Kinnevik AB (KINVB) Earnings Call Transcript

Thank you, Torun.

So before we start talking to Iyah and Toyin, let's have a short look at what does Cityblock do. [Presentation]

We are so excited to have you with us.

Thank you. It's a pleasure to be with you today.

Good. So the audience just saw a short clip about Cityblock. Toyin, can you explain why are the patients that you care for, why are they falling through the cracks in the U.S. health care system today?

Absolutely. Thank you so much for having us here. So our patients are underserved because the health care system in the United States and the social safety net aren't equipped to handle the needs of folks whose health needs intersect with poverty. We have a significant population in the United States who struggle with the confluence of poverty, lack of access to social services, systemic underinvestment in their communities as well as physical health and mental health and substance use challenges, all of which predispose them to worse outcomes and to higher acute care utilization. It follows that these patients then fall through the cracks when they hit up against a health care system that for all the reasons that Christian sort of laid out and helped to explain is really focused on reactive care, whose incentives aren't aligned around improving outcomes typically. But instead around dosing out elements of episodic reactive care when people show up in the acute care setting. And so for our members, being able to wrap around them, ensure that people have the time and the trusted relationships that they need to access comprehensive health care services in the community before they need to go to the hospital has been a longstanding challenge in the health care system and majorly contributes to rising costs and worsening outcomes over time. These are the folks who we are really built to serve.

Thanks, Toyin. And could you explain to us what the care model does that's unique in the market to really serve the patients you just described?

Absolutely. So when you think about the needs of the patients and the communities that we serve, these are folks, as I described, to have multiple competing priorities. They're both struggling with social issues and often with mental health and chronic physical health needs. What we know is that a health care model like ours needs to be focused on engagement and really driving trust and activation. The data shows even before the pandemic, that populations with the most complex needs, often have the lowest utilization of primary care and mental health services, largely because of the way it's reimbursed, but also because of lack of access. So the first thing that we do is focus on engaging people. And building meaningful trusted relationships with individuals and communities so that they're able to access health services, often coming out of the background of having felt very stigmatized and marginalized from the traditional health care system. The next thing that's really important is being able to integrate services. So we know that human beings don't exist as sort of separated organ systems or separated clinical diagnoses. Our brains and our mental health is connected to our physical health is connected to our environment. And so separating out the delivery of health care doesn't actually work for people. What we do is we integrate those services. We provide mental health and physical health and social care, all in the same place, recognizing that people's needs are holistic, and we've got to address them in a holistic way. The other piece that is so critical is the ability to meet people where they are. And we talk about this as a core of our model. It's not just physically. So we serve members in our physical hubs located in the communities where they live. We also serve people in their homes and have an extensive home-based clinical model. We care for people during moments of transition when they're in the hospital and need to be transitioned to home. We accompany people to social services within the community. We're there 24/7, 365, virtually and in person. And the recognition that our health care needs don't follow a 9 to 5 schedule, but we really must be able to meet people where they are. And infuse all of our services with an idea towards scale to technology, allowing us to surface insights and drive decision support. So we're fully integrating the needs of the members with where they're living and working and experiencing their day-to-day lives. That is very unique in the market. That heterogeneous approach, that ability to really serve people with mental health and physical and social needs and to show up where they are in an integrated model.

Yes. Thank you. Thanks, Toyin. And, Iyah, it sounds like it's a complex population, right? And it really requires this high-touch extensive care model that Toyin was walking us through. Could you help us explain how you drive margin in a model like that?

Sure. Thanks, Christian. So the U.S. health care system is deeply wasteful. And as you well-articulated at the top, much of that waste stems on the way that we pay for services. On a fee per service basis or paying for units of service in Brooklyn, which is where Toyin and I both call home, going to the hospital cost $10,000, $11,000. For $11,000, I can pay for food for a family of 4 for 2.5 years. I can pay for 500 hours of community health worker time, 120 primary care visits, 180 behavioral health visits. And the disproportionate way in which dollars are allocated in the system perpetuates the system of high-cost and perpetuate to system of inefficient outcomes. So in the way that we are paid, as you've described, Christian, as a value-based organization, we're able to invest upstream and keep people first out of hospital, keeping them out of the inpatient hospital and emergency setting is the most important cost lever that we can pull. And we believe there's between 30% and 40% of wasted spending in the system. And then from there, our third party claims, first-party assessments that we do create very strong data signals in a tech-enabled system that allows us to deploy selectively highest ROI interventions, whether they be for medical behavioral or social needs that allows us to meet a acuity level and specific need of individual members in a cost-efficient way. And all of this is built around the premise that we take full accountability for the total spending of a population and by investing upstream in primary prevention and community services which in the U.S. is notably absent as you and Toyin have both well described, we're able to keep people out of the downstream and much more expensive inefficient settings.

