Investing in Morin Capital's Syndicate: The Power of Choosing and Staying Committed to Ideas for the Long Term

Investing in Morin Capital's Syndicate: The Power of Choosing and Staying Committed to Ideas for the Long Term

In the world of investing, it is not the initial idea that matters the most. Instead, it is the ability to choose the right idea and stay committed to it for the long term. This philosophy is at the core of Morin Capital's Syndicate, a company that aims to serve entrepreneurs by building close and personal relationships with them. By bringing together various elements such as ideas, focus, capital, technology, creativity, design, philosophy, relationships, authenticity, love, and a dash of optimism, Morin Capital aims to build lasting companies.

But what does the future hold for industries like autonomous cars? Benedict Evans, a renowned analyst, discusses the concept of winner-takes-all effects in this field. While not all autonomous car companies will succeed, there is enough potential for one to wonder where these effects could be and what kind of leverage they might entail. Evans emphasizes that hardware and sensors for autonomy, as well as electric vehicles, will likely become commodities. However, unlike the third-party software developer ecosystems seen in PCs and smartphones, the number of apps a car can run is not a deciding factor for consumers. The real potential lies in the autonomous software that enables cars to navigate without accidents, city-wide optimization and routing systems, and the on-demand fleets of 'robo-taxis'.

From a technological standpoint, these three layers - driving, routing and optimization, and on-demand services - are largely independent. In theory, one could install the Lyft app in a GM autonomous car and let the pre-installed Waymo autonomy module drive passengers around. However, the key factor that will determine success in the autonomous car industry is data. Specifically, two types of data are vital for autonomy: maps and driving data.

Maps play a crucial role in autonomous driving. Just as our brains constantly process sensor data to create a 3D model of the world around us, autonomous cars rely on Simultaneous Localization and Mapping (SLAM) to map their surroundings and determine their position. Maps have network effects - the more cars a company sells, the more frequently and accurately its maps are updated. This leads to a reduced chance of encountering unexpected obstacles or confusion. In other words, the more cars a company sells, the better all of its cars become, creating a powerful network effect.

The second type of data that is essential for autonomy is driving data. This data serves a dual purpose: understanding how an autonomous software reacts to various scenarios and training the software through simulation. Waymo, a company under Google, has a significant advantage in this aspect. It reported driving 25,000 'real' autonomous miles each week and simulated one billion miles in 2016. Tesla, on the other hand, focuses on computer vision software and foregoes LIDAR for cost and practicality reasons. Although this approach saves time, it also poses challenges for the software in solving more complex problems.

The winner-takes-all effects in the autonomous car industry center around data. Companies with access to vast amounts of driving and mapping data have a significant advantage over competitors. This is reminiscent of the dynamics seen in the PC or Android industry, where the tech company reaps most of the network value while the OEMs become near-commodity providers. Car manufacturers are keen to avoid becoming reliant on third-party autonomy platforms and aim to develop their own solutions to avoid a similar fate.

However, the strength of the network effect remains an important question. How many users or, in this case, cars, are needed before the autonomy platform reaches its peak performance? The answer may lie in the evolution from Level 4 to Level 5 autonomy. As manual controls become less prevalent and eventually disappear, true Level 5 autonomy will emerge. At one extreme, there could be five to ten companies with viable autonomy platforms, and the car industry would buy autonomy as a component, much like ABS, airbags, or satnav systems.

In conclusion, investing in Morin Capital's Syndicate offers the opportunity to be part of a company that values long-term commitment to ideas and building lasting relationships with entrepreneurs. The autonomous car industry, on the other hand, is poised for a winner-takes-all effect driven by data. Maps and driving data play pivotal roles in achieving autonomy, and companies with access to extensive data will have a significant advantage. However, the strength of the network effect remains a key question.

To navigate this evolving landscape effectively, here are three actionable pieces of advice:

1. Emphasize the importance of data: Focus on acquiring and utilizing vast amounts of driving and mapping data to improve the performance and capabilities of autonomous systems. Invest in technologies and partnerships that allow for data collection and analysis.

2. Foster collaboration and partnerships: Recognize the value of collaboration within the industry. Form partnerships with other companies to leverage respective strengths and develop comprehensive autonomous solutions. By working together, companies can create a network effect that benefits all involved.

3. Prioritize long-term commitment: In both investment and development, prioritize long-term commitment to ideas and relationships. Building lasting companies and solutions requires patience and dedication. Avoid being swayed by short-term trends and focus on the bigger picture.

By following these actionable advice, investors and companies can position themselves for success in the autonomous car industry while aligning with Morin Capital's Syndicate's philosophy of long-term commitment and building lasting companies.