What do each of my taGMan portfolio companies (Tesla, Apple, Google, Microsoft, Amazon, Nvidia, General Motors) have in common beyond building the important assets and capabilities today that will allow these companies to thrive in tomorrow’s global transportation-as-a-service market?
An impactful CEO!
It’s no secret that each company’s CEO is adept at executing the strategies that are driving business profits today while strategically allocating capital toward tomorrow’s opportunities. Often, CEO leadership is the only differentiator among companies that win consistently versus those that do not.
For example, why did Ford Motor Company avoid bankruptcy during the Great Recession of 2008 - 2009 and thrive afterwards, while both General Motors and Chrysler succumbed to bankruptcy and poor performance? Ford had as its CEO at the time, Alan Mulally. GM and Chrysler did not. Ford had no environmental business advantages at the time. It suffered many of the same business challenges of their automotive cross-town rivals. While GM and Chrysler operated in a “business as usual” mode, Mulally (after becoming CEO in 2006) swiftly executed significant restructuring plans that turned around Ford’s massive losses and rapidly declining market share.
When Mulally retired in 2014, I should have sold Ford stock!
Because Mulally was at the helm of Ford, I purchased Ford shares in 2008 believing Mulally was among the best CEOs of any company in the world at the time. For the vigilant long-term investor, Ford was an important holding specifically due to Mulally. Between December 2008 and September 2017 (when I sold my last Ford shares), the dollar weighted annual return for me (including dividends) was 13% (my total return on this investment was 139%). In 2011, Mulally was named Person of the Year by the Financial Times, and CEO of the Year by Chief Executive magazine. Unfortunately for investors, Mulally retired in 2014 which is when I should have begun selling Ford stock in hindsight. The two CEOs following Mulally did not have the same positive impact on Ford’s business and stock performance (the current CEO since October 2020, Jim Farley, seems like a great choice for the job, however).
Like Mulally, each of the taGMan portfolio companies has an impactful CEO as well. Impactful does not mean most well-known or having the largest Twitter following. Impactful has nothing to do with CEO celebrity status.
Tesla has Elon Musk - a CEO celebrity for sure. But Musk, more than anyone, has pushed his company and the entire automotive world rapidly toward an electric vehicle future in a manner much faster than anyone would have predicted only 10 years ago. Today, Tesla’s valuation is larger than the value of most legacy automakers combined.
At Apple, there’s Tim Cook. When Cook became CEO in 2011, the value of Apple was under $400 billion. The company’s value today is $2.4 trillion. While there has been no formal announcement, I believe Apple will develop an electric, autonomous driving business to attack what many believe will be a $10 trillion global market.
Google (Alphabet) has been run by Sundar Pichai since 2019. With Pichai (an employee at the company since 2004) reportedly being more focused on substance and results over style, the company seems to be in good hands. Importantly, Larry Page and Sergey Brin (Google founders) remain active board members of the company. In fact, tt was Larry Page who began the Google Self Driving Car Project in 2010 now known as the company’s autonomous driving subsidiary, Waymo.
Satya Nadella became CEO of Microsoft in 2014. Cloud Wars recently proclaimed Nadella as the world’s top CEO based on his vision, leadership, the company culture, emphasis on business partnerships, and innovation. Since becoming CEO, the company’s market capitalization has climbed from $311 billion to $2.2 trillion. Under Nadella, Microsoft will continue accelerating its investments and partnerships in cloud computing technology targeting the massive self-driving data requirements of it growing list of clients.
Jeff Bezos ran Amazon since its founding until July of this year. Now the CEO reigns have been turned over to Andy Jassy. While it’s too soon to crown Jassy as in impactful CEO, Bezos is still involved with the company as its executive chairman. Under Bezos, Amazon has made a number of significant acquisitions and investment developments targeting electric vehicles and autonomous driving solutions (Zoox, Rivian, Aurora, etc). Much of this suggests that Amazon leadership, like Tim Cook at Apple, also wants to profit from the $10 trillion mobility solutions business that is now developing.
Jensen Huang is the co-founder, president and CEO of Nvidia. Between 2017 and 2021, Huang has grown Nvidia’s revenue from $6.9 billion to $16.7 billion. Part of Nvidia’s core technology is artificial intelligence and self-driving computer systems. Current customers include numerous companies developing autonomous vehicles (Tesla, Toyota, Mercedes, Navistar, NIO and others). Under Huang, these customers and Nvidia’s usefulness will only grow as the world transitions to an autonomous driving future.
Today’s Alan Mulally in the legacy automotive space is Mary Barra, CEO of General Motors. No other automaker has the broad portfolio of technologies and businesses focused on electric vehicles, battery technology and production, fuel cell development, and autonomous driving business solutions. Barra has positioned GM to profit from a changing industry like no other automotive competitor in the world.
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Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.