Great. And lastly, I think the audience will be super interested in hearing your approach to quantify the market opportunity and also whether you're focused on Medicaid for the long-term or your -- you would expand that population focus as well going forward?

Sure. So on the total market opportunity, Christian, it's truly massive. We often joke with our investors that our TAM represents a bigger TAM than the entire rest of their portfolio if they're not health care investors. And it is truly in the U.S.-only depending on how one counts that $1.2 trillion, $1.3 trillion total addressable market of public programs alone, of which managed public programs, as you described, Christian, account for about $700 billion that is those privately managed dollars, of which the vast majority is complex or disproportionately high-need populations. Beyond that, of course, then you can think of comparables in other places, and we get calls frequently from other countries about whether this reportable components of our model are applicable in other developing or developed countries ecosystems, where even though the broader social safety net may be richer, the underlying need for folks with high needs is often equally potent. We started with Medicaid, both -- and dual eligible populations both because it's what we know well, and it's where our passion is. And because we see significant differentiation in greenfield in the market. And certainly, over time, we see massive expansion beyond that.

Wow, thank you so much. I mean, this makes me want to be a patient of Cityblocks'. So thank you so much for joining us, Iyah and Toyin, and great to have you with us.

Thank you for having us.

While Cityblock is the most recent investment in our health care portfolio, we will now move on to the veteran, that is Babylon Health, our first investment into health care and the one we did in 2016. And we will shortly be joined by Ali Parsa, who is the founder and CEO; and Georgi will also be back to join the conversation. But first, let's have a look at the operations of Babylon Health. [Presentation]

Hi, Ali, Good to see you.

Hi.

How are you?

I'm excellent. Thank you so much for having me.

Good. We're very glad that you're here. Now of course, we need to talk about the pandemic. We're 1 year into the pandemic, and I know it's been a transformational also for Babylon. So can you tell us how has that impacted Babylon?

The pandemic, I think, has impacted all of us, both personally and professionally. And while it has been very good in growing Babylon. I think that no one should bloat about this. I lost my own father to the pandemic last year, my best friend. So it's a sad thing that is happening to all of us. But the effect for Babylon has been one of immense growth. We have quadrupled our revenue again last year. We had done the same the year before, as you know. And we are hoping to achieve the same this year. Our consumer-based paid members went to 20 million. We saw a patient every 5 second, we delivered 1.3 million clinical consultation, 2 million AI interaction. We moved into the United States, where we now in California alone, look after 3.5 million Medicaid patients for their telemedicine, not into to end. But we also managed to build a business from scratch on what you earlier described so well by Christian and Toyin and Iyah on value-based care, where we built a business of about 65,000 members now. If you think Christian very rightly described the importance of that sector, but if you think about one of the companies, Christian mentioned, Oak Street Health, it took them about 10 years to go from 0 to 70,000 members. And we went to 70,000 members in a matter of 10 weeks frankly from -- at the end of September, we had none. And now we have about 65,000. So it's been good. We've grown a lot, but it's been -- it has taken a huge toll on the world as a whole. So I don't want to be too boastful about what is not a good event for all.

Ali, we've been part of this impressive journey for some years now. And this is only the beginning. But now when you're going in for real into the U.S. market, which is a very competitive market, what is the uniqueness, what makes Babylon different and what can be different for the American patients?

