A revolution is overturning long-established industries and reshaping economies. A short list of industries currently grappling with fundamental challenges to their existence includes: retail; media; hotels; car rental firms; logistics; enterprise software; banking.
Like most revolutions, it is provoking a reaction. In protest against the perceived threat from ride-sharing app Uber, taxi drivers in Paris took to the streets, overturning cars and smashing windows. The response of the hotel chains to the challenge from Airbnb has been equally pointed if more peaceful.
After commissioning and publishing a report showing that Airbnb accounted for 7.8% of overnight stays in New York, the city's Hotel Association complained that "They're a de facto hotel company with none of the regulation that every hotel has to comply with." The association also donated to a campaign group behind "proposition F" - an unsuccessful attempt by residents in San Francisco to impose restrictions on the home-sharing site.
But if this period of disruption seems unusually intense, turmoil and change are nothing new. They are an inherent feature of capitalist economies. In 1942, the Austro-American economist Joseph Schumpeter welcomed the "gale of creative destruction [...] an industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one."
Although Schumpeter coined the term in the 1940s, it is clear that episodes of ‘creative destruction' have recurred throughout history. In 1900, for example, more than 24 million horses - one for every three Americans - were at work pulling buses, street trolleys, wagons and carriages.
By the 1930s, the refinement of the internal combustion engine and Henry Ford's production line had rendered working horses redundant, driving down the price of grain so dramatically that the US Bureau of Census described it as "one of the main contributing factors" to the Great Depression. By 1959 America's equine population had declined by four-fifths.
An entire mode of production was suddenly obsolete. Long-established businesses (carriage makers) and professions (cart men, dray men and all the labourers involved feeding and tending to working horses) were eliminated. Put another way, years of patiently accumulated human and financial capital had been destroyed by a new technology.
If creative destruction is nothing new, it does seem to have reached a new level of intensity since the financial crisis. The speed of the change has been such that it has created an appetite for explanatory theories.
Clayton Christensen of the Harvard Business School obliged, providing a new version of Schumpeter's theory - repackaged, more narrowly defined and relabelled as ‘disruptive innovation'. His writings have become required reading for business leaders looking either to become disruptive innovators themselves or to ensure that their companies don't fall victim to them.
And so pervasive have Christensen's ideas become that the New Yorker devoted a long article to a detailed rebuttal of them.
Clearly, executives across a range of industries are obliged to study the current wave of change. But it poses questions to investors too. When we think about technological progress, the natural tendency is to focus on the winners. Armchair stock-pickers fondly imagine the returns they would have enjoyed had they been able to pick the long-term winners in, for example, the car industry.
Or what if they had bought shares in Apple when it floated in 1980? In reality, this is often wishful thinking: even among the auto and oil companies - the ‘disruptors' of the horse-based economy - the losers vastly outnumbered the winners.
So picking the winners from rapid technological shifts is far from straightforward. As the transition from horsepower to the combustion engine showed, the fundamental conditions of a system can't be altered without damaging a lot of businesses in the process. Might identifying the losers be easier?
We think it might. In the Artemis US Extended Alpha Fund we have the flexibility to hold short positions. It might not be possible to short the family-owned taxi companies being ‘disrupted' by Uber.
But - if we wanted to - we could short other possible losers, such as rental car companies and car manufacturers (One effect of Uber is to significantly increase utilisation rates of existing transport infrastructure).
Another potential area for shorting: the large, bricks-and-mortar retailers that are squeezed by Amazon. Or if you are impressed by Airbnb's achievement, you may anticipate shorting opportunities arising among the hotel groups.
Looking further ahead, might car companies find their markets remade by an Apple car? Will technology companies succeed in wresting control of the payments system from the banks? Or will peer-to-peer lending destroy their loan books? It is too soon to say. What we can be more certain of is that Schumpeter's gale of creative destruction will continue to blow. Both long and short, the Artemis US Extended Alpha Fund intends to benefit.
Stephen Moore manages the Artemis US Extended Alpha Fund
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