Why energy is near an Uber moment ⚡, and what I’ve learnt curating a newsletter ✉️

Hey Friends,

Our weekly dose of Monday Morsels centres on building “mental models” in AI, automation and the technologies or business models that support it. This week we cover why energy is near an Uber moment, and what I’ve learnt curating a newsletter.

Image: Matt Cherubino

Why energy is near an Uber moment —

I’ve written about the logic in moving our energy economy from a fossil to renewable base, purely from an economic sense, but also for real risk aversion. Articles that have caught my attention since then include; why electric vehicles are not just a car, business model shifts (PC meets the internet moment — Alex Danco), VICE guide to energy, commercial storage opportunities in Germany, the “ballistic” storage market, and Apple is even foraying into selling power. If you read Alex Danco’s article in particular, you will get a grasp what Bloomberg New Energy Finance, Elon Musk and others have been indirectly saying. That is, the grid is decentralising, and we’re heading towards an energy moment similar to what Uber did for transport. Our 20th-century energy system is based on a grid. The core structure and value-add of that grid is what Alex highlights as “dxdt” or “accessibility to energy as you need it”. However, this accessibility is restricted to only a few centralised providers, therefore impacting the price. What’s happening now is that the grid is being decentralised by the productivity of energy production (renewables, home solar) and increasing storage (battery packs, electric vehicles). This productivity will be amplified over the coming years as more and more renewable projects are created, and the technology of renewables pushes the cost of generating electricity near to zero, except for capital and running costs of course.

Historically the grid has always been about a one-way supply/demand pipeline; from energy utility to the household. But with this decentralisation, it’s pushing the system towards an Uber model — whereby the line between the utility and the consumer is being blurred. Think about our point earlier from a production side — more and more utilities are investing in renewables, which over time drive the price close to zero due to the abundance of renewable energy. From a storage side, battery packs and electric vehicles are not only able to charge, but discharge. That means that all of us, with our future electric vehicles, or energy storage units can charge at a cheap rate and discharge at an expensive rate (arbitraging) the market — allowing us to make money from our idle assets. So where does the real value-add come from? With this change, the scarce resource switches to information and trust (just like Uber) and the money to be made is in managing the marketplace.

Germany and Tesla (from our articles above) highlight just how soon this is coming, and with a ramped up production timeline for electric vehicles, it’s very likely that these impacts will be seen over the coming years. To start engaging in this opportunity as a business or individual I recommend going through the following process to start understanding opportunities and risks over the next five years:

  • What side of the equation am I likely to be on in an Uber model? Supply or demand? How invested are we in the supply or demand?
  • If you’re on the supply side; what competencies do we have to make investments or changes to our business model?
  • If you’re on the demand side; are we potentially going to be buying a vehicle soon? Should we consider electric?
  • If you’re looking to allocate capital; Which company could we invest in locally? Are they advancing any technology for this business model shift?
  • What will happen if I don’t do any of the above? Will it impact me or can I spend my time elsewhere?

Image: Statkraft

What I’ve learnt curating a newsletter —

Curating this Monday Morsels series is a lesson in the ebbs and flows of media, and biases of corporations. It’s eye-opening how one week my inbox will be brimming with pieces on Autonomous Vehicles, then Deep Learning the next. The trend is always set on the Monday and crescendoes on a Sunday, as the leaders of the tech industry finish their musings. Breaking down this noise is hard, and I’m sometimes mentally pushed by what I read. Distilling this noise and extending your own reading outside of my own newsletter is important in developing a well-read set of skills that understands where changes in technology and business platforms are happening. Here’s what I’ve been able to refer back to regularly:

  • The Supply Chain (The “unbundling” that CB Insights regularly completes now spans across many industries. For a format of understanding a sector I’d say they’re on par with IBISWorld).
  • The Hype Cycle (Another CB Insights tool, MAP helps you understand how strong a trend is specifically amongst the media)
  • The Real Cost of Things (We often forget the true cost and changes in every day products, regularly viewing data like this provides perspective)
  • Ben Evans & Stratechery (Two great “first principle” thinkers, when it comes to technology and business platforms)
  • Google Trends (Another hype gauge, the pull for most knowledge almost always lands at Google first. Important for understanding how much hype is involved in certain trends I read)

Image: Benedict Evans

Random Morsels to get smarter

A key to having a toolkit of generalist skills, is to read outside of where you gravitate. Below is a list of our picks for the week:

  • The Superinvestors of Graham & Doddsville. I’ve now read 10+ books on value investing, the legendary practitioners and practices. Rationally it seems to be the smartest method for investing over an extended period of time. If you assess the greatest investors and identify who has succeeded over the longest timeline (thanks to this graph); almost all are Graham and Buffett adepts. This article is an exceptional introduction into the mindset of those investors from “Graham & Doddsville” (the economists behind value investing), and what this could offer to your abilities in allocating capital.
  • The Power of Writing About the Things you Read. I love taking notes, jotting ideas and writing lists — I find the process therapeutic and beneficial for developing my ideas. Those who know me well will chuckle at the lists I used to write in early adulthood, particularly ‘to buy’ lists. Now that I’ve read almost a book every fortnight, I’m finding the practice of writing about the book after I’ve finished incredibly beneficial. Srinivas writes that “if you can recreate the material you’ve digested, then you truly understand it” — this article covers some great suggestions for actually understanding what you’re reading well into the future.
  • Two Eras of the Internet & The Reality of Missing Out. I came across these articles while discussing digital advertising recently with close friends. The first gives fantastic context to the differences between the push & pull dynamics of internet ads. The second discusses why there are only three ways to advertise on the web; Google, Facebook and nothing else. Facebook, in particular, is unrivalled in the pixeled ads and retargeting that allows for 20x ROI on your ad budgets and sales. I wholeheartedly recommend reading the second article if you engage in advertising or marketing decision-making.

Thanks for reading,

Jordan Michaelides

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