I think that -- I'm not sure whether we will be unique, but I think we have something to offer. And what we have to offer is a platform that was built to scale to not deal with sick here as it was described earlier so well, but to focus on keeping people healthy and monitor them continuously. And of course, unfortunately, they do get sick today and look after them intensively to bring them back to health and then keeping -- trying to keep them at the height of their health. That model is still a small minority of providers in the U.S., [indiscernible]. And again, I was listening to Christian earlier on, how he described it really well. And it's an incredibly heartening to do to monitor people why they're healthy. You must remember that entire secular system in United States. And we call it healthier, it really isn't. It waits for people to get sick, then it fixes them and brings them back. It's a highly valuable thing to do. But the entire incentive system is based around that secure. And there are not that many players who are trying to take the budget as Cityblock is doing, take the budget and then invest it heavily in keeping people healthy. And as Iyah described earlier, this is an industry that has huge potential the TAM is massive. The value-based section in it is tiny. The room for growth is significant. I was talking to a member of the new administration and an official of the White House the other day. And when you look at how much there is to go on, how much appetite there is for this. I think there is room for everybody to grow.

Great to hear, Ali. And I mean, you've expanded the platform from being very product or centralized powerful AI into move into value-based care and physical care, what's your view of the omnichannel, if you will, of health care going forward, let's say, 10 years from now, what will be digitally, what could be physically, you think?

I was born in Middle East and they say, if you won't God to laugh in that part of the world, you give her your 2 year plan. And the reality is none of us can predict where the world will be in 10 years' time. But I think what we will see is a much more integrated work, one in which -- what I'm wearing my watch, the actions that is monitored on my phone will have a direct effect in the ability of health care providers to continuously monitor me, one; two, to give me an assessment of my health in dynamic continuous basis and predict where I'm going; three, to continuously adjust my health goals; and four, to give me plans that are personalized to me to meet those goals; five, to monitor me seamlessly; and six, to reward me for staying healthy. And that continuum between physical to virtual will be seamless. And I hear a lot of people talking about, look, we have to do things in the physical world. And I believe that too. But the reality is there is nothing that is scalable by building more clinics. By building more hospitals, by creating more bids. And also, when you look at the [ OE ], that only looks after people in the timely amount of time through their lives that they go visit a doctor. That is not the what determines our health is almost everything else we do. How I speak today is more than anything else regulated to the fact that I slept well last night. If I had slept badly last night, as I do often, then what you have would be much worse performance today than I would have done otherwise. By the way, speaking of performance, Georgi, I heard your speech, you're a pro, not only you're a fantastic CEO, you're a great presenter.

Thank you very much, Ali. And I mean, I think you told me once that this is not about replacing doctors and nurses it is about making them 10x more efficient that's what you're alluding to, how we can use this data on an ongoing basis. Very interesting. My final question, Ali, is around your capitated model. When you're now bringing that from U.S. into Asia and Europe, what is the main difference here looking at that model?

So I think if I go back and think about perhaps one of the biggest mistakes we made in Babylon was not to go to the U.S. fast enough. U.S. is the largest market in health care it's not only 40% of all the revenue in health care. It is probably well north of 50%. A majority of the disposable health care in the capability in that. I mean, in U.K., we have a, say, a $200 billion health care market. But the reality is 90% of that is allocated and cannot shift in any shape or form. So U.S. has a huge advantage. And I am delighted that we are in the U.S., we will give it all the attention it needs in the next 2 years to catch up with what we should have done maybe a couple of years earlier. Having said that, beyond U.S. I see Asia as the fastest-growing market in health care. We're lucky to be in 11 Asian countries, which are software that allows us to monitor to watch and see how people behave to collect the data that we require in order to plan all the clinical operations. And I hope that once we get our head around the U.S. and have that organized we'll move into the Asian market. But I think that as you have often told me Georgi, CEOs are defined by their ability to focus. And I think in the next 2 years, our focus will remain United States. While we keep our home that we are very proud of in Europe and in U.K. specifically. And what we do continue doing our work in Rwanda. One of the things I didn't mention and I must mention is the fact that last year brought for us a contract that perhaps I'm most proud of, which is excellently President Kagame of Rwanda, where we wrote a 10-year contract to deliver free at the point of delivery universal primary care to the entire population of the country. We have already registered 20% of that population. We delivered 3,500 consultation at a cost of around $1.5 each every single day in Rwanda. That tells you how scalable health care can be. And I think that is the way to go for the rest of the world.

