FEATURING:
William Blair Global Research Analysts Bill Benton, CFA, and Drew Buckley, CFA

21
Beyond Digital Reality

July 8, 2021 | 30:00

In less than a decade we’ve moved from Google smart glasses to Oculus virtual reality headsets; what’s next? In the third installment of our Convergence series, which examines five growth themes that are shaping the future of investing, Hugo Scott-Gall speaks with William Blair Global Research Analysts Bill Benton, CFA, and Drew Buckley, CFA, to discuss a vision of the internet in which the virtual and physical worlds become a seamlessly interconnected realm.

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Hugo Scott-Gall, Partner
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SHOW NOTES
00:43 Host Hugo Scott-Gall is joined by two of his colleagues, Bill and Drew.
01:20 What is the metaverse?
04:23 Technological constraining factors holding the digital world back.
08:20 A closer look at the three constraints—hardware, software, and consumer adoption.
13:23 Potential investment themes and considerations.
14:52 Psychology insights of the digital world.
18:24 Social connections and experiences.
22:31 Behavioral patterns: physical versus digital worlds.
27:45 Closing remarks.
Transcript

Hugo Scott-Gall: Today I’m joined by two of my colleagues, Global Research Analysts Bill Benton and Drew Buckley, to discuss all things metaverse in the next installment of our convergence series, which examines five growth themes that are shaping the future of investing.

In this episode, we are going to talk about the metaverse: what is it? The blending of realities, that’s what we’re gonna get into. Bill and Drew both cover small-cap companies, with Bill focusing on the consumer sector and Drew focusing on technology, media, and the communications services sector. Bill and Drew, thank you for joining me.

Bill Benton: Thank you, Hugo.

Drew Buckley: Yeah, thanks for having us.

Hugo Scott-Gall: Not at all. The first question is a simple one, and I think Bill, you can have the first go at it. What is the metaverse? Are we in it? Am I in it? Are you in it? What is it?

Bill Benton: Maybe it’s not that simple of a question. I don’t know if there is one definition of the metaverse, but the way I think of it is, it’s effectively a collection of all virtual worlds in its kind of conclusion state. I think people talk about it today as somewhat of a Roblox or a Minecraft kind of thing where you can interact, you can play, you can create things, you can spend in a virtual economy. It’s effectively interacting everything you do within a digital ecosystem.

You’re getting pretty close there, but you’re also getting pretty close in something I would argue in a Tencent ecosystem in China. They have a gaming platform, they have a chatting platform, they have entertainment payments, mini programs that allow you to connect, everything you would want to shop for in the physical world. So, that in essence is kind of an entryway to digital life in China, and it’s somewhat on the way to that metaverse.

Hugo Scott-Gall: Do you agree with that, Drew?

Drew Buckley: Yeah. I think what Bill said is really a big part of it where it’s a collection of many different things. I think of the metaverse, if you’re a science fiction reader and you think of Ready Player One or Ready Player Two as a great description of the metaverse where basically, the physical body that you have, you feed it, and you make sure you sustain your life, but everything else you try and do in digital form.

So, effectively at the end point, as Bill was saying, your whole life is lived in digital form. You have a body, of course, and you make sure you sustain that life, but everything else you do is wrapped into this digital form, so even the sensations that you try and feel, touch, smell, sight, all of it is somehow communicated from that digital reality into your body. And then, you basically just effectively live in that state forever, and that’s where you do your education, that’s where you’re employed, that’s where all of your leisure time is spent, etc.

Bill Benton: I would argue that obviously we’re not in that metaverse yet. We’re in this halfway in-between state of what we term in our themes kind of a “digital reality,” where the virtual and physical worlds are kinda getting interconnected. Examples of that being the Pokémon GO, but there’s others that are happening, whether it’s in commerce where you can actually interact with things, or furniture shopping, or eyeglasses shopping at a Warby Parker, something like that.

But technology itself is not as pervasive as it needs to be to get us to actually that real engagement in a digital sense. And that’s why I think customers want to interact with this, but frankly the solutions aren’t good enough yet, so we haven’t really seen it being used even when it’s available today.

Hugo Scott-Gall: What are the constraining factors from a technology point of view? Is this the argument really around virtual reality and even augmented reality, that they are conceptually very appealing, but their growth so far has probably been a disappointment rather than something that’s been underestimated and been a resounding—success is the wrong word, but the penetration has not really come through in the way that perhaps some have forecast. So, are there technological constraints that are holding the expansion of the digital world back?

