The Palm Beach Letter folks have been shaking the tree for new subscribers to Teeka Tiwari’s Mega Trends, and the latest ad is generating a bit of buzz in Gumshoedom … quite a few questions so far this week.
And I don’t blame ’em — it sounds kind of cool. And with everyone chattering about the “unveiling” of the Apple Watch today, everyone’s probably wondering what the “next big thing” is… so let’s see what Teeka Tiwari’s idea is.
The start catches your eye, and will give a big fat hint to those who have paid attention to the history of technology…
“I’ve shown the map above to dozens of the most successful investors I know…
“They were all shocked that three of the biggest breakthroughs of our time came out of this one little place…
“Apple swiped the key technologies for the first Macintosh personal computer from this building…
“Microsoft’s Word and Windows products were the direct result of work done on this property…
“And the man behind Adobe Systems, maker of the Adobe Reader and PDF, got his start in this modest set of offices.
“In this video, I’ll tell you about this obscure lab. It’s just three miles off the 280 Freeway in California.
“And according to Forbes, ‘Technology companies… have collectively realized trillions of dollars in revenues and tens of trillions in market value because of [this lab].'”
So that’s obviously a reference to Xerox Palo Alto Research Center, usually called Xerox PARC, the advanced research center started by Xerox (XRX) as a places to design the “office of the future” 45 years ago, and where the graphical interface, computer mouse, and many other now-commonplace technologies were first pioneered. Xerox, as you may have noticed, didn’t benefit very directly from those advances designed by their engineers (though they certainly benefited from some — laser printing was developed at PARC, too, along with dozens of other technologies and standards that are either core to our technological lives or were stepping stones to reaching the current standards.
PARC is still owned by Xerox, though it’s now an independent subsidiary corporation and they do a lot of contracted R&D for other companies — so is Tiwari just suggesting that we buy shares of XRX? Let’s keep digging through the spiel…
“You see, this lab is working on the next major tech breakthrough.
“It’s almost ready to go public… and only one company holds the key patent.
“We could be looking at the next Apple or Microsoft.
“The MIT Technology Review says this invention ‘could revolutionize the way electronics are made.’
“This advanced technology is at the center of an industry one major tech CEO says will be worth ‘$19 trillion by 2020.'”
That is indeed a Xerox PARC technology (though they’re not the only ones working on this kind of thing), a flexible and potentially low-cost way of making chips that are partially “printed” — which would, at least conceptually, be a big boon for the widely anticipated “Internet of Things” wave of interconnected devices… if you can make the chips flexible and out of lots of different materials, and cheap, then the number of things that can be “smart” increases substantially.
The “$19 trillion” number is the one that’s widely used for the “Internet of Things” — I think the number originally came from Cisco (CSCO) CEO John Chambers in a presentation a little over a year ago (Cisco is very focused, understandably, on the Internet of Things). The “revolutionize” quote is indeed from the MIT Technology Review in an article you can see here.
Then we get a bit more detail (and hype) from the ad…
“Current 3-D printers have one major flaw.
“They can only print a mold or replica of a solid object. A shirt, a hammer, a car door…
“They haven’t been capable of printing objects with microchips or circuits—so-called ‘smart’ devices.
“What that means is, you can print a car door in your garage right now using a 3-D printer. But that car door isn’t actually complete…
“To add the computing equipment that’s standard in every modern car, you have to do it the old-fashioned way; install it after the door’s been made.
“There are no 3-D printers capable of manufacturing advanced electronics and embedding it inside an object.
“You see, scientists in this Pentagon-sponsored lab in California have created the most advanced 3-D printing technology to date.
“As a result, you could be printing smart devices in your own home or business very soon.”
Hmmm… the nice thing about “very soon?” It’s a phrase that sounds compelling and immediate, but it doesn’t have a specific (or legal) definition.
More from the ad:
“With this special ink, a jet is added onto the 3-D printer that can print and place microchips exactly where they’re needed.
“Those microchips can be added to any kind of surface or material. You can literally put a computer in anything…
“As it is improved, this technology will get cheaper and cheaper. More people will have access to its incredible benefits.
“The influence on intelligence, science, business, and politics will be massive.
“Literally everything you own will have a ‘smart’ device inside it.
“As I’ll show you in a moment, there’s a chance at once-in-a-lifetime profits if you’re ahead of the trend.”
Well, on this particular technology you’re well ahead of any “trend” — this is still a R&D project, and it’s not going to be in a commercial 3D printer churning out plastic gizmos with embedded microchips anytime soon, though that is the envisioned future by these engineers. Is this really an investable idea?
