Invest like Jeff Bezos: The World's Richest Man
Earlier this week, Jeff Bezos became the single wealthiest person in the world after a healthy bump in Amazon’s stock price on Thursday morning sent the CEO’s net worth to an incredible $90.9 billion on the Bloomberg Billionaires Index.
It can be difficult to comprehend just how much money that actually is, so here’s a bit of perspective:
If Bezos were a publicly traded company, he’d be among the biggest in the world. At $90.9 billion, he’s now worth more than massive corporations like Morgan Stanley, Goldman Sachs, and Starbucks.
If he wanted to, Jeff Bezos could buy every standing Taco Bell, KFC, and Pizza Hut in the world three times over and still have enough cash left in his pocket to own the New York Yankees, the Dallas Cowboys, and Real Madrid.
His net worth is roughly equivalent to the nominal GDPs of Libya, Honduras, and Serbia... combined.
For most of us, this kind of individual wealth is unfathomable. For Bezos, though, it has been a calculated climb involving a number of forward-looking investments over the last two decades.
Not Luck, But Conviction
Many people don’t know this, but in 1998, Bezos became one of the first investors in Google, dropping $250,000 in a private round of funding at just $0.04 a share. At the time of Google’s IPO in 2004, Bezos was already looking at roughly $280 million from that investment alone.
Over the next two decades, Bezos would continue to leverage a number strategic investments, providing funding for rapidly growing tech startups such as Uber and Airbnb as early as 2011. In the process, he has proven to be arguably the savviest investor in the world, with an early finger on the pulse of anything and everything in the world of tech and finance.
Business Insider, Stack Overflow, Rethink Robotics, Twitter, Juno Therapeutics, Twilio, Zappos, MakerBot, Twitch TV, Audible, Songza, IMDB, Living Social... Jeff Bezos has had a hand in funding every one of these companies from their earliest stages.
Notice we haven’t even bothered to mention Amazon yet, and already these accolades make Bezos’ investment acumen impossible to ignore. When it comes to making money off technological trends, there’s little arguing against the fact that the man has a golden touch.
Given his incredible success at identifying and profiting from early-stage technology assets, reason suggests it pays to bet alongside Bezos whenever possible. And even though it’s safe to say you’re not going to become a $90 billion man doing so, following the same trends as Bezos is a smart move for any intelligent investor.
Where is Bezos Looking Next?
Jeff Bezos may be well diversified across a wide range of technology subsectors by now, but there’s one area of focus he’s particularly keen on at the moment, and that’s artificial intelligence (AI).
In a May interview with the Internet Association, Bezos called AI the “tech renaissance to business and society.” In an earlier interview with Recode, he expressed his conviction that AI has “gigantic potential.”
In his most recent letter to Amazon’s shareholders, Bezos also praised AI’s role in Amazon’s everyday operations, specifically in regards to machine learning.
But much of what we do with machine learning happens beneath the surface. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type — quietly but meaningfully improving core operations.
And according to Bezos in a separate statement:
We are now solving problems with machine learning and artificial intelligence that were… in the realm of science fiction for the last several decades. And natural language understanding, machine vision problems, it really is an amazing renaissance.
At the same time, Amazon is betting big on AI hardware with Bezos at the helm, as evidenced by the rollout of its digital assistant Alexa and its Echo smart home hub.
So far, the Echo has proven a huge success for the company, which has struggled in the past to market its in-house hardware. In the most recent holiday season, Amazon sold nine times as many Echo devices as it did the year prior, and during its most recent “Amazon Prime Day” — a one-day sale event — the Echo Dot was its most popular product.
And from the looks of it, this may just be the beginning for Bezos and family.
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An Artificial Intelligence Windfall
According to Ovum’s Digital Assistant and Voice AI–Capable Device Forecast, devices like the Amazon Echo are going to experience an incredible tenfold increase from 2016 through 2021.
In fact, Ovum predicts that the installed base of digital assistants will outnumber the human population by the end of that time frame. In other words, there will be more artificially intelligent entities than there are living people on Earth in less than five years' time.
As overly ambitious as that might sound, it’s not so unbelievable once you consider how quickly mobile devices managed to accomplish the same feat. In 2014, mobile devices surpassed the human population at 7.2 billion, with smartphones multiplying at a rate five times faster than people. That all happened less than seven years after the first iPhone was sold.
Even if we’re to cast doubt on the five-year forecast, the near-term growth is clear. According to eMarketer, 35.6 million Americans will use a voice-activated assistant device at least once a month in 2017. That’s a 128.9% increase from last year.
There will always be doubters, but it’s not at all a stretch to expect that digital assistants will soon become part of our everyday lives, opening an incredible profit opportunity for investors in the process.
And with Amazon’s Alexa and the Google Assistant controlling ~94% of that market, there are only a few avenues for investors to take...
The first and most obvious is to invest in Amazon or Google directly. Both companies have been incredible success stories for investors, but it should go without saying the growth opportunity is now limited.
The other option, which I am a fervent proponent of, is to invest in the companies making the physical components that make digital assistants a reality.
Specifically, I’m talking about the listening devices embedded in products like the Amazon Echo and Google Home. Voice-activated digital assistants rely on — who would have guessed it? — voice recognition.
The premise of this investment strategy is incredibly simple: folks like Bezos looking to build an AI empire are going to rely on embedded microphones, and lots of them, for their personal digital assistants to function.
The Echo, for one, uses an array of seven microphones (yes, seven) to make sure Alexa knows exactly what’s being said and who’s saying it.
And as is usually the case, today’s early movers will have the biggest advantage. The same way Bezos benefited from moving early on Uber, Airbnb, and Google, you have the opportunity to do so with AI today.
Until next time,
Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and The Cutting Edge. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.
Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.
Outside the office Jason is a lover of science fiction and the outdoors, and an amateur squash player at best. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.
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