That's fantastic, Ali, and I think a lot of exciting things happening going forward. So thank you so much for joining us, and we look forward to hosting you again at our next event.

Thank you for having me.

Thank you, Ali. And I think we still have Christian on the line. Hi, Christian.

Hi, Torun.

So we've now heard from Cityblock and Iyah and Toyin and Ali. What are your reflections on what you've heard and what it means for our health care portfolio and our focus going forward?

Yes. Thanks, Torun. And I think what is evident listening to the 3 of them is really that despite the scientific advancements in health care, there remain very large care gaps. That's something we call health inequity, and it's effectively an unfair distribution of access and quality of care across the country. And we are very determined to keep backing these missionary companies like Babylon and Cityblock that help close these care gaps and make quality care accessible to people no matter where they live or where they come from.

Fantastic. Thank you so much, Christian. And that concludes our discussion on the health care sector, and we will now move on to talk about the consumer services sector. But before we're joined by our Investment Director, Akhil, let's have a look at the macroeconomics of the consumer services sector. [Presentation]

So joining us now on Zoom is Akhil Chainwala, who is Investment Director in our London office. Hi, Akhil.

Torun, you seem relieved that there's only 1 person in this handover.

Yes. It makes it easier. Good to have you with us. And as Georgi alluded to, we are in the midst of trying to transform our consumer services sector, which was a couple of years ago, very focused on, say, fashion e-commerce, and we have deployed some SEK 1.7 billion into companies such as Common and Vivino, and you have been very much part of driving that transformation in these investments. So can you explain to the audience, how do they fit into our new sort of focus within consumer services?

Sure. So over the last 3 years, what we've done is we've begun a journey to reshape our consumer services portfolio, as you and Georgi alluded to, this was historically based on 2 pillars: inventory-based e-commerce and listings-based classified marketplaces. Times change, consumers change, and so do we. And therefore, we're now refocusing our attention, both in terms of our new investments and in challenging our existing investee companies to adapt. What do we mean by refocusing our attention? Three things: one, broadening our focus segments; two, investing in interesting and new and innovative business models; and three, structurally lowering acquisition costs.

Okay. So take the first theme around broadening our vision and where we're looking. Please explain where are we looking? What are we doing?

So historically, our portfolio was quite skewed to its physical goods, apparel, furniture, used goods. These are well aligned with where online penetration was 10 years ago. Today, millennials and Gen-Z users overwhelmingly value experiences over things, even if this secular trend experienced a temporary reversal during the pandemic. Some of the defining technology companies of our generation, Uber, Airbnb, Tinder, Peloton, have all benefited from this shift. And therefore, what we are looking to do is to apply our horizontal skill set. A deep understanding of business models of user retention, cohort analysis, unit economics to then identify winners within various vertical segments. You've already seen us expand into leisure and corporate travel and apartment rentals. And you should expect us to continue to evaluate a wide range of new sectors, including digital fitness, pet care, child care, on demand quick commerce and others.

And I know you've also been -- the theme of enablers also fit into the consumer services thinking. How is that?

So traditionally, we focused on companies that are building a direct consumer relationship. And what we're now beginning to do is to also leverage our understanding of the pain points that are faced by both marketplaces and by end users to also invest in the so-called enablement layer, as Natalie referred to. So if you look at 2 of our existing investees, Budbee and Bread, they both improved consumer convenience while increasing conversion rates for merchants. And the reason this is important is it significantly increases our addressable opportunity set. As just an example, the value of just 2 enablers alone Stripe and Shopify far exceeds the value of all vertical e-commerce businesses in the U.S. and Europe combined. So that gives you a sense of how much broader our field of vision now is.

And then as a second thing, we talked about product innovation, give us an example.