And then we get to the part where it becomes clear that Tiwari is probably not talking about Xerox stock… he describes how the technologies pioneered at PARC, like the mouse and even the Internet (they deserve at least partial credit for Ethernet) created titans when those products were commercialized, helping to build both Apple and Microsoft into multi-hundred-billion-dollar goliaths. Which makes you wonder about the lack of commercial vision at Xerox in the 1970s and 80s as they focused on their cash-cow copying business, but that ship has sailed (according to YCharts, XRX shares — had you bought them in 1972 a couple years after PARC opened — would have given you a total return, over 43 years, of 11.5%. Not 11.5% a year, but 11.5% in total — including dividends).
More from the ad:
“This silver ink’s ability to print electronic devices on any surface could have the same impact on the tech world as those three titans…
“The Matadero lab itself recently released an internal memo about the potential of this device:
‘The market for flexible, printed, and organic large-area electronics is rapidly growing. Currently estimated at over $1 billion, the global market is expected to increase to a $45 billion market by 2016.’
“One company has the patent on this technology and works in partnership with the Matadero lab.
“Investors who get in now before it goes to the mass market could make a fortune…”
Ah… so who is that “one company” with the patent on this technology? More from the pitch:
“Sharp investors can see the potential profits coming very soon… many of them are positioning themselves for major gains from the IoT.
- Billionaire Julian Robertson, the retired former head of the Tiger Management hedge fund, is heavily invested in the IoT, as is his former firm.
- Goldman Sachs senior analyst Simona Jankowski says it’s the lucrative ‘third wave of the Internet’…
- Other billionaire hedge fund managers like Chuck Royce, Jim Simons, and Dmitry Balyasny are also betting big on the Internet of Things.
“It’s clear. This is truly the next huge trend in technology…
“And you could be at the forefront as an investor…”
Ah, the allure of being “at the forefront” … finally, something to talk about at that next cocktail party! Tiwari doesn’t actually say that those billionaire investors are buying the same stock he’s talking about, and clues are thin on the ground for that one, this is about all he says…
“And, most importantly, I’ll share the name of the only company that holds a patent on this printable electronics breakthrough.
“It’s a publicly traded company and its share price could go through the roof over the next few years, just like Apple (4,364%) and Microsoft (59,302%) did.”
So… we can’t be 100% certain, given the vagueness of the clues, but the Thinkolator has an answer that’s a good match: The little Norwegian company Thin Film Electronics. They’ve filed to establish an ADR Program in the US, which should make trading the stock a bit more viable for US investors, but it’s not actually going to get a US listing or, probably, trade in high volume — the home listing is at ticker THIN in Oslo, the new sponsored 1:10 ADR (meaning each US ADR equals ten shares in Norway) is TFECY, but I haven’t seen it trade at all since it was introduced last week, and the current over the counter ticker in the US, which does trade at least a few thousand dollars a day, is TFECF.
Thin Film has a market capitalization of about $400 million, and the shares in the US have recently traded pretty close to their fair value in Norway (last price was about 6 Norwegian Krone, which is about 75 cents). They do have some patented developments in thin film electronics, ranging from their current products in the “smart label” category through to more advanced ideas that they’re working to commercialize with Xerox and others — with the idea now being that they hope to get other companies to do the heavy lifting when it comes to building manufacturing plants and the like. There is some potential for “Internet of Things” applications, to be sure, and they do have companies trying to the technology in somewhat connected products that use NFC — like the “smart bottle” from Diageo that was announced last week… but I have no idea how fast they can ramp up to getting to some kind of commercial scale. They’re nowhere near that point now, from what I can tell, with most of their revenue still coming from R&D collaborations or projects in 2014 (you can see their preliminary Q4 report press release here, or the presentation here).
They’ve been collaborating with Xerox and PARC for years (they announced a partnership to work on smart printed labels back in 2012, for example), and Xerox is one of the “scale up” partners they seem most focused on for early work in what are effectively “smart labels” that either provide more information (like temperature), connect to customers or devices, or provide authentication/security.
And that’s about all I can tell you in my few minutes looking at Thin Film — it looks really interesting, they are growing revenue very, very fast… but the revenue level is still largely trivial and the potential for profit seems fairly far off unless there are large partnership revenues baked in that I’m not seeing in my first glance, so it seems likely that this is all about the future… betting that Thin Film’s technologies and standards will become, well, standard in the expanding “smart label” part of the “Internet of Things” trend. Speculative, to be sure, and interesting… and beyond that, well, it’s your money so you can make the call. Let us know what you think with a comment below.