Brinton Johns and Jon Bathgate, public equities investors at NZS Capital, dive into the intriguing world of complexity investing and its intersection with the semiconductor market. They discuss how complexity theory shapes their investment philosophy and why adaptability is crucial in uncertain markets. The conversation then shifts to the critical role semiconductors play in the information age, touches on innovations like silicon carbide, and highlights the landscape of key industry players. Their insights reveal the intricate dynamics that drive both technology and investment decisions.

Brinton Johns is a co-founder of NZS Capital, a US-based investment boutique applying lessons from nature to invest in companies with the capacity to thrive in a complex adaptive world.  As the future is inherently unpredictable, Brinton and his colleagues believe it is best to focus on adaptable and innovative businesses that create more value than they take, whilst structuring the portfolio to exhibit both resilience and optionality.Those interested in learning more about NZS's Complexity investing framework should read their whitepaper (https://www.nzscapital.com/news/complexity).Show notes:[1:20] Brinton talks about how he got into the investing industry and his career at Janus Capital[5:32] The benefits of focus, a defined investment philosophy and a flat team structure[8:05] The genesis of NZS' Complexity Investing framework[9:51] The key tenets of Complexity Investing and the importance of being adaptable and creating more value than you take[13:37] Structuring the portfolio for resilience and optionality[18:01] Psychological safety and empowering creativity by being allowed to make mistakes[20:27] Texas Instruments as an example of an adaptable and resilient business providing oxygen in a digital age[22:44] Testing for adaptability and resilience at Texas Instruments[25:08] Assessing the quality of people, culture, the nature of a company's growth and valuation[28:47] Great allocators versus great operators[30:48] Understanding the asymmetry of optional investments[32:57] The power of vertical integration in disrupting horizontal incumbents[35:06] Spreading bets in the tail of the portfolio[36:15] A culture of candour for limiting biases and recognising mistakes[39:04] Companies that graduate from being optional to resilient and vice versa[41:02] Investing in optional businesses allows for greater mental plasticity[42:31] Web3.0[44:00] Be curious and open-minded

Brinton Johns and Jon Bathgate, tech investors from NZS Capital, dive into Cadence Design Systems' crucial role in semiconductor design. They discuss how Cadence's electronic design automation software has transformed chip production, making devices smarter and more compact. The conversation covers Cadence's strategic evolution, reduced market volatility, and resilience through economic challenges. They also share insights on adopting a subscription model and navigating competitive dynamics, drawing valuable lessons for investors in the ever-innovative semiconductor landscape.