The New Normal. Ditlev Bredahl :: CEO, OnApp

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2 The New Normal Ditlev Bredahl :: CEO, OnApp

3 My Service Provider CV Been in the hosting biz since 96 Last 6 years as CEO of UK2Group ($77M exit 2011) Plenty of M&A Now founder and CEO of OnApp.com Don t be a stranger! We re at booth C09

4 Software stack that automates Cloud CDN Storage Bare Metal

5 30% Marketshare

6 So, this is my 5 th keynote at WHD

7 And, I ve learned a few things

8 Never start your presentation with a graph!

9 +

10 Few slides = Good!

11 So let me start with a graph showing the impact of my 150 slides in 30 mins

12 Number of slides Death by powerpoint me Deaths in audience

13 And it s flavored with an excessive use of LEGO throughout.

14 Right let s get started!

15 OK our industry had a good few years

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17 Things are changing though

18 Now the industry is in turmoil

19 Consolidation Endurance Group Ι Savvis Ι Zayo Ι HostEurope Ι SingleHop Ι Cogeco Ι IBM Ι web.com United Internet (1and1) Ι Telecity Ι InterXion Ι UK2Group Ι Six Degrees Group Ι etc etc

20 Capital requirements

21 CPAs skyrocketing

22 What worked yesterday does not work today!

23 Like

24 What did your clients care about? Uptime // SLA? Price? Support // Service?

25 Yes true, clients did care about that

26 The problem is that the whole industry focused on those three (and only those three) USPs

27 Hmm we all look the same?!

28 Where s Waldo Marketing

29 So, you all solved the same problem

30 And together we raised the bar

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32 But what were cool USPs before, are now only the entry ticket to the game

33 Innovation died out, and we left the door open to the

34 MegaHosters

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36 AWS = The Dark Side!

37 But AWS suck at price, uptime and support, right? Yup, we have nothing to worry about!

38 Yes, they really do

39 So how are they stealing my clients?

40 The AWS Jedi Mind Trick

41 You do not care about uptime, price & support! HUH?! Megahosters and their JEDI mindtrick

42 Why are megahosters not focusing on Uptime, Price or Support?

43 Because anyone can deliver good uptime, with decent support at fair pricing. It s a commodity. are you a commodity!?

44 Megahosters sell: 1. Scale 2. Geographical reach 3. Product breadth Because they know you can t

45 It s normal

46 rule of three

47 The rule of three is a rule of thumb suggesting that there are always three major competitors in any free market within any one industry. Boston Consulting Group in 1976

48 Three companies own over 80 percent of the carbonated soft drink industry. Three companies sell over 80 percent of the beer. Three companies sell over 80 percent of the cigarettes, and two companies sell over 70 percent of the cigars. Four companies sell over 80 percent of all the recorded music. Four companies own virtually all railroad operations. Six companies produce and market over 85 percent of all the movies. Two companies own a majority of the radio market. Three companies make over 95 percent of all the razors and razor blades. Two companies sell over 80 percent of all the cookies and crackers. Two companies manufacture and sell over 50 percent of all the toys. Two companies sell over 75 percent of all the carpets. Four companies sell over 80 percent of all the breakfast cereals. Two companies sell over 85 percent of the light bulbs. Three companies sell over 90 percent of consumer batteries.

49 Return on assets The ditch Specialists 1% 5% 10% 40% Generalists If specialists are too big If generalists are too small Their returns are too low, and they end up in the ditch! And 2-4 players end up winning Market share

50 Three end up standing We rock!

51 Splitting up the market between them *Mumble mumble* world domination *mumble*

52 Old school hosters will feel the pain!

53 Megahosters will eat you for breakfast

54 That was the first 50 slides

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57 Go big or go home

58 That s the normal Deal with it

59 Back to the MegaHosters

60 IaaS Marketshare Rackspace Google IBM Microsoft YoY Growth AWS 51% MS 96% IBM 48% GCE 81% RAX - Amazon Marketshare 0% 10% 20% 30%

61 CAGR Dedicated hosting $3,078 $3,257 $3,468 $3,690 $3,922 $4,166 $4,421 6% Shared hosting $8,584 $9,385 $10,455 $11,621 $12,888 $14,244 $15,689 11% Managed Hosting $12,808 $15,524 $18,931 $22,958 $27,655 $33,179 $39,648 21% IaaS $680 $1,572 $2,872 $4,475 $6,211 $8,152 $10,232 57% PaaS $316 $618 $1,358 $2,232 $3,177 $4,244 $5,347 60% Total infrastructure $26,161 $31,359 $38,506 $46,902 $56,389 $67,188 $79,251 20% Overall growth ~%20 YoY

62 CAGR Dedicated hosting $3,078 $3,257 $3,468 $3,690 $3,922 $4,166 $4,421 6% Shared hosting $8,584 $9,385 $10,455 $11,621 $12,888 $14,244 $15,689 11% Managed Hosting $12,808 $15,524 $18,931 $22,958 $27,655 $33,179 $39,648 21% IaaS $680 $1,572 $2,872 $4,475 $6,211 $8,152 $10,232 57% PaaS $316 $618 $1,358 $2,232 $3,177 $4,244 $5,347 60% Total infrastructure $26,161 $31,359 $38,506 $46,902 $56,389 $67,188 $79,251 20% Overall growth ~%20 YoY IaaS/PaaS %60 YoY

