FEATURING:

Jayesh Kannan, CFA
William Blair Global Research Analyst

18
Connected Commerce

March 4, 2021 | 31:42

The world is not just being recreated click-by-click instead of brick-by-brick; it is being reimagined. In the second installment of our Convergence series, which examines five growth themes that are shaping the future of investing, Hugo speaks with William Blair Global Research Analyst Jay Kannan, CFA, about what we call “connected commerce,” which covers the entire architecture of the digital economy.

Meet Our Moderator

Hugo Scott-Gall, Partner
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SHOW NOTES
00:48 Host Hugo Scott-Gall introduces his guest, Jay.
01:19 Hugo has Jay define connected commerce.
03:55 Who is in the middle of the connected commerce architecture?
06:05 Where are there pain points in e-commerce and what is the growth opportunity?
08:44 The difference between emerging and developed e-commerce markets.
11:32 Understanding online consumer behavior.
15:41 Where do you find growth in tech?
21:18 Jay talks about where growth may be underestimated.
23:38 Hugo asks Jay about lessons learned in connected commerce.
26:27 Jay discusses technology moonshots that could radically change the economy.
Transcript

Hugo Scott-Gall: Today, I’m joined by my colleague, Global Research Analyst Jay Kannan, to discuss connected commerce in the next installment of our Convergent series, which examines five growth themes that are shaping the future of investing.

In this episode, we’ll cover connected commerce, which basically covers the whole architecture of the digital economy. Jay covers small cap technology, media, and communications services companies. Jay, hello. Welcome. It’s great to have you here.

Jay Kannan: Thank you, Hugo. It’s wonderful to be here.

Hugo Scott-Gall: Good. Well, we both agree on that. Let’s get started. I had a goal, very briefly and no doubt inadequately, to describe and define connected commerce. You can do much better. What is connected commerce?

Jay Kannan: Hugo, we think of connected commerce as an integrated shopping experience. We think about it as anytime, anywhere shopping. Now, what used to be two discrete and disparate experiences, one offline and one online has now come together in an omnichannel world, which one might rather refer to as bricks and clicks for that matter, so bringing together bricks and mortar as well as clicks and the connected commerce environment.

Now, why this is important is essentially this connects the end-to-end consumer journey across both offline as well as online mediums and then collects the data and then uses learnings and insights from that data in order to affect future consumer behavior in order to link back to payment systems. Much of these insights are then fed back into the dropper funnel, which then creates a flywheel effect of sorts, which can drive even more monetization for merchants, can drive a happier and more enjoyable experience for the customer, and can create reduced friction in this process.

Hugo Scott-Gall: That all makes sense. I guess the reason we’re talking about this is because it is quite new. I think, and you were going to agree with me, the assumption that what we just took the system, the architecture from the old, physical world and just re-created it click-by-click instead of brick-by-brick in the digital world. It’s actually wrong. This is a new way of doing things or a new way of organizing things. Is that right?

Jay Kannan: I think that’s fair, Hugo. One would say that we bring together the best of both of the offline as well as the online journeys and experiences and then connect them in a way in which they can talk to each other. They can share insights from what a consumer likes offline to what he or she may like online. If you prefer a paddle of a certain brand or a certain size offline, there’s a good chance you’ll likely want a similar experience or have similar interests online as well.

What used to happen disparately when both of these systems or ecosystems didn’t talk to each other is now coming together with an ecosystem or an architecture, and we can go into that shortly, where they talk to one another and where we can drive insights and drive learnings and therefore drive predictability in what the consumer might want in both these systems.

Hugo Scott-Gall: If we think about the whole architecture, who is really sitting at the middle of this? Who has got the big, central role or the must-have pipes that it all has to go through?

Jay Kannan: If you think about the value chain here in connected commerce, we can think about merchants at one end. We can think about consumers at the other and perhaps a wide set of intermediaries in the middle who often facilitate interactions or connected commerce between the merchant and the consumer.

When we think about the merchant, probably the new age infrastructure involves enablement type software or services, so allowing them to understand what the consumer likes, allowing them to track consumer journeys offline, use those insights online, and then a lot of software that just helps reduce friction. Enablement in terms of a digital point of sales, enablement in terms of connecting with financial ecosystems, and then of course customer management; this can be a traditional CRM system, but it can also be managing loyalty systems, tracking what consumers do across other websites, and targeted advertising.

