资产负债表背后第54期——创新拥趸（詹姆斯·安德森与摩根·萨梅特，Lingotto），意大利科技周

STEPHEN CLAPHAMYou may have noticed… This podcast is shorter than usual. It’s not because of a lack of quality content, far from it. Rather, it was recorded live at Italian Tech Week, and I was limited to 45 minutes. And tech problems meant we started late, so we had already eaten into that time.

STEPHEN CLAPHAMIt’s a shame because I had several other areas I wanted to explore, but nevertheless, we had an interesting discussion. My guests this month are James Anderson, the former senior partner of Bailey Gifford. He worked with recent guest Tom Slater on the Scottish Mortgage Investment Trust, the largest closed-end equity fund in the UK. James now manages the Lingotto Innovation Strategy with my other guest, Morgan Samet.

STEPHEN CLAPHAMThe geography here is complicated. James works in Edinburgh, Morgan in New York, while the Lingotto HQ is in London. Lingotto is the main asset management arm of Exor, the Italian family holding company run by John Elkann. Which is headquartered in Amsterdam. The innovation strategy has recently been expanded to include venture capital investments.

STEPHEN CLAPHAMSo Morgan and James do everything from seed to NVIDIA globally. We talked about AI, of course. We discussed the parallels between NVIDIA’s relationship with OpenAI and the vendor financing practices of the dot-com era. Spoiler, James, who is invested in NVIDIA, didn’t dismiss the analogy.

STEPHEN CLAPHAMOf course, we discussed the hyperscalers CapEx. We talked AVs, and Morgan, recently returned from China, is very positive about this opportunity and has identified a couple of quoted companies which are leaders in the space. The team is also Bullish in China, which is racing ahead in a number of tech areas and where they still see the risk-reward as positive.

STEPHEN CLAPHAMI asked them how they manage a fund which straddles public and private markets globally, early stage to late stage. And they see it as essential to ensure they pick up the biggest winners. The Lingotto philosophy is to be curious, courageous, humble and patient. And all of that is on display in this conversation. I bet you wish it was longer.

STEPHEN CLAPHAMWelcome. I will start with the same question, which is, how did you both get into investing?

MORGAN SAMETWell, I think I didn’t directly always know that I wanted to be an investor. I always knew that I wanted to be building businesses and an entrepreneur, which is why it’s also interesting that we are building this strategy and this platform for the future.

MORGAN SAMETBut it translated pretty quickly, you know, in my early adulthood into wanting to be an investor because so many of the business ideas that I had and had built as a kid, you know, as early as seven years old, meant that I couldn’t just pick one. And that I was fascinated by the idea of invention and the idea of building things and being able to select amongst those.

MORGAN SAMETAnd so being an investor allowed me the sort of intellectual curiosity and creativity to be able to express that the best. I started investing at 18. In college, I, along with some other students, helped start a public markets fund, which actually still exists today. And I’m on an advisory board for it. And so the bug hit me pretty early.

STEPHEN CLAPHAMOh, cool. James?

JAMES ANDERSONI can’t claim any of that. Like most people of my generation, particularly British people, Steve. I thought university was for enjoying yourself and educating yourself more broadly than choosing a career.

JAMES ANDERSONWhat I did have was a lot of curiosity.

JAMES ANDERSONI thought about becoming a journalist on that basis. Little did I know at the time that the financial repercussions of becoming an investment manager rather than journalist would turn out as they have been.

STEPHEN CLAPHAMWell, it’s definitely a more profitable.

MORGAN SAMETEndeavor as I’m trying to be persuade my older son but seven years old what was that a lemonade stand or actually it was a candy reselling business oh a candy was some margin on my allowance for doing chores and being able to resell it at a higher profit for the other kids who weren’t allowed to go to the store but I was the the youngest of four children and had a lot more autonomy so oh cool business cards the car an entire model my mom still keeps these keepsakes.

STEPHEN CLAPHAMSo listen, AI, we’re here at Italian Tech Week, every second badge has got an AI something on it. What are you thinking about AI?

