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Thanks for the great article. Some of the stories that have come out about the ways in which Palantir has been able to stop crimes, save lives and solve problems are incredible. The obvious challenge here is the moral dilemma between arming intelligence agencies with as much data as possible and individual’s rights to privacy. Great arguments can be made on both sides. One trend that has unfolded over the past few years, as especially since the first round of this debate in the years following 9/11 is that tech companies have been aggressively mining and collecting data about their customers. The very citizens that were outraged by the government collecting data about them without warrants are giving their information away for free to Facebook and Google.

Seperately, I agree with AJ’s point above in that we should never strive to move past human involvement in these investigations. Palantir can hopefully create powerful tools for the intelligence community that allow us to save lives and stop crime – will minimizing invasion of privacy. At the end of the day though, this needs to be a tool that is used by human professionals.

Hey Laura, very interesting article. It is fascinating to think about incredible brands such as Steinway whose product has been built pretty much the same way for decades. The very source of a Steinway’s value (its hand built craftsmanship) would be wiped out by any decision to modernize or digitize their product.

I think that they should resist any urges to develop digital pianos. In my opinion, it is going to be a race to the bottom for digital instruments. Sources of differentiation between one digital instrument and another will only disappear as technology progresses – leaving very little hope for long term pricing and margin.

Perhaps they can pursue digital initiatives in a different way? Maybe they can bring Steinways to public places and film musicians playing the instruments for the first time? Some of these videos could go viral and there could be strong digital engagement with the brand, while maintaining the non-digital craftsmanship of the product.

An additional part of the story here is that Steinway is currently owned by the hedge fund, Paulson & Co. Whether these owners will be good stewards of the brand or overly focused on short term profits remains to be seen.

Hey Pete,

Great article, thanks for sharing. It is certainly an interesting time to be a luxury retail brand. As eCommerce continues to devour the world, there are a decreasing number of physical retailers who can claim to offer a better experience than purchasing on the internet. Buying a book or buying groceries is simply a more convenient and often less expensive purchasing experience than a physical retail shop.

I believe that luxury goods retailers, on the other hand, do have a place in the future. If a woman is going to spend $4,000 on a Louis Vuitton bag, they are going to want a purchasing experience that reinforces the luxury, style and class that they are looking for in their purchase. Handling a bag in a decadent retail flagship store in the heart of London is a lot more in line with the brand experience a customer wants than clikcing a picture online and getting a bag sent to you in the mail.

I am surprised, however, that Burberry has endeavored to “take their website to the store” as opposed to vice versa. They need to be careful that they don’t cheapen the retail experience by introducing too much ubiquitous technology. Having iPads in your store doesn’t communicate much more than “I have the same tech as everyone else”. The more creative endeavors that they have undertaken with their technology, in my opinion, are more in line with what they should be striving for in their brand.

Hey, thanks for the interesting post. I’m still in the process of completely understanding blockchain technology, but it seems like it has some incredible promise. I can think of a lot of examples from my career thus far in which having a centralized ledger would have been valuable. For example, maintaining a capitalization table for ownership of a private company can be tricky. If there are multiple different investors in a business, all with different types of shares, as well as employees of the company with different stock option plans and vesting schedules it can get confusing as to who owns what percentage of the company. Typically one of the lead investors is in charge of documenting and maintaining a master cap table that serves as the official reference for all others. Being able to make this a central ledger, as opposed to an excel document owned by one group, could be a better system.

As you mentioned in your post, it seems like a shame that the most prominent use case for blockchain technology thus far – Bitcoin – has had so many issues. From the high profile hacking and fraud at the Mt. Gox Bitcoin exchange to the legendary volatility of the currency, I don’t think that Bitcoin is a very good ambassador for blockchain technology in general. I’m certainly not rushing to tie my savings up in the new currency…

Hey Chris,

Great article and thanks for the shout out. Activision Blizzard has definitely been aggressive about staying ahead of the trends in their industry. Two of the acquisitions that you mentioned really stand out to me in this regard: King Digital and Major League Gaming. King Digital seems like a high risk high reward acquisition. Mobile game development seems to have very similar economics to movie studios. It is difficult (though not impossible) to predict which games are going to be hits, and most games fail. But when they succeed, the profits are astronomical. Case in point is King Digital’s financial performance in 2013 – the year that Candy Crush went viral. They grew from $160 million in revenue to $1.8 billion in revenue (over 1,000% growth) while expanding their EBITDA margin to 38%. If Activision is able to get one or two more games like that out of King Digital they will have hit a home run with their acquisition. Mobile gaming is clearly a massive market.

The acquisition of MLG is very interesting as well. As you mentioned in your post, if Major League Gaming is able to establish themselves as the defacto league for eSports competition then Activision will made an incredible purchase. They will have positioned themselves as gatekeepers to eSports – certainly a powerful position to be in. As of yet, however, I don’t think any single league has been able to establish itself as the clear cut platform for competition. Just like how the NHL, MLB and NFL formed from the competition, fighting and eventual merging of several different professional leagues, I would expect that the next few years will see a good amount of consolidation of different eSports leagues. MLG appears to be the frontrunner at this point.

Hey Avatar,

Thanks for the post. It’s interesting to think about peach as a company in transition. It sounds like they started off as a company focused on making bras that actually fit people and then training direct sellers to measure potential customers in the comfort of their own home. The new model, digital peach, sounds like a digital service for measuring many more women, albeit in a less personal way. The first model sounds more intimate, the second model sounds more scalable.