63 So, clearly the fastest growing segment in the history of our industry And we left it to a bookshop?!

64 Like a boss

65 It s bound to happen to any industry growing up

66 It s normal, right?

67 Meanwhile, hosters are thinking

68 We will be fine Our customers respect us for who we are They like that local touch We have a special bond with our customers Loyalty blah blah

69 Let s stick with what we know

70 Right!?

71 Peter Drucker thinks you are wrong! Peter who!? Peter Ferdinand Drucker was an Austrian-born American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation

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73 The winners will be people who break the mold and change the way stuff is done

74 Who create a new normal

75 50 slides left how are we doing? you still with me here?

76 Disruption!

77 Examples

78 What is the sharing economy? The Sharing Economy is a socio-economic ecosystem built around the sharing of human and physical resources

79 Keys for sharing economy 1.Unused capacity 2.Critical mass 3.Trust between strangers

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81 Hotel industry Rooms +500, , , ,623 Market cap +$20bn 28bn $9bn $23bn Founded

82 530 hotels 78 ~$200M each ~100 years

83 More Locations in San Francisco than Hilton has world wide Zero capex investment Less than 10 years in the making ~doubling in capacity YoY

84 World wide hotel occupancy rate ~65%. So, around 1 out of 3 rooms are empty! Statistica.com 2015

85 Where am I going with this?

86 Similarities Hotels and DCs 1. Unsold capacity = Lost money! 2. Utilization significant 3. Capex requirements prohibitively high

87 Q: Can we build airbnb for service providers?

88 Let s take those points again

90 Keys for sharing economy 1.Unused capacity 2. Critical mass 3. Trust between strangers

91 our industry is super capex intensive

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97 Gartner study from 2012 sets Data Center utilization rate at less than 13% world wide For whole sellers the number is closer to 60% For server capacity it s below 5%

99 Keys for sharing economy 1. Unused capacity 2.Critical mass 3. Trust between strangers

100 OnApp only: ~200k servers

101 OnApp: 3,000 service providers

102 OnApp: 500k web apps

104 Keys for sharing economy 1. Unused capacity 2. Critical mass 3.Trust between strangers

105 Trust is best achieved with FULL TRANSPARENCY!

106 This is how we do that in the OnApp Federation and marketplaces

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109 For the first time ever Buyers can make an informed decision

110 And your clients have full transparency as well This is how we ve done it at cloud.net >>

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113 What would it take? A worldwide network of Service Providers A way to speak to them with one set of APIs A real time marketplace to buy/sell spare capacity A way to migrate workloads, to build fluidity And a new way to look at your competition

114 What s that I hear you say? I like to be in control

115 Well the model is not exactly new to our industry

116 At least 30% of our industry revenue is tied into reselling infrastructure or services outside of our control

117 You are already a reseller!

118 Power IP DC DC gear Network gear Servers OS Software Etc.. Etc

127 You re not doing all that, are you? Power IP DC DC gear Network gear Servers OS Software Etc.. Etc

128 Most are you are probably in this space Power IP DC DC gear Network gear Servers OS Software Etc.. Etc And reselling the rest to offer a full stack

129 Sales Business processes Management Applications Operating system Server Infrastructure Network Infrastructure Data center Infrastructure Datacenter plant and building IP/bandwidth/internet connectivity Redundant power supply

130 Margins Sales Business processes Management Applications Operating system Server Infrastructure Network Infrastructure Data center Infrastructure Datacenter plant and building IP/bandwidth/internet connectivity Redundant power supply

131 Technology has reduced transaction costs, making sharing assets cheaper and easier than ever - and therefore possible on a much larger scale

132 Sharing economy is reseller hosting on steroids!

133 What s next?

134 Marketplaces should not be closed

135 For ISPs, access is better than ownership

136 For now just: and

137 More to come this year

138 How does OnApp fit in?

139 In 2015 Uber, the world s largest taxi company owns no vehicles. Facebook the world s most popular media owner creates no content. Alibaba, the most valuable retailer has no inventory. And Airbnb the world s largest accommodation provider owns no real estate

140 How does OnApp fit in?

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142 OnApp is to AWS what Airbnb is to Hilton

143 With OnApp you Have a competitive automated platform Get access to worldwide capacity on tap Monetize spare capacity in your data centers

144 #ThugLife

145 Together we have a shot at it - we can totally do this! Maybe running a bookshop is not all bad

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147 @ditlev skype: ditlev.dk Linkedin.com/in/ditlev

148 QA?

149 No? OK, so I brought my own...

150 Q&A 1. Who is OnApp again? Never heard of you 2. What does this mean to the environment? 3. Who else has done this? 4. How can we get started? 5. Do you have de-commoditization examples? 6. What else did Peter Bruckner say? 7. How many slides did you do a minute?

151 150/30 = 5 slides/min

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156 Oh, and it s the right thing to do for the environment as well

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