Do Not Read Until 2032
Discover more from Invest Karo India
Do Not Read Until 2032
A Data Driven Attempt to Understand Where the Puck Maybe in a Decade
If someone told you in 2012, that self driven Robo Taxi’s would be roaming on the streets of Arizona, United States in 2022, you would have either labelled them a fool or a sci-fi nerd.
To put things into context, Tesla in 2012 barely managed to sell 10,000 of their cars. Electric vehicles were a distant dream, at best, telecom companies were flashing in their brand new ‘high speed’ 3G internet service and Apple had just released it’s state of the art iPhone 5!
Fast forward 10 years to 2022 and Tesla is doing over ~$75 Billion in annual revenue, selling just shy of a million electric cars every year, last of 3G services in US are being shut down and 5G services are being rolled out in most developed countries in the world.
World moves fast!
This write up is my attempt to imagine what 2032 may look like. Now, I do not claim to see the future or predict it accurately, most of what I have to say today may not turn out exactly as written but by looking at data and ground up research, we can make an educated guess into what technologies will succeed and how dramatic these transformations may be.
I will also not bore you into stating the obvious - electric cars will be the norm or renewables will power the majority of the electric grids.
With that, lets dive in.
Before we proceed, please consider sharing this write up with your friends or on your social media.
My aim, through these write ups, is to reach out to as many people as I can, so that they can make informed financial decisions.
Prediction #1
The world of Gaming and VFX will overlap and consolidate
This one is pretty obvious and already happening without us realizing it. Gaming industry today is many fold bigger than all of movie and music industry combined. Technologies are made for gaming first and adapted for movies later on.
If you’re a fan of the TV Show Mandalorian, you maybe surprised to know that entire VFX for the show was done in Unreal Engine by Epic Games (the makers of Fortnite). There was no typical ‘green screen’ used in the show, backgrounds and visual effects were pre rendered in a game design software and simply added via Led Screens while filming.
The implications of such a move? Millions of dollars and thousands of hours that were spend on VFX are now reduced to simple pre renderings costing you no more than a subscription to a software. It is for this reason that gaming companies are in 2022 buying out VFX companies like Peter Jackson’s Weta being bought out by Unity.
A typical gaming company of 2032 looks very different from a gaming company of 2022. In 2032, gaming companies earn most of their revenue by licensing out their world creation software - to movie studios, smaller game design studios and other indie developers, just like today you can subscribe to a Adobe software and have access to the same tools as a professional.
Further, all gaming in 2032 is streamed, think of Netflix but instead of an on demand movie or tv show, you get to play a game from an endless continuously increasing library.
Signs of this change are already showing - with Google experimenting with Stadia, Amazon with Luna, Netflix with their minor games related to their IPs, Microsoft with xCloud and PlayStation with PS Now.
So what does all this mean to you as an investor?
Well, for starters, a proxy bet would be the underlying software providers to these gaming companies - Unity being an example of such. The other is small gaming companies, will find it increasingly hard to compete in a space that is getting major attention from deep pocket Big Tech. In 2032, gaming industry is highly consolidated and dominated by players that have technology and online distribution as their strength first and creating immersive games second.
If you would like me to do a deep dive or hold a webinar into Gaming and Metaverse related companies, please leave a comment.
Prediction #2
Low Skilled jobs ranging from farming to truck driving will be automated
(*at least in the developed world)
This one isn’t that hard to predict. Most of the western world is going through a labor crunch esp. in low skilled areas. The reasons behind it vary - from an aging population to a more educated and skilled workforce and finally inability for a worker to survive on a low skilled pay.
Some western countries like Canada are tackling this problem by allowing more immigration. More than 80% of growth in Canada’s population is due to immigration alone. The country of 30 Million people, wants to allow over 361,000 new immigrations every year starting 2022.
The reason for this mass immigration is simple - Canada has an aging population which if not revived with a much younger workforce can collapse its economy and social security systems in the coming years. Today, if you are college graduated and below 30 years of age, you can get a Canadian PR visa in a few weeks.
The problem with such immigration is - most immigrants are skilled and do not migrate to a developed country like Canada to work in restaurants, drive a taxi or apply for other low skilled jobs. So as the population ages in the coming decade, the high skilled jobs are the first to get filled with immigrated population, the low skilled ones - well, they will keep facing labor supply crunch and thus are ripe for - automation.
In 2032, low skilled jobs in countries like Canada are increasingly automated. Take farming for example. Canada is one of the largest producers and exporters of grains and food in the world. An average farm in Canada is around 700 hectares in size and uses machinery that costs millions of dollars. These farms will be the first in the world to adopt technology that will make them increasingly automated.
Before we see autonomous cars, we will have autonomous tractors. The logic behind it is simple - its much easier to program a tractor or any other farm equipment to operate on a piece of walled off empty farmland than it is to program a car to operate autonomously on a road filled with multiple other vehicles and pedestrians.
Signs of autonomous farming equipment are already emerging. Below is video by John Deere - the largest farming equipment manufacturer in the world showcasing their new fully autonomous tractor.
The farm of 2032 is self farmed - with minimal supervision involved.
Another area to get automated is truck driving - again with autonomous vehicles. TuSimple - a company listed in US already operates completely autonomous trucks for UPS every single day.
