Morningstar - Q3 2021 - 49

investment approach. American capitalism
it seems to me is past its prime, a little
fat and happy, not aggressive enough. There's
only half the number of people working
for firms one and two years old than there
were in 1975, so we're losing some of
our dynamism.
But there is one thing where the U.S. is still
exceptional, and that is venture capital. Venture
capital is really attracting the best people
these days. They don't go to Goldman Sachs to
write algorithms. They go into venture capital
or to start a new firm. And they should. Venture
capital is not like private equity or institutional
investing. In the end, we have to admit we're
playing a cosmic poker game. We're trying
to beat the hell out of the other players, and it's
fun. But we're not really creating net value.
But venture capital is. We're causing firms to exist
that otherwise would not exist. We're raising
money for them. In some cases, some of us are
giving good advice to them.
America does that very well, and we decided,
in our foundation, to go for broke. We are
aiming to put 70% of everything we have
in early-stage VC, of which half will be in green
early-stage VC. And we have our own team
doing that-thoroughly exciting. Boston is a great
place to do that. We started more new ventures
last year than San Francisco. That's five, by
the way. It's just amazing what new technologies
are out there-microbes that will fix nitrogen
in the ground and batteries that will last twice as
long and weigh half as much and won't burst
into flames. The list is endless. And the challenge
is endless. So, this is going to be where all
the opportunities are.
The FAANG-type companies are what separate
the U.S. stock market from the rest of the
world-and not so much the P/E as the earnings.
Most of the outperformance of the U.S. market
in the last 10 years has come from extra earnings,
and over 80% of that extra earnings have come
from this handful of FAANGs. Now, they are
recently sprung out of the venture capital industry.
They are a classic demonstration of that pool
of 20 to 50 years of venture capital-these
are some of the winners that have become global
giants, bone-crushing in their competence and
their competitive spirit. I think that will continue
and that it will be a true advantage for the
American system.
you fight bugs without putting toxic chemicals
on. You send a message courtesy of messenger
RNA, like the vaccines, and it turns off the
switch of the Colorado potato beetle, and it can't
process carbohydrates. We are investors in
a firm that's called GreenLight, in Boston. So, the
Colorado beetle eats the potato and dies
of starvation and falls to the floor of the field and
When I go to an ESG conference, I say,
'Guys, S and G, they're terrific. Some of
my best friends are S and G. What's not to like
about good behavior?' But E is a matter
of survival.
Jeremy Grantham
Kapoor: I wanted to end it on a very specific
note. I'm interested if you'd share a few books that
have left an impression on you and ones
you'd recommend that others consider as well
for their reading.
Grantham: I'm afraid I've been very nerdy
this year, because a lot of it has been
on regenerative agriculture and green stuff,
which is so exciting, but they would have
everyone rolling their eyes in boredom, because
they're all quite technical.
But I've just started a biography on the American
woman [Jennifer Doudna] who got the
Nobel Prize in chemistry the year before last for
gene splicing.3
She is involved in things that
have terrific implications for agriculture and how
is eaten harmlessly by the other insects. It
changes everything. By the time we finish gene
splicing, we'll all have IQs of 150, and maybe
we'll be programmed to be long-term investors as
well. No doubt we will have a value bias as
a consequence. K
3 Isaacson, W. 2021. The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race. Simon & Schuster.
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Morningstar - Q3 2021

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