It strikes me as inevitable that global technology companies run by exponential entrepreneurs will dominate their sectors for at least the next 5-10 years.
Examples of such companies include Amazon, Google, Tesla, Facebook and Apple. The exponential entrepreneurs who were the founders of these companies are of course respectively Jeff Bezos, Larry Page, Elon Musk, Mark Zuckerberg and the sadly departed Steve Jobs.
So what is an exponential entrepreneur? Steven Kotler, co-author of “Bold: How to Go Big, Create Wealth and Impact the World,” explains the basic tenets of what he and Peter Diamandis call “exponential entrepreneurship.” An exponential entrepreneur is an entrepreneur who leans on exponentially accelerating technology, exponential psychological tools, and exponential crowd-power tools. He also points to the 6 D’s: digitization, deception, disruption, demonetization, dematerialization, and democratization. Each of these is a stage in the exponential entrepreneur process, which Kotler explains is a great way to get a leg up over the competition.
These 5 example companies cited are prime examples of what appear to be unstoppable businesses currently. Why is this?
Well their use of technology is quite simply outstanding. They are all market dominant companies. They are constantly pushing the boundaries and experimenting with new ways of doing things. They were all founded by exponential entrepreneurs.
They are all extremely profitable apart from Tesla so far! Once a Tesla’s Gigafactory is fully operational they will of course have a production cost advantage over all other car manufacturers because their Gigafactory is solar powered and capable of producing cars at 20%-30% less cost than any other car manufacturer worldwide! They will then become very profitable. Of course Amazon’s profits are kept deliberately low currently because it is all part of their strategy to dominate the world in their market.
What we like about these companies is that they are in fact much like investment funds themselves in that they own subsidiary companies in different markets which makes them effectively quasi investment funds. For example Alphabet has over 200 subsidiaries including Google!
Most US technology companies do not pay dividends. This is a major cashflow saving compared to traditional quoted companies. Although dividends are in theory not an expense they are undoubtedly a cost and a very large one at that for public companies.
What they also have in common is the unerring ability to employ computers and robots and maximise the use of automation.
Lastly they largely get their customers to do the work for them. For example the customers write their own posts on Facebook, Google’s customers design their own Adwords adverts and Amazon customers place their own orders online.
All in all these companies are or will be incredibly profitable for years to come. Over the last 5 years the average increase in their share prices has been between 100%-300%. It is well known that increasing share prices as well as increasing positive cashflow is the driving force behind growing share prices. That’s why it is a no brainer to include such stocks in Minerva Money Management.
Tony Byrne
Managing Director
Minerva Money Management
