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016 – Jim Cavuoto

016 – Jim Cavuoto

Jim Cavuoto is the Editor and Publisher at Neurotech Business Reports, a neurotech market analysis firm that’s been following the field for nearly two decades. Jim holds a Bachelor’s Degree in Biomedical Engineering from Case Western Reserve University.

Top 3 Takeaways

  1. Neurotech Business Reports has unique visibility into the neurotech field because they’ve been following it for a long time.
  2. Closed-loop deep brain stimulation is an emerging trend.
  3. Neuromodulation is the biggest subset of the neurotech market, at more than $4B.

Show Notes

  • [1:02] Loup Ventures wins a Golden Electrode award at the Neurotech Leaders Forum
  • [1:18] Neurotech Leaders Forum & adaptive deep brain stimulation
  • [2:23] When will adaptive DBS come to market?
  • [3:35] Adaptive DBS & an expanded set of treatments
  • [4:45] Electrode placement
  • [5:44] There’s good progress in neuroprosthetics
  • [5:52] Neurotech market size
  • [7:10] Jim’s definition of bioelectronic medicine
  • [8:20] What Jim wants people to take away from Neurotech Business Reports’ research
  • [10:13] Why Jim’s excited about the current state of the neurotech industry
  • [13:00] Jim’s favorite neuroscience book

Selected Links

Related Podcasts

We owe a special thanks to Ladan Jiracek of the Neural Implant Podcast for his videography and editing.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Neurotech, Neurotech Podcast
1 min. read Show less
The Victor’s Mindset: Investing for the Long-Term Drives Faster Revenue Growth

The Victor’s Mindset: Investing for the Long-Term Drives Faster Revenue Growth

Written by guest author Carlos Castelán with Andrew Murphy. Carlos is Managing Director of The Navio Group.

There’s an old Sun Tzu quote that speaks to the power of a winning mindset: “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” In other words, “the battle is won before it starts.”

The notion that Sun Tzu articulated over 2,000 years ago is one that still applies today and deserves consideration in the business arena. So, how can leaders develop a victor’s mindset? Together, The Navio Group and Loup Ventures identified a key driver of sustained success for retailers and brands: long-term investments. Long-term investments – defined as Capital Expenditures plus Research & Development (R&D) – lead to winning outcomes for retailers and brands over time.

For this analysis, we focused on the same basket of companies we analyzed earlier this year in relation to transformations (to recap: the more a company talks about transforming on their earnings calls, the less likely they are to succeed in driving future revenue growth). Using our definition of long-term investment (CapEx plus R&D), we stacked the numbers against total revenue and looked at the effects over a five-year period, from fiscal years 2013-2017. Traditional metrics, such as return on invested capital (ROIC), are often evaluated against performance in the same fiscal year which can be limiting for a variety of reasons. So, we sought to take a broader view to look at growth effects over five-years since long-term investments, by definition, should be evaluated over a longer period.

It should come as no surprise that retailers and brands that invest a higher percentage of their total revenue see higher revenue growth over the long-run. What is surprising, then, is that brands don’t invest more dollars and at higher rates given the connection to growth. The linkage between investments and revenue growth held true for both mature retailers (Nordstrom) as well as younger ones (Lululemon) so the growth seems to be agnostic of brand maturity level.

Source: The Navio Group

In the wake of Sears’ Chapter 11 bankruptcy, a lack of investment in presentation, products, and needed technology should be viewed as an omen of future performance for any retailer or brand. From our work with clients, we’ve seen a hesitation to make investments most often come down to “unclear” ROIs in financial models and, in one instance, speculation about how Wall Street and the media would perceive these very visible upgrades. It’s important to have a clear vision and rationale of the future to back up the investments and bring stakeholders along. As some of the leading companies, like Amazon and Nordstrom, in our model show, long-term investments are about making bets on what the customer will want in the future rather than identifying a short-term ROI from that specific investment. Amazon pushes the envelope in relation to ecommerce and technology. Nordstrom does the same for high-end retail concepts, as Nordstrom Local and their flagship in Manhattan demonstrate.

So how does a company manage to dig in and make the long-term bets that will protect them from a nose-dive like Sears? The key, as with most many questions in business, comes down to exceptional leadership. It’s no surprise that leaders of both Amazon and Nordstrom appear in the recently released list of Harvard Business Reviews top CEOs. Without a doubt, there is a significant place for ratios and finances when preparing for long-term investments, however, just as important, is the company’s willingness to make bold bets.

As technological change continues to accelerate, and consumers continue to be empowered, it will be more critical than ever to identify emerging leaders at brands and set up the right structure for them to innovate and pursue new ideas. We once heard an executive joke about the number of “store of the future” projects he had worked on during his career and the similar arc they had followed: 1) stores of the future were branded a success at launch to ensure continued executive support, 2) they were expanded quickly and communicated publicly to create buzz, and then 3) killed just as fast when the reason for building the stores became diluted or unclear and the project ran out of money. These issues at larger organizations are common and happen when there are competing focuses across teams and many handoff points.

To ensure focus, Amazon has the famous memo/press release concept to help others envision what the solution could look like for customers and empowers small teams to doggedly pursue new/out-of-the-box ideas. Without the sizzle of visuals or the oft-used PowerPoint presentation, the idea must stand on its own in the memo. Dominos was successful because it rallied its teams and franchisees to invest in and support new technologies that allowed it to leap ahead of its competitors and earn praise as a “tech company that happens to make pizza.” These are examples of the victor’s mindset that great leaders engender across their company: be proactive and on the offensive. The brands that will win during the next decade of immense change will be the ones that adopt the mindset of the victorious warrior from Sun-Tzu’s saying by being bold and investing today.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

Retail
4 min. read Show less
Nvidia: Despite Earnings Miss, Long-Term Story Still Intact

Nvidia: Despite Earnings Miss, Long-Term Story Still Intact

Shares of NVDA are down 16% after-hours. While the near-term is ugly, the long-term story is intact.

  • Nvidia missed Oct-19 revenue by 2%.
  • The biggest miss occurred in its gaming segment. Crypto miners have been using gaming products for mining cryptocurrencies. As the price of cryptos has fallen, fewer graphics cards have been purchased.
  • Despite Nvidia’s inability to accurately segment mining from gaming, we believe the underlying gaming demand remains healthy.
  • Nvidia guided Jan revenue 15% below street expectations as it cleans up channel inventory from declining crypto mining interest.
  • The bottom line: crypto has been a bigger part of the recent upside, and now the downside, than we or the company thought. As crypto has fallen off, unwinding the channel inventory had a significant (15% on overall revenue) negative impact on Jan (and partially Apr) expectations.

Guidance Reveals Failure to have Accurate Pulse on the Business

Oct-19 results and Jan-19 guidance caught investors and the company off-guard, which causes us to question the company’s channel inventory management, along with visibility into which segments are driving overall results. For example, crypto declines are the reason for the disappointing guidance, but embedded in this is the company’s failure to recognize the greater positive impact that crypto was having on the way up (late 2017, early 2018). Most concerning about guidance was the commentary on last quarter’s conference call, suggesting that crypto would not be factored into guidance for the Oct-19 quarter. Simply put, the company failed to have an accurate pulse on their business. Undoubtedly, January guidance will weigh on investor confidence at least for the next quarter. Near-term (three months), Nvidia is a “show me” story.

Measurable Setback, but Long-term Story Still Intact

Long-term, we continue to believe that the company will be one of the key beneficiaries of three massive tech waves, including gaming, datacenter, and automotive.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

Cryptocurrency, Gaming, Nvidia
2 min. read Show less