This week Ford announced their acquisition of EV fleet management software Electriphi.
I've been interested in the EV fleet management space for a year or so now because I believe it's an obvious problem that will need to be solved as more logistics firms make the switch from ICE vehicles.
EV fleet management is an example of a derivative investment thesis. Derivatives are securities whose value is based on the value of a primary security.
Replace the word security with the word theme and you get the same idea. In this case, the value of EV fleet management platforms is tied to the electrification of commercial fleets.
The electrification of commercial fleets is the primary thesis. EV fleet management is a derivative.
Other derivatives of vehicle electrification are vehicle-to-home and vehicle-to-grid software and battery analytics.
Our recent investment in Twaice is a good example of the latter segment. It's also a derivative of a separate thesis around the continued penetration of utility-scale renewables.
Another great example from our portfolio is Matroid. Matroid makes computer vision simple for non-engineers. If you believe computer vision or the ubiquity of images across new sectors is a primary theme, the derivative is what you can do with those images.
I love derivative investing because it requires a deep understanding of a primary theme. Better yet, if you can invest in derivative solutions tied to multiple primary themes you get an outcome similar to the lollapalooza effect made famous by Munger.
Megatrends in electrification, construction, and manufacturing will create new derivative opportunities in the coming years. These are new opportunities that we can't even imagine yet, but I have no doubt they'll produce great outcomes for founders and investors alike.