At the other end is the consumer. For the consumer journey, why this is important is so that they can then have pipes or payment intermediaries, so the same way they pay offline is a way they pay online. If that is not the case, especially given regulatory constraints or countries in which these ecosystems operate, then that can change using intermediaries.

Intermediaries, finally Hugo are essentially the payment platforms or other forms of value chain intermediaries. These can be logistics, they can be credit, they can be simple pipes or rails in different countries. Think of them as either payment-type platforms that enable payment transactions to take place or even mobile e-wallets in certain types of countries, which are enablement for consumers who do not have access to credit cards, debit cards, and the traditional banking ecosystem.

Hugo Scott-Gall: You touched on it a bit there, but I’m very interested in the question of, is this all now done? Certainly, digital commerce, the online economy feels very smooth and frictionless versus how it used to feel. One of the ways we always like to think about growth is by asking the questions of where there were still frictions, where there were problems to solve.

Will we look back, 10 years’ time and say, whew; the system back in 2020-2021 was pretty antiquated? It had these frictions, these pain points. It was slow. How is it going to change? How will you know when it’s done? What are the still-big problems and pain points to deal with?

Jay Kannan: I believe we’re still at the early innings when it comes to either online or omnichannel penetration of the commerce opportunity. Now, if we look back perhaps 11 or 12 months, we’d say that the current environment, especially when many of us were at home, accelerated the pace of many consumers transacting online for the first time ever. Even having said that, less than a fourth or a fifth of global commerce is conducted over the internet.

It’s funny, but I remember what the CEO of Stripe, which is a large payments company, often says which is, their mission as a company is to increase the GDP that is transacted over the internet. I’m paraphrasing here, but essentially what that means is that there is a lot more here to go when it comes to connected commerce and the online experience.

Now, what can we think of when the jobs that are done by these either intermediaries or platforms going forward and how that can change? Well, the simple low-hanging fruit here is reducing friction. Irrespective of what we think, there is increased friction between either the different platforms, the types of authentication we need, the types of payment methods, the commissions that are paid, and simply the leakage in many ways of a dollar that is spent by a consumer versus the residual part of that dollar that actually reaches the merchant.

To the extent we can create more efficiencies across the system, the consumer and the merchant can probably transact at a price that is much closer to each other than what it is today. Both can have a more enjoyable experience, more insightful experience where you can have more targeted products and services at consumers who can then purchase them either cheaper, efficiently, or faster in a more enjoyable manner.

Hugo Scott-Gall: So far, we’ve talked of this in a generalized way, but I’m wondering if you can talk a bit about the difference between developed markets, emerging markets? By that we mean Europe and the U.S. versus kind of the rest of the world, but certainly Asia, how the architecture looks different and why it looks different. I suppose here I’m already getting at this idea of leapfrogging, where you didn’t have to disrupt something that wasn’t there. It’s a lot easier.

Jay Kannan: That’s right. One easy analogy here that would be a good point, too when thinking about how this opportunity set might play out in developing countries or in emerging markets versus those that are developed is to look at the spread of telecommunications services over the past three or five decades. We had fixed-line telephony in developed markets, which is essentially a landline that you could use at home or in the office. Then, that transitioned towards mobile phone penetration, which at the first instance were just feature phones where you could either text or make voice calls, and the finally the advent of data.

Now, in emerging markets we leapfrogged much of that, so we went from absolutely no connection, maybe snail mail or telegram services, or for the most part connectivity that wasn’t first-rate to smartphone data. The availability of cheap data, the availability of fast data, and what was often populations which either didn’t have access to much of the online world now coming online for the first time ever; as they say, although consumer wallets are different in different parts of the world, willingness, the ability to engage, perhaps even transact in front of a screen is likely not different at the most primal level when we think about humans, our intent and much of our needs and wants.

When we apply that analogy to connected commerce, I think what has largely changed or allowed for this leapfrogging is the smartphone revolution. Whether it be increased smartphone penetration, the availability of cheap as well as access to fast data, 4G for the most part today, but likely 5G in the future, and then of course new and differentiated form of payments. Now, in the emerging world, much of the population is either on the bank or unbanked for the most part, which means that credit cards, usage of systems like PayPal is not something that those markets are essentially used to.

