I am reading a book by Thomas Friedman called “The Optimists Guide to Thriving in an Age of Accelerations”:
In this book, he queries how many people missed the radical accelerations of technological change that occurred in 2007…changes that had enormous impact on your technology investments…some which many of you benefited from this past year.
What were those major accelerations?
- The IPhone
- Facebook goes global and scales
- Utube brought to you by Google along with Android
- Kindle brought to you by Amazon
- ATT brought software enabled networks
- Airbnb was founded
- Computer Storage capacity exploded courtesy of Hadoop
- Cognitive computing with Watson - first AI version launched
- INTC introduced non-silicon into chips to massively increase speed
- DNA sequencing costs dropped to $1000 from $100 million previously.
Had one been able to see these seminal events in realtime in 2007 and invested accordingly, what an amazing run you would have had in those subsequent 10 years!
GOOG a 5 multiple. APPL a 16 multiple! AMZN a 30 multiple!
Truly amazing runs from 2007…but why didn’t everyone see these events…they were everywhere to see and numerous as listed above? Obviously, in retrospect, much easier to appreciate the magnitude of pace of technology change…but could learn from this, step back and see the next wave if it were right in front of you?
But don’t feel bad if you missed it…so did Michael Dell…so did Thomas Friedman himself…until 2-3 years later.
I bring this up because you had a great year in 2017…investing in predominantly high tech stocks…many without earnings but instead with promise of better times ahead and expanding TAM’s. In your process of identifying unique companies suited for investments, it is clear that a premium is being placed on YoY revenue growth and that has been very predictive of stock appreciation this past year.
But it has perhaps also led to some overlapping themes that may indicate a more global “seminal event(s)” like we had in 2007. For example, consider artificial intelligence and look at what role NVDA, WIX, AYX, TLND, AMZN, and many others play in that rapidly adopting technology paradigm shift.
There were countless of times over the past 10 years that GOOG, AAPL and AMZN were “finished, too expensive, in danger of disruption”…but it didn’t happen as yet…and their stocks soared. Where are those new seminal events and how can we as a community exploit them for better long term investments?
Are we seeing new tectonic technology shifts that would be equally investable themes…maybe some that you have perhaps inadvertently stumbled on indivually but by looking at groupings of the stocks that were so successful in 2017…might we see patterns or themes that could point us to a larger “awakening”?
What might some themes be?
- Artificial Intelligence - massive shift to AI
- Data Storage - billions of sensors and massive data accumulation on-prem and cloud
- DNA sequencing and interventions
- Blockchain technology in financial and storage
- Energy storage
Now there are lists produced all the time suggesting what the next AMNZ will be…like this one with 21 candidates:
And then some food for thought at the NPI:
But perhaps this would be a worthy discussion to provide a framework to explore and identify individual candidates rather than identify individual candidates in a vacuum without consideration to greater theme.
As Thomas Friedman suggested in this book…sometimes it helps to be “late”…and give time to just thinking about what is happening around us…that we otherwise might not even be noticing.