JAMES ANDERSONI think, and you know, I thereby worry about giving one sentence answers, that it’s very, very much more nuanced and complicated than people wish to purvey it as.

JAMES ANDERSONIn the long run…

JAMES ANDERSONI think the importance of AI, Steve, is about solving very deep, very serious questions.

JAMES ANDERSONThat, to my mind, is almost the opposite of where we’re going in the short run with LLMs.

JAMES ANDERSONI think we’ve talked before about some of the intellectual influences that I admire and have impact. One of those over the course of time has very much been the people, the brilliant people at the Santa Fe Institute. And I was chatting to David Krakow, the president of the Santa Fe Institute, quite recently, and his response was that AI is actually the opposite of intelligence.

JAMES ANDERSONOn the basis that if any of us had a friend who we asked a question to of any level, and their immediate response was, I don’t know the answer and I can’t think it through, but I can go and look it up in a library. We wouldn’t think that person was desperately intelligent. But that is effectively what it’s doing at the moment. Now, that’s not… To say that it may not lead anywhere.

JAMES ANDERSONAnd there are certain areas, and above all, I would say, in healthcare, where both the scale of the data we need and the ability to solve problems is absolutely profound. But that is a matter of, oh, at least 10 years, probably more than that. And I think that, you know, there is a danger that we get exaggerated and carried through at moment because the expenditure levels, as we know, are enormous.

MORGAN SAMETI’ll touch on what James said, and then I’ll give a little bit more context. So I agree with him, I think. The way that AI architectures are structured today isn’t likely to lead to scientific breakthroughs by the very nature of the reason for why it scales.

MORGAN SAMETYou know, when you or I learn something, it mostly stays with us beyond a few people that we’re able to teach that lesson to. But when AI or robotics learn something, that learning is immediately uploaded into the cloud and the entire system learns it and builds off of one another.

MORGAN SAMETSo the concept of having original thinking or first principles thought is actually like the antithesis of what or the reason for why AI scales. And so if you’re going to have, you know, breakthroughs in fusion or longevity or things that we haven’t even been able to think of, you’re going to need a new architecture.

MORGAN SAMETThat being said, I don’t think we need AGI to get massive changes in the way that we live our lives. Some of them positive, some of them negative with… We don’t manage them as a society.

MORGAN SAMETAnd so because of this scale, I think it is going to be one of the most transformational things that happen in our lifetime. I think we are in a different type of capital cycle and world. It has sort of had as markers of the industrial revolution in terms of the atoms, but also has markers of the internet revolution in terms of the bits.

MORGAN SAMETAnd they’re both happening in parallel, probably even faster, because you’ve got the atoms of the semiconductor and infrastructure stack, the bits of the digital economy, and then atoms again, this feedback loop with autonomous vehicles and robotics on top that actually move faster than old CapEx cycles have.

MORGAN SAMETAnd I think it’s in that latter category where you actually will have some of the really big improvements in human quality of life and happy to talk more about.

STEPHEN CLAPHAMWhat I think that is. Sure, we’ll go on to that in a moment. But just, you know, it’s a big subject. We could talk about the wider world and improvements, but just talking about investment, there’s hundreds of billions of dollars changing hands. I mean, how do you make sense of this?

STEPHEN CLAPHAMI look at the $100 billion investment by NVIDIA and OpenAI and the $300 billion that OpenAI has invested. Investing with Oracle, some of which is going back to NVIDIA, and I see a circle. And it reminds me of the dot-com era. It reminds me of Lucent and Nortel and lending your customers money so they can buy stuff from you. How do you make sense of the money that’s changing hands?

JAMES ANDERSONSo as at least a semi-trained historian, I’m always a bit skeptical.

JAMES ANDERSONAbout historical analogies but actually i’m not trying to be disagreeable here because i think this no this this one does seem to me reasonably hapusite not because NVIDIA can’t afford it whereas it was quite questionable with a loosened and nautilus later turned out could afford it but because i think the main danger for this is that there is excessive investment in the short run that has relatively minor in the short run impacts.

