2017 Internet Trends Report
Mary Meeker’s annual report is an invaluable tool in understanding how connected businesses are evolving over time. It is a long presentation, so we’ve included our favourite points below:
- Global smartphone shipment growth has slowed to a crawl at +3% vs. +10% last year
- The average user now spends over 3 hours per day on their mobile device
- This has led to mobile ad dollars exceeding desktop for the first time ever (Google and Facebook took in 85% of the growth)
- eCommerce grew 15% to almost $400B in the U.S.
- Data created per year is up 10% - Humans created roughly 14 zettabytes of information in 2016, or 14 trillion gigabytes
- Recorded music revenue is finally growing again after 16 years, thanks to streaming services
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International Development’s “White Paper Industrial Complex”
In this article, former banker and private equity professional, Tariq Fancy, speaks to the “white paper industrial complex”, highlighting the abundance of resources being dedicated to researching solutions versus actually implementing them. We’ve seen this problem firsthand at Capitalize for Kids. Many community service providers and non-profits simply don’t have the bandwidth, financial capital or human resources necessary to execute solutions. This is part of the reason we’re increasingly focused on implementing capacity-building solutions at organizations like Kids Help Phone vs. simply providing funds.
“We don’t need any more white papers. We already know what we need to do. Now we need help actually doing it.”
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This Is What the Demise of Oil Looks Like
We promise we aren’t making a prediction that bold ourselves. This was, however, a fascinating article, which succinctly explores the possibility for oil demand to disappoint long-term. As you might expect, the results weren’t pretty for Exxon Mobil Corp. and OPEC members. With so many variables at play – electric cars, renewable energy, efficiency gains, and so forth – it is very difficult (if not impossible) to get a true sense for what oil demand may look like long-term. The only certainty here is uncertainty, which is why industries with the potential for dramatic shifts generally aren’t ideal for long term investing.
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Jamie Dimon Wants This Guy to Disrupt JPMorgan
It is rare, particularly in financial services, to find a firm as focused on disruption as JP Morgan. David Hudson’s secret title is effectively Chief Disruption Officer. He has been given the budget and flexibility to try and disrupt the banks own business lines. In one striking example, the bank created a machine-learning program to interpret commercial loan agreements, eliminating 360,000 hours of legal work each year. Only time will tell how effective larger organizations will be in fortifying the moats around their respective businesses. That being said, some firms – such as JP Morgan – are taking threats seriously enough to fundamentally shift the underpinnings of the financial world. Their leadership in blockchain being one such example.
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William Deresiewicz: How To Learn How To Think
A short essay worth revisiting from time to time. In today’s world, the temptation to multitask is all too great. Personally, we can be guilty of underestimating the importance of time spent in deep thought.
“I find for myself that my first thought is never my best thought. My first thought is always someone else’s; it’s always what I’ve already heard about the subject, always the conventional wisdom. It’s only by concentrating, sticking to the question, being patient, letting all the parts of my mind come into play, that I arrive at an original idea.”
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Passive Investing - The “Greatest Bubble Ever”?
Our initial reaction when people mention the above is something along the lines of, “maybe, but probably not yet”. We would note (and closely monitor) some shocking statistics though. Vanguard saw net inflows of $2 billion per day during the first quarter of this year and according to The Wall Street Journal, quantitative hedge funds are now responsible for 27% of all U.S. stock trades by investors, up from 14% in 2013. Based on a recent Bernstein Research prediction, 50% of all assets under management in the U.S. will be passively managed by early 2018. In this article, 13D Research provides their perspective on how the well-reported rise of passive investing is leading us towards potential sizeable disruptions. With Exxon as his example, Bregman puts the crisis of price discovery in a real- world context:
“Aside from being 25% of the iShares U.S. Energy ETF, 22% of the Vanguard Energy ETF, and so forth, Exxon is simultaneously a Dividend Growth stock and a Deep Value stock. It is in the USA Quality Factor ETF and in the Weak Dollar U.S. Equity ETF. Get this: It’s both a Momentum Tilt stock and a Low Volatility stock. It sounds like a vaudeville act...Say in 2013, on a bench in a train station, you came upon a page torn from an ExxonMobil financial statement that a time traveler from 2016 had inadvertently left behind. There it is before you: detailed, factual knowledge of Exxon’s results three years into the future. You’d know everything except, like a morality fable, the stock price: oil prices down 50%, revenue down 46%, earnings down 75%, the dividend-payout ratio almost 3x earnings. If you shorted, you would have lost money...There is no factor in the algorithm for valuation. No analyst at the ETF organizer—or at the Pension Fund that might be investing—is concerned about it; it’s not in the job description. There is, really, no price discovery. And if there’s no price discovery, is there really a market?”
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