As these trucks make more trips, the autonomous driving software will get better at an astonishing pace. Expect to see more autonomous trucks in future.
The underlying need for all of this automation is the aging population and unavailability of enough labour supply to fill these jobs. As these jobs get more automated, the pay for such low skilled jobs will further reduce and drive even further shortage of labour until we reach a point where these jobs are automated to a large extent.
So what does all this mean to you as an investor?
Look for companies that are enabling this automation. Automation for passenger vehicles is far away, but in 2032, farmlands are completely automated. John Deere for example, is not considered by many a bet on autonomous vehicles, yet it is!
Look for opportunities where others aren’t. If there is consensus around an investment thesis, its usually the wrong investment to make.
Prediction #3
Space Industry will worth many Trillions of Dollars
Space, the final frontier for humanity. In 2022, Space Industry is largely ignored by the investment community - it is seen as a small niche industry that makes less than $10 Billion in revenue every year. But by 2032, Space Industry combined will worth many trillions of dollars and growing at high double digit rates.
Here is why I say so.
Access to Space is Democratized
The main challenge for any form of space industry to take place was access to economical launches. This in 2022 has been fixed to a large extent - there are multiple successful rocket launch companies, SpaceX and RocketLab being the two most successful ones.
As a result, launch activity has exploded.
From just about 20 satellites being launched in 2009, we have reached velocity of ~1000 satellites being launched in 2022. This pace will sustain through the coming decade. Today, the use case for space transportation companies is the small-sat industry, tomorrow, the use cases will be far and wide.
Take for example, building a new space station. The current International Space Station is nearing its end of life and will soon be burnt up and decommissioned by NASA by 2028.
The next space station to be built, will not be sponsored by a Government agency like NASA. Instead, there will be multiple space stations developed by private companies in collaboration. Just like today in 2022, companies lease out commercial office space from real estate companies, in 2032, companies will be leasing out space (no pun intended) on the Space Stations orbiting the Earth.
Take for example, Axiom Space, a company that specializes in building space habitats. It was recently awarded $140 Million contract by NASA to build habitats that can attach to the current International Space Station.
The same company, signed a deal with Tom Cruise’s production company to build a studio in space!
In 2032, space stations are commercial and operated via private companies. The same space station is used by movie studios, research companies and new age businesses that can only operate in environment of space - 3D Organ Printing for example.
So what does all this mean to you as an investor?
Look for companies that enable this industry to take place. It is not easy to build a rocket company, a sustainable reusable rocket company - even harder. This is an industry with the highest barriers of entry - even the paint that goes onto a rocket has to be approved first. When a rocket launches, the entire aerospace surrounding it has to be seal off from activity. In 2032, when the rush for space age is in full swing, it is these rocket or space transportation companies that will be the prime beneficiaries.
I will let Peter Beck, the founder and CEO and Rocket Lab, explain this further.
Prediction #4
The most significant advancements will be made in the world of Biology - Not Necessarily Healthcare but Biosciences
In 2022, synthetic biology is at the cusp of its commercialization. Advancements in the field of CRISPR and precision fermentation over the last decade have finally made it possible for humans to control and program biology.
Today, we can make enzymes and bacteria in lab do whatever we want to.
Want to revive the smell of a 200 year old extinct flower? Well, we can do that. Want to make enzymes that take all the waste material out of a chemical plant and produce valuable products out of them? That’s possible too.
In 2032, biosciences effects every product that you use without you ever knowing it. The chemical used to make the products you use - they are 100% carbon neutral - all thanks to an enzyme. The food you consume - 100% organic and disease free without using a single harmful pesticide - all thanks to the wonders of synthetic biology.
Enzymes in 2032 is a buzzword, similar to how Artificial Intelligence and Electric Vehicles are a buzzword today in 2022. The largest chemical company in 2032, doesn’t have any chemical plants - it instead manufactures and sells enzymes that help boost the output of other chemical plants in a carbon neutral way.
Another advancement in the field of Biology, will be precision medication.
Today, traditional drug manufacturing companies only invest R&D money into areas where there are a large enough pool of patients. This unfortunately ignores those that suffer from rare health disorders. In 2032, patients of all types are cured no matter how rare the disease is - all thanks to sharp decline in R&D due to gene sequencing.
So what does all this mean to you as an investor?
Look for areas where companies are enabling this movement. The guys at Andreessen Horowitz, famous for coining the term ‘Software Eats the World’, are today focusing on companies that enable this movement towards biosciences. They even run a podcast called ‘Bio Eats World’.
Gingko Bioworks is an example of a company that is enabling this movement.
So, those were my four predictions for what the next decade holds and where it is headed. I do not claim that these will turn out exactly as I have described them here but by looking at data and researching from grassroots its easy to get a sense of where some of these industries are headed.
No matter what the year 2032 may look like, I am sure it will be an exciting time to be alive.
Thank you for reading, see you in the next one.
Peace,
Tar
Do Not Read Until 2032
Kindly do a webinar on Gaming Industry
I love the concept of Ginkgo, and have been studying this versus Zymergen and Amyris. DNA seems to have complicated the business model by creating "innovative" payoff matrices instead of a simpler payment for service model. Are you planning a deep dive into this field anytime soon?