So I think the most powerful shift that we've seen within our own portfolio as well is the shift from 1P inventory-based models to 3P market-based read models. We're seeing this underway at both Zalando and our Global Fashion group. This obviously increases choice for customers by broadening the assortment. But it also makes these companies more asset-light and more capital efficient. What it also does is it reinstills technology at being at the core of these companies DNA any rather than, say, buying or merchandise. But there's various other shifts and innovation taking place. To take another example, long tail marketplaces like eBay, they fail to offer a consistent and standardized user experience. And therefore, they are now being disrupted by so-called full stack marketplaces or managed marketplaces. So if you look at a company like Common in U.S. apartment rentals, or AUTO1 in German used car sales, which recently went public. These companies are offering a single touchpoint user experience which minimizes friction and they're, therefore, building trusted brands and they are formalizing fragmented sectors. Another example we can point towards is content platforms themselves becoming transactional marketplaces. The highest profile, such example is Instagram shopping, where you can now close the transaction loop in one tap from within the social app. Nearer home, Vivino is at the very early stages of a similar journey. As you know, less than 2% of app users have so far converted to buyers.

Yes. And I think that actually brings us on to the third theme that you mentioned, doesn't it around structurally lower acquisition costs and explain why is that important?

So the reason we particularly emphasized this is it's the #1 reason we passed some new investment opportunities. Low marketing efficiency. And to provide some context here, Facebook's average revenue per user in Europe and North America has increased 10x over the last 8 years. And what that means is businesses that we see around us today would no longer scale viably or efficiently in today's CAC environment. Therefore, we are drawn towards models that have sustainably high organic traffic. This typically means having some element of community or a social element as we see at Vivino and at HungryPanda. And this creates a more deep, more engaged customer relationship rather than a more transactional or less frequent one. But there are other ways to lower acquisition costs as well. For example, you can build products that end users love, but sell them via corporate. The consumerization of enterprise trend was pioneered by companies like Zoom and Slack, but companies within our own portfolio like Travelperk and Qliro are hoping to follow suit. And what we love about this business model is that you combine the stickiness and revenue retention of B2B SaaS with the consumer delight and network effects of a B2C business. And finally, I should point going back to the point on enablers that companies like Budbee also benefit from structurally low acquisition costs since they rely on their merchant partners to help acquire end users for them.

Thanks. We will actually look into Budbee in just a minute. But before that, thank you so much, Akhil, for joining us, and we look forward to the continued journey in consumer services. So Budbee is a company that we first invested in, in 2018 in our Nordic venture portfolio, and it has grown massively since then. So we had a chat with CEO and founder of Budbee, Fredrik Hamilton.

Budbee is a tech company we're not a logistics company. Budbee's purpose is to make it easier to shop online. And how we do it is that we build digital products that make it easier for consumers to shop online and make merchants more happy. If I would compare Budbee another successive company, I would say that we are, what colonized for payments. What Budbee really differentiates is that we focus on the consumer experience all the time. Our competitors, they are mainly incumbents with a lot of legacy. And they are more focusing on their production to make deliveries efficient from a production perspective, and we focus on the consumer. 2020 was a very challenging year for everyone with the pandemic. Since we are an e-commerce, we were in a quite favorable position. We could see a huge shift from physical retail to online retail. I'm very proud that we launched 3 great products last year. One, we launched our first consumer app for App Store and Android. Secondly, we launched a fantastic feature, which is our product search. What we do there is that you can search for any product in the world, and then we will show the consumer where they can buy it from above this specific merchant and get it delivered with Budbee. Thirdly, we also launched our first subscription program called Budbee Plus that we have high ambitions for in the future. We are still very early in our journey. We prioritize long-term growth over short-term profitability. But we are already today, profitable in certain markets, which we see as a huge milestone for us. Sustainability is something that's extremely important to everyone and especially the younger generation. We can see that it's an extremely important part of the buying decision from consumers. We want to be seen as a pioneer. We are a pioneer. We have launched so many great green initiatives, and we have just started there as we're going to release many more in this year. In 2020, we grow our revenue with 175%. On a run rate basis, 30%, 35% of our business comes from international markets, which is a huge proof point that we actually are able to scale outside of Sweden. For '21, we have started this year with a very good pace, and we are actually growing fast this year than we did last year. And our ambition is to triple revenue in '21, and it's still day 1 on our journey.

So now I am joined by Andreas Bernstrom, who is a senior Investment director running our investments in the Nordics. Great to see you. And out of the home office, pajamas.

Yes, wonderful to be here. Thank you very much.

So Budbee by, one of our earliest investments in the Nordic portfolio, what do you see for them going forward?