JAMES ANDERSONNow, that doesn’t mean that investment, to carry on the analogy, isn’t eventually turned to useful outcomes. But I think you can have a downdraft from that point of view. And I think that one always ought to be worried by the circularity. And I think, you know, to me, this is something that’s changed quite badly just over the last few months.

JAMES ANDERSONI would add in another parts of anxiety that I think when you see the type of sudden leaps in valuation, you know, you wake up one morning, you think it’s pretty remarkable that OpenAI has been valued at 300 billion. You open up your eyes the next morning and it’s worth 500 billion. Now, something a bit strange is going on when you see those types of developments.

JAMES ANDERSONYou know, the angle of ascent is often worrying from that point of view. And I think the other one that I would worry about, Steve, is that I think there is, as you say, too much attention on this topic directly and not about the broader. Innovations that our society deeply needs. So it’s when it becomes monomaniacal that it bothers me.

JAMES ANDERSONI’m not saying that there’s not going to be a lot of interest over the next 20 years, but am I.

STEPHEN CLAPHAMRelaxed about what you identify there no i’m not relaxed about what you identify there i mean the question it raises in my mind when you’ve got hundreds of billions of dollars changing hands it assumes a rate of ascent that’s very very steep and it seems to me that there is infrastructure bottlenecks all the way along the chain i remember very early on in my career reading ellie goldrat’s book the goal which i think Jeff bezos used to instruct his senior employees to read.

STEPHEN CLAPHAMIt’s all about bottlenecks. There seem to be huge numbers of bottlenecks.

STEPHEN CLAPHAMCan all this cash actually be deployed?

JAMES ANDERSONWell, it can. And I’m very keen to hear Morgan’s, on the whole, more upbeat take on it. But I think one thing that’s important that I should say is that I very much dislike in the investment industry the search for certainty and still more that search for certainty when it’s expressed in to three decimal points, the presumptions about earnings and the multiples you should apply for them and hence market capitalizations.

JAMES ANDERSONSo, you know, this is all about probabilities and payoffs. Now, if we were to see the type of uptick in both productivity figures and GDP that we are promised, then arguably we should be spending much more even than we are at the moment. Now, I think that that is a comparatively difficult course. I might give it a 10% probability chance over the next five to 10 years.

JAMES ANDERSONBut that’s what it’s about. And that’s why I am cautious because I don’t think you’re being, at the current valuations, paid to take the same degree of bet on the eventual outcomes that you were even Even at the beginning of this year.

MORGAN SAMETThere’s definitely, so James sort of pointed this out, I am a little bit more optimistic. I think there’s definitely risks. The valuation jumps, you know, as an investor are definitely, you know, alarming and how quick and how drastic they can be.

MORGAN SAMETAnd, you know, that’s another reason for why it’s great that we have the long-term structure that we have, the continuum of capital. It’s a huge. Duration is a massive advantage as both an investor and an operator to be able to see through that kind of volatility.

MORGAN SAMETAs long as you believe that these industries or this potential will be this large long term and that the players that you are backing will have a role and a seat there. You know, where I think it’s different than in prior cycles is because of this sort of not just atoms, but bits on top of atoms and atoms on top of bits, again, sort of cycle and flywheel.

MORGAN SAMETYou know, these are… Very cash-rich tech companies that are more cloud-based and agile and intelligent with data modes, scale modes, distribution modes. So it’s different than, you know, the players in sort of the dot-com era.

MORGAN SAMETI think they are basically funding this entire cycle. And so they’re kind of are also gambling that they will be able to capture a lot of the value that they’re creating just for the ecosystem. You know, we talked about the article that came out. In the Financial Times today about Jensen.

MORGAN SAMETAnd he is notorious for sort of being a rainmaker and a kingmaker and investing in his ecosystem, whether it’s in biotech or robotics or in traditional AI, to make sure that those industries can absolutely thrive. And so they’re sort of funding that.

MORGAN SAMETI think the benefits are that what you do see in a lot of countries and companies is bureaucracy. Bureaucracy squashes innovation in so many different ways. And so you now have an ability to speed and scale in a way that’s never been seen.

