years after his famous voyage — the scale of change would be incomprehensible. We fly across the Atlantic in a matter of hours. We navigate with “global positioning systems,” not the stars. And, speaking of stars, we’re exploring them with space ships. Heck, in February, Tesla launched a car into space as a publicity stunt. Columbus’ mind would explode if he saw any of these developments — let alone the Internet or smartphones.

The same could not be said for someone transported to Columbus’ time from 500 years earlier. The ships would look similar. So would cities for that matter. Most cultural norms would check out. You would need to go back thousands of years for someone to be blown away by the medieval world Columbus inhabited.

This pattern — human progress moving quicker and quicker as time goes on — is what futurist Ray Kurzweil calls human history’s Law of Accelerating Returns. We call it the “Future of the Future.”

Today, the Future of the Future can be traced back to a “Big Bang,” of sorts, defined by four dynamic forces — Moore’s Law (1965), The Fall of the Wall (1989), Internet (1994), Human Genome Project (2003). These forces have changed — and continue to change — the world as we know it.


Ironically, our education system would be one of the few elements of modern society that would still be recognizable to Columbus. The ASU + GSV Summit is all about daring to imagine — and to create — the Future of the Future for education and talent.


The world of Columbus was defined by the Seven Seas — North Pacific Ocean, South Pacific Ocean, North Atlantic Ocean, South Atlantic Ocean, Arctic Sea, Indian Ocean, and Antarctic Sea.

But the Future of the Future will increasingly be defined by the “7 C’s” of education and talent: Critical Thinking, Creativity, Communication, Cultural Fluency, Civic Engagement, Collaboration, and Character. Our keynote speakers highlighted these qualities.


44th President of the United States George W. Bush kicked off the Summit in a fireside chat with OZY CEO Carlos Watson. During his remarks, President Bush shared a candid reflection of his experience leading the United States and his efforts to create broader access to high quality education post presidency.


Angela Duckworth, MacArthur “Genius” grant winner, author of Grit: The Power of Passion and Perseverance, and a co-founder of the University of Pennsylvania Character Lab, shared her perspective on the type of character individuals need to persist through challenges and thrive.


Academy and Grammy award winning artist John Legend closed the second day of the ASU+GSV Summit, reflecting on the critical role education and mentorship have played in his success. Additionally, Legend shared an update on his work to support underserved communities through programs like LRNG Innovators, which brings together teachers, families, and local employers to cultivate talent through innovative learning models.


Legendary education entrepreneur Chris Whittle shared a vision for the 21st century school, including an update on his latest ground-breaking venture — Whittle School & Studios, the world’s first global and modern school. Whittle School will launch its inaugural 2,500 student campuses in Washington D.C. and Shenzhen in the fall of 2019.

Bill Sahlman (Professor, Harvard Business School), Deborah Quazzo (Managing Partner, GSV Acceleration) & Dick Kramlich (Chairman, NEA)

Venture Capitalists Dick Kramlich (Chairman, NEA) and Deborah Quazzo (Managing Partner, GSV Acceleration) in a moderated conversation by Bill Sahlman (Professor, Harvard Business School) spoke about the rise of entrepreneurship and venture capital investment to address the world’s most challenging problems.


In an interview with Richard Sarnoff (Chairman of Media, Entertainment and Education Investing, KKR), Penny Pritzker (Former U.S. Secretary of Commerce) discussed her vision for the future of work, education, and business — as well as her current areas of focus in all three areas.


John Katzman — serial entrepreneur and education innovation pioneer — was awarded the 6th Annual GSV Lifetime Achievement Award. Katzman founded The Princeton Review in 1981 out of his Princeton University dorm room and then co-founded 2U (NASDAQ: TWOU) in 2008. John is currently the Founder and CEO of The Noodle Companies, which connects learners, educators, and innovative technologies. Today the Noodle platform includes Noodle Search, Noodle Partners, Noodle Markets and Noodle Pros.


Academy Award winning actor Matthew McConaughey discussed his efforts to level the playing field through the just keep livin’ foundation, which supports young people with holistic programs focused on education, healthy living, and good decision-making.


Mexico’s 55th President Vicente Fox closed the 2018 ASU+GSV Summit, sharing his thoughts on the importance of global collaboration to improve outcomes. In a moderated fireside chat with Reality Changers Founder and President Christopher Yanov, President Fox shared the story of his upbringing and his ascendence from Coca-Cola delivery truck driver to CEO of Coke Mexico, and eventually to the Presidency of the country. He also discussed the impact that his presidential library and academy, Centro Fox, is having on Mexico’s underprivileged populations.


by Luben Pampoulov

Disproportionate Gains To The Leader

Sometime in the future, modern marketplaces will be on Blockchain. Having that technology in the middle between buyers and sellers will eliminate inefficiencies and will add more visibility and reliability. And regardless of the industry, Blockchain will eliminate extra fees that buyers and sellers are currently paying to “be connected.”

The current wave of disruptive marketplace models such as Airbnb, Lyft, Spotify, added simplicity and visibility to the incumbent, “old” model; payments happens automatically in the app, and you also get what you pay for.

When evaluating marketplace companies, in order to identify the stars, we look for characteristics like 1) disproportionate gains to the leader in a category, 2) frictionless adoption by sellers and buyers, 3) viral network effects, and 4) expansion of the current market. Size obviously matters, but quality is just as important.

