Explaining your crazy pivot to investors

IN FOCUS

In today’s newsletter, we look at:

• CreateAI, the startup pivoting from driverless trucking to AI gaming
• How Donald Trump is making the crypto world nervous

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Hi there,

A pivot always makes investors nervous.

In Michael Lewis’ classic 2011 nonfiction book The Big Short, hedge fund manager Michael Burry tells his clients that he has just spent US$1 billion on credit-default swaps (CDS) – basically an insurance policy taken on financial assets.

Few people knew what CDSs were back then. Worse, Burry’s hedge fund Scion Capital was buying them in anticipation that the housing markets would crash in 2007, something many people thought was impossible.

Thinking Burry had gone off the rails with his pivot from equities to CDSs, some investors pulled their funds. But he was right, and in 2008, Scion Capital posted returns of 489%. Meanwhile, the S&P 500 index – which tracks the performance of the 500 top-listed stocks in the US – posted gains of only 3%.

Such a pivot takes courage to execute and requires intelligence to accurately predict where the market is going. Even if you’re right, a lot of people won’t believe it.

Remember this as you read this week’s Big Story on CreateAI, which was once an US$8 billion, publicly listed company called TuSimple, a firm focused on autonomous trucking.

After a string of controversies, CEO Cheng Lu is planning to move forward with the company in a new direction: video games and AI-generated content.

The investors had questions, such as “what does autonomous trucking have to do with AI and gaming?” You’ll have to read the story to get the answer.

After you finish with that, you can scroll down and read my take on how US President Donald Trump is raising hopes and eyebrows in the US’ crypto industry.

– Scott

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BIG STORY

CreateAI eyes redemption with high-stakes pivot

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Hot Take

The long-awaited executive order

Trump launches TRUMP 🤦‍♂️

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