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Proposed Agenda

• Review OATV investment opportunity

• Update on fundraising and first close

• Explore OATV’s investment thesis: “Watching theAlpha Geeks”

• Feedback/Next Steps

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Investment Opportunity Review

• Seed investments in the $500K +/- range

• Participate in Series A round with top-tierventure funds (an additional $1-3M) or sell tostrategic buyer

• Total investment: $1-4M

• Maintain a board seat

• Leverage O’Reilly to validate and promote start-up technologies through books, blogs, onlinesites, and conferences

• Historical performance: 41% annualized IRR

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Investment Thesis: “Watching the Alpha Geeks”

• O’Reilly identifies emerging technology trends bywatching the cutting edge individuals

• An accepted marketing discipline, known in otherindustries as “Coolhunting”

– Fashion, Sports, Toys, Video Games

– “Who is the coolest kid you know?”

• Essence of Alpha Geek watching or Coolhunting ispattern recognition

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Pattern Recognition

• Some obvious patterns: Moore’s Law; The DotCom Boom and Bust; The World is Flat

• Other patterns are the product of fragileintuition that seemingly unrelated items aredeeply connected

• OATV pattern recognition methodology:

– Identify the Alpha Geeks and watch whatthey’re doing

– Integrate seemingly unrelated signals thatindicate broader technology trends

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Identifying the Alpha Geeks

• Ask network of O’Reilly authors, advisors andentrepreneurs: “Who’s doing the mostinteresting work in your field?”

– FOO Camp

– Conferences

– Books

• Triangulation as a filter: when someone showsup in 2-3 di!erent contexts, pay attention

– Joshua Schachter: blogging, mapping andsocial software

• Find where they collaborate

– P2P in 2001: decentralization@yahoo.com

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How We Find Signals Showing a NewTechnology Trend

• Non-Standard Data Sources

– If you want accurate non-consensus forecasts, it helpsto have data sources not used by everyone else

• Examples:

– BookScan- measure book sales (Amarank Tool)

– Netscan– ask the computers rather than the users

– Google AdWord Technology- measure cost per click

– Simply Hired- millions of technology job postings

– Del.icio.us- tag volume

– Yahoo Search Terms- popular tech terms

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Use Alpha Geeks and Signals toIdentity Long Term Trends &

Investment Opportunities

• If a trend takes hold, what primary andsecondary companies benefit? Past examples:

– The Internet

• eBay, Sun, Cisco, Oracle

– Open Source

• Red Hat, MySQL, Google, Yahoo!

– Screen scraping

• IBM, Microsoft, Amazon, Flickr

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Examples of Trends We’ve Identifiedand Related Investment Opportunities

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Data is the Next “Intel Inside”

• Technology trend: Applications are increasinglydata driven; the technology or even look andfeel of the application is easily copied

• Investment thesis: Companies that own unique,hard to recreate sources of data may lead to anIntel-like single source of competitive advantage

• Example: Navteq

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Data is the Next “Intel Inside”

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Designed for Participation

• Technology trend: Successful software projectsare architected to be used easily as a componentof a larger system

• Investment thesis: Software companies that keeptheir product modular, well documented andunder a license that doesn’t hinderrecombination will attract more users

• Example: Amazon.com

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Designed for Participation

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Participation by Default

• Technology trend: Only a small percentage ofInternet users will go to the trouble of addingvalue to a web site

• Investment thesis: Companies that haveservices which make participation the defaultchoice will grow faster

• Example: Flickr

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Participation by Default

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Software as a Service(the perpetual beta)

• Technology trend: When devices and programsare connected to the Internet, applications areno longer software artifacts: they’re ongoingservices

• Investment thesis: Companies that don’tpackage up new features into monolithicreleases but rather engage users as real-timetesters satisfy their customers’ needs andrequirements

• Example: Google

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Software as a Service

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The Long Tail

• Technology trend: Many of the limiting factorsfrom the physical world are absent on theInternet.

• Investment thesis: Companies can use thepower of the computer to monetize nichesformerly too small to be commercial.

• Example: MySpace

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The Long Tail

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Software Above the Level of a SingleDevice

• Technology trend: The PC is no longer the onlyaccess point for networked applications

• Investment thesis: Companies should designtheir applications to integrate services and sharedata across bound and mobile devices, Internetservers and services

• Example: Apple

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Software Above the Level of a SingleDevice

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Remixing of Existing Apps andTechnologies

• Technology trend: When content is digital, itlends itself to being broken down and remixed

• Investment thesis: Companies that build theirbusiness model from the smallest atomic unitswill be more competitive

• Example: Salesforce.com

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Remixing of Existing Apps andTechnologies

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OATV Investment Thesis

Watch Alpha Geeks

Identify Signals Indicating New Trend

Invest in Companies Leveraging Trend

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Feedback and Next Steps

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