Thought Starters

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From Bryce & Ren: Investing is for the curious

One aspect of investing that we love is how it allows us to go down rabbit-holes, read widely and just be generally curious. Too many non-investors think that to be interested in investing is to be interested in finance. What we’ve learned is that it is about being interested in every aspect of the world around us.

This week we were reminded of this as we explored the world of bioplastics for our latest Uncovered article. We uncovered Danimer Scientific (NYSE: DNMR), a company working to commercialise and scale plastics made from plants as an alternative to the fossil-fuel based plastics.

The plastics industry is worth $593 billion US dollars a year. That is expected to rise to $810 billion by 2030. And governments and big corporations are looking for alternatives to plastics, with particular pressure to phase out single-use plastics.

Danimer Scientific feed vegetable oils to soil-based bacteria in bioreactors and, in turn, this bacteria produces a polyester called PHA which can be used as a plastic-alternative. Fascinating.

Our curiosity doesn’t always lead to good investments. Danimer Scientific is a great example of this. Bioplastics remain unproven and face a number of technical and cost hurdles to compete with the traditional plastics industry. But we just love exploring these off the beaten track companies and understanding how they are trying to solve some of the biggest challenges of our time.

You can read the full Uncovered article on our website.

Weekly Thought Starters

Microsoft’s AI head fake and making Google dance

Microsoft’s CEO Satya Nadella has played the rollout of ChatGPT incredibly. By investing $10 billion into ChatGPT’s creator OpenAI and integrating the service with Bing, Microsoft put itself in the centre of the conversation. And the conversation quickly turned to how Microsoft challenging Google and threatening their dominance in search.

As Satya said to The Verge, “I hope with our innovation they [Google] will definitely want to come out and show that they can dance. I want people to know that we made them dance”.

And Google did dance. They rushed their ChatGPT equivalent, Google Bard, and in its first demonstration it made a factual error when returning information about the James Webb Space Telescope. That error saw Google’s parent company Alphabet lose $100 billion in market value.

There are now a few different companies that have developed and launched their generative AI chatbot. The biggest winner so far is a company that didn’t develop their own - Microsoft. This article takes a look at where this $10 billion investment in OpenAI may lead and where Microsoft sees its future, both with AI and outside of it.

The developing country industrialisation series

This was a comprehensive look at a number of developing countries and how their economies are changing. All over the world, from Mexico to Indonesia, Vietnam to Jamaica, there are fascinating growth stories playing out and interesting companies emerging. This series of articles has attempted to tell some of their stories.

For us based in Australia, the most interesting story is Indonesia. The fourth largest country on Earth measured by population, with supportive age demographics, blessed with natural resources, right on Australia’s doorstep. It is a story we should be paying attention to.

Indonesia’s GDP per capita has already risen 160% since 1990 and it is looking to take its natural resources - in particular nickel, a key component in batteries - and build an onshore green manufacturing capacity. Late last year there was reporting that Indonesia was supporting an OPEC-style cartel for battery metals. There are going to be huge winners out of the world’s shift to a renewable energy economy. Indonesia has ambitions to be one of them.

Inside Flipkart, the Indian giant beating Amazon

This year, India will overtake China to become the world’s most populous country. Such a large addressable market has been enticing for many of the world’s biggest companies, especially when many of these companies lost out to local incumbents in China. In the retail space, some of the world’s biggest retailers have been competing to win India’s growing eCommerce market.

In one corner has been Amazon. The American eCommerce giant launched its first shopping website in India in 2013 and Prime Memberships in 2016. In the other corner is Flipkart, the locally grown startup founded by two ex-Amazon employees in 2007.

These two companies have been going head-to-head for the past decade to win market share in India. Then, in 2018, Flipkart got a big boost after being acquired by Walmart for $21 billion. Now the two American retail giants are battling it out for the world’s most populous market.

This article from Rest of World tells the story of Flipkart and their battle with Amazon. India is one of the hardest countries to manage logistically. Many more established western brands break up India into a lot of smaller regions. For example, Unilever’s Winning in Many Indias strategy sees it break up the country into 15 smaller regional clusters.

At the same time, the opportunity is huge. In India, eCommerce still only accounts for a single-digit percentage of the retail market, compared to 25% in China and 14% in the United States. As more and more Indian consumers get smartphones and become online shoppers, Amazon and Walmart are hoping that the difficulties in managing Indian operations is worth it for the hundreds of millions of extra users.

Superfoods of the future, from cockroach milk to DNA-personalised meals

Kale, avocado, goji berries, chia seeds. Most of us have probably come across some of the ‘superfoods’ of the past few years. They are the foods that often come in fads and are celebrated for their maximum nutritional benefits for minimal calories.

This was a pretty out there look at some of the potential superfoods of the future. To compile the list, MIT Press looked at recent academic papers or books that have promoted the health benefits of various foods. For example, a 2018 paper published in Evolution & Development that suggested cockroach milk was more nutritious than cow’s milk.

The article also unpacks the potential for DNA-personalised superfoods. We are just at the start of understanding the relationship between the human genome, nutrition and are starting to see the amazing potential of precision medicine to tailor disease treatment to a person’s genetic makeup. This article suggests that personalised nutrition could become as common as precision medicine and in the future our diets may also be tailored to our specific genetic makeup.

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