The current state of leading marketplaces is characterized by solid growth rates and premium valuations for those with high operating leverage (high operating margin). Global E-commerce leaders Amazon, Alibaba, and MercadoLibre are all experiencing disproportionate gains as leaders in their respective Geographies. In the travel industry, Priceline and eBay are growing at a similar pace, but Priceline’s competitive advantage is its superior operating leverage.

In the music industry, Spotify is growing at a robust pace but has yet to become profitable. However, with the re-negotiated contracts with music labels, the visibility towards profitability is improving. In 2017, Spotify generated €109 million in free cash flow, and its gross margin improved from 12% in Q1 2017, to 25% in Q4 2017. (Disclosure: GSV owns shares in Spotify).

In order to be a successful marketplace, one has to start with Quality. The best quality services enjoy viral network effects, with little or no money spent on marketing. Then, execution is another key element, as competitors are quickly to follow. Navigating the rising competition while maintaining a superior service is a dynamic and complex job. But those who consistently achieve both are the ones that enjoy disproportionate gains for being the leader in their category. Currently, businesses like Spotify, Dropbox, Amazon, Lyft, Alibaba are in such a spot.

For the first time last week, Amazon announced the size of its Prime subscriber-base: over 100 million! A number that indicates Amazon is generating over $12 billion in annual Prime membership revenue alone. This is remarkable, and also proof of the concept of Disproportionate Gains to the Leader. Amazon launched Prime in 2005, and few could have imagined a 100 million members network…

Leading Subscription Models

Source: Company announcements, GSV research

Pioneer Notes

by Li Jiang

The Most Important Founder Trait

On Tuesday morning, I was at Philz Coffee in Redwood City just grabbing a cup of coffee and in walks Jacob Jaber, the CEO of Philz.

Jacob spoke at our conference last year so I immediately recognized him though most of the patrons didn’t seem to know him. I thought okay I’m not going to go fan-boy him right now. He’s got things to do and places to go.

But then Jacob goes behind the counter, high fives and fist bumps his fellow baristas and takes up an open station and start calling customers down. He’s handcrafting individual cups of coffee for people. When my turn came, I got a cup of Jacobs Wonderbar (look man, I’m a VC so I need to pander because I don’t have any other real skills).

I mean they only have 36 of the hottest coffee stores around and Jacob is brewing coffee, one cup at a time.

There’s something different about these founders.

Everybody says you need passion, but what does that mean. More importantly, what precisely does that look like in practice. There are founders, and then there are founders — the 10X founders — who are on another level in intertwining their souls into the basic atomic units of their products.

huh? atomic what?

When I talk to these 10X founders, their souls light up with joy when they get to do the foundational piece of work serving their customers. Jacob serving coffee; Seth hand building the furniture for the spaces he designs; Farb moving into a clinic to work with the doctors on their administrative challenges; Brian and Joe hosting guests in their apartments.

The real personal question for aspiring founder is “do I obsess about serving my product to people?”

And the question for investors is “am I working with founders whose souls are on fire about doing their work?”

My friend Ahren (pronounced “Aaron/Erin”) told me that I need to write a post about how someone can go about figuring out their calling and find that thing that lights them up in metaphorical flames. I’ll have to get back to you on that one 😉










Jacob Jaber serving coffee at the Redwood City Philz.

Inspired by Jacob Jaber (JJ), SQ, FN, TR, SV, DK, DD, JD, JS, AV, ZT. You all know who you are…and there are so many more people to include, so this is only a slice from the past month. Recency bias.

Market Update

Week ending April 29, 2018

World Indices

America Index 12/16/2018 YTD Week
U.S. GSV 300 108.4 -8.70% -5.10%
NYSE 11755.4 -8.20% -9.50%
Dow 24100.5 -2.50% -8.90%
NASDAQ 6910.7 0.10% -11.30%
NASDAQ-100 6595.0 3.10% -10.90%
Russell 2000 1410.8 -8.10% -13.60%
S&P 500 2600.0 -2.80% -9.90%
Brazil Bovespa 87449.5 14.50% 6.20%
Mexico IPC 41312.2 -16.30% -14.00%
Canada S&P TSX 14595.1 -10.00% -8.50%
Euro-Asia Index 12/16/2018 YTD Week
China SSE 2593.7 -21.60% -8.10%
Heng Seng 26094.8 -12.80% -1.80%
Singapore Straits Times 3077.1 -9.60% -4.10%
Indonesia JKSE 6169.8 -2.90% 7.60%
Japan Nikkei 225 21374.8 -6.10% -10.10%
India Sensex 35962.9 5.60% 4.60%
Russia RTS 1116.5 -3.30% -3.70%
France CAC 40 4853.7 -8.60% -9.40%
Germany DAX 10865.8 -15.90% -10.30%
U.K. FTSE 100 6845.2 -11.00% -6.50%

U.S. Indices Snapshot

Valuation P/E Est. P/E/G Price/Sales
S&P 500 24.4x 18.1x 15.10% 1.6x 1.2x 2.5x 2.3x
NASDAQ 26.0x 21.8x 17.00% 1.5x 1.3x 3.1x 2.7x
Russell 2000 58.7x 27.3x 6.30% 9.3x 4.3x 2.7x 2.5x
GSV 300 37.0x 23.6x 57.80% 0.6x 0.4x 6.5x 4.2x