Updated: Oct 9
WEquil Group does not give investment advice. Nothing that we say or write should be interpreted as a recommendation to buy, sell or trade any security or any Blockchain project.
WEquil.Capital is discussing themes of the Personalized Economy on October 9th at 3pm EST. We discuss five themes although there are many more. These themes correspond with many of our investments which help to fund WEquil Group. Taken together these themes are pushing down costs for more tailored products and services. We humans have always had personalized preferences, but new technologies are rapidly helping to make our personalized tastes become more cost competitive.
Major areas of personalization that we will discuss include...
Manufacturing is becoming more personalized through the use of new technologies like additive manufacturing (3D Printing), cheaper sensors, robotics and a dramatic drop in the cost of transportation. These factors are enabling manufacturers to increasingly adapt to meet customized demands. The digital transformation of businesses is a big driver enabling immediate operational changes through code as opposed to fixed machinery and specific use cases.
Additive manufacturing is a leading example. Over the past decade many products have switched over to 3D Printing such as hearing aides, plastic braces, and hip replacements. 3D printers tend to be a superior manufacturing approach for anything tailored to individuals. Many products can only be produced with 3D printing such as the lightest and strongest bike frames and specialized parts for aircraft and satellites. Many products used to fight COVID19 were created using 3D Printers such as ventilators because they could be produced immediately from 3D Printing factories. Simple organs have already been printed and successfully transplanted into patients. Human tissues are being 3D printed and used to help expedite testing the efficacy of drugs and therapies.
Robotics is another example, allowing machines to become more customizable. Actions can be more collaborative. They also work autonomously from human intervention making for more flexible operations. Startups including Covariant, Ocado’s Kindred and Bright Machines are already using machine learning and reinforcement learning to help robots to detect and pick up objects of various sizes and shapes out of bins, among others. Over time the same models may help Robots learn to operationalize the production of personalized designs through a combination of embedded sensors and machine learning tools that use data gathered from experience.
Top holding: 3D Systems ($DDD)
Healthcare is becoming more personalized through technologies such as genomics, telehealth, and digitization with broad machine learning applications. In combination these technologies are driving down costs for traditional health needs by increasing health outcomes through more personalized prescriptions and experiences.
The power of Gene Editing is hard to over-estimate. People are being literally cured of genetic diseases. Genome sequencing is growing in adoption and with it the applications of Machine Learning technology to improve diagnosis and treatment outcomes. This video from students at WEquil.School provides useful background on the Genomics Revolution.
Telehealth not only reduces the cost of healthcare but it allows for more personalized experiences opening up a broader range of options. Reliance on local healthcare options forced standardization of services. Part of this is driven by health insurance plans which standardize costs for services to the insured. Part of this is also driven by the need for local health professionals to easily communicate their services to new patients. Now that many health services can be delivered virtually the options span the globe making it far easier for more niche offerings to connect with clients uniquely suited to their business models.
Digitization and machine learning are applicable in healthcare as well...improving the diagnoses and prescriptions for patients as more data is collected. More data means more accuracy on the potential risks and effectiveness. This can help lower the bar in terms of assessing the risks to individual patients for new drugs. Digitization is also helping to reduce the cost of trust by giving doctors and other healthcare professionals around the world ratings and comments from users to help overcome challenges in sourcing health services between countries.
Top holding: Invitae ($NVTA)
The video on Genomics produced by students at WEquil.School illustrates two realities of the Education Revolution. First, anyone can learn just about anything for free. Second, anyone can demonstrate that knowledge no matter than background ... even children. These are the two problems that brick-and-mortar schools from K-12 through University were created to solve...that and teach our population to be good soldiers if necessary (history is fascinating).
Educational Technology is bringing new opportunities at an exceedingly fast rate since the pandemic in 2020. The world changed ... and its rapidly changing behavior. The traditional 9-5 working model is no longer necessary. Neither is physically going anywhere to learn. All one needs is an internet connection and ambition.
Companies like Coursera and Blue Prism are already taking advantage of this historical movement. They are partnering up to provide top notch online education for young professionals that have an interest in learning the skills needed to take on an intelligent automation role. Through Coursera, Blue Prism is offering an online certificate for Robotic Process Automation as a response to the creative disruption that will take place within the next 5-10 years.
The world is changing fast and the pace is only increasing. According to the World Economic Forum’s 2020 report, half of all employees in the world will need reskilling by 2025 due to technological innovation. That is largely going to occur virtually and using micro-degrees for specific skills. Why? Because Bachelor's degrees are exceedingly expensive and are not tailored to the individual demands of increasingly specific jobs.
The Harvard Business Review highlights the fact that ⅔ jobs in the US require a bachelor degree yet in most of those fields the usefulness of theory in the classroom is considered unimportant in comparison to hands-on work experience. Thus the term STAR or Skilled Through Alternative Routes came to be as plenty of suitable candidates were discarded by many hiring companies for not holding 4 year bachelor degrees. Seeing as this issue is being brought even more to light after the 2020 lockdowns, more employers will be inclined to disregard the arbitrary requirement for their candidates to have 4 year degrees and opt to hire people that demonstrate “STAR” like qualities.