I mean, just watching the film, you're struck by the enthusiasm and the ambition of Fredrik. But this company is young. It's 5 years old. And it has the opportunity to grow a multiple of different dimensions. It's on its own footprint. It's got the ability to grow 10 -- probably 20x from where it is today. Geographically, its 35% of revenues are international. You'd expect that to grow over time. They're in 5 markets. There's no reason why they couldn't penetrate more markets. It will be interesting to see how they integrate deeper into the merchant to drive average order value and frequency, as Akhil was talking about. Ultimately, they're enabling e-commerce. So their value is very much directly linked towards that. They're launching new products, Budbee Plus, I think, is a viable alternative to Prime, Amazon Prime for hundreds, if not thousands, of merchants in Northern Europe. And likewise, a shopping experience where you start by actually describing what kind of experience you want delivery. And last but not least, he talks about other companies focusing on production, but this is a very technology and data-driven business that's already profitable. So the opportunities of this business are pretty big.

Yes, I certainly only shop if I can get a Budbee delivery. So great to hear. I think it's now time to leave the consumer services sector and move on to food, which has almost become a sector on its own right in the past 3 years. And Andreas, you will start by giving us your thoughts on what's moving in the sector, but we will start with a short film. [Presentation}

It's great to be here to talk about food once again. And it's obviously an area that's been hotly debated in media due to COVID and also because it's something that everybody can relate to. Food has grown out of consumer services and is now a sector in itself. And the last time we spoke about it was the last CMD, which is around 18 months ago. So this is an opportune moment to give you an update as to where we are. But just glancing backwards, Kolonial was our first investment in the food space. We dipped our toe. At the time, Kolonial was a relatively small tech and consumer-focused business, disrupting incumbents on online groceries in Norway. Today, 3 years on, this business has delivered against its promise of high growth, consumer excellence and operational efficiency. Now I'm not going to steal too much of that thunder because Karl will be speaking to us in a little bit. But from an execution perspective, what they've achieved has been pretty remarkable. So since that investment in Q2 2018, we've got really excited about food. We spent a lot of time in the area. We've met with about 200 companies from different geographies in different verticals and business models, and we've learned a great deal. We like the space because it's very big, the second largest part of consumer wallet. It's also very important to everybody. Whether you have planetary ambitions or health ambitions or you just want to save time. And last but not least, it has been relatively slow in its transition online. There are new structural changes, plant-based diets. There's delivery food and meal kits, and there's also new moves in infrastructure and technology, whether that be vertical farming, or last mile logistics, automation. Now COVID has turbocharged everything within e-commerce, but nothing quite as fast as within food. I wanted to touch upon in a little bit more detail how we at Kinnevik, think about our investments because there is a lot of change, and there are a lot of things to think about. But there are 3 specific lenses that we ultimately focus on when we look at investments, and that is consumption patterns, health, and sustainability. To give you a little bit more information on those. In terms of consumption, how have things changed? Well, in the U.S., you have approximately 50% of all food is now purchased out of the home. That's in restaurants, it's home delivery and meal kits, people looking for experiences. They're looking to save time. And these products are helping them from an economic perspective. Likewise, health, we have almost 40% of the world's population now being overweight this is a burden to themselves, but also to governments, and you're seeing taxes being installed in numerous markets to try to help that. This is something we need to think about when we're doing our investments. Likewise, Generation Z, those in their 20s, they are wanting to have 2 days a week where they're not eating any meat. Yes, for health purposes but also for the planet. And one can understand why. If cattle were a country, it will be the world's third largest global emitter of gas house -- sorry, of gas emissions. And hence, that is something that we need to think about when we're doing investments. So how does this fit into our portfolio? If we look at our most recent investments, the last 3, HungryPanda, Simple Feast and Vivino, they sit squarely within this. Simple Feast is a vegan vegetarian meal kit, locally sourced, delivered to your door and ready-to-eat within 10 minutes, you can eat in Denmark, Sweden and California. HungryPanda is a specialized vertical online ordering platform for Chinese people living abroad, giving them localized support for UX and also payment options. And last but not least, Vivino, it's the world's largest wine community, 50 million wine lovers, comparing notes, giving data and information, allowing that platform to provide personalized offerings tailored to every single person's needs. Now unprecedented change means unprecedented opportunities. And to date, we've made investments in the Nordics, we've made investments in the U.K., but you should expect to see investments further afield likely U.S. coming up. Thank you very much, Torun?

