Briefing: Vaclav Smil’s latest book, “Number Don’t Lie,” is a treasure trove of interesting data and stories. | Visa’s $150,000 Crypto-Punk NFT purchase this week is a sign of forward-thinking leadership. It also wasn’t really that costly for the $500B market cap company. | General-purpose robots may be here sooner than you think; Hyundai and Tesla are the first leaders to step up.
Insights from Vaclav Smil
I recently finished Vaclav Smil’s latest book, “Numbers Don’t Lie.” Smil is one of Bill Gates’ favorite authors, especially when it comes to big macro societal topics like energy and vaccinations. Here are some takeaways:
- Megacities: In 1900, only 5% of the world’s population lived in cities. By 1950 it was 30%. In 2007 it passed 50%. Cities create countless synergies, investment opportunities, superior education and rewarding careers. In 1950 there were only 2 megacities in the world: Tokyo and New York City. Today 60% of the megacities are in Asia. You can expect more megacities to pop up in the East and not the West.
- India will soon supplant China as the most populous country. No later than 2025 and perhaps as early as 2023. Short-term demographics are easy to predict and difficult to change.
- Vaccinations: It costs more to treat a sick person than to prevent a sickness via a vaccine. The initial cost of vaccinating every infant at birth against polio, diphtheria, tetanus, and so on is 40x less than the future cost of care if they were to get sick. Vaccinations are an excellent return on investment.
- We’re stuck with diesel fuel for now. The largest international diesel-powered container ship can transport up to 23,756 containers over 21,000 km. The largest lithium-ion-powered container ship can transport 120 containers over 55 km. Diesel is nearly 200x more efficient from a weight perspective. Batteries have a serious energy density problem. Using lithium-ion batteries on our largest container ships would take up more than 40% of the cargo space. That would crush profit margins and then some. We need to see a 10x increase in the energy density of batteries before they become the standard.
- Longevity: Japan has the highest life expectancy in the world. Japan also has the lowest obesity rate globally at 4%, while the US is 36% (!!!). Vaclav and others estimate that the low-calorie diet of <2,700 kCal/day is really all there is to Japan’s longevity secret. The US diet is between 3,600 and 4000 kCal/day.
- Save the planet through reducing consumption: 30% of all food globally is wasted. We can benefit greatly by investing in food waste reduction. 50% of residential energy consumption goes towards heating. We can dramatically reduce energy consumption at scale by investing in better insulation like triple-pane windows for all housing in cold areas, for example.
Visa Purchased an NFT
Visa announced this week they purchased a crypto punk NFT for $150,000, and they wrote a blog post about it. Visa is a $500B market cap company with $20B in cash, so this transaction isn’t even a rounding error for them. It’s a great marketing campaign, though. What is most important here is Visa’s willingness to test and stay on top of emergent trends. Visa is a top 15 holding of the S&P, meaning a significant number of Americans now own a tiny fraction of this crypto punk NFT.
Blockchain technology is a rich territory to explore. It’s not all about the price of bitcoin or the stunningly high returns of most of the crypto assets to date. A willingness to explore and test in the crypto space is a healthy sign of leadership for Visa. It’s getting tough not to write about crypto each week, considering it iterates quickly (because it’s software) and has an ever-expanding number of passionate participants. If you want to read more about NFTs, we turned our weekly article into an NFT back in February.
Tesla had their AI Day last week and made headlines for introducing their conceptual Tesla Bot. Elon’s logic was that an autonomous car is essentially already a robot. Eventually, the wheels can be replaced with arms and legs. He also said he would like to see it weigh 125lbs. A Tesla battery weighs 1500lbs. For the Tesla Bot to operate on batteries, we will need to see that 10x increase in lithium-ion energy density mentioned above.
Boston Dynamics, which produces the Atlas robot that can do parkour and backflips, is owned by South Korean auto manufacturer Hyundai. Atlas weighs about 200 lbs and is battery-powered but almost certainly lasts less than 90 minutes. It takes a lot of capital, vision and talent to tackle the challenges needed to create these humanoid robots. When we solve the battery storage challenges, you can bet we will start using these general-purpose robots in many areas that require repetitive or unsafe work. Consider that it may be a reality sooner than you might think.
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.