What we’ve seen is new, innovative technologies. We think about mobile wallets, we think about easier payment access, anti-fraud systems, which are unique and differentiated in terms of what they target, who they target. A lot of these connections with the online ecosystem, online shopping experience, logistics infrastructure that it’s connected to is very differentiated in emerging markets.

Think about last mile access, non-standardized logistics infrastructure, so on and so forth. Those are two or three examples where one needs more specific, geography-specific use cases as opposed to perhaps global, cross-border payment providers or technology platforms, enablement software.

Hugo Scott-Gall: Is one of the big areas of growth understanding behavior, consumer behavior, customer behavior in terms of—in some ways, we feel we understand it already versus where we were when things were essentially done, someone bought something, but you got no feedback. You didn’t understand the purpose, you didn’t understand why they went to that place, you didn’t understand what they were searching for.

So, in some senses you could argue there’s quite a lot that’s understood, but I wonder back to my question; in 5 years’ time, 10 years’ time, understanding intent, desires, predictive—are we still quite early on that journey? Does that tie back what you were saying about the GDP of the internet? The GDP of the internet still might be quite early, almost in its infancy because there’s a lot that we don’t understand in terms of what ultimately any producer, any seller would like to know versus what they do know. That’s still quite a big gap.

Jay Kannan: That’s right, Hugo. A good way to think about this might be to think about the evolution of the advertising business model and how that has transitioned as it relates to either improving the way one could measure the intent of the targeted audience and then relay that back to the top of funnel. Make advertising even more targeted, even better as a result of that.

Back in the day, we had offline ads at its most basic form. Think of a billboard that you and I drive by every day. We see the same billboard all the time. Think of that as level one. Level two was then online, where it was more contextual. If you went to a sports website, you saw an ad related to sport. If you went to an e-commerce website, you likely saw an ad related to apparel or some sort of shopping-related intent, so a little more contextual.

We then came into search, which I define as probably level three, where depending on what you searched for, you found an ad which was a little more targeted but couldn’t really capture ultimate intent. You often didn’t transact at that level. We’re now moving into level four or level five, which I would argue on an absolute basis is still very early, where either merchants or ecosystems can track a consumer’s journey.

They see some of your past behavior in terms of either transactions, intent, what you may be looking for, and then there’s predictive analytics on that, of course well within the bounds of what can be allowed in a privacy-controlled and sensitive environment. That helps enhance the customer experience. It also enhances intent for the consumer when it comes to what they might be wanting to do.

I would say that’s where we are today. Where can we go from here? Well, we can do a lot more with intent. We can have business models where essentially companies are paid based on the return on investment you get for the marketing spend, so cost per converted customer as opposed to cost per either impression or cost per showing an ad. That’s one example of where we might be going forward. We can do a lot more for that.

Also, when it comes to merchants, which is the other stakeholder here in the ecosystem, you can have just-in-time inventory management and a lot more in terms of predictive behavior of a customer. Think about grocery online purchases when it came to the current environment. A lot of retailers were quickly able to bring that up to speed in their inventory systems because grocery behavior, for the most part, is repeatable, predictable. It’s likely that you’ll order the same amount of milk every week if the number of folks in the household remain constant.

That’s one example of how this can help transform inventory management and other logistics infrastructure for the merchant as well.

Hugo Scott-Gall: While you were talking there, I began framing my next question, which wasn’t my next question. I changed my mind. Really, as a technology analyst the business of forecasting growth, where there’s going to be growth is really central because it’s such a dynamic, fast-growing area. How do you approach that task? How do you approach the task of where to find growth across the broader tech spectrum?

Jay Kannan: I humbly submit that this is probably one of the most exciting parts of what we do on a daily basis but at the same time challenging as well. This can go in so many different directions, so as much as we’d like to explore, we sometimes have to bring it back to either growing revenue pools and then investible, exploitable opportunity sets within them. As a team, we often try to think about first principles. We try and understand where growth is overall, so we think about the overall revenue pie and how this may either be growing in different aspects of the economy or shifting in many cases as a result of what is going on in our case here in technology.

Either advances or innovation, technological changes; this could be more of the same. This could be revolutionary or disruptive in many cases. We often look at that as a starting point. Now, of course alongside that there are quite a few bread crumbs that we find along the way as we research. Now, this can be thinking about or reviewing funding activities. We often look at what the smartest venture capitalists do or private equity investors not necessarily as something we want to do, but essentially as a guide for what might be happening in changes in the economy.

