You may have been crushed by waves, or you may feel battered, exhausted after fighting the currents, scratching and pulling yourself forward, only to be forced to relive and repeat the experience time and time again.
As an entrepreneur your daily experience in an attempt to survive the post COVID economy may feel similar to my days of surfing the jersey shores in my teens. You may have been crushed by waves, or you may feel battered, exhausted after fighting the currents, scratching and pulling yourself forward, only to be forced to relive and repeat the experience time and time again.
Conversely, your undertaking may have been like those surfers who danced on the waves and then propelled themselves back out to sea with little effort.
To be certain, the post Covid economic tsunami has afforded incredible rides, but only for those with the capacity to experience them. At the top of the economic pyramid, the big wave hunters are companies like Amazon, Facebook, Netflix and Shopify. They are the veritable Laird Hamilton’s of our time.
While the economy collapsed under our feet, a small handful of companies increased and expanded their market capitalization by over one and a half trillion dollars.
Extraordinarily, the companies that were able to surf the giant waves were predominately not in the health care space. Or serving up alcohol to the hundreds of millions of homebound Americans who sorely needed a drink. Or manufacturing ventilators and syringes.
Who was it that led the market in growth and appreciation?
It doesn’t take an MIT chaired astrophysicist to see that the velocity of change is occurring within the technology sector. In 2020, the economy enveloped entire industries, including travel, entertainment and fossil fuels. Within those market segments lay the fate of tens of millions of Americans, pinned against the sea floor while suffering tremendous hardships.
At the same time, in just a matter of a few months, the largest tech companies in America had increased their value by over a trillion dollars.
Stepping back looking at the big picture it’s easy to see how and where the metamorphosis took place. By December of 2020, the market capitalization of less than a dozen tech companies approximated a quarter of the S&P 500. Nearly 25% of the value of all publicly traded stocks in America was concentrated in fifteen companies.
While this was a tremendous opportunity for savvy stock market investors, we are left with a future for many American businesses that are irrevocably fated to compete against the tech giants (who we call Diamonds – exceeding valuable and difficult to penetrate). They are fueled by hundreds of billions of dollars of fresh capital, ready to be deployed in business warfare against their weaker foes.
The Diamonds were positioned, partly by design and partly through Covid, to be propelled into leadership positions. The Diamonds also have boat-loads of political clout and extraordinary capacity to scale quickly. In short, they will continue to triangulate their competitors, aiming to develop unbridled monopolies.
To be clear, if you are business builder of middle market companies, or an owner of surgical centers, or a professional, your ability to directly compete against the Diamonds is, by and large, extremely limited.
Yet, many thousands of companies and professionals will be pulled to safety and beyond by the currents stemming from the success of the monolith tech companies. Properly positioned, these companies will be able to surf the post Covid economic Tsunami.
The question is whether you’ll be left in a freefall, crushed by the breaking surf, or if you’ll dance on the waves, above the froth, as a ballerina.
In April 2021, I am hosting several private webinars related to the opportunities in this unique time. If you would like to learn more about these webinars and it’s a fit for you, reach out via Private Risk Capital.
