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Wu Jun: Investing in technology stocks requires some scientific knowledge _ Tesla

Release Time:2021-07-14 Topic:What knowledge do you need to master when investing in stock Reading:16 Navigation:Stock Liao information > Car > Wu Jun: Investing in technology stocks requires some scientific knowledge _ Tesla phone-reading

But from another perspective, Tesla may really be worth a lot of money. For example, another friend of mine believes that if Tesla can truly realize driverless driving and turn selling cars into selling services, then the value created by each car may be almost 40 times the value created by manufacturing cars. The stock price can be fully supported.

For the value of Tesla, everyone may have their own judgments, which are actually based on different assumptions. If Tesla is nothing more than a car manufacturing plant, then its value is quite limited. If Tesla is a high value-added IT company, then its value can be very high. I want to remind you that even if Tesla’s stock price is so high now, you should not go short it, because short selling is very dangerous. As long as 20% of investors in the world believe that Tesla can enter a new field, The stock price is very high.

"Barron's Weekly" Chinese version: Recently, "Barron's Weekly" interviewed Catherine Wood of Ark Asset Management. Her logic is similar to your last friend, she It is believed that Tesla may launch a car-hailing network to compete with Uber and LYFT, so that there will be a lot of room for profitability. As you said, the valuation of technology companies is actually based on different premises. So how do you see the possibility of antitrust lawsuits and splits that big technology companies may now face? Does the election of Biden mean these? Will big technology companies face more risks in the next four years?

Wu Jun: Indeed. Let me give another example. I am also a very famous investor. I can't disclose his name here. Once we were discussing, how many trillion-dollar companies will there be in the world in ten years? His answer is: there is no family. Everyone said how could it be possible, there are now three. He said, rest assured that within 10 years, the US government will split these companies.

The United States has a tradition of breaking up large companies, but this is by no means a bad thing, but a very good thing. We all know that Silicon Valley actually originated from a company, Fairchild Semiconductor. If we count these subsidiaries and Sun companies derived from Fairchild, there will probably be hundreds of them. There are 20 or 30 listed companies, with a combined market value of nearly 3.5 trillion U.S. dollars. At the end of the 1960s, the tycoons of semiconductor companies all over the world met together and chatted with each other during the tea break. They found that 90% of them had worked in Fairchild.

As Fairchild continues to split up and spin-off subsidiaries and grandson companies, the world has today’s semiconductor industry. Chip companies such as Intel and AMD are all Its subsidiary, Mike Markkula, who originally invested in Apple founders Steve Jobs and Steve Wozniak, came from Fairchild, Kaipeng Huaying and Sequoia Capital. The company’s founders, Kleiner and Valentine, are also from Fairchild...So we split the Fairchild company and prospered the entire Silicon Valley. From the perspective of US national interests, I don't think splitting is a bad thing.

First look for a big market, and then use technology to change it

"Barron's" Chinese version: Is your investment biased towards early-stage startup venture capital or secondary market investment?

Wu Jun: I actually do both markets. In the beginning, we were specialized in the secondary market. At the beginning, I set up a hedge fund with some early employees of Google who had already had enough food and clothing to specialize in quantitative trading. In the early days, our investment style was very proactive and our performance was very good, but slowly Local people’s goals and style changesChanged, I also turned to venture capital.

The purpose of my venture capital investment is different from those of fund partners who rely on investment returns to make a living. My main purpose is twofold. One purpose is to understand technological changes and market conditions through investment. When you are really ready to invest $1 million in it, you will study the company seriously, understand the corresponding technology and market, and figure out whether it is good or not, otherwise you will not really care about it.

Another purpose is to help young people who want to do something. In fact, we also have some entrepreneurial ideas, but now we don’t have the time and energy to lead the team and do projects. Since there are many young people who are willing to do what you want and are more motivated, you might as well use money to support them. .

These are the two main purposes of my venture capital investment, so I participated in the first and second rounds of investment more, and basically I didn’t participate in the third round. Up. If a company that I am particularly interested in suddenly appears, I may start to spend time studying it.

The Chinese version of "Barron Weekly": What investment cases have you shared in recent years, and what is your basic investment philosophy?

Wu Jun: In the past few years, I have been very optimistic about the application of IT information technology in biomedicine. In the United States, the output value of the large health industry is higher than that of the Internet industry, accounting for about 20% of the US 20 trillion GDP, which is 4 trillion US dollars, and this proportion will definitely be even higher after the new crown epidemic.

This summer, the Grail company we invested in was acquired for $8 billion. What this company does is to detect abnormal DNA through blood tests and conduct early detection of cancer. The DNA of cancer cells is not the same as the DNA of normal body cells. If a person has tumor cancer, the cell spheroids enter the blood after the cell is metabolized, and the DNA can be detected. This company monitors DNA for early cancer screening.