Bill Benton: Yeah. Some could argue that this technology is even older than you would expect. I mean, there was actually a Virtual Boy 3D gaming system offered by Nintendo in the mid ’90s, so this technology’s been around a really long time. But even a decade ago we were talking about things like Google glasses, right? It hasn’t, though, taken off, like you said. Frankly, a couple years ago, I was talking to the manufacturer of a lot of these devices in China for big companies like Facebook, Microsoft, Sony. They were all talking about this stuff. And it was always kinda tomorrow on volume, and it never really happened until actually the last year.

I think, as I said before, kind of the slow adoption has been a little bit of bad customer experience and frankly the design. Gaming was the obvious natural application for the technology, but you had a kind of chicken-and-egg problem. You need good hardware, it had to be accessible, and you had to have good software to be able to interact on the game with. It was just disappointing honestly until the last year, where it feels like the software is coming on and the hardware is coming on. Now you’re actually seeing the units are doubling, and it’s actually very hard to find some of the devices that allow you to interact with this virtual world today.

It has been disappointing on the pace, but it is picking up. In fact, over the weekend I came across a company that’s using what is called Rec Room that’s actually using it to have virtual weddings right now in the obvious backdrop or have different engagements, social rooms. It’s like a Discord for virtual get-togethers. So, it is starting to happen. The pandemic basically catalyzed the market a little bit, and the technology solutions are coming along to create a better experience, but it’s still super early.

Drew Buckley: Yeah, and the one thing I’d add to that is connectivity. It’s super important. You need fast speed, low latency, a lot of bandwidth to be able to deliver the information, the graphics that you need to make this digital reality or the metaverse be a real thing at the end point, so at the end customer. And we just haven’t gotten there yet. 5G is going to be a big step in that direction because it has higher bandwidth, and a big part of it is lower latency. A part of having the sensation is that you feel like it’s in real-time and things are changing in real-time, and 5G can give that to you.

Part of it is hardware/software, part of it is the connectivity, and then, as Bill was kinda saying, this third part of getting people to actually adopt or proving use cases that make it important to adopt. And part of that goes to just figuring out what the right use case is. Gaming first, and then there were some other enterprise applications that are taking place. Part of that was the pandemic which forced people to be at home, so they’re looking for new ways to connect.

And then, there’s a psychological aspect there for sure where you just have to prove this new technology is something that you want to integrate with your life and that it’s better for you than potentially whatever you’re giving up to do that, and I think that’s a big part to proving. As you see with the younger generations, they’re much faster to adopt. But to prove it to older generations or even people my age in their 30s, you kinda have to be able to prove why you’d want to adopt something like this, and I think that’s a big part of it.

Hugo Scott-Gall: Let’s just take those three things one step at a time. So, predictions are always difficult, especially about the future, as someone once said. But let’s think about the hardware and the software. When do these—I don’t know if they’re impediments, but when do you think we’re going to get to the sort of abundance or ubiquity that would see this widely adopted? Because that third part, consumer adoption, is really going to be driven by the first two.

If connectivity was totally abundant, as in free and super powerful, as powerful as you needed it to be, that would accelerate consumer adoption. On the hardware side, I imagine it’s the same thing. How far off are we?

Bill Benton: I can start there, Hugo. I think we’re right on the edge of this actually right now. I think you are seeing it in the technology that’s being adopted in our phones. Different types of camera technology that’s allowing us to get that depth, that 3D kind of experience is coming to market. Obviously, 5G networks are in the early stage of rolling out to have that kind of always-on ubiquitous connectivity that we talk about. So, the hardware side is coming along.

Frankly, the companies are getting increasingly more serious about building the software because, again, there’s a chicken-and-egg problem, but they now see the need to have that software there. And I mentioned a little bit earlier, last year the VR headset sales doubled, and they’re expected to double again this year, and they’re sold out. So, something is clearly already happening on the gaming side of the equation.

And I will tell you when I’m talking to companies today, including the furniture retailer we just were looking at, they are talking about AR more than ever. This has the potential to disrupt their place in the marketplace, so they’re getting very serious about making sure that they have a great customer experience. Even if the customers aren’t interacting with it today because it’s been a bad experience, if they can make it a great experience they can take share from those offline retailers and move some of those markets that have been slow to adopt that need this type of technology to really drive penetration.

Drew Buckley: I was just going to add to that. I think the hardware and software, you get this layering-on effect. The first set of hardware and software solves the first set of problems, and then the next set solves the next set of problems, and so on and so forth. And what we’ve gotten to at this point, what Bill said is you’re at that point where we’re really starting to see the hardware and software be able to enable some of the use cases that you want it to do at this point.

