During a coffee meeting in Cherry Creek, fund manager Justin Borus excused himself to do something he believes soon will be a quaint memory: feed the meter.
Borus is managing partner of the Denver investment firm Ibex, which launched as Lazarus in 2003 and rebranded this month.
Ibex’s newest hunch is that driverless cars will boost some businesses and kill others – including paid parking.
It’s a thesis Borus has been debating for three years, and his firm spent the last two years working on a feasibility study.
The Ibex Driverless fund launched this month. Borus said Ibex, which currently has $250 million under management, is targeting a $100 million raise for the driverless fund within the next year.
The fund takes long positions in businesses that Ibex thinks will accelerate in a driverless world, like car batteries and software that stops hackers from hijacking cars. On the short side, the fund bets against entities – say, roadside motels – that Ibex thinks will be left out in the cold.
The following is an edited transcript.
BusinessDen: There aren’t that many driverless cars to serve right now. So are there companies out there to bet on?
Justin Borus: One of the misconceptions that people have is thinking that this is 20, or 30, or 40 years off. This is within two years. And we believe it’ll be not only the biggest technological disruption of our lifetimes, but it’ll be the quickest adoption in the last hundred years.
If you look back, horse and buggies took dozens of years. With cars, it was about 15 or 20 years. Then adoption got a bit quicker. Things like the internet took about 10 years, smartphones took five years. We think the technological adoption of driverless cars will be a lot quicker.
Why? You won’t have to buy your car, auto insurance, gasoline, all the maintenance of the car. That’s going to be equivalent to one of the biggest tax cuts in the history of the country.
What’s going to happen very soon is that cities will ban driving your car: Seattle, San Francisco, Denver. It’ll be like smoking. It’ll be like, ‘You’re still driving your own car, putting all of our lives in danger? What’s the matter with you?’
BD: Have you decided which driverless technology companies you’re picking?
JB: We like betting on the guy selling blue jeans to gold miners. We’re not so much interested in picking which is going to be the winner, which one is going to be the iPhone of cars. But whoever wins is going to need all of this data, security, chips, software, new glass, very comfortable seats, big screens, that kind of thing.
BD: I like driving my car sometimes.
JB: You like it, but imagine a living room on wheels. Say I’m sitting in a car and someone’s driving it. That’s not very appealing. But imagine Emirates first class, when you’re on a bed, on your iPad, drinking beer, listening to music.
Don’t even think of it as a car. Think of it as a new experience of getting around. And you know you’re never going to die.
Ibex Driverless Fund
- $250,000 minimum investment.
- Launched in August.
- Open-ended investment fund.
- Limited to publicly-traded securities.
- Open to investors with $5 million in net investments.
BD: That’s the long part. How about the short?
JB: Day one, it’ll be rental companies that go. You already start to see taxi cab companies, auto parts and car dealerships decline.
Within year three or four, it’ll be roadside motels. If I’m going from Denver to Santa Fe, I no longer have to stop in Raton, New Mexico to sleep. I can just set the car to go to Santa Fe.
And then, ultimately, year 20 or 30, big oil will fall, it’ll be a zero. We’re looking for the carmakers that are asleep at the wheel, no pun intended, that have barely even started their driverless program.
JB: Honda, they’re a zero. DaimlerChrysler’s probably a zero, because Tesla and Apple and Google are already millions of miles ahead of them. You can’t start today, you’ve already lost.
The rabbit hole goes pretty deep. We’re also shorting municipalities. There are some municipalities that 90 percent of their revenue comes from speeding tickets and parking tickets. Where are they going to get revenue now?
There aren’t going to be speeding tickets and parking tickets anymore. Because your car, it’s not going to have to park here. It can park a half hour away to the airport or wherever there’s a free parking lot and come back and get you. Parking meters are done.
BD: You changed your name all of the sudden. Why?
JB: An Ibex is an animal that thrives in harsh conditions. It goes straight up cliffs. It’s very resourceful. It’s also easy to spell. I think with Lazarus rising from the dead, we get a lot of questions. Are you guys religious? Do you have biblical roots or something? It was kind of a self-inflicted wound.
Previous BusinessDen coverage of Ibex:
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DU professor trades dismal science for stock picking; sells stake to local firm
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