April 15, 2016
The need for good money managers has never been greater. Total investable assets are continuously rising. High-net-worth individuals are now influential sources of capital in both established and emerging markets. Baby boomers are living longer in retirement, and as they stop working they'll need their assets to last longer. Yet for investors too few good options exist. ... Many of our colleagues don't believe that disruption is imminent. After all, asset management is one of the world's most profitable and exciting businesses. Why should we even worry about disrupters? The challenge, according to innovation expert Clayton Christensen, is that incumbents have a blind spot toward disruption. It is difficult to see because it goes against a set of ingrained assumptions that most likely have led to success so far. As a result, the profitable big players have a hard time seeing threats, especially when these are coming from smaller and more innovative players or outside their traditional set of competitors. ... We expect that asset management is about to go through a particularly dynamic period of disruption, for three reasons: high profits, new technologies and a new set of client demands resulting from global social changes. ... Roughly half of the world's $270 trillion-plus of investable assets are in real estate and cash, which were also the most popular investment areas in the 1800s. ... Our research suggests the power base will eventually shift from the money managers to the money holders.
People tell me about miniaturization, about electric motors the size of the nail on your finger. There is a device on the market by which you can write the Lord's Prayer on the head of a pin. But that's nothing. That's the most primitive, halting step. ... Why not write the entire 24 volumes of the "Encyclopaedia Britannica" on the head of a pin? ... Let's see what would be involved. The head of a pin is a sixteenth of an inch across. If you magnify it 25,000 diameters, the area of the head of the pin is equal to the area of all pages of the encyclopedia. All it is necessary to do is reduce the writing in the encyclopedia 25,000 times. Is that possible? One of the little dots on the fine halftone reproductions in the encyclopedia, when you demagnify it by 25,000 times, still would contain in its area 1,000 atoms. So, each dot can easily be adjusted in size as required, and there is no question that there is enough room on the head of a pin to put all of the "Encyclopaedia Britannica."
It has been a year since the bird flu tore through the Midwest: enough time for decimated farms to cash their indemnity checks and begin buying replacement birds; for the wholesale price of eggs, which doubled, to slide back to normal; for national awareness of the outbreak, the worst animal-disease epidemic in United States history, to dissipate. But among the poultry farmers who endured the flu, and others watching elsewhere in the country, there is a pervasive uneasiness, because after a year of scrutiny, federal and academic scientists still cannot say for sure how their properties became infected. Despite their own efforts to harden their defenses, and new federal plans to help them, it is possible that poultry farmers are not equipped for the flu to return among the United States’ billions of chickens; and that ranchers and pork producers might be equally unprepared if an unfamiliar disease detonated among the country’s 92 million beef and dairy cattle or 68 million pigs. Planning for epidemics, animal or human, is to a large extent based on what a disease did the last time. It is much more difficult to predict what a disease will do next. ... Naturally occurring epidemics might be as dangerous as maliciously introduced ones; and diseases in plants and animals could undermine national security as seriously as human epidemics would. ... A study done in July estimated that the flu cost the United States $2.6 billion in lost sales, almost $400 million in forgone taxes and 15,693 jobs. But as devastating as the losses were to Iowa, Minnesota and other states, their 50 million turkeys and hens represented a small portion of the poultry industry. The largest concentrations of chickens in the United States — Georgia, which raises 1.3 billion broilers a year, and the Delmarva Peninsula, where the broiler business began in the 1920s — lie under another migration route that ducks take over the Americas. If the flu were to land in those areas and spread the way it did in the Midwest, much of the United States poultry industry would be in jeopardy: almost nine billion birds, 90 billion eggs, more than $40 billion in earnings, 1.3 million jobs.
The conversion of crop dusters into light attack aircraft had long been part of Prince’s vision for defeating terrorists and insurgencies in Africa and the Middle East. In Prince’s view, these single-engine fixed-wing planes, retrofitted for war zones, would revolutionize the way small wars were fought. They would also turn a substantial profit. The Thrush in Airborne’s hangar, one of two crop dusters he intended to weaponize, was Prince’s initial step in achieving what one colleague called his “obsession” with building his own private air force. ... The story of how Prince secretly plotted to transform the two aircraft for his arsenal of mercenary services is based on interviews with nearly a dozen people who have worked with Prince over the years, including current and former business partners, as well as internal documents, memos, and emails. Over a two-year period, Prince exploited front companies and cutouts, hidden corporate ownership, a meeting with Russian arms dealer Viktor Bout’s weapons supplier, and at least one civil war in an effort to manufacture and ultimately sell his customized armed counterinsurgency aircraft. If he succeeded, Prince would possess two prototypes that would lay the foundation for a low-cost, high-powered air force capable of generating healthy profits while fulfilling his dream of privatized warfare.