A fascinating and slightly unnerving aspect of technological advancement (TA) is the fact that everything ever learned is harnessed for further learning, causing the rate of advancement to accelerate continuously towards eventual parabolic growth. The chart resembles that of long-term compounding returns, and both resemble the bottom right quarter of a circle. A less understood phenomenon in the case of ‘TA’ is the inversion which occurs when a particular product or function approaches perfection. Product perfection doesn’t supersede additional learning; it invigorates a more useful process to displace itself! Consider the examples:
- The 2007 BlackBerry, with its seamless keyboard, instant e-mail syncing, and 3-Day battery life, was dubbed a “CrackBerry” by Wall Street due to executive addiction yet was displaced by the iPhone in 24 months, rendering the stock near worthless; today BlackBerry’s are no longer made.
- $50 AI-tutors, which package employable outcomes, are actively displacing $50,000 universities, which package credentialed knowledge.
- The farmer’s milk bucket became a portable, direct feed dumping station, then a direct line to the tank; today robots milk happier cows non-stop for wealthier dairy farmers who have more time and better knees.
- One needs but a short drive on either U.S. coast today to see the coming inversion of personal transportation. I’m excited to see the far more productive uses transportees will engage during ‘travel time’ as we grow accustomed to self-driving cars.
Josh Baylin, a senior analyst at Stansberry Research, astutely recognizes the greatest danger to a tech company in this redundant process isn’t early on when a company strives to gain market share, but later when “it gets so good at solving the wrong problem that it makes itself irrelevant”. Baylin suggests that in this accelerating, AI-driven tech world it is crucial for investors to identify companies refining nearly perfected processes and allocate less capital to them, and those introducing new processes which eliminate problems and steps and allocate more capital to them.1 Might AI’s voice-first interface alter the human/computer discourse and displace Apple’s nearly perfected iPhone? Is this why Berkshire is reducing its Apple position in noticeable proportions? To what extent are you exposed to the same displacement risk? Can you identify emerging processes that are capable of inverting existing systems and displacing present leaders?
This is an important topic to consider in an age in which parabolic ‘TA’ causes more frequent process inversions and company displacements. Think about it, and may God bless your wealth-building efforts!
Shaun
“For the LORD gives wisdom; from his mouth comes knowledge and understanding” ~Proverbs 2:6
1 Stansberry Research, Daily Wealth, “Don’t Get Caught in the Perfection Trap”, by Josh Baylin, April 21, 2025
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