The limits to our imagined vision of the future

A programming note: I hope to publish my Deep Dive on Booking Holdings tomorrow.

Since this is my first year of publishing daily at MBI Deep Dives, I am still thinking about some vacation policy. I will let you know once I finalize something, but for now, I would like to take Thursday and Friday off during Thanksgiving next week.

I would also take the last week of the year off. My son, who is a Christmas baby, will be turning one this year; so I think I will have my hands full during that time!

In addition to “Daily Dose” (yes, DAILY) like this, MBI Deep Dives publishes one Deep Dive on a publicly listed company every month. You can find all the 64 Deep Dives here.

Earlier this year, I read this piece “Finding Awe Amid Everyday Splendor” which made the point that seeking “brief moments of awe is as good for your mind and body as anything you might do.” The writer of the piece interviewed Dacher Keltner (the author of the book “Awe”) while strolling through Point Reyes beach. The first time I went to Point Reyes North Beach was in October 2024 and I remember telling my wife how the vastness of the sea in that foggy October afternoon in a nearly secluded beach added a surreal element to our life events! It almost felt like we were saying good byes to our past selves before entering a new phase in our life: parenthood!

Then when I read that piece about “awe”, it rekindled a deep desire to go back to that beach once again. So, I have been thinking about going back for a while, but finally, after publishing my “daily dose” on Friday last week, I started driving for Point Reyes North Beach!

It took me three and half hours to get there. This time, it was lot sunnier. With a clear sky and constant sound of crashing waves, I found the beach even more secluded this time. I took a stroll for half an hour around the beach and then started driving back to my home for another three hours!

Admittedly, I was less awestruck about Point Reyes North Beach the second time around, but I actually conjured lot more awe while driving to and from the beach itself because during the entire 7-hour trip, I was finally listening to Acquired’s three Nvidia episodes (part 1, 2, and 3). It was a bit surreal to listen to these episodes knowing what we know today: Nvidia is the largest market cap company in the world!

While listening to the episodes, there are a few things that really stood out to me.

Jensen Huang was born in Taiwan and his family later moved to Thailand. At age Nine, his family sent him to a boarding school in the US to chase the American dream. While the school seemed affordable, his family’s knowledge about the school was clearly quite…limited! From the podcast:

“It turns out that the reason that this school, OBI (Oneida Baptist Institute) was so cheap was it’s actually not a prep school. It’s a reform school. This is a school for troubled kids. It’s a reform school. Jensen’s roommate, when he shows up as a 9-year-old, is a 17-year-old kid who had just gotten out of prison and was recovering from 7 stab wounds that he got in a knife fight.”

Many people may laugh or even raise eyebrow at such callousness of Huang’s parents, but as an immigrant father, I can confirm feeling a bit sentimental when my son’s American passport arrived. I almost felt like I did something “very important” for my son.

The other thing that really stood out from the series was a particular Marc Andreessen quote. I googled it and found the quote in a Forbes piece from Nov 30, 2016. Here’s the quote from Marc Andreessen:

“We’ve been investing in a lot of startups applying deep learning to many areas, and every single one effectively comes in building on Nvidia’s platform,” says Marc Andreessen of venture capital firm Andreessen Horowitz. “It’s like when people were all building on Windows in the ‘90s or all building on the iPhone in the late 2000s.

“For fun,” adds Andreessen, “our firm has an internal game of what public companies we’d invest in if we were a hedge fund. We’d put all our money into Nvidia.”

Oh, he would have so much more fun if he (or any of us) actually did that! The stock compounded at a cool 62% CAGR AFTER that Forbes piece was published.

A few days ago, I was lamenting to a couple of investor friends that how hard investing may be evolving to be, especially in tech given how seeds of the major value unlock in recent years came from “academic papers” 7-8 years ago (think “Attention is all you need”). Isn’t it going to be increasingly more difficult to understand these inflection points? Admittedly, listening to the Nvidia series was a good reminder that indeed “attention is all you need”! You don’t have to take any prominent VCs (or anyone) words as gospel obviously since just like anyone else, they can often be wrong but in retrospect, there was enough “easter eggs” out there for a good student of the market to at least start paying attention to what’s going on in Nvidia.

Of course, investing is never going to be so easy that just by paying “attention” you will magically sense the future! When Acquired published its Part 1 of Nvidia series in March 2022, its Enterprise Value (EV) was ~$700 Billion. A month later when they published part 2, Nvidia’s EV dropped to $500 Billion. It was interesting how the bull-bear cases that Acquired discussed in April 2022 still remains relevant to this day even though the company is today almost ~10x larger. Notice the below excerpt from part 2, for example:

“Google is sort of counter positioned against NVIDIA here, where they’re saying, we want to differentiate Google Cloud with this offering that depending on your workload, it might be much cheaper for you to use TPUs with us than for you to use NVIDIA hardware with us or anyone else. They’re probably willing to eat margin on that in order to grow Google Cloud’s share in the cloud market. It’s kind of the Android strategy, but runs in the data center.”

In fact, while listening to episode 2 of Nvidia series, I didn’t know when they published it since I was driving. But it became clear that it was definitely before ChatGPT as they were kind of struggling a bit to justify what could explain Nvidia’s $500 Billion valuation.

By the time, Acquired released their part 3 of Nvidia series in September 2023, the world became obsessed with ChatGPT and Nvidia’s EV reached $1 Trillion.

When I got back home, it was wild to see the earnings revisions of Nvidia’s in recent years. In January 2023, Nvidia’s consensus operating income or EBIT estimates for FY’26 was just $20 Billion. Today, estimate for FY’26 shot to $135 Billion!! You bet I found “awe” looking at this chart!

One of the easiest way to be humble in market is to imagine time traveling and wonder if you could possibly foresee now that you know how in reality it actually turned out. More often than not, I quickly come to the realization how investing would still be very, very difficult even if I knew some (but not all) key data points beforehand. Even if I were following Nvidia like a zealot for the last 10 years and became infatuated with ChatGPT right after it came out in November 2022, the harsh reality is I might still have been quite tentative about investing my money in Nvidia.

Investing is inherently forward looking, but I find time traveling in the past is quite underappreciated. Because we don’t know the future, all our debates are understandably centered around how any of these will pan out, but if we just go back even a couple of years, it should be crystal clear that how our imagined vision of the future likely stands on a foundation of sands! I hope that should make it apparent that the distribution of outcomes is likely always wider than we like to imagine!

Disclaimer: All posts on “MBI Deep Dives” are for informational purposes only. This is NOT a recommendation to buy or sell securities discussed. Please do your own work before investing your money.