Finally, I’d say we enjoy learning. We try and either speak with or learn from who we believe are the cleverest minds and use some of the best in the industry, whether they be academics or scientists or other industry entrepreneurs in innovative companies are saying, doing, and seeing. We’ll use some of that as a mosaic to identify patterns and start from there on.

Hugo Scott-Gall: So, it’s the identifying of patterns. I guess one of the things I’ve always found interesting and a fascinating concept is this idea of recombinant innovation. When you take two things and put them together, they produce something that you wouldn’t necessarily predict or know about. An obvious example is all the platform apps that you can have on your phone are only really made able by communication technology, 4G and now 5G. How do you think about this equation of problem to solve, new technology, often a communication technology, and what that might lead to?

It wouldn’t necessarily always get you to a music streaming app or even something like a TikTok, or even when the whole Pokémon craze or virtual reality, so it’s hard to know specifically what’s going to happen. How do you weigh the odds of a problem getting solved because the odds are now in favor of the problem being solved because of a non-related technology, this sort of idea that when you put these things together precisely unknowable things happen but directionally knowable things happen?

Jay Kannan: I remember first thinking about this a few years ago because I think that the phrase recombinant innovation comes from The Second Machine Age, which was a book whose author taught school when I happened to be there, at graduate school. That’s when I first heard about not just combining and creating an innovative product by combining either components or systems that for the most part, already existed.

Of course, we’ve seen plenty of examples of that as you rightly pointed out where these components are, very often like you said, communication technology or some advances thereof. We had to look back 5 or 10 years at a key starting point or a leading indicator of where we see recombinant innovation. Much of that has been accessed to communication technology, so either becoming faster, more accessible, or cheaper for the most part.

Waves of that continue to happen. Now, that can be with next-generation communications technology, but that can also be with inherent problems that exist in the world today which are yet to be solved. Let’s think about it from the consumer’s perspective. When we think about leisure time in the world over the past 10 years, it’s largely remained flat or time devoted to leisure, but the share of that time has largely moved online. A large percentage of that has increasingly, for the most part in various aspects of the world moved towards either gaming or in its broadest bucket, entertainment, which can be some combination of gaming, watching content, consuming content either video or audio.

What am I getting at with all of this? Inherently, the consumer’s desire to either want or do something digitally today remains the same. Then, when we put that together with a lot of these other elements, you bring in commerce from one direction, so we all will continue to shop. Think about gaming. Many of us would like to entertain ourselves on a daily basis, gaming being one avenue for that. Then, you bring yourselves either aspects of entertainment. That can be music streaming, video consumption, and so on and so forth.

Put all of that together, and then very often now you have one platform that uses communications technology but essentially is innovative because it solves different problems. It takes up a fair amount of your leisure time, allows for entertainment, allows for commerce or shopping, and then uses some form of underlying payments technology to enable all of that.

Hugo Scott-Gall: This is a tough question, maybe not even a fair one, but when you put together all of the growth themes that sit within your coverage, within the broader tech sector, where do you think it is underestimated?

Jay Kannan: Let’s start with the first part of that question, which is very broadly if we had to classify or think about where growth could be as it relates to the technology sector, I’d probably bucket those into five categories. Not necessarily exhaustive, but where we feel very excited; one, I’d say is ubiquitous connectivity, so more number of devices, more connections in the world. The second I’d say is Digital Enterprise 2.0, so more enterprises adopting digital infrastructure, cloud infrastructure for the most part, subscription-type software services, platforms, and infrastructure.

The third would probably be next-generation computing, so the increase in both our capacity as well as the need to consume more processing power in the world today. That’s likely going to increase with the increased amount of data that is both created on a regular basis but also consumed, researched, tracked, so on and so forth.

The next we’d say is just the digital lifestyle. Think about the digitization of the consumer, more of regular, daily services, whether they be classifieds or food delivery or practically anything else, consumption of entertainment, moving to the online world and technology enabling that. Lastly, we’d say is a fair bit of de-globalization. We’ve seen that for both geopolitical reasons but also as a result of disruption in supply chains over the past year or so, increasing supply resilience with different parts of world, increasing localized or accessible supply to technology-related infrastructure as a result of what is going on in the world today.