The pandemic has created a radical shift in the mindsets of both employees and employers in the job market. A McDonald’s employee can now quit his/her job, learn the skills necessary to become qualified to take on a role in automation through Coursera for a much more reasonable price and get hired by an employer in the field that sees value within skilled workers that don’t necessarily hold a college degree.
That same former McDonald’s worker can even become the tech support agent for the many automated systems or bots that would have otherwise replaced him/her in his/her previous job. (e.g. Voice Recognition Software in Drive Through, Touch Screen Order, etc.)
Top holding: Stride ($LRN)
Blockchain technologies are driving up personalization in many ways. One is by reducing the cost of collaboration to zero through the creation of Decentralized Autonomous Organizations or DAOs. Another is by enabling a wider range of finance solutions through DeFi. More personalized communities are also springing up around the world in part because of Non-Fungible Tokens or NFTs which can signal buy-in to a particular lifestyle or political philosophy.
DAOs are organizations that are not overseen by any one entity (such as a government), but are instead controlled through rules encoded in a program and controlled by many of its members. DAOs have grown from near non-existence three years ago to holding over $10 Billion in crypto treasuries. Technologies like Aragon, itself a DAO, allows users to create a DAO in minutes. We know...because we created several using the platform just to test it out. We’ve been discussing DAOs at length on our Spotify playlist, but suffice to say that any group of people around the world now that wish to poor resources to create decentralized solutions can now do so without trust or revealing their identity. We believe this will lead to a straight line up in terms of adoption for years to come.
Decentralized Finance is another area driving personalization...this time in the areas of banking and insurance. We wrote about it already in another piece titled "DeFi Tech" ... a publicly traded security which provides a wide range of exposures to the space. Our podcast with the executive team of Tellor provides another useful look into the space. Decentralized exchanges facilitate a broader range of options for investors to trade. Smart Contracts allow parties to engage in activities such as providing loans in crypto or insurance without the need for a central authority or 3rd party intermediary. DApps with material usage exist across a wide range of finance and insurance such as P2P loans and crop insurance verified through GPS satellite measures of rainfall to trigger payments.
Non-fungible tokens, or NFTs, create personalization directly by creating new forms of art and other on-chain collectibles that previously did not exist. NFTs are quickly revolutionizing the digital art and collection markets, letting ordinary investors own a stake and vote on the eventual outcome of them. This process can be applied to items as diverse as collector cards and digital game assets. NFTs are also beginning to serve as “membership” cards to crypto communities such as “CryptoPunks”.
Top holding: DeFi Tech ($DEFTF)
The Startup boom is illustrative of personalization in the workforce as well. The NYT’s published an article in August on how the “Start-Up Boom in the Pandemic Is Growing Stronger”. In short, Americans started 4.3 million businesses in 2020, a 24% increase from the year before, and the first material increase in 40 years. The boom has proven to be broader and more durable than early skeptics expected. So far this year the economy’s reopening has not reduced the share of workers reporting as self-employed with the number rising in July to an eight-year high.
Measuring things like “Hours Worked” and “Productivity” is more challenging for the self-employed. That has always been the case in part because self-employed people generally don't have set hours or track them. The new “Gig Economy” makes these measurement issues even harder. Platforms like Uber, Etsy, UpWork, eBay, YouTube, Amazon … etc (long list) … create new opportunities and flexibility for individuals to work when, how, and where they want. Some of this “Work” may technically qualify as “Leisure” to individuals working in more traditional jobs.
For example, is blogging or sharing conversations with friends on a podcast “Work” or “Leisure”? Does it matter if your friends are also clients? What if one’s use of social media does not generate income, but builds a digital brand that can be used to create income later?
Economic data has always been a lot more sketchy to interpret than market prices. Prices reflect the reality of a transaction. Economic indicators are estimates constructed by economists with varying assumptions and measurement errors. Take "Jobless claims" as an example.
The changing nature of how we work could mean the strength of our recovery is even stronger than the numbers suggest. How much people will shift behavior when it comes to flying or driving is still an unanswered question. But the pandemic shocked our understanding of the power of virtual and digitization … so we expect the growing startup trend to continue.
Those who wallow in fear and uncertainty will only break free if they open their minds up to change and innovation. In times like these that it’s important to not mistake risks for opportunities. When investors panic and lose faith in great companies that are growing fast because they are making the world better...we play the contrarian and buy. The term “Disruptive Innovation” means different things to different people. We are not simply buying and holding a bunch of Ark Invest stocks. We are buying "Value" and where we see value is in companies growing fast and changing the future trading at a 50% discount to prior highs.
Our top conviction stocks are listed in our Twitter bio. Feel free to follow and don't forget to join our podcast every Monday at 6PM EST. Zoom link is sent out at the Twitter handle below.
Rishi and Mr. WEquil