Vince really interesting write-up. I would have to agree with Amelia Lee in a few perspective but one in particular: how can BCG differentiate BCGDV from its existing consulting brand? I think its critical to look at the two separately because the failure of some of BCGDV investments on the BCG brand could have some implications which is quite worrying to me. Interested to get your thoughts.
I agree with all the post above. This is an awesome write-up. I do have to agree with MattGerow. While I think the technological innovation here is second to none there is a key barrier to entry here. Will people be willing to part with information that they believe to be so personal? It seems unlikely to me now but the potential of the company’s technology is too significant to ignore.
I would have to agree with TH above. I think Kickstarter is a great idea fundamentally, but what worries me about it is the barriers to entry. What stops another firm from coming and competing with Kickstarter on fees. I think the company needs to pursue M&A in order to have a more defensible business model. I think Paul Xie is right, what gives kickstarter the edge? Market research might be the answer.
A great write up. Its really incredible what Interswitch has done in the last few years. Value creation at its finest. I think a key question for me would be where do you think that Interswitch’s future growth markets will come from? They have done a tremendous amount in a short period of time. Are they at the top of their growth cycle?
Really interesting write up. I think Quantopian is a really interesting concept with a lot of promise but I do worry about the long-term sustainability of the business model. Inherent in the assumption of the business model is that there is latent investment talent that has been untapped by hedge funds and that in a way the company will be able to pool the talent of these individuals in order to create a strategy that will outperform the market. I question, like you, the investment professionals desire to stay on such a platform if they recognize that their strategy is one that Quantopian is trying to license (why not leave the platform for greater economics).
I completely agree with one of your conclusions that over regulation by political entities can distort markets. That is clearly exemplified in the clean tech industry and I thought your blog post helped to lucidly articulate that view. What a blood bath. Outside of extraneous one-time events/reverberations in the market, has an asset class posted such putrid returns before? Really amazing. The one view that I would like to challenge is your assertion on capital allocation. I do broadly think that the market in its manifestations is efficient and while an asset class can go through short-term vagaries that ultimately the market is efficiently pricing in the risk of clean-tech. Could it be that capital is not going to this sector because perhaps the risk-reward profile of the asset class is still not what it should be? Perhaps we still have some way to go from a technological and cost perspective till the market sees these projects as viable from a risk standpoint.
Bridging infrastructure gaps in Africa comes with a number of opportunities. A presentable example is the wide adoption of mobile phones in the absence of land line infrastructure. Africa as continent, but particularly sub-saharan africa has a massive opportunity with alternative energy particularly given the abundance of alternative energy resources (solar, wind, etc.) and I think SunCulture is well-positioned to capitalize on opportunities out there.
Thanks for the link and the read Aayesha. I definitely agree with your point about the efficacy of solar and the multifaceted benefits that SunCulture
Very valid and astute question that I think is key to SunCulture’s success going forward. They know they have a massive market and a strong, differentiated product that adds very material value to their customers. However as you have pointed out financing is the issue. Many local banks would rather stay with less risk averse projects with sectors of significant size and scale in their local economies, and tend to not back small-hold farmers with insignificant access to capital or collateral. While many governments and developmental institutions provide financing for agriculture projects in Africa. Can SunCulture access this capital and other forms of capital in order to support its growth? That in my view will be what fundamentally defines the company.
Totally agree with you here Sam. Positioning is important for SunCulture and it is something that is very relevant from a strategy perspective for them. They tend to go to the market with a “efficiency” value prop but as they begin to scale in line with their ambitions I think the market will continue to put increased scrutiny on the communicated value prop.
Great post Raphael. I, like Miras, have always been positive about Elon Musk’s mission driven ambitions. While I think that Elon Musk has created a products that is desired by the basic consumer, I tend to think that the company is set up for success even in a world where people are living in a more sustainable manner. As you duly noted, the Tesla products are cool and with the Tesla 3 soon to be released (2017), Tesla will now be available to the average American consumer (current price of around $35,000). This is a company that continues to innovate, improve its product range and aesthetics, and drive down the price of their vehicles and driving broadly. I think they are set up for success in any environment but is that success already built into the stock price? Valuation does seem relatively rich.
I couldnt agree more with the author in this case. While I was not privy to the lengths that Related has gone to in order to develop eco-friendly buildings and while I am quite astonished by the capital intensity and scale of the Hudson Yard’s development (cudos to them), I do think Related and many other developers should be held to a certain standard as it pertains to achievement of eco-friendly metrics. Forecasts are good and well but if outcomes are significantly worse than projected there needs to be a fundamental shift in the scrutiny of projections or retroactive assessment of LEED certification levels. What is perhaps a bit concerning to me is, as you stated, tenants tend to put a premium on eco-friendly developments. Assuming this is reflected in valuation, one of the last points about LEED developments being 29% less efficient than there commercial alternatives is at best a marketing ploy, but at worse some what unethical. Individuals are paying premium valuations for something that is either value destroying or whose value is assumed to come at some point in what appears to be the distant future. This simply doesnt feel right to me and hence I unequivocally agree with the authors end conclusion.
Great article Sam. I think there are a couple major issues at play here: 1) As you correctly noted. There is a fundamental question of the economics of solar. While governments always have a major role to play in the creation of specific incentive structure’s sin society (alongside the general transfer of wealth), I find that the best businesses find a way to viability without the support of government. Can the combined business find a route to profitability? Seems like that reality very well may be in the distant future. 2) Getting away from environmental sustainability a bit, I am interested to get your views on the transaction, particularly as it pertains to corporate governance. It appears to me that Elon Musk has continued to articulate a propagated narrative that investors have bought into again. While there was widespread consternation about the transaction (http://www.forbes.com/sites/chuckjones/2016/11/07/is-teslas-elon-musk-throwing-a-hail-mary-for-the-solarcity-deal/#61e2a9201736) the deal was somehow approved by shareholders. A levered asset with negative cash flows acquired by a company with astronomical valuations and a propensity to oversell to investors. The results could be interesting but hey Tesla just posted its second quarterly profit ever (http://www.cnbc.com/2016/10/26/tesla-reports-third-quarter-earnings.html). Interested to see what you have to say.
Bank of America is well positioned and certainly set to benefit IF the “green revolution” truly takes off in a major way. With that said, we have learned that the market requires a certain level of return for a given level of risk and I fear that there will be continued market limitations to the progress of “green bonds” specifically. While Bank of America is trying to be a market leader in this segment of the market, I often find that financial products are lagging market indicators of a industry’s general life cycle. In other words, market products typically tend to proliferate as the market begins to mature. There are some key caveats to the aforementioned statement, but I wonder to what extent technology and cost reduction therein can play in the growth of this sector (as it should help to make projects bankable and more economical thereby justifying market returns).
I think this is a particularly compelling post. Being a fast-food company does not require you to forgoe thoughts about sustainability as it relates to your supply chain and what is on your menu. I think its great what Shake Shack is doing, but I wonder why there seems to be a lack of publicity about how they sources suppliers. I have been to Shake Shack well over 50 times now and I have never been privy to their sustainable leanings. While making sustainable operating decisions is an unequivocally required first step, how powerful would it be if an emerging brand like Shake Shack made there attempts for sustainability very public? I think the implications are quite significant.
While Shake Shack has adopted a number of measures to ensure that their business is “sustainble”, I, like Parker, do wonder about the quite contradictory message that Shake Shack is sending. Can someone genuinely contributing to obesity make a genuine argument that it cares about sustainability? Are they in effect optimizing for the environment over people?