Having said that and set the framework for where we think growth might be, we’d say that one aspect—many of these are exciting, many of these have smaller elements where we believe growth is likely underestimated—but one of them is the one we’re currently researching. It’s the digitalization of the consumer and how that’s happening in different parts of the world but in smaller, atomic business models that could be geography-specific as it relates to countries that are late on the adoption curve or consumers where behavioral shifts haven’t taken place to the extent that they have in certain other parts of the world.

Hugo Scott-Gall: I’ll ask you two more questions, and then we’ll wrap. The first one is how lessons are learned. Particularly, going back to connected commerce, what do you think are the learnings from an area that has been, as a generalization, overall consistently underestimated rather than overestimated?

We can observe that from the performance of many stocks and share prices of many companies who are linked to this theme but also in the forecast for their revenue, which have generally been upgraded rather than downgraded. So, there was an underestimation here, so why do you think that was? What are the lessons you’re taking away from that?

Jay Kannan: Perhaps at the first instance, Hugo thinking about lessons learned we maybe will use what you’ve just mentioned two questions ago, which is recombinant innovation. We say often innovation or technology is incremental for the most part until there’s a step function change at some point, and then it becomes radical. What does that mean? What’s the case study here?

We think about wider smartphone penetration, cheap access to and ubiquitous connectivity, so data access, especially in emerging markets. As investors, or a wide part of the investment community underestimating not the first-level impact of that, so number of people in these countries who buy a smartphone or get connected. We have lots of data on that, but the second and tertiary impacts of wider smartphone adoption; that is likely one area or aspect that has been underestimated, especially in connected commerce-related business models in the emerging world.

We’ve often seen that either in South Asia, Southeast Asia, Latin America more recently, and perhaps the new, unexplored investible opportunity is parts of Africa, where connectivity is still in its first few stages. That’s probably underestimated at the first instance.

The second aspect of what could we see from here or lessons we could have learned is that change in consumer behavior as a result of this, so the ability to engage online, the ability to overcome either digital or vernacular language, illiteracy, innovation around payment systems, osmosis of technology, and then finally innovation of localized solutions for localized problems in many of these markets. It’s often easy to paint a single brush suggesting that one global technology would likely penetrate and be adopted in its shape and form around the world, but we often see that as not being the case.

We underestimate the ability of local, innovative companies to produce solutions that cater to their local markets and the durability of their competitive advantage sustaining over many, many years.

Hugo Scott-Gall: That brings me to my final question, which is a tough one because it’s a tough one in the sense that it’s hard to know. It’s an easy one to answer because it’s hard to prove you wrong, but give me some sort of moon shots. Give me some low-probability but high-impact things that could radically change the economy, the way we live, certainly change your area of technology more broadly. What are the kind of things that are maybe not visible today but are being worked on that could have an outsized impact if they come to fruition?

Jay Kannan: Let’s perhaps start with the more obvious ones. Then, we can go to less obvious ones as we think along here. At the first instance, I’d say a faster rollout of 5G, which is the newest communication technology, perhaps can lead to new business models that don’t necessarily exist today. For the most part, we think this would be faster than the current infrastructure, better experience, but similar to what we saw with 4G and ride hailing or food delivery, there could be new use cases here in terms of smart cities, fixed wireless, so social use cases of reaching parts of the population who don’t have access to high-speed, broadband internet today.

And then, areas like connected vehicles, so autonomous vehicles, connected cars speaking with each other, and perhaps that leading to better safety outcomes or better efficiency outcomes, so that’s maybe one area that we could crystal-ball on.

When we think of less obvious ones, let’s think about broadly what’s happened over the past year. As a result of the current environment, we’ve had a higher degree of personalization of one’s self or increased personalization of technology within one’s self. Here, we can think about either wearable devices, we can think about smart dust or even smart fabric for that matter, which may not be so much of a moon shot five years from now, especially if we have faster, cheaper, more ubiquitous connectivity.

We could have, many of us constantly connected not just with one another but with ourselves as well and that data being used to either predict health outcomes or do other things that may lead us to eating healthier, exercising more, speaking with one another, connecting with those or predicting mental health issues, things like that.

Then, I’d say perhaps the other aspect of this which we can also think about is the commercialization of either drones, which isn’t a moon shot anymore but certainly has many challenges between what is done today in a more secure manner, and what can be done where delivery packages arrive on a drone as opposed to being delivered by someone. Those are three or four examples of where we could see outsized impact to revenue pool creation or shifts in the future.

