Hi, I’m Azeem Azhar. I convene Exponential View to help us understand how our societies and political economy will change under the force of rapidly accelerating technologies.
This week on the podcast
I speak with Johnny Boufarhat, CEO and Founder of Hopin, one of the fastest-growing startups in history (you might remember the chart showing Hopin's growth from EV#340). Johnny and I go into...
- 💻 How Hopin made the most of the opportunities afforded by the pandemic [6.55]
- 📈 How learning to delegate helped Johnny scale his company rapidly [10.08]
- 🌄 Why Johnny might never make it to Silicon Valley [23.34]
Today's edition has been supported by our knowledge partner, McKinsey & Company.
The future of climate tech. One crucial component in facing the climate crisis? New technologies, such as better batteries for electric vehicles, meat alternatives, or improved energy storage. While significant progress still needs to be made, the drive to develop and scale climate tech is accelerating. A new article lays out five themes that could attract $2 trillion of annual investment by 2025.
Dept of near future
The changing nature of capital
💸 Venture capital has traditionally been good at exploring uncertainty, while public capital is more aligned with certain bets. As we progress through the Exponential Age, our economies will rely increasingly on the novel (and unproven), and less on the established. Hence the growing importance of venture capital.
The rationale is not simply about what type of capital is better able to take “exploration” risk. It is also about the nature of Exponential Age firms. They don’t build off traditional tangible assets. The value of these firms, the overwhelming value, arises from their intangible assets - software, networks, data, know-how. And these things are hard for traditional capital to back, especially in the early days when a startup has none of those things.
Sequoia Capital, for example, recently moved from the fixed duration fund with the introduction of permanent standing capital. This will allow them to cross over asset classes and ride the success of companies through their lifespan.
VC is the prime asset class for the transition to the Exponential Age. As I point out in my book, firms like Sequoia make bets on firms whose value will be driven by intangible assets that don't lend themselves to the traditional tools of analysis that have supported debt and equity markets for decades. Instead, assessing their potential requires novel skills. In the same way, conventional finance will need to acquire those skills (to better bet on potential rather than tangible assets), non-traditional finance (which does understand that) should expand its footprint to more mature companies. This is what we see unfolding. EV's friends at VC house Anthemis recently listed a SPAC vehicle to support similar public-private crossovers.
[See also: after a false start in investing in European startups (poor returns drove them away), American VC firms have Europe in their sights.]
The future of Chinese technology
🇨🇳 China’s nearly year-long crackdown on technology companies has been hard to parse. The scarcity of stories in the western media doesn’t reveal the scale of interventions by the government. To that end, Ruihan Huang and Joshua Henderson have done an excellent service for those that want to get a handle on the crackdown. They note that “regulators almost exclusively targeted “bits” (software) companies rather than “atoms” (hardware) companies; regulatory actions taken appear correlated with firm size; these actions were likely less political in nature but were vigorously pursued because of the available window of opportunity.”
One of the most revealing aspects of this research concerns the timing of the crackdown. Fearing severe economic repercussions, it appears Beijing used the economic hit of Covid-19 as the perfect opportunity to carry out the purge. This means the crackdown was planned well in advance. The crackdown confirms the widely-held belief that China doesn’t view bit technology such as e-commerce and crypto as a long-term interest. China is pivoting toward atoms technology such as energy, high-end equipment, electric vehicles, and biotechnology as the tech sector’s future. [See also: Fortnite is calling it quits in China.]
Propelling cities to the future
🏢 Cities are the key to humanity’s future. Despite some hiccups during the Covid-19 pandemic (which I discussed last year with the World Bank's Sameh Wahba), cities remain hives of commerce, technology, and culture. This isn’t just because cities are attractive. Instead, cities stimulate economic benefits. Exponential technologies such as solar energy, vertical farming and 3D printing increase the capabilities of cities. In addition, cities appear to be better judges of what their populations need than national governments. This enables them to lead on issues such as livability, self-sovereignty, and democracy.