The difficulty of this technique is that because the content of abnormal DNA is very small, it has to copy many copies, so the amount of calculation becomes very large, and the detection becomes This is an arithmetic problem. Using cloud computing, Grail can reduce costs by 90%, but the amount of calculation is still large. The company’s early angel investor was Amazon’s Jeff Bezos who sent a team of 20 engineers to the company to use Amazon’s cloud service (AWS), and then discounted the price by another 10%, so they The test can be completed at about 1% of the cost of other companies, and a CT-like whole body cancer screening can only cost one or two thousand dollars, and the price is very competitive.

This company was approved by the FDA last year and was acquired for $8 billion this year. We have been looking at this kind of company that uses big data to monitor the health direction. I think the investment of this company also reflects my basic investment philosophy: first find a very large market, and then use technology to change it again. market.

Technology investors should know some common sense in the information world

"Barron's Weekly" Chinese version: In addition to investing, you have also been writing books, from "The Beauty of Mathematics" to "The Peak of the Wave", from "Attitude "And "Insights", then to "Intelligent Times" and "Global History of Science and Technology", and the latest "Information Biography". The quality and speed of your content output are amazing. Why do you want to write this "Information Biography" What do you think is the biggest inspiration it can bring to investors?

Wu Jun: We can divide the world into two worlds, one is the physical world One is the information world. Although our bodies live in the physical world, the time spent in the information world may be less than the time in the physical world.

Almost everyone in society now, even if they just graduated from high school, has a lot of knowledge in physics. For example, knowing that the speed cannot exceed the speed of light, knowing that the machineThe efficiency cannot exceed 100%. If anyone tells you that he invented the perpetual motion machine, everyone will call him a liar. In fact, we also have some similar laws and common sense in the information field, but we don’t have these common sense yet. Therefore, consciously or unconsciously, we still do a lot of things like manufacturing perpetual motion machines and super speed of light in the information field, especially in the field of information. When starting a business.

Let me give two examples. The first example is that there have been many video websites in China in the past few years. They have a common problem that the traffic is very expensive, so most of these websites are losing money, so many companies are doing the same thing, that is, trying to Compress the image to a smaller size while sacrificing resolution.

Many people were asking me at that time. I said that this is impossible. Shannon (the founder of information theory) has already said in the information theory that when information is finally pressed down to information entropy, it will not be able to be suppressed, and further pressure will cause losses. Information entropy is equivalent to the speed of light in the physical world, speed cannot break the speed of light, and compression cannot break information entropy. This is a very basic principle of informatics, but many entrepreneurs do not understand this principle, and have spent a lot of engineers trying to make breakthroughs. In fact, this is the same as making perpetual motion machines and superluminal rockets.

Give another example. Many media have reported on Tesla's "Starlink Project" and compared the "Starlink Project" with China's 5G construction, saying that this is a "6G technology" that is more advanced than 5G. But these two things are completely comparing oranges and apples—not even oranges and apples, but comparing a Chinese cabbage with a chicken. They are completely irrelevant.

Because the goals of the two are completely different, Starlink is to cover some places where we cannot build base stations, such as the sea and the polar regions, rather than replacing base stations. From the perspective of transmission rate, satellite communications can never be compared with base station communications. If you understand the relationship between the energy of the energy signal source and the transmission rate, you know that the energy of information transmission is inversely proportional to the square of the distance from the source. The distance between you and the satellite is several hundred kilometers, and the distance between you and the base station is two to three hundred meters. This distance is 1 million times worse after squared, which means that the communication speed of the base station can easily be 1 million times that of satellite communication, so You should not compare base station communication with satellite communication.

By the way, countries such as the United States, South Korea, and Japan have already started the 6G alliance. Companies including Intel, Microsoft, Samsung, Google, and Apple have all joined, and 6G The implementation method is still the way we know today to build a base station.

I think all these scientific knowledge should become common sense. I also have some investors and friends in China who invest in projects like Starlink, but I couldn't explain it to him for a while, so I wanted to write a book to write out the basic principles of information theory. But no one reads the textbooks, so I wanted to write the principles of information theory in the form of historical biography. When I was writing this book, I put two books on the desk. One was a professor of information theory at Stanford University, Thomas. Kovo's "Information Theory", and another is Stephen Zweig's famous book "When the Stars Are Shining".

There was also a scandal in the United States. An entrepreneur named Elizabeth Holmes founded a company that conducts medical examinations by collecting blood from her fingertips. She found a lot of Celebrities come to the platform, but none of those celebrities understand technology. They are all politicians like Henry Kissinger. Later, I heard a professor from Stanford Medical School say that he said that all medical practitioners know a common sense, that is, the composition of blood in your blood vessels is different from the composition of blood on your fingertips, so this is fundamental The above decided that the fingertip blood test must be a scam.

This story also tells us that to invest in technology stocks or technology companies, you have to understand the basic principles of science, otherwise you may pursue some fundamentally wrong directions. .

Chip manufacturing needs to be done steadily and in accordance with the law

"Barron Weekly" Chinese version: Now China is also working hard to realize the localization of chips, you are optimistic about the localization of Chinese chips Prospects and why?