Hugo Scott-Gall: I thought you were going to talk about space and maybe also companion robots, which would have made lockdown a lot easier for some people.

Jay Kannan: There’s always your closest video streaming service to learn more about those two at this point in time.

Hugo Scott-Gall: True, very true. Jay, I want to say thank you very much for coming on the show. It was a delight to have you. We covered a lot of stuff, and so thank you again.

Jay Kannan: Thank you.

Meet Our Moderator

Hugo Scott-Gall, Partner
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William Blair posts on social media may include statements concerning financial market trends, and are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and should not be relied upon as such. The investment strategies and broad themes discussed in William Blair’s social media posts may be unsuitable for investors depending on their specific investment objectives and financial situation. Information contained in posts has been obtained from sources believed to be reliable, but not guaranteed. You should note that the materials on the social media platforms are provided “as is” without any express or implied warranties. Past performance is not a guarantee of future results. All investments involve a degree of risk, including the risk of loss. No part of William Blair posts may be altered without express written permission from William Blair.

William Blair posts may provide links to third party websites only as a convenience and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by William Blair of any content or information contained within or accessible from the linked sites. While we make every attempt to provide links only to those websites we think are trustworthy and accurate, we cannot be responsible for the content or accuracy of the information presented on those websites and we specifically disclaim any liability for any loss or damages which you may incur, directly or indirectly, as a result of your use of them. We reserve the right to terminate a link to a third party website at any time.

General User Guidelines

Due to the highly regulated nature of our industry and as a matter of policy, William Blair, in some instances, may not reply to user comments. Please ensure that your contributions in relation to any William Blair posts are relevant and topical. Do not publish your own advertisements of any kind on any William Blair social media page or with respect to any William Blair posts. We ask you to be respectful and courteous and refrain from publishing, including through hyper-links, inappropriate or offensive material on any William Blair social media page. Do not attempt to promote investments (this includes posting testimonials, giving investment advice, or making recommendations about specific securities, securities strategies, products or services) on any William Blair social media page. Do not attempt to submit to William Blair any personal, confidential or account information through any William Blair social media page. William Blair is not subject to any obligations of confidentiality regarding information submitted to them through any William Blair social media page or otherwise through any social media platform.

Third-Party Posts on any William Blair Social Media Page

While William Blair may monitor third-party posts published on any William Blair social media page, such posts may be reviewed to ensure regulatory compliance, but otherwise are not edited before being displayed. Third-party posts on any William Blair social media page are the view and responsibility of the third-party, not William Blair. William Blair cannot guarantee the appropriateness, accuracy or usefulness of any third-party posts or of any third-party hyper-link, nor are they responsible for any unauthorized or copyrighted materials contributed by a third-party in any William Blair social media page. William Blair reserves the right to remove or edit any third-party posts or comments on any William Blair social media page that are inappropriate or that violate (or may violate) applicable regulations.

William Blair does not publish or otherwise disseminate statements relating to current or former clients’ positive experiences with or endorsements of William Blair and expects you to refrain from publishing such posts on any William Blair social media page. You should limit your posts on any William Blair social media page to investment themes rather than commenting, positively or negatively, on William Blair, its products, services or personnel. Although our clients may follow this account, this should not be interpreted as a testimonial regarding any client’s experience with our firm.

Any descriptions of, references to, or links to other products, publications or services do not constitute an endorsement, authorization, sponsorship by, or affiliation with William Blair with respect to any hyper-linked site or its sponsor, unless expressly stated by William Blair. William Blair expressly disclaims any responsibility for the posts, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites, as posted by third-parties on any William Blair Social media page.

Use Social Media Platforms at Your Own Risk

William Blair is in no way affiliated with any social media platform and has no responsibility for any social media page’s operations and services. William Blair and their respective affiliates, directors, officers, or employees are not liable for any direct, indirect, incidental, consequential, punitive or special damages arising out of or in any way connected with your access or use of, or inability to access or use, a social media platform, any William Blair social media page thereon or reliance on any William Blair post or any failure of performance, interruption, defect, delay in transmission, computer viruses or other harmful components, or line or system failure associated with a social media platform or any William Blair social media page thereon. Use of a social media platform or any William Blair social media page thereon is at your own risk.