MORGAN SAMETAnd so I think if I’m the founder of a startup, I’m happy that they’re funding this for me to be able to build, you know, really interesting applications on top of this infrastructure. And so that’s exciting. The risk here, and this is a societal risk that needs to be addressed, is with great power comes great responsibility and everything, you know, strengths when taken to the extreme become weaknesses and risks.

MORGAN SAMETAnd so a lot of this, these companies have even more power law characteristics, which is our corridor investment strategy than in prior periods.

MORGAN SAMETAnd so if in the wrong hands, that is a danger to society and we need to think through and make sure that the decision makers and the system and the structure is set up to support what’s in the best interest of society and humanity. I’m a believer that we who will figure that out and have ideas. But it’s definitely a concern and should be on people’s minds.

STEPHEN CLAPHAMThe hyperscaler is all this capital expenditure. Are you confident? That that money will get returned. I mean, are you invested in any of the hyperscalers?

JAMES ANDERSONTo a small extent, Steve, but, you know, we’re certainly not major investors in the hyperscalers. You know, I’d like to tug it back. Carrie, run forward your original analysis. Analogy of the Lucents and Nautones and Worldcoms and the like of this.

JAMES ANDERSONBut what then happened, as those of our age will recall, was that that capacity was so exaggerated that the price fell. And when the price fell, you could have useful buyers. Now, if I go back 18 months even, when we were talking to a lot of, for instance, the healthcare companies or autonomous driving companies that can solve problems.

JAMES ANDERSONTheir main complaint at that point was that AI capacity was just much too expensive. Now, do we have a golden opportunity that if your contention is right about the hyperscalers, then that’s actually a very good world for the use of this technology?

JAMES ANDERSONThe recently retired boss of AWS said, and perhaps he retired partly because of his disagreement on these scores, we will see that, you know, the right companies to invest in in 1999-2000 were not the Ciscos of this world, even if they didn’t go bankrupt in the analogies that you were talking about.

JAMES ANDERSONBut it was the next generation of companies who could use that capacity, like Amazon itself. And the point he was making is that we don’t know who those companies are as yet. But I think actually that’s what excites me more, Morgan, about the last 12 months, is that we’ve got some hints as to who’s winning in certain of these areas.

JAMES ANDERSONAnd, you know, to me, investment is about trying to find those very small numbers of 100 times plus winners. Your odds of doing that are much easier if you’re starting at a few billion rather than a few hundreds of billions.

MORGAN SAMETNo, absolutely.

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JAMES ANDERSONWhat should we be looking at when we’re looking at the autonomous vehicle? Area?

MORGAN SAMETSure. Well, first, I do want to touch on a few things that James said that I think is important.

MORGAN SAMETWe have this infrastructure layer that we’ve talked about, but there’s also all these applications on top of it, of which some are unknown. That’s why the reason for us extending our strategy to go even earlier. That’s why we’ve brought on innovation council members to expand our network to be able to understand and think through where those applications are going.

MORGAN SAMETAnd those use cases will most grow. And because it’s both relevant from an investment perspective in the early stages, but it’s also relevant for information for our later stage companies to say, you know, who’s still going to be here? I think we are going to see the largest change in Fortune 500 companies in the next 10 years than we will see or have seen in any 10 year period in the last century.

MORGAN SAMETI think autonomous vehicles in particular is, it’s almost maddening. How little money has been dedicated to something that is so impactful when the technology is indisputably here. I mean, you can talk to, you know, anybody in tech and investing or anyone on the street, and I don’t think there’s sort of any doubt that it’s here and it’s ready for deployment.

MORGAN SAMETYet, you know, of a multi-trillion dollar opportunity, the valuations in aggregate of the players that are clear leaders right now is like, you know, massively pales in comparison. And I think it’s… You know, it does take longer to deploy because there’s physical assets at work.

