Last week I found myself browsing some documentaries to watch one evening to kill some time and relax at the end of a long day. I stumbled on one from Vice called the Third Industrial Revolution by Jeremy Rifkin.
Initially, I didn’t pay too much attention to what he was saying. Terms like Internet of Things and Smart Grids have become so cliched, I wondered what new light Rifkin could possibly shed on this topic. I was wrong. Rifkin turned this much-discussed topic on its head, bringing a completely different perspective to anything I had seen before.
He explained some fascinating concepts such as how the cost to generate a watt of energy using solar has dropped from $74 in 1975 to just 74 cents in 2018, and is dropping still. Other points of note were:
- Around 80% of the cars are expected to disappear over the next 25 years as we move to driverless shared cars
- Nearly 70% of the world crops are used as feedstock for animals for us to eat meat, or in the manufacture of biofuels.
- The increase in the share economy, with music and news services ultimately falling victim.
The documentary calculated that the third industrial revolution would take about 25 to 30 years. This was based on trends from the previous 200 years, which saw the last two industrial revolutions – one in Europe and one in the US. Except, of course, when the unexpected happens, as it did with COVID.
It really got me thinking about how companies have benefited from these developments, since Rifkin first published his book in 2013. There are immediately two which jump to the top of the pack: food and smart grid.
Food. We have known about the importance of protein in a balanced diet for quite some time. What is relatively new, however, is the health imperative to reduce the amount of meat in our diets. Two years ago, the idea of a vegetarian sausage was about as appealing as eating a tennis ball. Up until recently, there were no major plant-based protein sources in the market – no one was making them because no one really knew we needed them. Then, straight out of California came Beyond Meats, which listed in 2019 for $1.5 billion and was worth more than $13 billion dollars just three months later. That’s a total gain of 859% from turning vegetable protein into meat. They finally started to understand the concept around human psychology and made the things bleed and sound like the real thing when cooking. Change the chemical compounds so that the texture feels like the real thing as well. Clearly, they’re on to something.
Smart Grid. Another Rifkin example, which really resonated with me, is the smart power grid and how it is going to completely drive fossil fuels from virtual existence by 2050. No doubt we have all seen the wind farms and solar farms going up over the years and the energy providers requesting that we pay a little more to switch to green. While I’m in no hurry to pay more, I put solar on my mother’s roof four years ago, with a battery two years later. This was in 2018, when they were still relatively inexpensive. It was an LG battery, and cost substantially less than that of a Tesla battery. It seems that investors have flocked to Tesla in their droves, with the share price soaring from $58 in 2018 to $378 today, a gain of 653%. This was the company that just put in the largest battery in the world down in South Australia in record time, and is one of the only vertically integrated companies, which offer both solar and batteries.
Are these two companies the first to really benefit from the revolution? In my opinion, yes, they are. first company to start to really start to benefit from the revolution. Beyond Meat has largely enjoyed monopoly status, the competition is starting to awaken to the possibilities of plant-based proteins. Personally, I see Tyson Foods, who currently supply meat to almost every supermarket in the world, coming back strong. Give them around 10 years and I’m sure they will be a formidable force, along with the other new players coming on the scene.
Tesla is also set to encounter strong competition in the electric car space, with other large car manufacturers coming on to the scene. At the end of this year, Volkswagen, who own Lamborghini, Audi, and Bugatti, and have one of the largest manufacturing capabilities on the planet, will finally release their electric cars.
I personally see the next 12-18 months bringing a bit of a correction but after this, the energy side will truly set in, and we will begin seeing the impact of the third industrial revolution in all its glory. There are other items which did fascinate me and I will cover these in a future edition of my tip blog.
26th October 2020
At the time of writing this:-
Tesla – $388
Beyond Meats – $144
Tyson Foods – $65