There’s always going to be improvement. It’s going to come slowly, and then there’s going to be step function, of course, but I think where we see it right now is we’re just at the cusp at the edge of where the hardware and software can break through and the use cases can be done. The connectivity is right there at the edge where you can start to see some of these use cases come through. And more than that, inventors, companies, people are finding ways to use what they have today, hardware, software, and connectivity, to create a use case that can solve a problem. I think that’s a big part of it, too.

And then, as we level up—because 5G’s not the end. There will be 6, 7, 8, 9G, and this set of hardware isn’t the end. You know, we’ll have better hardware that can deliver better graphics, that has better motion capture that doesn’t make people sick when they look at it or give them nausea. As we get to that point then the new problem will get solved, and then we’ll continue to build on that. But where we are today is definitely—and our view is we’re right at the edge where you’re starting to see all three of those things come together, hardware, software, and connectivity and use case.

Bill Benton: I think some people thought that cloud computing, again, would not happen. It went through this period of long adoption because they said, “Oh, there’s security issues,” and things like that. And people came back around that. They came up with better solutions, and ultimately it took off. Now everyone says everything is going to be on the cloud. So, I would argue that we’re kind of in this stage right now as it relates to these enabling tools in the e-commerce landscape. No one’s using them today because they frankly are not good enough, but that doesn’t mean that they aren’t going to be important for tomorrow’s future shopping experience and closing those gaps.

And when you think that e-commerce penetration is maybe less than a quarter of total retail spending, the categories where you really need AR to kind of identify that product that sits in a room or identify the glasses you’re going to wear, those things that need almost this physical interaction, those things are penetrated at levels half or less than overall spending. So, this type of technology is necessary, and it is coming. I actually think we’re at that stage.

Again, your seed company—yeah, we talk about Google, we talk about Microsoft, we can talk about Facebook, they’ve been doing this for a while. They gave up on those early efforts. They’re in Round 2 or 3 in these situations, and they’re still coming at it. So, I think we’re getting right at the point of actually inflecting in this space.

Hugo Scott-Gall: You’ve both touched on various parts of the value chain around this, but just from a hardware/software point of view, are there any other areas you think that have a big investment opportunity as suppliers to the tools to create a deeper, richer digital reality, or beyond that, the metaverse itself?

Bill Benton: From an investing standpoint in terms of finding investment themes around this, we are going be looking at this oftentimes as an enabling technology, very much the way I think AI is today for the software universe, right? It actually improves existing products, but clearly you’re going to see this get put to use in areas like education, and in certain areas where you don’t see it today, which could expand TAMs around how are you actually delivering service or actually maintenance of equipment in industrial markets? Those business models could certainly change.

They often talk about surgery implications, to have the talent be transportable rather than on a physical basis, more local. So, whether it’s education, whether it’s healthcare, whether it’s industrial applications, whether it’s consumer applications, I think it will find itself into many of our existing investments. And frankly, as I said before, it could be very disruptive to companies that don’t adopt the technology because I think somebody will move their cheese, frankly.

Hugo Scott-Gall: Okay. So, we spent quite a lot of time on the key enabling technologies there. I’m wondering if that is only half the battle when it comes to analyzing this and predicting it. I wonder whether in addition to really understanding technology capability that we do need some kind of psychology here, or some deep insights into the human soul and its needs and its wants and desires, because predicting how people are going to behave in what is a very new way, as in the idea that they could spend a higher percentage of their lives in the digital world than actually being fully present in the physical world, is definitely different.

Would you, Drew, say that the sort of toolkit one requires as an investor here might be a little bit different? It might be a bit different from if you were looking at standard industrial industries. There’s something extra here required to really understand where the revenue pools are going to be at and actually where they’re not going to be as a result of these things we’re talking about.

Drew Buckley: I think it’s a great point and a great thought. Something we talk about a lot on the tech team and tech and consumer teams where we’re collaborating is the idea of you have to really tap into the human desire, the human condition, understand it, understand what people want and what they want to do. One thing that Bill didn’t mention in the several things he mentioned in the last question was around content, and content as an area of opportunity as it relates to a profit pool that should continue to expand. I think about that in terms of advertising, too, and what we’ve seen change in advertising over the last 20 years, and how it’s all moved online.

But now, I don’t know, this might be unique to me. Maybe other listeners will agree, or you guys will. I don’t actually mind getting ads pushed at me on Instagram if it’s for products that I like, or I think I might potentially use. And I think that’s a really unique and interesting proposition that they’ve been able to create, this idea that they know what I want, and then they’re able to serve me ads that are related to that. I think what they’ve done there in a really good way is use all the data that’s coming off of everything I do on my smartphone, banking records, etc. and they’re able to serve me very simply a product that I might want, and I actually don’t mind that kind of advertising.