Privacy Policy

William Blair is not responsible for the terms of use or privacy policies of any social media platform on which William Blair posts may appear, including in any William Blair social media page. For additional information regarding account security and privacy, refer to our Privacy and Security statement

Copyrights and Trademarks

Each social media page’s content and information, and all trademarks, service marks, trade names, trade dress, logos, copyrights and other intellectual property displayed on the Site by William Blair (“Content”) are protected by U.S. and worldwide copyright and trademark laws and treaty provisions, and are owned by, controlled by or licensed to William Blair or their respective owners. By using any social media page, we do not grant you any rights to reproduce, sell, or license any of the content contained herein, except that you may print a copy of the information contained herein for your personal use only. You may not reproduce or distribute the text or graphics to others or copy all or substantially all of the content to your own hard drive or server without the prior written permission of William Blair.

Permitted Uses of Our Sites and Content

We have listed below the permitted uses of our Content. We reserve the right to change our permitted uses at any time.

  • William Blair grants you a limited, revocable, nonexclusive and nontransferable right to view, store, bookmark, download, copy and print pages from the Site for your personal and noncommercial use only. Unless you receive our permission in advance, you may not exploit any of the Content commercially or forward it as a mass distribution.
  • If you link other websites to any Site, you may not imply or suggest that William Blair has endorsed or is affiliated with such websites and you may not display this Site as “framed” within another website.

Prohibited Uses of Our Sites and Content

William Blair does not grant, by implication, estoppel or otherwise, any license or right to use Content on any social media page other than those set forth above, and you shall not make any other use of such Content without William Blair’s written permission. Without limiting the generality of the foregoing:

  • You agree not to copy large portions of any social media page (such as by bots, robots or spiders that “harvest” the Site), interfere with the functioning of the Site or restrict or inhibit any others from using the Site.
  • If you download any pages from any social media page, you agree that you will not remove or obscure any copyright or other notices or legends contained in any such Content. You may not alter or modify the Content in your copies.
  • You may not (and may not encourage or assist others to) violate any law, regulation, rule or the intellectual property or contractual rights of others, or attempt to violate the security of any social media page or use or gain access to the identities, information or computers of others through any social media page.
  • You may not transmit any virus, worm, time bomb or similar system interference or corruptant through any social media page.

William Blair has the right (but not the obligation) to monitor any social media page for unauthorized or objectionable conduct and to take all appropriate actions in response, without notice to you. We reserve the right to change or supplement our website policies at any time to the fullest extent permitted by applicable law.

Forward-Looking Statements

Statements made on any social media page that look forward in time involve risks and uncertainties and are forward-looking statements. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in William Blair’s products’ performance, a general downturn in the economy, competition from other companies, changes in government policy or regulation, inability of William Blair to attract or retain key employees, unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.

Forward-looking statements reflect our current views with respect to, among other things, the operations and performance of our businesses. You can identify these forward-looking statements by the use of words such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “should,” “seek,” “approximately,” “predict,” “intend,” “will,” “plan,” “estimate,” “anticipate” or the negative version of these words or other comparable words. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

International Use

The Content provided in or accessible through any social media page is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject William Blair to any registration or other requirement within such jurisdiction or country. William Blair reserves the right to limit access to the Site to any person, geographic region or jurisdiction. Unless otherwise expressly set forth herein, William Blair makes no representations that transactions, products or services discussed on or accessible through the Site are available or appropriate for sale or use in all jurisdictions or by all users, or that access by any user in the place it is located is not illegal or prohibited. Users who choose to access the Site from other locations do so on their own initiative and are responsible for establishing the legality, usability and correctness of any information or Content on the Site under the laws of any applicable jurisdictions. You may not use or export the Content on the Site or accessible through the Site in violation of applicable laws and regulations.

Transmission to and From any Social Media Page

Subject to any applicable terms and conditions set forth in our Privacy and Security Statement, any communication or other material that you send to us through the Internet or post on any social media page by electronic mail or otherwise, is and will be deemed to be non-confidential as between you and us and William Blair shall have no obligation of any kind with respect to such information. William Blair will be free to use, for any purpose, and without compensation due or payable to you, any ideas, concepts, know-how or techniques provided by you to William Blair through any social media page.

