Finance Monthly - January 2022

Inve s tment 54 Finance Monthly. Innovating the Tech and the Business Model too Furthermore, an unprecedented level of tech innovation, coupled with a maniacal focus on business model innovation/ rationalisation, should deliver an amplified economic, earnings and productivity impact for years to come. A recent McKinsey report stated three out of four executives believe changes brought about from the pandemic will be a significant growth opportunity. And all executives agreed, Dolly Parton’s “Jingle Bells” rendition was “one of the greatest holiday songs ever.” Thanks for that, McKinsey! While more efficient business models are lovely, for publicly- traded equities, some of this is already baked in, as equity valuations are pricier than a fully- refundable Concorde ticket from CDG to Rio. Although this double scoop of innovation provides ample opportunity broadly, there is also an avalanche of irrationality and noise, especially within the uncharted crypto and NFT worlds. To quote universally-cherished Laura Dern in genius David Lynch’s Wild at Heart: “This whole world is wild at heart and weird on top.” So, we try to retain a soberish Warren Buffet/Cathie Woods style view on fundamentals, tangibles and execution. Innovation to Mitigate the Flurry of 2022 Risks As we look to deploy capital in 2022, we think this innovation- led and justified business model framework provides a grounded and reassuring logic for navigating the uncertain days ahead. With a Royal Flush of risk (political + market + COVID + inflationary + interest rate), we are biased to deploying capital to private companies over public equities, early-stage businesses over mature, and innovators over brands. Our favourite sectors remain healthcare and technology with an affinity for companies that include unique and agile models, strong and bold operators, and underlying proprietary tech with clearly-defined adoption paths. Last year, after investing in and later assuming the CFO role at Los Angeles—based startup Binj, a new platform that solves the “what to watch next problem”, these themes helped frame the way we operated and communicated. In telling our story and in preparing to launch the platform, we beefed up messaging around tangible strengths—a novel TV and movie discovery tool powered by a proprietary AI engine and new emotional-driven rating language—and how we would execute on thoughtfully building a community to navigate streaming content overload. Going sector by sector, within the below, we’ve outlined our thoughts on some disjointed topics du jour and investment areas we like. Economic Growth and Labour Reshuffle: We expect overall economic growth will be stronger than predicted with innovation’s fruit and the most dramatic reshuffling of the job market seen in a century fuelling new activity. We’re not putting a lot of weight on 2021’s final G DP % g rowth number though, given 2020 was oh so weak and there is a lot of noise in the numbers. Nonetheless, 2022 growth should continue at a similar cadence. Interest Rates & Inflation: With almost every single holiday party and central bank meeting behind us, it is clear that inflation is even more serious than we previously thought. The Fed policy pivot and The Bank of England’s more dramatic and unexpected rate increase from 0.1% to 0.25% (the first increase “Our favourite sectors remain healthcare and technology with an affinity for companies that include unique and agile models, strong and bold operators, and underlying proprietary tech with clearly-defined adoption paths.”