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Mostly Borrowed Ideas

14 Oct, 8 tweets, 3 min read

1/8 Thread: Installation vs Deployment era investors

Ben Thompson recently wrote about Carlota Perez's theory related to "Technological Revolutions and Financial Capital".

Some thoughts on this topic.

2/8 As I kept reading and thinking on this, it occurred to me that the defining debate in investing for the next couple of decades may not be "value" vs "growth" investing rather "installation" vs "deployment" investing.

3/8 Perez identifies five distinct era for tech revolutions:

The industrial revolution
Age of Steam and Railways
Age of Steel, electricity, and heavy engineering
Age of Oil, automobiles, and mass production
Age of information and telecommunications

4/8 Each of these revolutions goes through a period of irruption and frenzy which inevitably leads to bubble and ultimately the bubble pops and the revolution enters a turning point.

Following the painful turning point, however, a new era of "deployment" ushers.

5/8 Of course, the obvious question that comes to our mind is whether the last revolution ran its natural course and we are in the brink of the next one.

Thompson seems to think the last two decades was the "deployment" era. Perez thinks we are yet to begin one.

6/8 I feel most public market investors these days, knowingly or unknowingly, are invested in this "deployment" or "installation" debate.

Perhaps the bull case for Big Tech is the deployment era is ahead of us.

7/8 And the people who are paying lofty/frenzied revenue multiples are betting on the fact that we are perhaps already in a new tech revolution which means there is a new "installation" phase ongoing.

8/8 Relevant readings

Ben Thompson's piece: stratechery.com/2021/the-death…

Carlota Perez's book (yet to read): carlotaperez.org/pubs?s=tf&l=en…

All my twitter threads: mbi-deepdives.com/twitter-thread…

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stratechery.com/2021/facebook-…

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