Podcast: This Week in Startups and I/O Fund on Tech Investing
September 17, 2021
Lead Tech Analyst
The I/O Fund believes venture capitalists are some of the world’s best tech growth investors so we were thrilled to join Jason Calacanis on This Week in Startups. Jason is a successful angel investor with a portfolio that includes Uber, Robinhood, Wealthfront and Calm. In the fast-moving podcast, we covered topics including:
· SPACs, which ones you should own and which ones you should avoid
· The difference between bubbles and bear markets
· How Roku has been able to stave off Big Tech
· Why I/O Fund is ultra-bullish on Nvidia
· Whether China is worth the risk
· If hybrid work-from-home is an investable trend
5:25 Interesting SPAC story
27:00 Will tech spin-offs create more value?
43:21 Chinese stocks
48:43 Post-pandemic world
49:52 Hybrid work-from-home
SPACS gives a chance to investors to invest in early-stage tech. It has got its pros and cons. Some of the merits include that individual investors can get a better price and higher returns. It would be prudent for investors to have the right skill sets to choose the best stocks since the early growth company’s financials could be limited compared to well-established companies. Investors also should be careful about companies banking on a lot of forward growth because if they miss estimates and the stock sell’s off immediately.
At the same time, we cannot ignore the SPAC market as we could miss some of the best growth opportunities. We will need to have some risk management and a good exit strategy; this is how I/O Fund approaches the SPAC market. We found stories that we liked, played some momentum, and we had an exit strategy.
Video clip: From 0:25 till 5:22 minutes.
Macro Trends (Is it a bear market now?)
The current market situation is not like the 1999 or 2008 bear markets. Many investors think that the sell-off of the last year was a bear market. It was just a bubble because of irrational, momentum-driven, and human psychology. We have seen many such bubbles in the past few years. So, bubbles don’t mean bear markets. It means that there’s an excess of liquidity. What leads to bear markets and recessions is typically Central Bank policy, which is incredibly loose right now. The U.S Federal Reserve is expected to continue this policy to stimulate growth a little longer.
Video clip: 9:22 to 11:05
Can Roku fight big tech?
Roku has the first-mover advantage in advertising-based video on demand (AVOD) versus subscription video on demand (SVOD) specifically not only by the cord cutters but also from the brand advertisers. They have designed an operating system that is cheap and flawless and fits well with smart TVs. All that is great because they have the hardware and the operating system. But ultimately, Roku’s path to Wall Street gains is that they are an ad platform.
We are moving into a world where advertisers on linear pay-TV are moving on to the cord-cutter companies like Roku. For the first time in 37 years, Budweiser did not advertise in the super bowl this year. So, the addressable market is huge for companies like Roku.
Video clip: 16:55 to 21:05
Bullish on Nvidia
Nvidia has yet to tap its real market, which is Artificial Intelligence (AI). A lot of people talk about gaming. But I firmly believe that this is a data center and an AI accelerator play. Most of the industries in the future will run on Nvidia. This is a big statement from me since I have researched very well and been writing about it for about three years. The stock is up 340% since my initial coverage. The main differentiator for Nvidia is GPU chips which are very good for AI.
Video clip: 30:45 to 33:08
Our exposure in Chinese stocks
I/O fund has exposure in Chinese stocks through an Electric Vehicle (EV) stock and a cloud infrastructure stock. We stayed in those markets because China has about 1.3 billion people and a lot of them are making decent money. So, when you think of EV companies selling to this huge population subsidized by the Chinese government we strategically played in that market.
There are cities in China that are of the size of Los Angeles that no one even knows the name of these multiple cities. The investment thesis is phenomenal but political risk is high. However, the market’s short-sightedness can make you miss the rally. For example, the French stocks, who was going to invest in French stocks last year? However, after the country announced the second lockdown last year, the stock market was up 25% in about a month. So, we think that inevitably this might happen with China and we are seeing the evidence of that in one of the position’s we are holding which is showing technically strong signs that it is going up.
Video clip: 43:21 to 47:19
Hybrid work-from-home stocks and why the I/O Fund thinks it’s an investable trend
Free Market Redistribution of Wealth
You can see the exodus of people moving from one state to another. People are actually able to make more money from the tools the tech is providing. They also have more time and on their own terms. It’s more like a free market national redistribution of wealth and it’s happening in a positive manner.
Video clip: 55:55 to 56.18
In the past we have mentioned that the debate on crypto has been distracting investors from the opportunity that these new technologies can deliver. We have invested in Crypto from a tech perspective. We think Bitcoin has done the unthinkable. An actual store of value on par with gold and with the dollar. We are comfortable since it has some real-world disruptive value and we run technical on it and ride the trend.
Video clip: 59:26 to 1:00:35
The I/O Fund currently owns shares of ROKU, NVDA, STEM, Bitcoin, Ethereum, alt-coins, and crypto brokerages such as Voyager Digital. This is not financial advice. Please consult with your financial advisor in regards to any stocks you buy.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock or crypto/asset in the companies mentioned in this podcast.
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