I wonder how they have handled the transition from being a person-to-person company to being, arguably, a tech platform. Do they require a different staff at the home office? Do they require the same number of bra experts, or can they scale down so that only the best experts get to do all of the fittings and make all of the sales (with the new found efficiency of the virtual fittings)?

Finally, if they get really good at these digital fittings, I wonder if they would ever be incentivised to ditch their own line of clothing and instead just become the ‘online fit experts’. I would be that a lot of high end brands would pay peach to be their white labeled ‘fit experts’. Ie, if a women wanted to know if a Burberry dress or a Victoria’s Secret bra was going to fit her she could be directed to a peach fit expert who will do a digital fit consultation. It seems like there is a lot of opportunity if they are able to get these digital fitting sessions to work well.

I thought this was a very interesting post. Ideally, an electric vehicle would get invented and Coke or GE would be able to replace their entire old fleet with the new vehicle within a year or so. In practice, I would guess that it is actually going to take many years before those old vehicles would get replaced with new electric ones. Having an interim option – this electric retrofit – is an innovative solution.

I’m interested in how this company’s value is related to the prevailing oil prices. I would imagine that their pay back period is closely related to whether gas is really expensive or really cheap at any given time. Do you have any sense of whether XL Hybrids thinks about this sort of thing? The volatility of gas prices over the past 24 months has probably been crazy for them!

Finally, I thought your description of how they actually perform the retrofit was cool. It makes sense that not only do these retrofits need to be cost effective, they need to not create downtime in their fleet. It makes sense that the idea of ‘asset utilization’ from our earlier TOM classes holds true with these fleets. If Coke paid a ton of money for a truck, they probably want it to be on the road making deliveries as much as possible. Being able to install the system overnight must be a big selling point with customers.

Great post, Amanda. The vulnerability of our grid is a subject of a lot of writing – usually in the context of national defense and hacking. Indeed, very few people realized how devastating it would be to American society if only a few components of our energy infrastructure fail.

I thought your thoughts on the relationship between Utility companies like Eversource and clean tech innovators (Solar City, for example) was interesting. I had never really considered whether the incumbent players were incentivized or disincentivized to promote the adoption of new clean tech. Obviously they would be happy if it reduces the demand variability that they face, but what if it starts to cut into the total energy demands that Eversource receives? As a public utility are they happy that our national energy consumption is going down or are they upset, because they are presumably generating less cash flow for their shareholders?

Great post, Paul. I think it is interesting how microbiomes seem to be growing in importance in a a wide variety of fields. At my previous job we considered investing in a startup company that helped enable the treatment of Irritable Bowel Syndrome via fecal transplants. A fecal transplant allows a person with an unhealthy or unbalanced microbiome in their gut to have their digestive track seeded with a healthy population of bacteria from a person with a particularly well balanced gut microbiome.

I know that microbiomes are being investigated as ways to reduce emissions from cattle farming as well as ways in trash dumps. I think that major advancements in our understanding and engineering ability with bacteria are going to open up a lot of doors for us in the future.

Hey Sam, great post. Solar panel companies are arguably the most high profile solutions to our climate change problem. In this regard, there is a lot of weight placed on the success of companies like Solar City in terms of the perception of clean tech as a whole. As you noted in your post, there has yet to be a demonstrated link between the public’s moral desire for solar power and a sustain business opportunity in solar power. Peter Thiel writes about this in his book, Zero to One. He recounts that in parallel to the dot com bubble burst in 2001 there was a clean tech bubble burst as well. Many investors had poured millions of dollars into companies such as Solyndra ($845 million in vc) only to have the companies closed down a few years later when their technology never improved at an exponential rate and when competition immediately copied their innovation.

Until a company can make a major technological leap and drive energy yields much higher than their competitors (and sustainably higher) or until Moore’s Law takes hold in the industry I would advise avoiding their industry as an investor.

Hey Lawrence, this was a super interesting blog post. I hadn’t really ever thought about the history of lawns or whether they were necessarily good for the environment. Is there something more environmentally friendly that folks could put in their yards? I know in areas with high amounts of droughts people have started looking for plant species that use a lot less water but still look nice. The fact that growing grass is a carbon positive activity is crazy to me. With the amount of focus that people are spending on getting solar panels on their roofs it seems like an even bigger opportunity to put something in their yards that will reduce the amount of carbon in the atmosphere without necessitating chemicals and pesticides. Maybe there’s a startup company out there already working on this?

I thought this was a really cool topic. Not many people think about foundries or metal casting as it seems like such an antiquated industry, particularly in the United States. Not only is it a form of manufacturing (which is increasingly rarely found in the US) but it is often seen as a form of commoditized manufacturing. In reality, however, these foundries are still very much at the heart of our economy. Indeed, one of the largest M&A deals of 2015 was Berkshire Hathaway’s acquisition of Precision Castparts for $38 billion. If Warren Buffett is willing to spend $38 billion on a company, I think it is pretty safe to assume that that company is going to be around for the next few years…

I had no idea that foundries consumed so much energy. It is shocking to hear that a foundry is the single largest energy consumer in the state of Wisconsin. Making even small improvements to their energy consumption can mean a big impact on our environment.