Season 6, Post 40: “Embrace change”
This was the emphatic message that Hamid Moghadam shared with the stakeholders of Prologis, the business he co-founded, at its annual Groundbreakers meeting earlier in October. Your author was privileged to be one of the in-person attendees at this unique event. After having attended the prior two Prologis thought leadership forums virtually (see here and here), Groundbreakers 2024 came to London. If the CEO of Prologis were not a big enough draw, then guest speakers don’t come much larger than Sir Tony Blair and Bear Grylls.
As the largest owner of industrial real estate in the world, embracing change is at the heart of what Prologis does. We have regularly made the thematic case for more warehouses and better supply chains, but as Hamid pointed out, change takes “courage” to implement. Prologis has succeeded, in his view, by “putting the customer first” and focusing on culture, which its co-founder sees as being “the only form of sustainable advantage.” We are highly sympathetic to such views.
The advent of AI is necessarily bringing change to all industries. Prologis, however, provided the valid perspective that “if you do not have data, [then] no amount of AI can help you.” AI’s outputs, in other words, are only as good as its inputs. Logistics start-ups such as Gideon (autonomous robotic forklifts) and Relay (a faster, cheaper and greener software for last mile delivery) demonstrated how they were practically leveraging AI in their businesses. Both are backed by the venture capital arm of Prologis. In the healthcare space, academics from Cambridge, Oxford and Stanford Universities saw the technology as the latest “cool tool” to enable accelerated drug discovery.
Energy was the other hot topic of the day. The key message: there can be no transmission without transition. Or, as Jean-Pascal Tricoire, the Chairman of Schneider Electric, put it, the world has “a mountain to climb” to meet energy demand. Think of decarbonisation as “the challenge of our generation.” Schneider is a key enabler in this space, but a business such as Prologis can play an important role. Its warehouses are increasingly equipped with rooftop solar and charging points for electric vehicles. Other businesses might want to consider following suit.
The last word should perhaps go to the UK’s former Prime Minister. For Sir Tony, life is about “risk-taking” (a sentiment obviously echoed by Bear Grylls). As a leader, he continued, it is important to “set standards” and “be authentic.” Standards and authenticity were both amply on show at Groundbreakers.
15 October 2024
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Prologis. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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