Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: And the way that those companies could or should think about the way to use agents is just to ask the question, "Okay, what are the core functions we do for the customer now? How can we further automate that with agents effectively?" [00:00:00] S1: If you're in CRM, well, what do our customers do? They talk to their customers. We're customer relationship management software and we do some customer support too. So make an agent that can do that and sell that at 10 to 20% and let that agent access all the data you have. Because what's happening right now, another agent made by someone else is accessing your systems- [00:00:00] S0: To do this job. [00:00:00] S1: ... pulling the data into their system, and then you'll eventually be turned off. And it's just crazy and it's just because, "Oh, wow, but we want to preserve our 80% gross margins." This is a life or death decision, and essentially, everyone except Microsoft is failing it. To quote that memo from that Nokia guy long ago, "Their platforms are burning." [00:00:00] S0: Burning platform. Yeah. [00:00:00] S1: Yeah. There's a really nice platform right over there and you can just hop to it and then you can put out the fire in your platform that's on fire, and now you got two platforms and it's great. [00:00:00] S0: Your data centers in space thing makes me wonder if there are other kind of less discussed, off-the-wall things that you're thinking about in the markets in general that we haven't talked about.
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: Your data centers in space thing makes me wonder if there are other kind of less discussed, off-the-wall things that you're thinking about in the markets in general that we haven't talked about. [00:00:00] S1: It does feel like since 2020 kicked off and 2022 punctured this, a series of rolling bubbles. So in 2020, there was a bubble in startup EVs that were not Tesla. And that's for sure a bubble, and they all went down 99%, and there was a bubble in more speculative stocks. Then we had the meme stocks, GameStop. And now it feels like the rolling bubble is in nuclear and quantum. And these are fusion and SMR. It would be a transformative technology. It's amazing. But sadly, from my perspective, none of the public ways you can invest in this, or really good expressions of this theme are likely to succeed or have any real fundamental support. And same thing with quantum. I've been looking at quantum for 10 years. We have a really good understanding of quantum, and the public quantum companies, again, are not the leaders. From my perspective, the leaders in quantum would be Google, IBM, and then the Honeywell Quantinuum. So the public ways you can invest in this theme, which probably is exciting, are not the best. So you have two really clear bubbles. I also think quantum supremacy is very misunderstood. People hear it, and they think that it means that quantum computers are going to be better than classical computers at everything. With quantum, you can do some calculations that classical computers cannot do. That's it. That's going to be really useful-
· Gavin Baker, Patrick O'Shaughnessy
[00:00:00] S1: It does feel like since 2020 kicked off and 2022 punctured this, a series of rolling bubbles. So in 2020, there was a bubble in startup EVs that were not Tesla. And that's for sure a bubble, and they all went down 99%, and there was a bubble in more speculative stocks. Then we had the meme stocks, GameStop. And now it feels like the rolling bubble is in nuclear and quantum. And these are fusion and SMR. It would be a transformative technology. It's amazing. But sadly, from my perspective, none of the public ways you can invest in this, or really good expressions of this theme are likely to succeed or have any real fundamental support. And same thing with quantum. I've been looking at quantum for 10 years. We have a really good understanding of quantum, and the public quantum companies, again, are not the leaders. From my perspective, the leaders in quantum would be Google, IBM, and then the Honeywell Quantinuum. So the public ways you can invest in this theme, which probably is exciting, are not the best. So you have two really clear bubbles. I also think quantum supremacy is very misunderstood. People hear it, and they think that it means that quantum computers are going to be better than classical computers at everything. With quantum, you can do some calculations that classical computers cannot do. That's it. That's going to be really useful- [00:00:00] S0: That's exciting. Yeah.
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: That's exciting. Yeah. [00:00:00] S1: ... and exciting and awesome, but it doesn't mean that quantum takes over the world. I think the thought that I have had, and this is maybe less related to markets than just AI. I have just been fascinated that for the last two years, whatever AI needs to keep growing and advancing, it gets. Have you ever seen public opinion change so fast in the United States on any issue, as nuclear power? Just happened like that. Like that. And why did that happen right when AI needed it to happen? Now we're running up on the boundaries of power on earth. All of a sudden, data centers in space. It's just a little strange to me that whenever there is something, a bottleneck that might slow it down, everything accelerates. Rubin is going to be such an easy, seamless transition relative to Blackwell, and Rubin's a great chip. And then AMD getting into the game with the MI450. Whatever AI needs, it gets. [00:00:00] S0: You're a deep reader of sci-fi. [00:00:00] S1: Yeah, exactly. [00:00:00] S0: You're making me think of Kevin Kelly's great book, What Technology Wants. He calls it the Technium, the overall mass of technology that just is supplied by humans- [00:00:00] S1: Absolutely. [00:00:00] S0: ... to grow more powerful. [00:00:00] S1: Yes. It just wants to grow more and more powerful. [00:00:00] S0: It sounds like the name of a movie. [00:00:00] S1: And now we're going into an end state.
· Gavin Baker, Patrick O'Shaughnessy
[00:00:00] S1: And now we're going into an end state. [00:00:00] S0: I have a selfish closing question, speaking of young people. So my kids, who are 12 and 10, but especially my son who's older, is developing an interest in what I do, which I think is quite natural. And I'm going to try to start asking my friends who are the most passionate about entrepreneurship and investing why they are so passionate about it and what about it is so interesting and life-giving to them. How would you pitch what you've done, the career you built this part of the world to a young person that's interested in this?
· Gavin Baker
[00:00:00] S1: I do believe at some level investing is the search for truth. And if you find truth first, and you're right about it being a truth, that's how you generate alpha, and it has to be a truth that other people have not yet seen, you're searching for hidden truths. The earliest thing I can remember is being interested in history, looking at books with pictures of the Phoenicians and the Egyptians and the Greeks and the Romans. I loved history. I vividly remember, I think in the second grade, as my dad drove me to school every day, we went through the whole history of World War II in one year, and I loved that. And then that translated into a real interesting current events very early. So as a pretty young person, I don't know if it was eighth grade or seventh grade or ninth grade, I was reading The New York Times and The Washington Post, and I would get so excited when the mail came, because it meant that maybe there was an Economist or a Newsweek or a Time or a US News, and I was really into current events because current events is like applied history and watching history happen, thinking about what might happen next. I didn't know anything about investing. My parents were both attorneys. Anytime I won an argument, I was super rewarded. If I could make a reasonable argument why I should stay up late, my parents would be so proud and they'd let me stay up late. But I had to beat them. That was the way I grew up. I was just going through life, and I really love to ski, and I loved rock climbing, and I go to college, and rock climbing is by far the most important thing in my life. I dedicated myself to it completely.