Given the importance of cities, finding a mechanism for greater self-governance in urban environments is pretty fascinating. Vitalik Buterin, the founder of Ethereum, explores current experiments using various crypto approaches and applications to aid self-governance. Vitalik argues that blockchain technology and crypto can create a new chapter in self-governance and enable financing for the ambitious urban projects of the future. “Harberger taxes and other mechanisms could be used to radically reform zoning rules,” he observes as one example. “Blockchains could be used to administer such mechanisms in a more trustworthy and efficient way”. Additionally, cities could issue tokens to create a source of ongoing revenue and finance development. We now have the technology to help cities realize their full potential. [See also: New York City’s new mayor will take his first three pay cheques in Bitcoin.]
🔋Dept of decarbonisation
CO2 level 414.09 ppm | 3,175 days until we reach the 450ppm threshold
The latest measurement of atmospheric CO2 (as of November 3, 2021): 414.09 ppm; November 2020: 411.15 ppm; 25 years ago: 360 ppm; 250 years ago, est: 250 ppm.
🌞 With COP26 coming to a close, it’s an excellent opportunity to take stock. Some crucial promises were made for Africa, including some concrete pledges to aid South Africa’s transition from coal. What is clear from COP26 is that government policy can have a significant effect, but the market has arguably more power to cause real change. With the falling prices of renewable energy, the market is already starting to price out fossil fuels. These declines will continue exponentially in the near future. A new study found that half of the world’s fossil fuel assets could be worthless by 2036. That’s nearly $11tn worth of fossil fuels assets. If that isn’t a market correction, I don’t know what is.
As you reflect on COP26, we compiled a brief but mighty list of conversations I had in the past few years with founders, technologists, policy-makers, scientists and writers about mitigating climate change to accompany your thinking.
🇦🇺 🦘When it comes to the messy social politics surrounding climate change, Australia is an interesting case. By and large, Australians are deeply concerned about climate change, but their leadership is responsible for some of the world’s leading pollution standards (primarily driven by the country’s dependence on coal energy). The question here is whether Australians can force their leaders to change course. New evidence from South Australia suggests that they might have a shot. The region has gone from a “power pariah to a hero, setting new records each month”. Pay close attention to how Australia navigates these tricky waters as it will be a good indication of the power of people to overturn and change policy.
Short morsels to appear smart in the outback
🚚 Are you worried about global shortages? Then this 20-year-old truck driver explaining why the shipping crisis is not close to ending makes for harrowing reading.
🙊 Do we know too much about each other thanks to social media?
🕺 A software engineer figured out how to trick recruitment software at its own game. The results are hilarious.
🛰 The battle over satellite broadband is heating up and getting a little messy.
📡 Elon Musk’s Starlink is learning the hard way that no matter how innovative you are, you can’t escape the global chip shortage.
😊 Big news! Facebook is going to delete over one billion facial scans and shut down its facial recognition system. At the same time: 🇰🇿 In a dangerous precedent, Facebook will let the Kazakhstan government directly flag content it deems harmful.
💻 Get ready for a wave of advertising on Zoom as the company unveils a new ad-supported program.
✈️ The dream of electric flight is much closer than we think. One startup has plans for a 100-seat all-electric plane by 2027.
📸 Incredible. Researchers have developed a 5D optical data storage method that can preserve up to 500TB per disc. What will we do with that storage capacity?
Writing a book is like adding a new piece to a jigsaw. You hope it helps clear up the contours of the puzzle, creating avenues for more pieces to be added. I was delighted to read this blog post by Jared Hecht, inspired after reading my book.
He picks up some of the key themes and then brings his own analysis:
The one thing I couldn’t help but think about when reading Azeem’s proposed recommendations was just how beautifully crypto networks emerge as a potential solution to the problems.
He provides a thoughtful extension to some of my arguments. I hemmed and hawed about including an analysis of crypto into the book, in the end deciding it would be a bridge too far in an already expansive work – even though crypto is clearly a high potential technology. And Jared rightly spots the connection between some of my recommendations and how Web3 might promise. It’s worth a read.
Have a lovely week,
What you’re up to – notes from EV readers
Hannah Tucker and Pascal Finette are in conversation on the Disrupt Disruption podcast, exploring disruption from a sustainability perspective.
Azeem spoke with McKinsey about closing the exponential gap.
Max Falkenberg just launched a dashboard mapping COP26 conversations on Twitter.
Edward Unger launched a first-of-its-kind e-prescribing app, mPrescribe.
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