You can see if you think that through to the logical endpoint how important understanding human behavior can be to drive transaction volume and also increase happiness, because I’m not mad about the fact that they’re driving something towards me that way. And I think that’s really important for people to understand and companies to understand as they look to these profit pools. What is the human behavior aspect of it? What do they really want? What are they willing to give up in terms to get that?

The other, darker side of it is they have all my information. They know what I’m doing, they know what I’m searching for, they know what I’m looking for. Do you want that information out there that they can use and then serve something back to you? There is an element of free will that you give up in order to get served ads which you like, which make your life easier, and make products easier to find.

I think understanding that equation and understanding how you can tap into the human mind, and what they want, and what they’re looking for out of these products is you transition them away from physical and towards the digital world. How you recreate that is a really interesting and unique thought process that we have to go to that maybe we wouldn’t have had to go to before when we were thinking about, okay, how many more iPhones does Apple need to sell? What does it mean when China unlocks for Apple? This is a totally different problem we have to think about.

Bill Benton: I’d just add to it, I think humans are looking for that social connection. That’s kind of a foundational element, and frankly, this technology can add to a feeling of a true social connection. In fact, some of the technology right now—this VR technology personally gives me a headache when I put the things on, but they are now putting these things inside nursing homes to create a family connection remotely. It’s actually solving a loneliness problem that exists in a lot of nursing homes. There’s a company that’s been formed around actually getting to these social elements around needing to connect for the elderly.

So, yes, there’s certainly a social element here that can be solved with the technology, but I still think the biggest thing that humans have an issue with is uncertainty. They want to solve the uncertainty puzzle, and you help solve the uncertainty puzzle in these kinds of interactions by actually using this type of technology to close uncertainty gaps.

Drew Buckley: Yeah. I think if there’s one more thing I can add to what we’re talking about here, it’s just around the internet, and what it means, and how it’s different. What it enables in different countries can be different than what we’ve seen in our own history. You think about gaming and how that’s taken off in China, and the freemium model, free to pay so you get to play a game for free, you get some ads and then you might pay for it differently later, and what that’s meant to the Chinese market, and how that’s actually brought back to the U.S. market versus what we might have used the internet for, communications, mail, things like that in the beginning.

And then, you think about where that might be for Southeast Asia or Africa, these areas that are not as highly penetrated with internet as we see in some of the other countries we look at. What are their needs? What do they want to use the internet for? I think that’s gonna be really important to understand what they need it for and what they need it to do. And knowing that, we’ll know where the profit pools are going.

You think of another example, a company like TikTok, and how quickly that took off and how quickly they were able to add users and add people onto their platform. I think it’s just interesting because to know that that was coming, you’d really have to understand the psychology of what people are looking for in their social experience online. You have to understand all the building blocks that came before it, Instagram, Twitter, QQ, and Tencent, and all the other things that have come, WeChat, etc.

You think about group buying, which is a huge phenomenon in China right now, and how that’s so different than—that had never really existed before, but it builds on something that is really socially relevant in China. I think that’s part of it is to understand how quickly these platforms can scale. You have to understand what the problem that they’re really trying to solve.

And if you wait too long, the platform, because it’s a platform and it’s a two-sided network, it can scale so fast. By the time you really understand it, it might’ve already scaled to a level that’s pretty large. And so, I think you really have to try to tap into that psychology and understanding as you go.

Bill Benton: There’s one other area where I think the technology can be used. It’s around these experiences as well. I don’t know if you go to Disney World, but they actually put you in these types of things where they blow things on you, and you can actually travel across the world and fly. The experience is another element of a social kind of need, to experience something different. But frankly, not everyone can do that, so the technology can actually allow you to have these types of experiences.

Yes, it’s within a game, but also I know there are companies that are buying up old theaters and actually allowing you to travel across the world using this type of technology. So, that’s turning into—they’re trying to solve that need for human experience without the ability to actually do that, and maybe even a more restricted ability going forward.

Hugo Scott-Gall: This question can go to both of you. I don’t think it’s an easy question, but on what we’ve learned so far about digital reality and how people behave in digital reality in terms of their behavioral patterns, what appear to be their wants and their needs, is it just that hierarchy has transplanted from the physical world to the digital world? So, in the digital world they actually behave the same as they do in the physical world, it just so happens they’re doing it digitally?

When it comes to signaling, when it comes to the things they’re interested in, the digital world looks actually pretty much like the physical world? Or have we seen already that people behave differently digitally, that actually in some way, for some people, the digital world can be freeing. It can be a chance for reinvention. It can be far more curated to what it is they want to do, and there are fewer things stopping them, the constraints of the physical world.

