Insight
Johns: Major technological shifts require vertical integration rather than horizontal efficiency
“When technology changes, like, I just didn't have a concept for the smartphone. So technology was about to change quite a bit. And in that change, you really want to be vertically integrated because you're not pushing efficiency. You're pushing sort of product…”
Insight
Johns: Leaving money on the table maximizes long-term total value
“When you leave money on the table, what you're doing is you're creating goodwill for your customers and you're buying the company duration, which is oftentimes the way to maximize total value, right?”
Insight
Johns: Emergent behavior makes exact future predictions useless
“We don't know how the future is going to unfold because the system is interacting together, and it creates what's called emergent behavior, and emergent behavior makes predicting useless in most cases, and we can have guidelines and heuristics, and those are a…”
Insight
Johns: Investing should prioritize biological resilience over predicting the future
“You know, it's really more about resilience than it is about predicting the future. And it's about adaptability. Like biology doesn't really care that much about the future. They care about adapting to this wide range of futures, right? Like my bees don't real…”
What-if
Johns: Intel should have adopted ARM's IP licensing model for mobile chips
“They came down, they came out with a cheaper version of it, but in reality, that's not what they should have done. They should have, you know, actually embraced a totally different business model like arm dead. We're just, they were just selling IP and enablin…”
Insight
Johns: Investment 'conviction' is just a synonym for overconfidence and sunk-cost bias
“We use conviction as a synonym for overconfidence. I think that's what Really is the right way to, that's the right way to think about it. Conviction for us means, hey, I've done a ton of work, so I've got a lot of sunk costs, which means I've got bias, and I …”
Opinion
Johns: Zoom looks more like a feature than a platform
“With a company like Zoom, which we never owned because, you know, I don't know, this bad call. It looks a lot to us like a feature, and then, so now the question is, can it become a product and eventually maybe a platform?”
Insight
Johns: Expensive valuations force investors to make predictions
“Valuation is a key piece. And this is the piece that we get every day as public investors and valuations, expensive valuations force predictions. I have to believe a lot more at 10 times sales than I do at 10 times earnings, right?”
Disclosure
Johns: NZS Capital intentionally holds zero Chinese technology stocks
“We've owned China tech for a long time, but when we put this portfolio together at the end of twenty-nineteen it just looked Sketchy to us, honestly. I don't know what there's a lot for lack of a better word. And so we own zero, zero China tech.”
Insight
Johns: No single company can vertically integrate advanced semiconductor manufacturing
“It's really this ecosystem approach that makes sense. No one can do all of this. It's just way too hard. It really does take a village.”
Insight
Johns: Investing is inherently a team sport because teams counter bias
“We think investing is inherently a team sport. It's a terrible solo sport for the most part. And the way we view team is our role is calling out bias in each other.”
Insight
Johns: Texas Instruments' moat is decades of catalog breadth, not technical superiority
“They're very hard to replicate, not because what they're doing so technically hard, it's hard, but it's because the breadth of what they have would take you decades to recreate.”
Insight
Johns: Samsung's consumer hardware division creates a foundry trust deficit versus TSMC
“Samsung is also doing logic, but it's, they have a different business model, right? They compete with their customers. So it's harder for their customers to trust them. Whereas TSMC doesn't have that conflict.”
Insight
Johns: Watershed research insights require wandering through 90% wasted time
“And the way we think about it is we can wander around not knowing what we're doing and waste 90% of that time. And 10% might be really useful and one percent might be absolutely watershed. And that's really all we're looking for. But you can't ever just get to…”
Disclosure
Johns: NZS Capital publicly publishes all internal research online
“We do try to write a lot. We put it all on the internet immediately. It is everything that we use internally. Nothing's held back because we know when we put it back, when we put it out there, we're going to get more value back.”
Disclosure
Johns: NZS holds ~15 resilient names and ~40 optionality names
“So we concentrate resilience. That's about 15 names and just over half the portfolio. And then we distribute optionality. So that's about 40 names. Also just under half the portfolio. Max position size one and a half. And in the middle is between one and a hal…”
Assertion Partly supported
Johns: Rich Templeton eliminated TI's 40% wireless and Nokia exposure
“When he took the company over, they have 40% of the business geared towards wireless and Nokia was a massive customer, their largest customer, and he bled that down to zero.”
Assertion Partly supported
Johns: Samsung controls 50% of DRAM and one-third of NAND market
“They have 50% of the market share in DRAM and about a third of the market share in NAND.”
Assertion Supported
Johns: Texas Instruments generates higher operating margins than Microsoft
“Who has higher operating margins, Texas Instruments or Microsoft, right? Because I ask it, you know, the answer is, it's TI.”