MORGAN SAMETAnd I think there’s just like there’s a view that it’s just OK, you know, cars without drivers and it’s a little bit cheaper. I think that misses the entire point of the massive amount of change to which this is going to create. I think, you know, in China, you’re already seeing that these are now moving spaces. They’re not cars, right? They’re moving offices, they’re moving hotel rooms, they’re moving entertainment centers.

MORGAN SAMETIt’s not just about cost, it’s about additional revenue. And then when you start getting into passenger vehicles, it’s also about additional time. Traffic is a function of human interactions. What’s interesting is if you actually look out and Zoom into highways, 90% of it is empty at any given time.

MORGAN SAMETAnd so you can get massive amounts of throughput first with HOV lanes becoming AV lanes. And then eventually you can have cars stacked such that you get everywhere in half the time. It means that people can live further away with far more convenience along the way, as well as as well as faster. You know, real estate prices have gone up 4x incomes during during my my existence.

MORGAN SAMETAnd so now people will be able to afford homes in different places with backyards that, you know, are cheaper. Kids can probably play outside again and hopefully get away from their screens that will be run by agents and bots and already sort of are. And it’s the safest thing that we can do in one of the most dangerous activities that humans do on a daily basis.

MORGAN SAMETAnd I think there’s other things that we haven’t even thought of. You know, energy storage, balancing the grid, being able to make money off of your vehicle by having it run off and do errands, you know, for you or for other people. I think we haven’t even scratched the surface of what this means for society and how we live our lives.

STEPHEN CLAPHAMSo when?

MORGAN SAMETAs soon as possible. I mean, Waymo, Aurora, Pony AI out of China, the technologies here, you know, Pony AI in China, for example, I think insurers under underwrite risk better than anybody. And the insurance costs are a quarter of that of a human driver. So that tells you how safe it is. And the cars currently are about $30,000 for a robo taxi in terms of in terms of cost base. And so the economics are extremely clear.

STEPHEN CLAPHAMSo The $30,000 is using just cameras, no LiDAR.

MORGAN SAMETNo LiDAR.

STEPHEN CLAPHAMSo how come it’s so cheap? Because the Waymo cars are more than 10, 15 times that, right?

MORGAN SAMETIt’s not that much higher. It’s more on the 100 plus, 100K plus. So meaningfully. In China, LiDAR is a tenth of the cost and the price is declining rapidly. You can get cheap LiDAR for a couple hundred dollars. And that’s because of China’s manufacturing prowess. And I believe they’re…

MORGAN SAMETTheir innovation capabilities as well. I mean, I spent a few weeks in China recently and UID cars, it’s like 10K for something that you would get in the US for multiples more. And so the ability to drive down that cost base because of that is absolutely, it’s incredible.

STEPHEN CLAPHAMHow many driverless cars are there in China now?

MORGAN SAMETFor Pony, I mean, it’s going to be in the low thousands. They’re not there yet.

MORGAN SAMETBaidu has around that. And so it is… You know, it will take some time to deploy. As context, the CEO of Pony was the chief architect of Baidu. And the CTO is the most credentialized computer engineer in all of China, which is absolutely saying something. He’s definitely a legend.

MORGAN SAMETBut there’s ways for that to scale faster by partnering with fleet operators. The average car is only, as I said, utilized 5% of the time. But when you’re driving 24-7, no cars will turn over in a five-year period. And so those fleet operators are going to be refreshing quickly. And I think you’re going to start to see like a material ramp up. And roll out of those robotaxis and eventually personal vehicles.

JAMES ANDERSONI really would caution Steve of any analysis based on the fact that there are only a few thousand at the moment. Five years ago, the notion that China would be the world’s dominant car manufacturer was not something that people even willingly considered, let alone that we got there much, much, much more quickly than any forecast I know.

STEPHEN CLAPHAMWell, it’s been stunning. I mean, the Chinese car manufacturing industry has been just incredible. I can remember going to China in 2007, 2008 and being stunned by how bad quality was. And you certainly don’t see any problem with the quality today. I mean, China’s in the lead, isn’t it? I mean, in almost everything.

