Site Network: Home |

Running Money

Over the weekend I had a chance to read the outstanding book Running Money by former hedge fund manager Andy Kessler.



Kessler describes a theory of investing that closely ties to Kurzweil's Law of Accelerating Returns. He refers to 'the growth of growth', is consumed with the idea of 'scale' and ultimately comes to the conclusion that economic growth will always be driven by the process of 'augmenting humans'.



The value of intellectual property is Kessler's primary concern. His motto is 'we think, they sweat'. As an example, Kessler describes the obscenely high-margin IP of US companies Microsoft and Intel who sell their products together to Japanese companies like Toshiba. The Japanese OEM is stuck with the inglorious task of actually slapping together some plastic and an LCD screen around the American components and building a physical product. The OEM then sells their product back to us here in the States for a razor-thin profit -- while the American companies rake in pure-profit royalties from mass adoption of their IP. It is easy to imagine how royalties for the use of Microvision's MEMS scanner designs and driving algorithims could take the place of payments to Wintel in this example, for cell phones, digital cameras, camcorders, gaming glasses, laser printers, and on and on.



There is a lot of info here -- for me it's a real thrill to see someone put millions of dollars to work who seems to have the same kinds of concepts about how value is created and how the rate of change is constantly accelerating. It's interesting to revisit some of the points over the last several years, like October 1998, when Long Term Capital Management imploded and the immediate, ugly aftermath of that -- the year and a half long run to Nasdaq 5000 that started right then, and the long slide back down, where Kessler and his partner saved themselves and their investors with the decision to force liquidations of their positions in 2000 and 2001.



Kessler's ideas about 'horizontal slices' of new technology and processes, in which numerous companies each provide high-margin components that enable new capabilities for people tie directly to the emergence of new applications like augmented reality. It's easy to see how Microvision's technology can enable a new 'waterfall' where US companies like Qualcomm, RFMD, Verizon and Oracle can augment humans by augmenting our perceptions of the world.



Reading this book as a Microvision investor, I felt a really wonderful sense of confirmation. Kessler reiterates several times the importance of confidence in what you're doing -- and that there is no limit to what is possible in an economy driven by the power of intellectual property, and the goal of augmenting humans.



Microvision's MEMS scanner designs and scanner/light-source driving algorithims will enable a see-through world of pop-up information that populates the real world and brings previously unattainable capabilities to you and me. The value these inventions can create for MVIS shareholders, as well as for investors in other companies that can play a role in bringing augmented reality to consumers, is unlimited.



Interestingly, Kessler will be at the Telecosm conference along with Microvision CEO Rick Rutkowski on October 19 and 20.

0 comments:

Post a Comment


This website does not recommend the purchase or sale of any stocks, options, bonds or any investment of any kind. This website does not provide investment advice. Disclaimer and Notices: Disclaimer: This website may contain "forward-looking" information including statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. The information on this website includes forward looking statements, including statements regarding projections of future operations, product applications, development and production, future benefits of contractual arrangements, growth in demand, as well as statements containing words like believe, estimate, expect, anticipate, target, plan, will, could, would, and other similar expressions. These statements are not guarantees of future performance. Actual results could differ materially from the results implied or expressed in the forward looking statement. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements are included in MVIS most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission under the heading 'Risk factors related to the company's business,' and our other reports filed with the Comission from time to time. Except as expressly required by Federal securities laws, MVIS Blog undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, changes in circumstances, or other reasons. Legal Notice: Although considerable care has been taken in preparing and maintaining the information and material contained on this website, MVIS Blog makes no representation nor gives any warranty as to the currency, completeness, accuracy or correctness of any of the elements contained herein. Facts and information contained in the website are believed to be accurate at the time of posting. However, information may be superseded by subsequent disclosure, and changes may be made at any time without prior notice. MVIS Blog shall not be responsible for, or liable in respect of, any damage, direct or indirect, or of any nature whatsoever, resulting from the use of the information contained herein. While the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. MVIS Blog has not independently verified the facts, assumptions, and estimates contained on this website. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, or completeness of the information and opinions contained on this website. Consequently, MVIS Blog assumes no liability for the accompanying information, which is being provided to you solely for evaluation and general information. This website does not contain inside information, proprietary or confidential information learned or disclosed as part of employment relationships or under nondisclosure agreements or otherwise.