Expert interviews

Expert interviews

Tech investment expert Pflugi: Blockchain will change business models

by Blocks99

7 months ago

Swiss tech investment advisor Evelyne Pflugi talks about value creation through the exponentially developing technologies that are reshaping industries and society.

Evelyne Pflugi is CEO and Co-Founder of The Singularity Group, a Zurich-based investment advisory dedicated to developing tech investment strategies and vehicles that enable investors to capitalize on exponential innovation across all industries and sectors. Her previous positions include roles as Portfolio Manager for Energy and Resources Funds at GAM Investment Management and Capital Research Global Investors (London) and Capital Group (Los Angeles).

Evelyne’s expertise and proven track record have pushed the boundaries of new successful investment opportunities. She is a recognized authority on markets and investing, including alternative investments in liquid and illiquid new products. She is a sought-after speaker at conferences. Blocks99 caught up with her after her presentation at the Exponential Finance Summit in November 2019 in Zurich.

Blocks99

You are a co-founder of the Singularity Group. Please tell us more about this tech investment company and how – or if – it’s related to Singularity University.

Evelyne

We are working with Singularity University at this event, but we are not related. I actually went to S.U. after I founded the company. What they do on the tech education side is what we do in investing, so it was quite natural that we could partner on an event about technology and finance.

The idea to look into more exponential technologies and also to look into the concept of singularity was born when my co-founder and I thought about how we could make innovation investable across industries. Singularity as a concept means the point in time when artificial intelligence will eventually exceed human intelligence. It became clear that what was driving artificial intelligence was increased computing power per cost unit. Prices are coming down for something that keeps getting better and better. And we saw the same thing happening in all sorts of other technologies, and what we also realized, and I think S.U. agrees with us on this, is that there’s a convergence of technologies. A lot of technologies come together to change the world, but now in ways that you wouldn’t have thought before.

And this applied to what we were also looking at on the investment side of things. A lot of investment vehicles that are tailored towards tech and innovation end up being technology companies. But when old economy, non-tech companies apply new technologies they have a renewed chance to disrupt themselves. What has happened in history doesn’t have to repeat itself – it doesn’t have to be the old economy being disrupted by a new economy and not surviving. So that’s how we started to think about our investment philosophy.

Blocks99

Interesting. Could you go a little deeper into that? How would you describe your mission?

Evelyne

It’s really all about “Why?” I think it started with a little bit of an annoyance, actually. About how funds and investment vehicles were structured and what was sold to clients. It’s like greenwashing in ESG portfolios, where you just put a label on it. I saw the same thing happening in tech. My background is biochemistry, and biotech, tech and science have always interested me. All of a sudden you see hype coming up and a few of the typical banks and asset managers launch vehicles that are supposed to give investors exposure to it. But what is in them is not a lot that has to do with what’s written on them.

So, basically, that’s our “Why.” We wanted to give investors true exposure to value creation in tech. If they buy something that’s called a technology fund or Singularity Fund, there should be the potential for performance related to what’s written on it. Our methodology is based on reality, not on perception. That’s what we wanted to do.

Blocks99

You just gave a talk about exponentials and tech investment. I wonder if you could sum that up for us.

Evelyne

I’d say that new technologies are creating value in every economy, every industry, every sector. If you want investment performance from new technologies, you should look not only into technology companies, but also look for “tech outside tech,” as well. And we’re able to do that. Summed up, this means: with us, you invest in companies before they themselves become tech companies. It’s all about the right momentum.

Blocks99

The motto of this conference is Exponential Finance. It’s all about exponential technologies, and yesterday the closing presentation focused on robotics and other fascinating stuff. In your view, what exponential technologies will have the biggest impact on finance and why?

Evelyne

We’re already seeing the biggest impact probably right now. We’re looking for revenue generation. And we’re seeing the early stages of revenue generation in the finance world in the field of big data and another topic that everybody is interested in, which is blockchain. But where it’s already happening is probably in big data and artificial intelligence.