JAMES ANDERSONNot sure I go as far as in almost everything, but, you know, I…

JAMES ANDERSONFundamentally agree with you that their leadership is both staggering and focused on many of these technologies that the world does need for the future you know i i think perhaps the strongest example of that is related to the car industry but not quite the car industry which is the battery industry where, you know, of BYD and above all CATL have between them 50% of the world market approximately.

JAMES ANDERSONAnd where it’s been very difficult for other people to catch up. You know, I was in the past an investor in Northvolt in Sweden.

JAMES ANDERSONAnd I thought that was a team of people, both good Swedish technologists and many Ex-Tesla employees, as well as many Asian battery experts. But they couldn’t.

JAMES ANDERSONMake it work and i think the challenge is quite enormous but we desperately need the energy abundance that we’re talking about i mean for the AI sums to work out you you need that to be in agreement absolutely i was quite interested i was reading i.

STEPHEN CLAPHAMWas on the plane yesterday so i actually read the whole Financial Times but i don’t normally do and there was an article about the CATL sending two to three thousand engineers to spain to build a new battery factory.

JAMES ANDERSONFor Stellantis. Yep. Yep.

STEPHEN CLAPHAMI mean, this is a disaster for Europe, isn’t it? We’ll never catch on.

JAMES ANDERSONI think it’s going to be extraordinarily difficult to do so. Yeah. So what would I see as signs of hope? I would see as signs of hope that some of the brands appear to be not dying, but adapting.

JAMES ANDERSONWe can pick our own individual candidates from that, but I think some of them may come forward. But I personally, and I’m sure there will be many different views of this within the audience and within Lingotto, but I think it’s going to be an enormous challenge.

JAMES ANDERSONAnd personally, I would rather have seen the European companies, or at least some of the European companies, say that instead of trying to to put it off the adaption that they should fully embrace the change and i think in the long run though challenging for short-term economics that would have been a better direction to go in yeah Morgan’s American so we mustn’t leave her out because Martin.

STEPHEN CLAPHAMI think Americans are far too often heard so i i would leave them well the thing is i i was at the FT weekend festival a couple weeks ago and Martin wolf the FT economics commentator who i i don’t usually agree with but Thank you. He said something quite interesting. He said that the current administration’s approach to science almost guaranteed that the U. S. Wouldn’t be creating the big tech companies of 2050.

STEPHEN CLAPHAMDo you agree?

MORGAN SAMETI would say that is my number one concern that I have. I think I fundamentally believe in attracting the best talent and finding and creating. The incentives to… Have them build the most interesting technologies and change the world. I mean, that’s why I am an investor in innovation and clearly, clearly believe in that. You know, and we have a team of academics, you know, that also invest.

MORGAN SAMETAnd so we really, really highly value that. And that is that’s a frustration and that’s a fear that I have. And I think I also come of the belief that being and this kind of relates to. What June was saying about Europe as well and cooperation versus competition with China, I don’t think you can be successful being obstructionist in anything that you do.

MORGAN SAMETI think it’s a dam that will inevitably break. And so the only way to change the future is to create a better one first. And so the U. S. Has one of the most valuable assets in the world, and that is a melting pot that has been attractive to the world’s best talent. And it’s something that we would be very It would be very sad and very unfortunate and leave us behind if we give that up.

JAMES ANDERSONThere was a presenter this morning here at Tatao Intech Week from OpenAI who is involved in partnering with European investors. And she said that the EU is in the lead in STEM graduates per capita looking at Europe versus the US and versus China.

STEPHEN CLAPHAMI thought was nonsense, but I can believe that it might be in the lead against the United States. I could just about believe that. But nowhere near the level of engineering graduates in China. The last number I recall reading was about a million graduates a year.

STEPHEN CLAPHAMSo, I mean, if we assume that China has got a technological lead, how do you take advantage of that? Do you feel comfortable investing in China? Is there a cap on how much exposure you’ll have with China? Had the experience very recently of Russia having its assets seized, that put a lot of people out of China. What’s your view from an investment perspective?

