Batch brew #16

Picks and shovels in AI, the new trillion dollar AI company

Hey, the Caffeine Capitalist is here! ☕

This time we decided to pick another day, Monday! Hope you are all fully refreshed and have a fresh coffee in front of you.

New trillion dollar company around the block! And some gold nuggets from Paul Graham and Charlie Munger. Let’s get right to it!

Dept. of Tiny Thoughts

“A good plan violently executed now is better than a perfect plan next week.”

- General George Patton

Business action and startup execution is similar to brewing the perfect cup of coffee - it's all about reducing the activation energy. Activation energy, in this context, is the initial effort required to take that crucial first step towards task completion.

Much like adjusting your coffee grinder to the optimal setting for the perfect espresso, reducing the activation energy for a task can trick your mind into perceiving it as less daunting. Lowering this barrier often leads to engaging in the task more frequently, leading to quicker and more effective execution.

Statistically, prompt execution makes a significant difference. A Startup Genome Report reveals that around 70% of startups falter due to premature scaling - often a result of delaying action in favor of over-planning.

Well illustrated in the startup landscape, an immediate yet well-measured action on a good plan can provide the caffeine shot of momentum needed to push ahead of the competition.

To put this into action, here are three espresso shots of advice:

  1. Prioritise speed: Cut the activation energy by starting on tasks immediately, driving momentum and frequent engagement.

  2. Iterate and adapt: Treat each action as a stepping stone towards refinement and progression.

  3. Encourage an action-oriented culture: Value decisiveness, informed risk-taking, and perceive failures as opportunities for growth and learning.

So as you procrastinate over your next espresso, let this 'tiny thought' be your inspiration for swift and decisive action. In case you forgot how to launch a startup, let Paul Graham's insights on kick-starting a startup be of help. There's no time like the present to press forward with your plans. Here's to less planning, more action - today, not next week.

How to Start a Startup by Paul Graham

Dept. of Insights

Picks and shovels around AI. Another 1 trillion dollar company?

Nvidia’s market capitalisation jumped from 750bn. USD to 960bn. USD in two days last week, thats a 24% jump! Due to increased quarterly revenue forecasts by 50%. It is now the sixth largest company based on market cap. Just behind Apple, Microsoft, Saudi Aramco, Google and Amazon. Larger than Meta or Tesla.

Nvidia is not only riding the AI wave, it was one of the most important players to create the wave in the first place. So let’s have a look.

Nvidia started 30 years ago and in 1999 invented the GPU - graphics processing units mainly for games. As good old gamers, we remember the GeForce brand!

But as also the blockchain and crypto hype had shown, GPUs are also very well suited for data processing, calculations and as it was shown later, also for model training demands in AI.

Instead of focusing fully on the smartphone and mobile market, Nvidia doubled down on the GPU business, as GPUs were suitable for the most complex calculations. As they put it: “World most important problems needed accelerated computing”.

Around the year 2007 Nvidia launched CUDA programming language or computing platform - compute unified device architecture. CUDA made easier for professionals to program GPUs and therefore increased it’s importance in the AI space. This was one of the catalysts for the increasing AI wave.

For many years, this bet on AI and R&D in the space did not materialise in increased market cap of the company. Now it did, one of the most valuable “picks and shovels” in the AI industry.

Btw. since beginning of the year, the market cap of Nvidia nearly tripled (364 to 963bn. USD).

Here is a commencement speech at NTU by Jensen Huang, president of Nvidia from two days ago (starting at 1:00 in english).

“RUN! Don’t walk to work on AI”

"If you don't, you'll lose your job to people who use AI better than you.”

Dept. of Twitter Thread Research:

1/ Some are prepared better. As new AI technology becomes accessible to many, some are prepared better to leverage it, find synergies. At the end, it is also about better distribution than the others.

2/ Sustainable Portfolio? It's not only full on acquisition mode all the time with Boring Businesses. There are also times you have to back out, divest or simply writeoff, just have a look at this one:

Dept. of Visual Research:

Well, something definitely worth framing!

Charlie’s Principles

News from our portfolios & where to shake hands:

  • Andrej with ZAKA.VC was taking part at Latitude59 in Tallinn last week, one of the best tech and start-up conferences in Baltics. What a blast!

  • Slavo will be visiting Berlin from 31st of May until 2nd of June, let’s grab a coffee.

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Enjoy your coffee fresh, allocate capital, repeat! See you in 2 weeks 👋

The Caffeine Capitalist is a bimonthly newsletter written by Slavo Tuleya, Andrej Petrus & Martin Nemecek. It is written in partnership & in support from ZAKA.VC and Chop Chop Ventures.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.