Fascinating that the radio is the third fastest technology in history to reach 50% penetration
It spread faster than the internet (only AI and the smartphone beat it)
But the dishwasher took 47 years
I loved Alex's analogy for the two models of adoption, the radio and the dishwasher:
"We commissioned Horace Dediu, who used to work with Clayton Christensen, to go look at S-curves over the last 100 years.
The radio S-curve is one of the fastest ever. But the dishwasher S-curve is the opposite, because it needs to be plugged into the back end.
B2B stuff can take a long time, because it needs to be plugged into the existing systems. Consumers generally tend to go a lot faster.
I covered B2B internet at Fidelity.
The underlying infrastructure wasn't in place for B2B to happen. It ultimately happened 20 years later, with SaaS.
That is a risk with AI, in that these big companies are very security-conscious and can be slow to move.
There are a lot of cultural issues with AI, where you really need a few evangelists to push it through.
The top management needs to push it through, but then IT is saying this is risky. And that happened with cloud too.
Everybody was afraid that it's not secure to have your data in the cloud. And then we saw the CIA do it, and we saw Capital One.
We talked to the Capital One CIO, who said it's more secure in the cloud. And then it really started to take off.
But what's amazing about AI is that you just open up the browser and it's there. And so that's why we're getting this straight up, we call it the backwards L-curve."
My conversation with Alex Sacerdote, founder of Whale Rock Capital Management.
Alex runs more than $17B and has been one of the best performing tech investors for years, though he keeps a low public profile.
As you'll hear, he is singular in how he thinks about investing through technology cycles.
For over 25 years, he has built his entire investment framework around a single idea, the S-curve.
We discuss: - The AI L-Curve - When to buy into an S-curve and when to sell out - The de-commoditization of data center hardware - Why he went net short software - His two models for tech adoption - Finding alpha
Enjoy!
Timestamps 0:00 Intro 9:55 AI's L-Curve 19:31 Whale Rock's S-Curve Playbook 26:14 Spotting Inflection Points 32:02 Finding AI Winners 40:04 AI vs Software 48:13 The Hardware Renaissance 58:04 Why Investors Miss AI 1:05:18 Whale Rock's Research Machine
