Efficiency is time, and time is the one true currency. Innovation in pursuit of efficiency is the most powerful underlying force in driving persistent growth.
Entrepreneur & author Jim Rohn said that “time is more valuable than money, you can get more money, but you cannot get more time.” He is right, of course, in an absolute sense, but efficiency provides us with a loophole. Using our time more efficiently allows us to allocate the time gained from increased efficiency to more meaningful uses.
We align more closely with a quote from JRR Tolkien: “All that we have to do is to decide what to do with the time that is given to us.” Using our time in ways we consider meaningful has a high correlation with satisfaction and well-being.
Innovation can drive efficiency across nearly every aspect of our lives. Time can be “created,” in a sense, and reallocated. Over the last 75 years, there has been a direct relationship between the reduction in work hours and higher GDP per capita. We believe this increase in global human efficiency is driven primarily by time-saving technologies, such as the PC, internet, and mobile. The ability to generate more collective wealth on fewer work hours “creates” time that may become available for meaningful uses.
Other reinforcing data shows that increased vacation time is almost perfectly correlated with higher GDP per capita over the past 75 years. Again, it is efficiency that enables such a counterintuitive correlation to exist.
Deepwater invests in persistent growth. Our deep research efforts aim to identify opportunities where persistent growth exists but has not been fully recognized. Innovation in the pursuit of efficiency fuels persistent growth companies and we’ve seen this continue to play out across the tech landscape over the past 50 years. There’s no reason to expect the pace of efficiency creation to dramatically change in the next 50 years, but, as always, the challenge will be identifying where those efficiencies will play out and for which companies it will drive persistent growth.
Our efforts to identify thesis areas that will drive persistent growth lead us to Deepwater’s TIDE innovation framework. In our view, innovation around transportation, identity, data, and entertainment has an outsized impact on our lives. Within each of these thesis areas, certain technological enablers come in and out of focus over time. Occasionally, an enabler “graduates,” becoming a multi-decade paradigm shift (e.g., PC, mobile, and cloud). Artificial intelligence is an example of a tech enabler that is in the process of graduating to a paradigm shift.
We see the following enablers as those that have the potential to generate innovation-driven efficiency, which creates fertile ground for persistent growth companies:
• Transportation: Electrification & Automation
• Identity: Digital Luxury
• Data: Artificial Intelligence
• Entertainment: Creator Economy
When effectively productized, each of the above enablers allows innovative companies to “sell” us time. For example, autonomous vehicles unlock commute time, digital luxury helps craft our online identity, artificial intelligence replaces human labor with nearly infinite time reallocation potential, and the creator economy allows us to quickly discover & consume content that is aligned with our interests.
At Deepwater, we search for tech enablers, paradigm shifts, and high-growth companies that will benefit from the persistent, tidal force of innovation. Our 2023 Rising TIDE report identifies tech enablers for the next wave of efficiency-driven innovation. Check out the report here to learn more.