Blocks99

Again, this is something that came out in the closing presentation yesterday. In your view, what are the essential human skills that we will need in this world where exponential technologies and singularity begin to reshape our lives? What human skills do we need?

Evelyne

That’s a really good question. What human skills do we need? I think they’re the same as we’ve always needed to survive – adaptability and probably an openness to change. I think a lot of the wealth that has been created was built on risk aversion. A lot of the investment mindset is around preserving wealth. And I think not enough is around creating wealth. And not just creating wealth for oneself, but for everyone else as well.

Another phenomenon will be “augmented intelligence.” A common misconception or concern about artificial intelligence is that our brains are in competition with it. However, in most cases, AI expands our abilities in areas where the brain is stretched to its limits. Take the example of augmented intelligence in cancer diagnosis: adding AI to human intelligence potentially reduces the human error rate by almost 85% and could lead to more accuracy. I think this will apply to other areas as well.

Blocks99

MIT is an important thought leader in many areas, and they put out a paper about surviving a faster future. And of course this is something that rings true to a lot of people. But according to a huge study by Accenture, every generation since the Second World War has felt the pace of change was accelerating. So, what’s your take? Is change getting faster?

Evelyne

Well, I have a strong opinion on that. There actually have been enough technologies in history that have changed the world significantly and very quickly as well at the time. I think what changes faster now is because the change doesn’t involve industry anymore. Electricity changed industry and then changed the way we live. But now, the things that are changing fast from one day to another have a broader impact – suddenly you have an app that lets us talk to each other or send money, etc. So it has to do with human interaction. And the reason that is happening much faster than other technologies that don’t immediately involve people is that humans are actually very adaptable – when something works, humans adapt to it very quickly. And I think the reason we feel that it’s faster now is because most of those technologies have use cases with interactions that involve humans.

But if you think about it, all of these things that have ties back to industry still have to fit into business models and existing infrastructure, and that’s where change is actually still relatively slow. I would say the implementation of a lot of the software technology that we’re exposed to is fast because there’s more and more of it. But I also believe that there are more and more technologies coming together, that are propelling change together.

I would now go as far as to say that there could be a cooling down again, where technologies plateau again and have to refine themselves and reintegrate or reconverge. There’s always a shift between convergence and then going apart together. And we’re seeing it right now, but if I want to give you an example: 3D printing was a crazy topic decades ago, even more so with robotics. So was nanotechnology. Now these three technologies are coming together, combined with artificial intelligence. This is why we believe the whole area of advanced materials or 3D printing combined with robotics is going to be one of those conversions of technologies. But that’s only because there are a few technologies reaching a point where they meet each other. As long as you don’t have that, you don’t have the propelling effect. There will always be phases where less is happening and always be phases of acceleration again.

Blocks99

Some people talk about blockchain as an exponential technology. What are your thoughts there? Is it a high-priority tech investment?

Evelyne

Well we have blockchain on our watchlist. And that is because we have enough reason to believe blockchain will change the world and will change business models. I have to say that we have more blockchain experts than any other technology experts, and that’s because what we see now is a lot of money being spent around blockchain. And we want to trace it, we want to follow it and see where it actually starts popping up as a value generator. Right now, apart from the area of cryptocurrencies mining etc., we just don’t see much revenue generation.

I believe that there might also be a technology similar to blockchain that is more applicable to the world and the current infrastructure that might use some blockchain elements. And that would mean that it will not be blockchain as we know it or have defined it so far that will be this exponential technology. What I do believe is that blockchain-based cryptocurrency is an important asset class. Researching the investment options is interesting for an investor’s portfolio. In terms of investment horizons, we will be paying attention in the next few years, when blockchain has some longer use cases as a technology.

Blocks99

What advice would you give incumbents in the finance industry about exponential technologies in general?

Evelyne

I’ll say the same thing I say to everyone else: Stop trying to produce cheap investment vehicles that you can sell easily that are not really generating much returns, and look for true value and think about something new and better.

Blocks99

Thank you!

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