JAMES ANDERSONAgain, one has to consider it in the risk in relation to the rewards that are potentially out there. And certainly, although the situation has changed somewhat in the last few months, certainly the start of this year. You were being paid to take that risk.

JAMES ANDERSONAnd I think the upside compensated for you with that, but you had to think, and I appreciate your balance on this. I think you had to think about how much of the overall portfolio you could therefore have from that point of view in the area. We still do think about that.

JAMES ANDERSONWhat I would want to emphasize is that as individual companies, Over the decades, I’ve had some fantastically good experience with the entrepreneurs there, who I think have proven to be not just talented and serious in the way that you’ve already described, but also deeply supportive and loyal with their investors. And that is something that weighs quite hard in my own mind.

JAMES ANDERSONI prefer to try and trust the individual companies and entrepreneurs. There are forms of disaster and corruption in every society of the world, as you know.

STEPHEN CLAPHAMBut it’s not in their control, though, is it? I mean, if the Chinese government decides that foreigners are undesirable investors, they’ll find a way to squeeze the foreigners out.

JAMES ANDERSONWell, I don’t know. So I think the… The sentence you’ve just talked is relevant in a lot of societies, and sadly it’s not becoming easier in many of those societies. I do think, though, I’m not trying to escape answering it by blaming everybody on this score, I do most seriously think that we need to think quite hard.

JAMES ANDERSONAnd rethink quite hard what the overall experience has been in China. Now, there are obviously those very big Jack Ma-Type moments that got some people’s minds. But on those, I would say, it’s not altogether clear with me. And I was an investor in Alibaba, so, you know, I suffered from it. It’s not altogether clear with me that letting your digital companies…

JAMES ANDERSONAll notion of societal responsibility has been a good thing in the West. And also, I would say that I think there is a certain revenge here going on, because I think the Chinese government is itself extremely aware in the current circumstances that actually they desperately badly need their technology companies, and above all, their serious deep…

JAMES ANDERSONTechnology, deep science companies of this score. So, you know, do I feel that we’re bound for another moment of what we had with Alibaba and the like? I think it’s become less likely rather than more likely.

STEPHEN CLAPHAMNo, you’re probably right. It is less likely. Just talk a little bit about how it works, how you manage the Lingotto Innovation Strategy. It’s a very complicated thing, right?

STEPHEN CLAPHAMBecause you’ve got global you’ve got public you’ve got private and you’ve now got everything from vc to what series a series b or later stage so how do you think about this i mean you can’t just divide it up and say 10 here 10 there how do you manage it shall.

JAMES ANDERSONI start so i think one of the features of fund management which has gone profoundly and i mean profoundly in deep wrong in the world is that we way over complicate our task and it carries on through geography it carries on whether you’re sitting in New York or in Edinburgh is to try and find those small numbers of companies that produce the power law returns over decades and if you take out everything of trying to talk through the preoccupation of markets from day to day and the short-term horizons on profitability, then actually you’re in a much better position.

JAMES ANDERSONAnd, you know, I sometimes think, in all honesty, that putting a little bit of grit in the system, whereby it’s not that easy to communicate about everything on an everyday basis, is a very good rather than a bad outcome. Come from ours.

JAMES ANDERSONSo, you know, I am entirely relaxed about it from that point of view. What I would hate is if we got sucked in to have it to respond to every single moment of doubt and moment of challenge and issues that the FT will be full of tomorrow.

MORGAN SAMETI mean, what I would add is that there are very few firms that are truly multi-stage, from seed all the way through to publics, with the same team. You know, managing the entire strategy. And I think there’s just arbitrary silos within investing that creates, you know, misaligned incentives. So by stage, by sector, by duration, duration, again, is the biggest advantage you can have by being long term.

MORGAN SAMETAnd as a result, they’re not able to or not incentivized to, like, step back and see the, you know, the handful of companies that truly matter and a handful of themes, the 1% of information, you know, that really matters. And by being able to be multi-stage, we also never miss it.

MORGAN SAMETYou just, you can get it, you can get it at a later stage and size it in a different way and manage your portfolio in a different way. And I think that’s also valuable to founders because they have, you know, more continuity of capital and more thought leadership of understanding mature businesses, which is, you know, increasingly, you know, which can be rare at the earlier stages.