Wu Jun: Let me talk about the advantages first. For example, making chips now is a bit equivalent to making cars in the 1970s. The U.S. auto industry feels that there is nothing to optimize, and engine efficiency is unlikely to increase significantly. At most, it can be made more refined. Later, the Japanese After taking over the American class, I really made the car a little more refined.

The current chip industry is a bit like the auto industry in the 1970s. In fact, the market value of American chip companies is not high, so in the past ten or twenty years, investment in China in the field of chip manufacturing may benefit more. This is a positive aspect.

The downside is that any industry has its own laws, and you have to follow the laws and you can’t do it arbitrarily. I told a story in the book "Information": Intel founder Noyce said as early as 1957 that the raw materials of the future electronics industry are sand and copper wires. Who can turn sand and copper wires into electronics? The key to components is the process, which is the added value of technology. As early as the 1960s, he predicted that the cost of repairing electronic products in the future will be more expensive than buying new ones, and throw them away if they break. Today, our mobile phone is broken, and no one will repair it, because the cost of repairing is more expensive than buying it again.

When it comes to Chinese semiconductors, everyone will think of TSMC, because they are also Chinese. Why can TSMC do a good job? TSMC’s accumulation of process experience is the result of two to thirty years of long-term efforts. Even the highest-end chips have a yield rate of more than 80%, while some domestic companies that compete with it have a yield rate of less than half, and the gap is too big.

So I think that the development of semiconductors requires a bit of hard work. The same was true for Japanese cars back then. When they first exported to the United States, no one looked down on Japanese cars. The Japanese polished them bit by bit. Samsung and TSMC took decades to polish the chips. Semiconductors cannot be solved by an algorithm, a design, or a genius, nor are they guaranteed to succeed by spending money. This industry requires many people to work steadily in obscure positions and become craftsman-type engineers in order to be able to make progress. , Even if the same lithography machine comes, you have to have more than ten years of experience to debug it in order to improve the yield.

Buffett has also invested in technology stocks and a good view of money

"Barron's Weekly" Chinese version: In the "Information", you also mentioned that Buffett has invested in Noyce’s company that is not well known. Known past events have broken many people's inherent impression of Buffett not investing in technology stocks. What do you think of Buffett's investment?

Wu Jun: This matter is a crooked deal for Buffett. In fact, Buffett's original intention was to do a charity. It was in the 1960s. Buffett's investment had begun to take shape. He wanted to do a charity, so he found the father of venture capital, Arthur Locke. At that time, Noyce of Fairchild Company came out to start a business. He especially hoped that his alma mater Grinnell College, where he used to undergraduate studies, could benefit from his entrepreneurship. Noyce's Ph.D. I studied at Grinnell College.

So Arthur Locke, according to his idea, price the seat of Grinnell College’s board of directors for $100,000. Buffett subscribed for one of the seats and donated it as charity The college. This investment was very successful and Grinnell College became very rich, but most of the money was ruined.

Because of this incident, Buffett never invested money in charity funds again. Many people saw that Buffett advocated charity, but he didn't donate much money himself, and felt that he was a bit duplicity. In fact, the reason why Buffett doesn't do charity is also related to this donation, because the college fund did not make good use of the funds, which led to Buffett's bad impression of the charity fund. He said, I'm looking for a trustworthy charity fund, and finally he donated the money to Bill Gates' Gates Fund.

"Barron Weekly" Chinese version: In addition to investment, you have repeatedly talked about the concept of money and financial management. What is the relationship between them and investment?

Wu Jun: Investment teaches you how to make money more, money The concept is to say how to use it after having this money. If you only focus on making money for a lifetime, you are the slave of money, so the concept of money actually teaches you to be the master of money.

In the United States, there are basically four places for money: the first is to donate, the second is to pay taxes, the third is to consume, and the fourth is to leave it to your children. There are good and bad things for children, and you will find that children from extremely wealthy families, if they are not able to manage so much money, money is a curse for him, not a blessing.

At the end of the 19th century, many children from wealthy families in the United States also spent money like the rich second generation in China. Later, Carnegie and Rockefeller took the lead in donating money. On the one hand, it was for social fairness. On the other hand, they also felt that if the children could not handle the money properly, the money would be a curse. So even if you leave the money to your child, you should let him use the money in the right way and have the conditions to do what he wants to do instead of doing nothing.

"Barron Weekly" Chinese version: Thank you very much!

About the author: Wu Jun, Silicon Valley venture capitalist, director of Johns Hopkins University School of Engineering, winner of the "Wenjin Book Award". Graduated from Tsinghua University, Johns Hopkins University, Ph.D. in Computer Science. Joined Google in 2002 and is currently the main designer of Google's Chinese, Japanese, and Korean algorithms. Joined Tencent in 2010 as the vice president of search business, and then returned to Google to be responsible for the computer question and answer project. In 2014, he founded Fengyuan Venture Capital as a founding partner. He has authored many best-selling books such as "The Age of Intelligence", "The Top of the Tide", "The Beauty of Mathematics", "The Light of Civilization", "Insight" and "Attitude".

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