Activant's Greene Street Observer No. 12

Founders, Partners, and Friends,

Today feels a bit like 1994. That year, the masses first had access to the internet with the advent of web browsers. Early days usage for the internet was primarily email and viewing pictures, but we could all see the productivity gains coming.  

Looking back, it is hard to remember that the 90s were rocky as well. It started off with a solid recession like the 1920s, which slowly ended with the first Iraq war in 1991. We had the Mexican crisis, in which the Peso devalued in December 1994, and then the Asian financial crisis in 1997 which almost brought countries down in Southeast Asia. This was followed by the Russian crisis in August of 1998, which devalued the ruble and eventually it all led to the collapse of LTCM, which was bailed out in September. Much of the seeds for the 2008 so-called “Great Financial Crises” were sown in that bailout. 

If you look on the face of it the 90s could have been bad. In our estimation, the public markets performed well on the back of productivity gains. These gains extended into the 00’s and that allowed Greenspan to lower rates while not creating pricing inflation in food, gas, and most goods.

However, we did see financial inflation that reared its head in the housing market. In the wake of the LTCM restructure and resulting new rules, banks and non-banks had the ability to package up more financial products. Like water flowing downhill, inflation found a home in the housing market.

We have our issues today: inflation, cost of living, dollar concerns, and geopolitical concerns. And not to sound like a venture guy that hangs out in the dog patch in San Francisco, but AI is going to be a big driver of productivity, which might just bail us out of government overspending that is causing the high inflation. 

Many pundits (VCs) are telling us AI will be a job killer and that it is going to revolutionize everything we do. Others think it is overhyped. The truth is that it is somewhere in the middle. Today, much like 1994, AI is mostly used for making cool pictures and writing simple emails and simple code. It isn’t all that useful, but it will be - and it is making many tasks much easier. Let me explain: 

When Lotus 1-2-3 came out and subsequently Excel copied it, many said that it would change the financial analyst and accounting industry forever. In reality, it created jobs and narrowed the gap between a novice financial analyst and an expert analyst. We believe AI will have a similar impact but will be broader across industries. It is going to make it easier to code, write, and interact with technology and the analog world. This is going to be a level-up for enhancing the productivity and capabilities of individuals.

The next couple of years may still be rocky, but the outlook for the remainder of the decade is getting bright. 

Let’s go! 🚀

Steve Sarracino

Founder & Partner

While machinery continues to evolve, the supporting software for it has flatlined. Our latest research on Industrial Intelligence - an intelligence layer added to industrial operations as a sub-sector of industrial software, dives into how industrial intelligence will unlock operational data and drive efficiency.

• Data engineers still spend around 40% of their time on data quality - carving into time that could be spent solving problems

• Since 2010, the cost of cloud storage has dropped by about 50%, and the number of industrial firms that have completed a shift to the cloud has risen from 13% to 64%.

• Companies leveraging industrial intelligence see gains of c. 25% across energy use, labor, and manufacturing costs.

Read the complete publication below to discover how the new generation of software will tackle this opportunity by our authors Josh, Matilde, Jono, and Max! And if you’re building in this space, reach out to our authors.

We have a new exciting category for research coming out this month! Stay tuned……….👀

• The team celebrated the holidays with founders, operators, and friends in our ecosystem at the Electric Lemon for Activant’s Holiday party. Thank you to everyone who attended!

Activant is a research-focused global investment firm that partners with high-growth companies, transforming the way the world makes, moves, and sells.

Founded in 2015, Activant has invested in category-defining companies like Deliverr (acq. by Shopify), Hybris (acq. by SAP), Bolt, Better, Celonis, Sardine, and many more.

The firm has $1.5B assets under management and is headquartered in Greenwich, Connecticut, with offices in New York City, Berlin, and Cape Town.

The Greene Street Observer is published monthly from Activant’s office on Greene Street in New York City.