Welcome to The Nightcrawler, a weekly collection of thought-provoking articles and analysis on technology, innovation, and long-term investing. The Nightcrawler is published every Friday evening by Eric Markowitz, Nightview Capital’s Director of Research.

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In this evening’s email… 

Quote of the week: “If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed.” — Mark Twain

Could the disruptor become the savior?

This week, our CIO Arne Alsin published analysis on a topic we’ve been studying together for the last several years: in the race to autonomy, what happens to the legacy automakers? Our early thesis (from 2017) was that a company like Tesla poised the ultimate disruptive threat to the incumbents. Now, we have a new view of how this could net out. 

“Once viewed by many (including me) as a threat to traditional automakers, Tesla’s FSD could become their saving grace,” Arne writes. “By licensing this technology, companies like Ford, General Motors, and Mercedes could transition from low-profit, market-neglected enterprises to robust, cash flow-generating businesses. It could also allow for the market to reprice these businesses—and expand their multiples.” He continues: 

• Key quote: “The basic story is this: these companies don’t have the vertical integration that’s required for scale. In contrast, Tesla’s approach requires embedding just eight cameras and an inference computer into each vehicle that the company manufactures. All Tesla vehicles manufactured in the last several years feature this equipment. This simplicity and efficiency make Tesla’s FSD not only scalable—but also economically viable for commercialization. If we look at the business world for an analogy, there are a few instances of technologies so technically difficult that they are nearly impossible to replicate or copy, regardless of financial resources. General Motors, for example, has spent $8 billion on autonomous technology but has achieved only a lagging solution, in our view. The challenge is not just financial—but also technical.”

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The enduring value of persistence 

There’s a wide cross-section of traits that successful individuals and businesses tend to have: flexibility, patience, creativity, focus, and resilience—just to name a few. The investor Paul Graham recently added another trait to the mix: persistence, or what he calls “the right kind of stubborn.”

His essay, which primarily focuses on the individual (but could nonetheless apply to business) is required reading for executives and investors alike. “One thing that distinguishes the persistent is their energy,” he writes. “At the risk of putting too much weight on words, they persist rather than merely resisting. They keep trying things. Which means the persistent must also be imaginative. To keep trying things, you have to keep thinking of things to try.” He continues:

• Key quote: “Energy and imagination make a wonderful combination. Each gets the best out of the other. Energy creates demand for the ideas produced by imagination, which thus produces more, and imagination gives energy somewhere to go. Merely having energy and imagination is quite rare. But to solve hard problems you need three more qualities: resilience, good judgement, and a focus on some kind of goal. Resilience means not having one’s morale destroyed by setbacks. Setbacks are inevitable once problems reach a certain size, so if you can’t bounce back from them, you can only do good work on a small scale. But resilience is not the same as obstinacy. Resilience means setbacks can’t change your morale, not that they can’t change your mind.”

A few more links I enjoyed: 

AI is now shovel ready – via David Cahn / Sequoia 

• Key quote: “We have written here extensively about the revenue side of the AI infrastructure buildout. My last piece, AI’s $600B question, focused on the implied revenue expectations for AI, and questioned the time horizon in which we’ll be able to meet those lofty goals. This piece turns to the cost side of the equation. In particular, we will focus on the data center buildout, the rise of the ‘AI factory,’ and its implications for energy, construction and the industrial supply chain. We believe that 2025 will be the ‘Year of the Data Center’ and that we are on the cusp of transitioning from a hype cycle into an industrial-driven build cycle.”

A new vision for the advancement of humanity – via Jason Crawford / Freethink 

• Key quote: “Fear and skepticism of progress put us at risk of stagnation and decline. The defeatism that arose in the 20th century about the challenges of progress does not give us a way forward. We need a new philosophy of progress for the 21st century, and beyond. The time for that philosophy is now. Stagnation and sclerosis have become too painful to ignore.”

Investing is hard – via Barry Ritholtz & Brian Portnoy

• Key quote: “Why is investing so hard? It’s because our brains have been trained, over thousands of years, to trust our fear instincts. In this episode, Brian Portnoy sits down with Barry Ritholtz to explain why humans aren’t built to be good investors. Portnoy has held senior investment roles throughout the hedge fund and mutual fund industries. He is also the author of the bestselling books, ‘The Geometry of Wealth’ and ‘The Investors Paradox.'”

From the archives:

This is Water – via David Foster Wallace [2005 Kenyon College Commencement speech]

• Key quote: “The point here is that I think this is one part of what ‘teaching me how to think’ is really supposed to mean. To be just a little less arrogant. To have just a little critical awareness about myself and my certainties. Because a huge percentage of the stuff that I tend to be automatically certain of is, it turns out, totally wrong and deluded. I have learned this the hard way, as I predict you graduates will, too.”