Conference Presentation, Panel
How Will Technology Trends Impact Your Portfolio?
Milken InstituteDan Primack, Jason Greenberg, Colin Le Duc, Morris Mark, Nicole Musicco, Jeff Schumacher
- Technology is projected to impact all aspects of portfolio construction, job functions, and every sector of the economy, with an accelerating pace of change expected over the last five years and into the future, creating significant challenges for businesses that fail to adapt.
- Investment strategies include viewing technology through investing, risk mitigation, and enablement lenses, with a specific plan to stay invested in Microsoft following the Satya takeover, and a prediction that the majority of technology deals over the last decade will be acquired by non-technology buyers rather than traditional tech firms.
- Emerging sectors such as mobility, energy, food, and cities are targeted for deep transitions, with expectations to scale deals within 36 months, while specific predictions include electric planes enabling short city-to-city hops further in the future and flying taxis appearing in tourism and select cities within a five-year window despite regulatory hurdles.
- Blockchain technology is anticipated to democratize value and solve power consumption and performance issues via third protocols, potentially enabling open and private networks to address authentication and identity verification, with a foundry expected to spin out approximately 15 portfolio companies.
- Significant risks include regulatory flux at municipal and international levels in jurisdictions like the U.S., China, and the U.K., which is viewed as the biggest leap affecting technology and likely to limit growth, alongside a potential loss of social license for dominant companies due to regulation lagging behind innovation.
- Market disruptions are predicted to eliminate process-based and repetitive jobs within financial services, potentially reducing the sector's share of GDP to less than 8%, while survival will depend on non-formulaic roles and the strategic adoption of AI infrastructure to gain unbeatable advantages.
- Success factors for startups hinge on product-market fit, team, capital, and timing, whereas failure often stems from being too early or too late; in the AI and education sectors, success is linked to human-centered design and the accumulation of valid information through learning systems.
- Specific sector expectations include Tesla mass-producing the Model 3 with a gross margin generating cash flow, a belief that government support for pollution-free technology will improve under conservative leadership, and a prediction that consumer-focused sustainability initiatives will outperform B2B and industrial-focused businesses.
- Technology is expected to enable a shift where value returns directly to users rather than intermediaries, with major incumbents like Microsoft eventually forced to adopt these decentralized concepts, while trade wars are noted as detrimental to the U.S.'s technology advantage by limiting addressable markets.