/terminal corp evolution 2020 Q1

2020 Q1

Some mental models reviewed this quarter.

0. Pirque on software is the new industrials.

  • All major drivers: 5G, ML, Semiconductors, Robotics, Cloud, IoT, Open Source now collide to build the factory for the XXI century.
    Vertical integration will continue. Resilient companies will build the software, hardware, firmware, the brand, and distribute the service.
  • Expansion to new markets (and India is the #1) will be over the cloud.
  • Every 3rd party operator (ie 3rd party risk) in the debt-savings axis will be disrupted.

  • 1. Carlota Perez on transitions into a new golden age.

    [For those who have read my investment approach, you should be familiar by how influenced I am by her work. If you have not read her book, do it. It is the most important literature I've come across into organizing my thoughts as a global macro investor.]

  • We enter a period of reversal (industrial revolution and mass production turned everything into a product).
    Now everything will turn into a service. Renting rather than buying. Maintenance rather than disposal.
    Companies will sell you a product that lasts 100 years, and they will charge you for renting and maintenance.
    eg. Rolls Royce does not sell engines, they rent it to plane owners. Rolls Royce is always the legal owner of the engine.
  • Productivity in energy and materials will finally become an issue (for a century productivity was only about human labor).
  • As always, assimilation of all new technologies requires good leadership, which is currently lacking.
    Transitions are like this. History tells us we should be optimistic.
    [this is mine] 1929 quote: "The old world is dying and the new world struggles to be born. Now is the time of monsters.” -Antonio Gramsci

  • 2. Peter Thiel on American exceptionalism.
  • Europe has one way out: green movement.
    Either they embrace green, or they succumb to Sharia law (Islam) or Chinese AI (authoritarian centralization).
  • Capitalism's stronghold: USA > Israel > UK > Europe
  • It is the time to be long on ideas.

  • 3. Naval Ravikant on blockchains (this is old, but resurfaces with Covid).
  • Blockchains will replace networks with markets.
  • Networks require rulers: not 100% open, meritocratic, efficient.
  • Blockchains replace rulers: 100% open, meritocratic.
  • Blockchains allow the market model to go into places it couldn't go before.

  • 4. Andreessen Horowitz on banking and building.
  • Every company will become a fintech company.
  • https://a16z.com/2020/04/18/its-time-to-build/
  • The problem is desire. The problem is inertia. The problem is regulatory capture. Building is how we reboot the American dream. The things we build in huge quantities, like computers and TVs, drop rapidly in price. The things we don’t, like housing, schools, and hospitals, skyrocket in price. It is time to build.

  • 5. Warren Buffet on America.
  • United States, we are a very, very young country.
  • Never bet against America.

  • 6. Chamath Palihapitiya on resiliency.
  • We move from efficiency to resiliency.
  • This is costly and less global.