Neither of you are psychologists, nor am I; however, what have we learned? And the reason I’m asking this is because I think it may well have predictive value for us as we get deeper into the digital reality. As we go towards the metaverse, the prediction of that I think has tremendous opportunity, tremendous upside for us as investors in getting it right. But is it as simple as saying, “Let’s just take how people behave in the physical world, and we’ll just replicate that faithfully in the digital world”? Or have we seen enough evidence already to say that actually, a person who would behave one way in the physical world has certain wants, needs, desires, habits, interests, they could be really radically different in the digital world? Drew, have a go at that first.

Drew Buckley: Sure. I think first of all, it will be different. If you think about the hierarchy of needs, a lot of what the internet has helped us to be able to do is reduce the time that we have to spend on basic things. Getting your groceries now can be delivered right to your door at a decent price, food delivery can happen from any restaurant that you want, and there’s so many more examples. Those are just two foods services at the lowest level of the hierarchy of needs, but so many other services can be taken care of for you digitally at a small fee or a low fee that that just gives you time back in your day to spend on leisure or to spend on other things.

And what you see is people take that time that they’re saving from digital enablement, and then they spend it in the digital world doing these things that you talk about. You go and now that all those needs are covered—food, shelter, all those things—you do see people spending more time on leisure and things like that in the digital world.

I do think that it allows some form of anonymity. You can be anyone you want in the digital world. It allows you to change who you are depending on which reality you’re in in the digital world. If you don’t like the person that you’ve put out there, you can kind of change who you are pretty quickly. You can delete your whole Facebook page and start a new one if you want. So, I think it does give people the option to be different if they want to, and then change that as they see fit going forward.

There are all sorts of different, smaller mediums maybe where you could seek out like-minded people in any number of areas, which would be more difficult to do just if you didn’t have that digital world. You can just search for a different community and find that community. You can broadcast as much as you want. You can show yourself doing dances on TikTok or show pictures of yourself or your kids on Instagram, or you can just consume.

And so, I think it does allow people to be different, and that’s where you get to the psychology. Right, we’re not psychologists, but what we constantly think about and try to understand is, okay, what drives somebody to actually do that? What drives it to become a platform? What drives it to become a network where everybody wants to be on there? What’s the problem that it’s solving? And that’s so important, right? We keep coming back to that and trying to understand how to drive that user engagement, how to drive the staying power, and then how to monetize that.

Bill Benton: I would just say we’re not psychologists. I think at the core the wants and needs are exactly the same, but when you go into the digital world the friction in your behavior is different. And so, I actually think there is more likelihood of bad behavior in the digital world versus the physical world. There is kind of this general social contract that exists that is just generally more broken in the social world.

Having said that, a lot of the same behaviors do exist, and Drew pointed to many of them. I will say, yeah, they’ll do dances, but also in this digital world you have those whales, those people that want to signal their status. They will throw flowers that cost thousands of dollars at performers, or they will throw eggs at people who don’t sing quite like they should on a karaoke thing. There are people that will have some of the same underlying core wants and needs that express them in the same way I think in the digital world, but I do think there is a social contract element that is violated more often than not moreso in the digital world than the physical world.

Hugo Scott-Gall: Okay. All that remains for me to say is we’ve confirmed that we’re not quite in the metaverse, that Bill and Drew are both still physical people in physical form, but we’re getting closer to the metaverse. So, Bill and Drew, thanks for coming on. Thanks for talking to us about the future. It was great fun. Thank you again.

Bill Benton: Thank you, Hugo.

Drew Buckley: Yeah, thank you. Good talk.

Meet Our Moderator

Hugo Scott-Gall, Partner
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William Blair & Company Privacy and Security Policy

Social Media Disclaimer

William Blair & Company, L.L.C. is a broker dealer and investment adviser dually registered with the U.S. Securities and Exchange Commission (“SEC”). William Blair, along with affiliated entities William Blair Investment Management, LLC and William Blair International, Ltd (collectively, “William Blair”) sponsors and publishes posts on or through pages, profiles, accounts, feeds, channels or other portions of various social media platforms, including but not limited to YouTube, Facebook, LinkedIn and Twitter (each, a “Site”) for educational, promotional or other business reasons.

About William Blair Posts

No William Blair post published on any social media platform is an offer to sell or a solicitation of an offer to buy shares of any William Blair investment product to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction. Additionally, all William Blair posts published on any social media platform are for informational purposes only and should not be considered as investment advice or recommendations to invest in any particular security, strategy or investment product.

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.