“This is the leapfrog decade”

Carbon Tracker published an excellent research note this week exploring the rapid shift to renewables in developing economies. The report, Reach for the Sun: The emerging market electricity leapfrog, dives deep into how emerging markets will likely not follow the same trajectory to renewables as developed markets. This dynamic has all sorts of fascinating implications, but for me, the main takeaway was this: Right now, 770 million people worldwide still have no access to electricity. But between rapidly declining solar/wind/battery costs—and improving efficiencies across the renewables value chain—emerging markets can leapfrog the fossil fuel system altogether by obtaining their growth in demand from renewable sources.

“The story of the energy transition is more nuanced for emerging markets than for advanced economies — and offers more opportunity. Emerging markets have several energy transitions underway simultaneously. These include: a shift from traditional biomass to modern energy; a shift in patterns of energy demand thanks to rapid urbanisation and industrialisation; deeper integration into and influence in global energy markets; and the imperative of cleaning up the energy mix due to a shrinking carbon budget.”

•••••••

A rebalance of power in China?

Lillian Li, who authors a very smart newsletter about the Chinese technology landscape (subscribe here), published a thoughtful piece this week about the “intent and tipping point for Chinese tech regulation,” which I highly recommend. One of the more interesting elements of her analysis is asking the “why now” question. Specifically, she writes: “I think the actual question here isn’t why tech companies are facing regulation, as Chinese tech history has shown that will always happen. The question should be: why now?” She continues…

“Tech platforms have shifted towards value extraction rather than innovation for growth: With diminishing growth in overall Chinese internet users and most of the big markets already digitalised, tech giants have to focus on increasing spend from existing users to grow. COVID-19 has solidified platforms’ positions in people’s lives but users are feeling the pinch. There is discontent with price discrimination practices (Didi and other platforms will charge older customers higher prices for the same products), with the stringent conditions facing workers and with the platform tax merchants have to pay to get traffic and attention to their wares. When the size of the pie becomes fixed, every player switches to extraction mode and the consumers suffer.”

•••••••

Investing as a craft—or as a business?

Way back in Issue #2 of The Nightcrawler, I linked to Hayden Capital’s Q4 2020 letter, written by Hayden’s founder/CIO Fred Liu, who discusses investing as an art form. This past week, Fred sat down with Tilman Versch, host of the excellent Good Investing Talks podcast, to extrapolate on this idea—and much more—from self-improvement, the role of writing, dealing with volatility, and so on. In particular, I enjoyed hearing Fred talk about how he is building Hayden Capital as a craftsman, and not as a businessman.

“The difference between a businessman and a craftsman is that the businessman is creating a product based upon the feedback of their customers. They’re building a product that their customers are demanding, versus a craftsman who is building a product or a service that they truly want to build for themselves… and then they go find customers who find value in it. We’re really trying to be craftsman here, which means that the majority of potential partners for us probably aren’t right for our partnership. That also allows me to be true to myself. I get to build it the way I want to build it.” 

•••••••

A few more links I enjoyed:

Too Smart – via Morgan Housel
“Wealth might be a sign of good decisions, but can those decisions be repeated? And do good decisions in one field translate to wisdom in other areas of life? Maybe, maybe not – that’s the best we can say. And there are times where exceptional wealth can prevent empathizing with ordinary people, making insight more precarious. A similar mistake, a bit harder to grasp, is the assumption that smart people have the right answers.”
The Future of Genome Editing with Professor David Liu – via Ark Invest
“Professor Liu’s research integrates chemistry and evolution to illuminate biology and enable next-generation therapeutics and, in this episode, he shares some of his insights into base editing and prime editing and their advantages when compared with CRISPR, specifically the advantages of precisely fixing rather than disrupting genes, which could be a life-saving solution for a huge number of genetic conditions. He also touches on the next frontier of proteome editing and explains the role that Botox plays, his surprising involvement in developing a system to beat Blackjack, and his predictions for the future of gene editing therapeutics, some of which might sound like science fiction!”

This information should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the investments or strategies referenced were or will be profitable, or that investment recommendations or decisions we make in the future will be profitable. This article contains links to 3rd party websites and is used for informational purposes only. This does not constitute as an endorsement of any kind. While Nightview uses sources it considers to be reliable, no guarantee is made regarding the accuracy of information or data provided by third-party sources. Nightview Capital Management, LLC (Nightview Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Nightview Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request.