Speed + Trust = Breakout Growth
How confident would you be to put the pedal to the metal, in a car without brakes?
Exactly.
As Forbes Editor Rich Karlgaard outlines, old-school ideas of wisdom and trust might seem out of place in this fast-paced, AI-fuelled business world. But don't be fooled. Trust, which builds over time, strengthens your brand, keeps your ethics in check, and accelerates your growth.
The time to start is now. Enjoy.
By Elke Boogert, Mach49 Managing Editor
March Roundup
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Speed + Trust = Breakout Growth
By Rich Karlgaard, Editor-at-large and Futurist at Forbes?
Last month, the chip company 英伟达 revealed a new AI processor called Blackwell. Thought AI was already moving fast??Blackwell will run up to 30 times faster than Nvidia’s current top, called Hopper, said Nvidia CEO Jensen Huang .
As a useful business tool, AI software has had many false dawns: AI startups briefly caught investor attention in the 1980s, 1990s and early 2000s. But for decades, AI remained more promising than practical. It was not ready for business.
What changed? Two things.
One was “transformer” – a new AI language model that emerged from Google’s labs in 2017. Transformer made today’s Generative AI possible.
Reason two why AI is hot news is the magnificent processing power of Nvidia’s graphics processors. The new Blackwell chip has more than 200 billion transistors. CEO Huang says Blackwell “can power much larger language models than are deployed today — up to 27 trillion parameters, many times the size of today's most advanced models, like GPT-4.”?
This level of AI capacity is like going from steam ships to jet aircraft. AI is a major accelerant and business leaders had well pay attention. Every business will be forced to adapt or face decline. Cities and countries, too. The clock is ticking, and fast.?
China was reborn. Prosperity has flourished in Southeast Asia, India, the Middle East, South America and now Nigeria and other parts of sub-Saharan Africa. Communication is instant and affordable. Intel invented the microprocessor in 1971. Within a year, modern venture capital firms like Sequoia Capital and Kleiner Perkins were born. Risk capital now flows to opportunity and talent around the world; if not perfectly, then amazingly well. Innovation and disruption have boomed. Now imagine the last 50 years of change compressed into a decade or two. This is the world we now enter.
Will anything stop AI’s acceleration? Regulators will try, under the guise of safety and security. They will find eager partners in large established companies afraid of smarter, hungrier and faster-moving competition. But this storyline, which writer Virginia Postrel calls “the future and its enemies” has played out many times throughout history. The pattern is clear. Innovation is persistent; it will have its way.
And all of this will happen at blinding speed given AI’s rapid evolution combined with nearly unlimited compute power.
Charlie Munger's Circle of Trust
Speed is good, but speed without trust is dangerous, even ruinous. Speed without trust may trick you into releasing flawed products into the marketplace. Speed without trust will burn out employees and suppliers. Speed without trust is a reputation wrecker.
We can quantify speed, but trust is by its nature qualitative. We study it from examples, not formulas.?
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Last month I moderated a panel called “The Wit and Wisdom of Charlie Munger” at a tech investment conference. The panel’s inclusion in a tech conference was itself remarkable. Munger was not known as a tech investor. He was known for being Warren Buffett’s partner at Berkshire Hathaway , the giant holding company. Buffett famously said he largely avoids tech investments because he doesn't understand them. Buffett prefers banks, insurance companies and the like.?
Before Buffett met his future partner Munger in the 1960s, Buffett liked to buy stocks of companies that were out of favor and dirt cheap. Buffett had learned these value investing techniques from his professor at Columbia University’s business school, Benjamin Graham, whose 1949 book, The Intelligent Investor, is considered the bible for value investors. Graham’s method was to buy beaten-down stocks when their prices had dropped well below their fundamental value and wait for a rebound.
Then Buffett met Munger. "Charlie changed Warren," said Robert Johnson, Professor of Finance at Creighton University's Heider College of Business , who attended almost every Berkshire Hathaway annual meeting for decades. "Warren was more of a pure value investor. That is, he'd buy a fair company if it was available at an inexpensive price. Charlie was more about buying a good company at a fair price."
To Munger’s eyes, a good company checks all the financial boxes: growing revenue and profits, strong balance sheet, operational efficiency, a record of smart capital allocation, and so on. But those are just table stakes.
Customers simply trust the company to do the right thing, and so do employees, suppliers and shareholders. Today we’d call Munger’s “circle” by a fancier name – ecosystem – but the idea is the same. The magic of a circle, or ecosystem, with trust at its core, is that its value compounds over time. Trusted partners can be trusted to bring other trusted partners into the circle. Without trust at the core, behavior and ethics will inevitably deteriorate and regress to average (or worse) as the circle grows. Brands and reputation become fragile. Operational efficiency is lost as trust erodes and transactions become bogged down in negotiations and contracts.
In the age of AI and accelerated business pressures, harried managers might be tempted to think wisdom and trust are old-fashioned ideas. Not quantifiable and therefore of lower priority than speed. As Charlie Munger reminds us, that would be a mistake.
The circle of trust is a truly wise idea and should be core to your business. The magic of its compounding returns is a giant wind in your sails. It will lead you to better customers, committed employees, more innovation and quality growth.
Trust doesn't compete with speed. Trust facilitates speed.
Rich Karlgaard was the Forbes publisher from 1998 to 2018. He is now the publication’s editor-at-large, global futurist, and columnist for Forbes Asia.
Opportunities Disguised as Big Hairy Problems
Our weekly list of must-read media, curated by Rich Karlgaard, on the predictable failure of cvc units, the drawbacks of monopoly and starting a business when you're 55. In short, opportunities disguised as big hairy problems.
He Turned 55. Then He Started the World’s Most Valuable Company / By Ben Cohen / The Wall Street Journal / March 29
Reason to read: Morris Chang wasn’t successful?despite?his age. He was successful?because?of his age,” writes the author. “As it turns out, older entrepreneurs are both more common and more productive than younger founders.” Questions to ask: Do you believe the myth that only young people can start successful growth ventures? Are you overlooking talented growth leaders because of their age?
Steer Clear of Corporate Venture Capital Pitfalls / By Ilya Strebulaev and Amanda Wang / MIT Sloan Management Review / March 12
Reason to read: “Even though CVCs kick off with great fanfare and optimism, many, if not most, fail to achieve their objectives. Often, they don’t survive the first change in CEO or make it to their 10th birthday.” Questions to ask: Are your CVC efforts falling into predictable failure traps? What are the warning signs?
The Plot To Break Nvidia’s Grip on AI / By Max A. Cherney / Reuters News Agency / March 25
Reason to read: To paraphrase an ancient Chinese proverb, one company’s high profits are another company’s opportunities. Your strongest advantages always invite competition, which means constant innovation is the only sure path to long-term success. Question to ask: How could your competitors – present or future– attack your most successful products?