Evolving our investment strategy

This is a long post (1,900 words). For those of you who are time poor here’s the tltr:

  • Forward Partners operates a focused investment strategy because it helps us make better investment decisions and provide better support to our companies
  • A good focus area for us is one that can generate 50+ deals and where we can build some generalised expertise that helps with our decision making and value add
  • Until now we have focused on marketplaces and next generation ecommerce
  • Recently we evaluated lots of options and did a deep dive on Applied AI before selecting it as our next area of focus

For the three and a half years that we’ve been going, Forward Partners has operated a focused investment strategy. We observed that small transactions of all types are increasingly moving online and backed the companies that were helping to accelerate that trend. That meant lots of

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6 Digital Strategies, and Why Some Work Better than Others

Digital technology has been roiling markets and disrupting companies for more than two decades, but despite that lengthy history, incumbents are still struggling to enact and deliver on digital transformations. The first challenge is disruption; digitization is enabling new, disruptive models that aggressively compete with legacy models, putting material pressure on incumbents’ revenue and profit growth. As incumbents fight back with their own digital strategies, our research shows that they often trigger a second wave of competition, closer to the notion of Schumpeterian imitation where incumbents start themselves to innovate, sometimes aggressively, against the threat of entrants slashing yet more revenue and profit growth. We estimate that on average, both waves of digital competition has taken out half of the annual revenue growth and one third of the growth in earnings from incumbents that have failed to respond to digital. The second challenge is that, even when companies do launch
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What Should an Apple Car Be?

Tim Cook recently confirmed that Apple is working on ‘autonomous systems.’ As usual with Apple, details are sparse, but it’s likely that autonomous cars are part of this. Apple is so great at connectivity, aesthetics, and entertainment that any vehicle they develop will incorporate these as table stakes. With that in mind, I can see three potential scenarios for how Apple might play in the autonomous car market. The first scenario is to enter cars as a Trojan horse to sell more iPhones. It’s the most conservative play–and a nod to the fact that Apple’s revenues are 60% driven by iPhones. Elon Musk has already said he thinks of Tesla as a ‘sophisticated computer on wheels.’ One could imagine an Apple car that is a Tesla-like product—one with comparable speed, self-driving technology, aesthetics, and features–but is so seamlessly integrated with the Apple ecosystem and requires a new
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Is Your Supply Chain Ready for a NAFTA Overhaul?

NAFTA is headed for a renegotiation. Changes could range from adjustments to the rules of origin for product content, and more-stringent labor standards, to the extreme of withdrawal and a return to World Trade Organization most-favored-nation tariffs. These shifts will have important implications for the supply chain and profitability of U.S.-based companies. However, there is a high level of uncertainty about the ultimate outcome and consequences for companies, in part because the effect could be offset or aggravated by how currency rates adjust. Notably, the proposed “border adjustment” that is part of a tax reform package Congress is debating could cause the U.S. dollar to appreciate relative to other currencies. Under the plan, companies would not be able to deduct the cost of imports from their revenue, a move that today enables them to lower their overall tax burden. At the same time, exports and other foreign
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How Can Companies Compete with Amazon? Netflix Has the Answer

Amazon’s grand ambition was on display last week with the news that it will acquire Whole Foods for $13.7 billion dollars. The move raised the question faced first by booksellers, then the rest of retail, and now seemingly everyone: How can you compete with the retail giant? Amazon doesn’t just want to be the place where you do your online shopping. It wants to be where you watch TV, how you interact with your home, the infrastructure behind your favorite websites — even the place that you do whatever offline shopping is left after its e-commerce behemoth is done gobbling up brick-and-mortar retail. In this way, Amazon is a company well suited for its era, as Neil Irwin pointed out last week in the New York Times. Today’s economy, he notes, is “replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to
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Value-Based Care Alone Won’t Reduce Health Spending and Improve Patient Outcomes

Despite spending twice what other developed nations spend on a per capita basis for health care, the United States has a longstanding trend of having lower life expectancy, greater prevalence of chronic disease, and overall poorer health outcomes. One proposed solution for this is to change the payment model of our health care system from the predominant fee-for-service (FFS) model, which reimburses services regardless of outcome, to a value-based model in which outcomes are reimbursed. Our experience at the Nemours Children’s Health System suggests that value-based care (VBC) is necessary to significantly improve health outcomes and to lower costs for children with chronic illness and complex medical conditions. We have found that a VBC approach can decrease the direct costs of care for a group of children with a chronic condition. However, transitioning to a VBC approach involves added infrastructure, training costs, and complexity of delivering care in an environment
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