- Is it 1999 all over again?
- Waves of the future
Are things about to go Kaboom?
The world is wobbly, fragile, turning inwards, constrained and running low on trust… all lowering animal spirits.
The global economy has been twisted out of shape by central bank policies. Case in point: Michael O’Leary said on CNBC that Ryanair borrowed $1 billion last year on an 8 year unsecured loan at 1.3% interest and that he wouldn’t lend to Ryanair on such terms.
And tech valuations are particularly skewed. It’s not quite 1999. These days in tech the start-ups tend to have better business plans. They have the power to leverage a mobile internet base of tens of millions of ‘digital native’ millennials to scale up. There is more patience money in the form of private equity and corporate funding.
But all that notwithstanding… those valuations! Uber valued at 20% more than BMW and Airbnb 3X more than Intercontinental Hotels…. all fuelled by the fund raising machine’s need to raise valuations at each funding round. As one CEO recently explained…’we need to be valued at a billion dollars, minimum, to be able to attract new engineers.’ Meanwhile the world economy is slowing and global trade flows have fallen by even more to 1.3% pa according to the WTO.
It’s now pertinent to ask whether the age of the ‘unicorns’ is going to become more like the age of the ‘unicorpses’? In a chronically over-capitalised and over-supplied mobile internet service markets consisting largely of glorified distribution and payments companies are we in a tech bubble within an ‘everything bubble’?
For me one signal that things may be about to slide comes from Goldman Sachs. GS is holding an event for its clients and tech movers and shakers in Las Vegas next week to lubricate the market for some IPOs next year. It can’t expect another bumper year in bond trading to take up all the slack but there are high hopes for Airbnb and Snapchat IPOs over the next 18 months.
What rings some alarm bells is the GS line up of candidates to present at the event: a Craiglist style company, two e-com companies <although one of them Playtm out of India does look interesting>, crowdfunding and peer-to-peer finance companies, an internet car sales operation, and a UK-based smart phone repair company….the next Googles, Amazons, Facebooks, even LinkedIns? Only if you can get them away while the going’s good.
This time IS different… a 2017-2019 version of the 1999 dot.com bust could be worse this time with more inter-meshed and ramifying broad-scale effects. So where to invest to escape these distortions?
Waves of the Future
<> We see genetics, along with cloud robotics, cybersecurity and the codification of money, markets and trust as the four big industries of the future. And we are keen on a few themes in particular…
“50 Silicon Valleys”: Invest in strategic industries in an emerging global network of city states (Israel, Mittlestand, Shenzhen).
“Terraforming”: invest in biosensors, farm drones, self-driving/navigation systems as tech titans draw genuine information from dysfunctional environments.
“Faith in code over humans”: AI directed cybersecurity, blockchain, computerised medicine as flawed algorithms replace deeply flawed human decision makers.
“Tech Crunch”: the frantically gestating world is creating enormous physical challenges. We need new chips, new batteries for a start.
On our radar this week…
<> I’m intrigued to note that start-up Ubiome has developed the world’s first sequencing based microbiome screening test to identify commensal and pathogenic microorganism. Ubiome’s lab where samples are processed is one of the 2% of labs across the world that have received College of American Pathology accreditation.
<> Cambridge University has developed an ultra-power transistor that scavenges energy from its environment which could eliminate the need for batteries for devices in the IoT hooking onto low-power networks.
<> ASX listed Fastbrick is showing off the capacity of its HadrianX brick and block laying robot. The $1.3 trillion global construction will be rebuilt by a combination of new materials, robotics, AI-based CADCAM, drones, big realtime data analytics, IIoT, and 3D printing. It’s only just starting and operates right up the stack from chips to EAS.
Lots of company to ‘laundry list.’
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