Disclaimer and Indemnity

William Blair and its affiliates disclaim, to the fullest extent permitted by law, all express and implied warranties of merchantability, fitness for a particular purpose, and non-infringement. If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

William Blair does not warrant that the information in any social media page is accurate, reliable or correct, that any social media page will be available at any particular time or location, or that any social media page is free of viruses or other harmful components. Electronic communications can be intercepted by third parties and, accordingly, electronic mail and other transmissions to and from any social media page or made via any social media page may not be secure.

The investments and strategies discussed in the content may not be suitable for all investors and are not obligations of William Blair or any of its affiliates or guaranteed by William Blair or any of its affiliates. The investments are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other entity and are subject to investment risks, including the loss of the principal amount invested. Nothing contained on the Site constitutes investment, legal, tax or other advice nor is to be relied on in making an investment or other decision. You should obtain and carefully review any applicable prospectus, statement of additional information and/or offering memorandum as well the William Blair Form ADV, as applicable, before making any investment decision. Decisions based on information or materials contained on any social media page are the sole responsibility of the user.

As consideration for access to any social media page, you agree to indemnify and hold harmless William Blair and their employees, contractors, affiliates, officers and directors from and against any claims whatsoever and of any nature for damages, losses and causes of action, including but not limited to actions by third parties against you, William Blair or any of its Related Person, arising out of or in connection with any decisions that you make based on such Content, your use of any social media page, or your violation of our website policies. You agree to make William Blair, whole for any and all claims, losses, liabilities, and expenses (including attorneys’ fees) arising from your use of the Site or any violation of this the policies laid out in this Disclaimer, unless prohibited by law.

Miscellaneous Provisions

YouTube, Facebook, LinkedIn, Twitter, and any other social media sites are public sites. William Blair is in no way affiliated with them and has no responsibility for their operations and services or for related service sites. William Blair is not responsible for any social media platform’s terms of use or privacy or security policies, or any other third party sites that may be linked to by a social media platform. By using a social media platform, you accept at your own risk that the Internet and online communications medium may not perform as intended despite the efforts of William Blair, your Internet Service Provider, and you.

For additional information regarding account security and privacy, refer to our Privacy and Security statement. For customer service inquiries or questions about your accounts, please visit our website at: www.williamblair.com.

Your Acceptance of these Terms

Your use of the Site constitutes your acceptance of the terms contained herein. You may reject these terms by leaving the Site at any time.

For additional information about William Blair or to contact us, please visit our website at: www.williamblair.com.

Glossary

INDICES
The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage backed securities.

The MSCI ACWI IMI Index is a free float-adjusted, market capitalization-weighted index that captures large, mid, and small cap representation across developed and emerging markets.

The MSCI ACWI ex-US IMI Index is a free float-adjusted, market capitalization-weighted index that captures large, mid, and small cap representation across developed and emerging markets, excluding the U.S. The Value and Growth Indices are a subset of the Index that adopt a framework for style segmentation in which value and growth securities are characterized using different attributes. Multiple factors are used to identify value and growth characteristics.

The MSCI ACWI Small Cap Index is a free float-adjusted, market capitalization-weighted index that captures small cap representation across developed and emerging markets.

The MSCI Emerging Markets Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of emerging markets.

The MSCI World Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets.

The Russell 2000 Index is a market capitalization-weighted index designed to represent the small cap segment of the U.S. equity universe.

Index performance is for illustrative purposes only. The indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly.

TERMS
Alpha is a measure of an investment's return in excess of the market's return, after both have been adjusted for risk.

Beta is a measure of the volatility of an investment relative to the overall market, represented by a comparable benchmark.

Half-life is a statistical measure of the time required for the discrepancy between price and value to contract by half of its starting value. Fundamental value estimates are based on the Dynamic Allocation Strategies team's proprietary research.

P/E Ratio is a measure of valuation which compares share price to earnings per share, calculated using estimates for the next twelve months.

Standard deviation is a statistical measurement of variations from the average.

QUANTITATIVE MODELS – FACTOR DEFINITIONS
The William Blair Earnings Trend Model captures information about short- and medium-term changes in analyst estimates in an attempt to anticipate future estimate changes and stock performance. The score combines measurements of earnings revisions, momentum, and earnings surprise.

The William Blair Valuation Model combines varying metrics used to characterize the relationship between the stock’s trading price and its intrinsic value. By going beyond using only one or two measures, the model attempts to build a more holistic version of a stock’s worth vis-a-vis the market. The score combines measurements of earnings/cash flow based, asset-based, and model-based factors.