Jeff the Great Educates His People on the State of the Internet in 2013

An important conference in the technology sector kicked off this week. Its called D: All Things Digital (also called D11, for the 11th annual showing). Its an executive focused conference, a real who's who. One of the presentations was a great one by Mary Meeker of venture capital firm Kleiner Perkins Caufield & Byers. She presented on Internet Trends, 2013.

Her presentation is one of the most valuable gems I've found on the internet this year. Its a 100+ slide presentation chalked full of great industry insights. Its the kind of data that research firms charge $5k+ for. If you are starting an internet company anytime soon, this presentation should be where your research begins.

Because its a long presentation, I've taken the time to highlight some of the slides I found most interesting and or helpful. A lot of this is based on what is important to my business, so if I excluded something it doesn't mean it isn't valuable or interesting, just not for me. Finally, please note that these slides and the included data are not mine, they are borrowed from the full presentation that I have linked back to in multiple forms.

Video & YouTube
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In 2012, I was fascinated by the fact that every minute, users were uploading 70 hours of video to YouTube. Thats 1 minute, 70 hours. Guess what? Just 1 year later, we are now uploading 100 hours of video content to YouTube every minute. A 43% increase from 2012 to 2013. Stats like this make the $1.65 billion dollar purchase of YouTube in 2006 a bargin for Google.

Global Internet Usage
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Its no surprise that internet access is peaking in the United States. If you want internet in the US, you can get it. Most people can afford it at some level. Guess what? Much of the rest of the world is still catching up. China is experiencing 10% year over year growth of internet use. China currently has more than twice as many internet users than the US does, and still only 42% of Chinese people use the internet. Imagine when China hits 78% penetration like the US has! India is another one to note. Only 11% of Indians use the internet, but thats growing at a rate of 26% per year. Soon, the US will only represent a small fraction of total global internet usage. Companies better be prepared for this.

Global Leadership in the US
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The US is a country of immigrants. In fact, 99% of us are either decedents of immigrants or are immigrants ourselves. The above chart shows us that 15 of the 25 largest technology companies in the US were founded by either 1st or 2nd generation immigrants. Apple, Google, IBM....all founded by 1st or 2nd generation Americans. Intel, eBay, Yahoo...the list goes on and on. America is lucky to count these people as citizens.
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However, a problem is looming. At the same time we are turning away talented skilled technology workers, we aren't producing nearly enough computer science graduates ourselves. Looking forward through 2020, for every computer science graduate that gets a job, nearly 2 more jobs go unfilled. We could fill this gap by increasing the number of highly skilled technology workers we issue visas to, but for some reason we aren't. Not only are those brilliant people not filing these open jobs, they won't be able to start a company in the US, for our benefit. This is a huge problem.
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Culture of Sharing
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One of the most exciting trends over the last year or two has been the emerging culture of sharing. It started with Yelp, then Facebook, and then Twitter. Now, however, the culture is shifting in a fascinating way. We have wearables...fitness trackers like the Jawbone UP and the Fitbit that track our every movement, even our sleep, and share the stats with our friends on Facebook and Twitter! The above graphic shows that just one device, the Jawbone UP, is already tracking billions of steps every day, and hundreds of thousands of hours of sleep. Guess what? Its just the beginning. I think we'll see HUGE growth of wearables over the next year or two. I'm talking 30%-50% growth, if not more. Big, big trend.
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Don't believe me that we'll be sharing more and more details like our daily activity? Check out the above chart. There are 14 countries who's citizens share more of their daily lives on the internet than American's do. In fact, we are nearly 10 points lower than the world average!

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The way we compute is changing. The orange line in the above chart is tablets. Look how fast they emerged. They have already outnumbered desktop shipments and they are neck-and-neck with laptops. The tablet category didn't even exist a few years ago, and now it dominates. I expect desktops to continue to decline while laptops will continue their volatile performance but ultimately continue to be a major player for the next few years.
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 With the change in hardware comes a change in operating systems. The above chart shows us that Microsoft is loosing importance just as fast, if not faster, as it gained it in the 1980's. Just as Atari and Commodore where players in the past, I suspect future years will have Playstation, Xbox, and Roku emerging on this chart as the living room becomes as important to the internet as the office.

Tech Company Finances
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So what does this all mean? Well, in a relatively short amount of time, tech companies can earn a lot of money. Facebook, in just 9 years has grown to $12 billion in annual revenue. In comparison  the 25 year old software company I worked for prior to becoming an entrepreneur was the largest in its industry with $3.5 billion in sales. Facebook not only has $12 billion in revenues, they have relatively low R&D expense and high gross margins compared to traditional companies.
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LinkedIn is a great example of the financial success that tech companies can achieve in a short period of time. More than 200 million registered users, and more than 85% gross margin. These impressive numbers account for their $18 billion valuation, and strong quarterly performance has resulted in an 80% in stock price since their IPO about 2 years ago (both the DOW and the SP500 are up under 25% over the same time period).

Well, thats it...thats the state of the internet in 2013. Big thanks to Mary Meeker and KPCB for their hard work and providing it to us for free.