From Technology in Focus to Finance with BlackRock's Tony Kim
Dec 12, 2024
auto_awesome
Tony Kim, Managing Director at BlackRock and veteran in tech investing, shares his insights on navigating the tech finance landscape. He discusses the evolution of profitability in tech and the transformative impact of the fifth industrial revolution on the workforce. Kim also delves into the complexities of tech valuations, particularly the 'Magnificent Seven', while emphasizing the importance of a human-centric approach in technology. Additionally, he highlights the significance of mentorship and continuous learning in building a successful career in this dynamic field.
Tony Kim's career journey illustrates the blending of technical engineering expertise with financial acumen in technology investing.
The fifth industrial revolution emphasizes human-centric technology which aims to enhance productivity and societal well-being, contrasting previous disruptive phases.
Understanding power laws in technology sectors highlights the dominance of a few firms, informing investment strategies focused on industry leaders.
Deep dives
The Transition to the Fifth Industrial Revolution
The discussion highlights the shift from Industry 4.0, characterized by advancements in AI and automation, to the emerging fifth industrial revolution. This new phase focuses on human-centric technology that aims to enhance individual productivity and societal well-being. Unlike previous industrial revolutions that have disrupted the workforce negatively, there is optimism that the fifth revolution can create a more positive impact on employment by emphasizing collaboration between humans and machines. However, skepticism remains about whether this new era will truly be kinder to ordinary workers compared to past revolutions.
Tony Kim's Journey in Technology Investing
The journey of Tony Kim, Managing Director at BlackRock, is explored, detailing his educational background in industrial engineering and an MBA. Initially starting his career as an engineer at Rockwell Automation, Kim worked on automation projects across various industries before pivoting to finance. His transition into investment banking during the tech boom of the 1990s allowed him to combine his technical expertise with financial acumen. This unique blend of skills eventually led him to BlackRock, where he now heads the Fundamental Equity Technology Group, focusing on tech investments.
Power Laws in Technology Investment
Kim emphasizes the importance of recognizing power laws within technology sectors, which often reveal that a few companies dominate market share. The strategy of investing in leading firms is rooted in the observation that the technology landscape consistently trends toward winners who gain significant advantages. He notes that established companies tend to capitalize on their strength and deliver value over time. Furthermore, he highlights the necessity for these firms to demonstrate adaptability and to have multiple growth avenues to remain competitive as technology evolves.
The Role of AI in Shaping Technology Investments
The conversation delves into how AI is dramatically reshaping the technology landscape, presenting both opportunities and challenges for investors. Kim outlines a structured methodology for identifying key technologies, emphasizing the importance of mapping out the ecosystem. This involves understanding the interplay between hardware, software, and infrastructure, and how AI applications cascade through these layers. Furthermore, he discusses the significant implications of AI for investment strategies, underlining the necessity for dynamic adaptation as the industry rapidly changes.
Future Trends in Active Management within ETFs
The podcast discusses the future of active management strategies within the ETF space, illustrating a growing trend of specialized active ETFs as opposed to traditional passive funds. Kim asserts that while passive investment strategies continue to dominate, active management will thrive in niche areas where domain expertise is critical. He believes that the shift towards thematic investments in active ETFs will allow for more nuanced engagement in sectors like technology. The conversation concludes with Kim expressing optimism about the robustness of active management, provided it can leverage deeper insights and adaptability to capture changing market dynamics.
Barry Ritholtz speaks with Tony Kim, Managing Director and Head of the Fundamental Equities’ Global Technology Team at BlackRock. Prior to joining BlackRock in 2013, Tony held key roles at institutions like Artisan Partners, Neuberger Berman, and Merrill Lynch. He is also a member of the Advisory Board for Columbia Business School’s Digital Future Initiative. On this episode, Barry and Tony discuss the success of passive investing at BlackRock, the general tech investing landscape, and what it takes to build a career that combines a passion for technology with finance.