MORGAN SAMETAnd the same thing for late stage companies. What’s going on in innovation? What are we missing? What are we not paying attention to? And the reality is that the world’s best investors are all generalists. And I think it’s the industry that sets up these arbitrary sort of silos.

STEPHEN CLAPHAMBut I mean, it’s a very complicated strategy. You have to hold a lot of cash, for example, because you don’t know when the next founder is going to walk through your door and need a check.

STEPHEN CLAPHAMIn practical terms, it’s very different from… What you both have been used to running in the past. And it’s kind of a new thing. So there isn’t a model. So just talk. I mean, I don’t want to know exactly what percentage of your funds is in cash, but just talk us through how you think about those sorts of issues.

JAMES ANDERSONI think it stems from what we’ve just been discussing. That in fact, although it can seem as though it is on a day-to-day basis, the markets are either going down or going up. Either painful to have too much cash or great to have too much cash. In fact, what matters is, as you say. Being able to fund the great entrepreneurs at the moment when it is useful to do so.

JAMES ANDERSONSo I think the logical corollary is that you should have some cash. And I don’t know, you say it’s very different. In my own case, very often the past had the ability to borrow money. I’m not convinced that’s a good thing to do overall. So I’m quite happy with the situation as it is. And I try keep those very specific what we’re trying to do principles in mind.

MORGAN SAMETAnd I mean, I would add that, you know, I’ve been doing both public and private investing for the last 20 years. And, you know, most recently, like for almost an entire decade in a combined fund, similar to what it is a very long term oriented strategy.

MORGAN SAMETAnd so similar to how we think about the world today.

MORGAN SAMETAnd so I actually think it’s a huge differentiator versus you know other structures and what’s your ambition for the strategy i mean where would you like it to be in five years time and will you still be will you still be working on it James well we all find the course of our personal lives difficult to be precise about so i don’t you know want to give any exact answers but you know what i can answer is that actually my dream of it is about having a group.

JAMES ANDERSONOf younger, very impressive colleagues who could not just invest in the way that I’ve tried to, but can push that forward. And, you know, the ideal course would be that it would be better for everybody if I was no longer there.

JAMES ANDERSONBecause my colleagues were doing such a splendid job developing it in such a fantastic way that they can build something for the next 50 years. Because, you know, they’ll never be able to retire because, you know, such will be the conditions of both longevity and lack of income in the world. They’ll just have to carry on anyhow, Steve.

MORGAN SAMETHe’s being very tight.

MORGAN SAMETI think, you know, what we want to build is something that matters and is impactful. And it goes back to, you know, the businesses I was starting as a kid, which is sort of the creativity to be. Understanding how a variety of different things work and to be able to have an impact to moving those forward.

MORGAN SAMETAnd so we want to be thought leaders and we want to be a safe haven, honestly, for founders and leaders who truly want to build something multi-generational and where the incentives and the construct of other strategies don’t allow them to do that. And so we want to be able to drive that with what it is that we do.

STEPHEN CLAPHAMListen, it’s been a great pleasure talking to you, Morgan Samet James Anderson, thank you very much.

MORGAN SAMETThank you.

STEPHEN CLAPHAMI really enjoyed talking to Morgan and James, and I could easily have gone on for much longer. Perhaps I’ll be able to persuade them to come back on, although I get the impression that they’d rather spend their time investing than talking about it.

STEPHEN CLAPHAMNo question that James is not only one of the most successful investors around, but also one of the most thoughtful. Morgan, too, displays that intellectual curiosity, which is the hallmark of so many of the guests. On this podcast. I think she may also take the prize of being the guest with the youngest entrepreneurial start at just seven years old.

STEPHEN CLAPHAMThanks to Lingotto for inviting me to Italian Tech Week, which I find fascinating, in which I’ve written up in my sub stack, if you aren’t subscribed, you’re really missing out. And hey, it’s free. As always, thanks for listening.