MY PLATFORM RULES Gold Coast 23 rd -24 th February 2015

1. MY PLATFORM RULES Gold Coast 23rd-24th February 2015 “Revolutions are triggered not by revolutionaries, but by the behaviour of incumbents.”

2. OUTLINE • Introduction • Context • About Mclowd • Implications • Third Industrial Revolution • Zero Marginal Cost Society

3. INTRODUCTION “A paradigm’s narrative power rests on its all-encompassing description of reality. Once accepted, it becomes difficult, if not impossible, to question its central assumptions, which appear to reflect the natural order of things. Alternative explanations of the world are rarely entertained, as they fly in the face of what is accepted as unambiguous truth.  But this unquestioning acceptance, and refusal to envision alternative explanations, leads to a festering of inconsistencies that pile up until a tipping point is reached where the existing paradigm is torn apart and replaced with a new explanatory paradigm better able to marshal the anomalies, insights, and new developments into a comprehensive new narrative.” Jeremy Rifkin, Zero Marginal Cost Society, 2014

4. CONTEXT • 19th / 20th centuries: • Capital efficiency • Labour productivity • Governance • 21st century: • Cloud computing • Crowdsourcing

5. CONTEXT

6. CONTEXT • Assumptions: • Subjective • Absence of proof • Hypotheses: • Evidence-based • Lean Start Up movement

7. CONTEXT Hypothesis A: Cloud computing and crowdsourcing will permit the vast majority of software underpinning the global asset management industry to be replicated, with a minimum deployment of capital. Subsequent to replication access to the software will be made available at or near marginal cost.

8. ABOUT MCLOWD • Genesis • Current: • Free SMSF accounting software • Marketplace: • Services • Product • Proxy for significant disruption: • 70-90% decline in per unit costs • Future: • Global end-to-end workflow solution • Wordpress for financial assets

9. IMPLICATIONS • The new rules: • Your customers are now your biggest competitor • Your customers have no incentive to support your current entity valuation • The speed with which you will be dis-intermediated is correlated with your distance from marginal cost

10. IMPLICATIONS Hypothesis B: Over the next 5-10 years the global asset management ‘value chain’ will deflate by 70-90 basis points.

11. IMPLICATIONS Speed of disintermediation Distance from marginal cost (%)

12. IMPLICATIONS Speed of disintermediation Distance from marginal cost (%)

13. IMPLICATIONS Speed of disintermediation BGL Class Sydney-based accounting firm Distance from marginal cost (%)

14. IMPLICATIONS • The two stages of disintermediation: • Perception • Action • Actual vs perceived value • Implications for price / pricing power

15. IMPLICATIONS • Implications: • Self interest vs collaboration • Role in value chain: • Vendor • Curator • Wholesale change will be required: • Cultural • Operational • Capital structure (remorse)

16. THIRD INDUSTRIAL REVOLUTION • Five Pillars: • Renewable energy • Building stock • Storage • Smart grid technology • Electrification of transport fleet • Other: • Social vs financial capital • Collaborative commons

17. ZERO MARGINAL COST SOCIETY

18. Contact Details: Ashley Porter ashley@mclowd.com 0402 117 935 Twitter: MclowdFM