Part of being human is to be pretty bad at spotting and accurately assessing the long-term impact of changes that are happening around us today.
With the benefit of hindsight even the greatest disruption to existing industries and businesses seems obvious, but it’s never nearly as clear in the early stages of that disruption, or creative destruction.
Platinum Asset Management chief executive officer Andrew Clifford says it’s an area that Platinum focuses on because “there are great opportunities for new companies to rise up through that, but there are also many companies that will fall along the way”.
But as that disruption is gaining ground, we’re like the metaphorical frog sitting in a pan of water with the heat slowly being turned up. Small, incremental changes are difficult to detect and easy to assimilate, but before we know it the environment has changed radically and we’re boiling. From our new vantage point the contrast with our starting state is stark and seems unmissable, even though missing it is exactly what we did along the way.
Clifford says the potential for e-commerce to disrupt traditional retailing was clear, and Platinum “went awfully close to buying Amazon 15 years ago and didn’t quite do it”.
And he says that even if it had, it is likely Platinum would have sold its holding if it had generated a decent return for investors.
“It was clear that e-commerce was going to be a big opportunity, but how many of us, including myself, actually took advantage of that and bought Amazon, or sold my retailers?” he says.
“Even though when it’s obvious and it’s here right now, as something like e-commerce was 10 years ago, you just really can’t imagine a day [will come] where life will change so much.
“It’s just part of our human condition – we just can’t see that change. And it’s why these are really interesting areas to focus on, when there is a lot of change.”
Clifford says investors need to be guided by fundamentals when it comes to assessing the likely winners and losers from disruption and creative destruction.
“We haven’t really worked out how our retailers are going to have a future, but we know they have one, because of simply the desire of people to come together and experience things,” Clifford says.
“So we see now across the world the leading e-commerce players…are coming in and buying [traditional] retailers to try and find this path that’s somewhere in the middle of the two things.”