Thank you, Andreas. And I think now it's time to invite Karl Munthe-Kaas, who is the CEO and founder of Kolonial.no, and as you said, Andreas, it was our first investment into the food space. Karl, are you with us? [Presentation]

Karl, now you're with us. We just saw the film about Kolonial.no, and we're really glad to have you join our Capital Markets Day again.

Thank you, guys. Happy to be here.

Good. So of course, as with Babylon, we have to start with the first question around the past year, which I think has been extraordinary for you. And how do you see the consumer behavior changing due to the pandemic that we are going through?

Yes. No, obviously, 2020 was an incredible year for us. Overall, we grew by 124% on B2C. We did experience maxing out over the 3-week period in sort of the first lockdown, but we're able to double the capacity and then stay ahead of the curve from thereon. But I think on consumer behavior, so obviously, we've seen some interesting changes. I mean, first of all, of course, there was a surge in new customers as well as an increase in frequency among existing customers. And we saw that the average age of the new customers coming in was significantly higher. So normally, it's about 42 years on average. The sort of COVID cohorts of around 50 years on average, which basically makes them most identical to the general demographics in the population. But despite sort of older age groups, we see that retention rates are exactly the same. And that, I think, is the important learning that it looks like these new customers behave just as our pre-pandemic customers have. And even after the lockdowns, the patterns were the same, we generally saw sales still being maintained at very high levels. And that's, of course, very promising for us.

And Karl, as a follow-up to that, there's been obviously a lot of discussion around what happens after COVID. Do you think this is something that will taper off or remain?

Well, that is, of course, the important question. But I think the key thing to remember there is the underlying trend, right? So Norway still only has about 2% online penetration even now. And the U.K. is apparently above 13%, I believe. So I mean I think if we go 10 years ahead of time, and we look back, COVID will just amount to a slight bump on a continuously growing trend line on online market share. And that is, for example, also what SARS did in South Korea. So -- and I think the customer data supports exactly that view that I mentioned that COVID simply made more people try e-grocery. And then discovered that it's better quality, more convenient and actually cheaper than physical stores. So on that note, I would like to just add that we just won a quality test now among all grocery stores online and off on one of the largest consumer review show. And then at the same time, we also ended up 1.7% above the discounters in the major price test. So basically, you get better products, better selection and at the same prices home delivered. So I think that -- I think the markets haven't fully understood that online grocery is fundamentally more efficient and more value-creating. And I think that is what's truly driving the e-grocery shift. It's not actually the pandemic.

Great. In terms of internationalization, I remember in the last CMD, there were some questions around this. How are you thinking about internationalization today?

Yes. So I can't say too much, but I can say a few things. So we are building warehouses internationally now and also planning for more capacity. We might have some more news on that in the next months. But I think overall, as I mentioned in the last Capital Markets Day, we've had some major operational and tech breakthroughs in last few years. And that has put us in a good position to capture market share globally, we think. And we believe we can sort of compete on a global level. We've quadrupled our tech capacity in the last 2 years to strengthen that global platform. So I mean we're building more sites in Norway now in parallel. And as a reminder, I mean, the Norwegian market alone is well above $20 billion, bigger than the global market for streaming music. However, the market in Western Europe and North America is about $3 trillion. And from sort of a macro perspective, it's still completely open. I mean this is very nascent, very low penetration in almost all areas. So yes, it's great blue ocean to enter.

Excellent. Last question for me. One of the things that impressed me and the team very early on was how you thought about differentiation from competition. And actually, in fact, how you executed against your plan. How do you see yourselves comparatively to call the digital disruptors, but also the incumbents.

That's a very nice question to answer. So I mean to get straight to the point. So as far as we can see, we have the most efficient warehouse operation in the world. And picking the groceries can typically be up to 70% of the cost in the e-grocery value chain. So obviously, being efficient on fulfillment makes a huge difference. And we are today around twice as efficient as most other pure players and about 3x more efficient than average store picking. And compared to kind of the one to beat, which has been Ocado, as we mentioned at the last Capital Markets Day, we had passed them on OpEx. We have now widened that gap. We are substantially more efficient than Ocado. And the difference is that we have achieved this with automation, but at a fraction of the CapEx costs compared to the sort of standard goods demand model. So that, I think, is what really sets us apart. And of course, this creates fantastic unit economics, even if you price yourselves at discount for level. And on the market side, I mean, we've beaten out some well funded start-ups and large incumbents, we currently have above 70% market share in e-groceries. And -- but the underlying point there between both sort of the customer side and the operational side results is that they are dependent on one, owning and developing all technology and can; and two, to have an extreme focus on operational excellence. Those 2 things are key, and that is where we are different.

I think I know many of our -- in the audience want to hear about -- I mean, your fantastic productivity -- Okay. Sorry, you're back. I have a question from the audience on your fantastic productivity. And would you consider selling that to Martin, for instance, your warehouse solutions, given that it's the same main owner.

Yes, exactly. That's a very sensitive question. I mean I would say that in general, so we, of course, talk to Martin and you are invested in both. In general, though, it is a good question. I mean, if you have these results, why not go the route of Ocado, right? And kind of package it and sell it sort of software-as-a-service or hardware solutions. And we have made a very conscious decision not to do that. And the reason is that -- so it's not just the technology. It's not like you can take this blueprint and then automatically achieve these results. It's how you work within that system, how you improve it, how you -- what your culture is, how you run this operationally. And we believe more in taking this advantage we have and leveraging it through expansion. So that is why we are doing the international expansion that we do. And we're more worried that if we try to change the company into being sort of technology provider, that is a very different company from what we are. We are an online grocery company through and through. That happens to sort of own all technology and develop that in-house and we then -- and to put it sort of simply, I think we focus more on trying to follow sort of the Amazon route than the Ocado route.

Okay. Very clear, Karl. Thank you so much for joining us. Andreas sort of following on to that question. So our broader food portfolio, what should we expect?

Well, to date, we have 6 companies. We've invested about $300 million worth of capital, and they are relatively new. The opportunity to grow within that portfolio is enormous. And just looking at some of the companies that we've discussed, HungryPanda is developing a platform into an audience that is, at the moment, relatively underpenetrated, but they also have an opportunity to sell other verticals and services there. Vivino is disrupting a $300 billion market. And as Akhil said, around 2% of users are today purchasing wine. So there's a lot to do in the existing portfolio. But we meet somewhere in the region of 10 businesses on a monthly basis, and we'll continue to do that. We'll continue to optimize and refine that pipeline to find the best business as possible. That are following the tailwinds that we discussed, but you should expect to see 1 to 2 investments in the food space from Kinnevik in the years to come.

Looking forward to that. Thanks, Andreas. I think we are soon wrapping up. So I will invite Georgi back to the stage to give some final remarks.

Thank you, Torun. So listening to this Zoom 2 hour Capital Markets Day. I have a few reflections, of course. The first one is that if we zoom out a bit and relate to what we said in 2019, I hope that it's clear now that we actually delivered what we said we would and that we have enough proof points in our portfolio and confidence that we can actually start 2021 from a position of strength across our portfolio. And I'm also happy that we were able to share more information from some of our portfolio companies and team members. And thirdly, I think I knew that we were bold investors. Now I know that we are bold Capital Markets days host as well because we did this event live. And, Torun, I applaud you for putting this together today it's not easy to connect all the different people from around the world into this event live. But I'm actually very excited about the future. And these 2 years, they have been fantastic. And I think that the following years will be as interesting and exciting as well. One, maybe last remark on that. I think Erika laid out it very clear that I mean we will, of course, expect some time a market correction. That will happen. It's not a question on if, but rather when. However, we are, again, today in a situation where we have a strong financial position. We have a net cash over SEK 4 billion. And we also have a strong stabilizer in the portfolio in terms of Tele2, right? So in a market correction, I would say that we are rather buyers than sellers. And of course, that is also something that we can say with confidence given our portfolio. And that is -- that value creation has come very well distributed in that portfolio. So with that said Torun, I think it sums up the day.

It certainly does. So thank you, everyone, so much for joining. If you have follow-up questions, I hope you know where to find us. And again, thanks for joining us on this digital event. Have a nice evening.