Complexity Investing & Semiconductors with NZS Capital (Extended Cut)
Ben Gilbert (host), David Rosenthal (host), Brinton Johns (guest)
In this episode of Acquired, featuring Ben Gilbert and David Rosenthal, Complexity Investing & Semiconductors with NZS Capital (Extended Cut) explores nZS Capital explains complexity investing, resilience, optionality, and semiconductors today NZS Capital grounds its investing philosophy in complexity theory: markets and companies are complex adaptive systems with emergent behavior, making precise prediction unreliable and pushing investors toward adaptability and resilience.
NZS Capital explains complexity investing, resilience, optionality, and semiconductors today
NZS Capital grounds its investing philosophy in complexity theory: markets and companies are complex adaptive systems with emergent behavior, making precise prediction unreliable and pushing investors toward adaptability and resilience.
They run a barbell-like portfolio: a concentrated “resilience” bucket of durable compounders and a diversified “optionality” bucket seeking asymmetric payoffs, with occasional “root MOS” positions that combine both.
A major lens is “non-zero-sumness” (NZS): favor companies that create more value than they take across customers, partners, employees, society—arguing this increases duration and long-term compounding.
They apply these ideas to semiconductors as foundational “oxygen” of the information age, discussing TSMC’s ecosystem role, ASML/EUV, Moore’s Law’s evolution (packaging/chiplets), and key differences among Samsung, TSMC, Intel, and catalog analog players like Texas Instruments.
Key Takeaways
Prediction is a weak foundation in complex systems; adaptability is the edge.
Because markets exhibit emergent behavior, NZS emphasizes building portfolios and theses that can survive many futures rather than requiring a single precise forecast to be correct.
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Resilience investing targets duration—steady compounding for decades.
They favor “set it and forget it” businesses (e. ...
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Optionality investing is about asymmetry, not batting average.
In the optionality sleeve, it’s acceptable to be wrong often if a smaller number of winners deliver multi-bagger outcomes; portfolio construction is designed so failures don’t “torpedo” results.
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Conviction often disguises overconfidence and sunk-cost bias.
They treat “high conviction” language as a cultural risk that can harden views and slow course-correction; instead they write theses down, define key leverage points, and encourage fast admission of error.
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Power laws and fat tails break traditional risk models.
They critique Gaussian-based frameworks (Modern Portfolio Theory) using non-ergodicity examples: the “average” outcome can look positive while most participants go bankrupt, implying risk must be managed for tail events.
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‘Non-zero-sumness’ can be a competitive advantage via goodwill and duration.
Companies that create more value than they capture (e. ...
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Semiconductors are a ‘super-organism’ ecosystem; no single layer can easily vertically integrate the whole stack.
From EUV tools (ASML) to lasers (Trumpf) to optics (Zeiss) to foundry ops (TSMC) and design software (Cadence/Synopsys), each layer contains deep know-how and learning cycles, making the “village” structure durable.
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Notable Quotes
“Complex adaptive systems are all around us... emergent behavior makes predicting useless in most cases.”
— Brinton Johns
“They found that about half the ants in the colony weren't doing anything... they're optimized around longevity... resilience.”
— Brinton Johns
“We named the firm NZS Capital... we're looking for non-zero sumness, so looking for a win-win outcome for all constituencies.”
— Jon Bathgate
“Valuations... force predictions. I have to believe a lot more at ten times sales than I do at ten times earnings.”
— Brinton Johns
“A recession is a terrible thing to waste.”
— Brinton Johns (quoting TI CEO Rich Templeton)
Questions Answered in This Episode
In NZS terms, what specific metrics or qualitative signals best indicate a company’s “duration” is lengthening (not just its growth rate)?
NZS Capital grounds its investing philosophy in complexity theory: markets and companies are complex adaptive systems with emergent behavior, making precise prediction unreliable and pushing investors toward adaptability and resilience.
Get the full analysis with uListen AI
How do you operationalize “create more value than you take” when analyzing pricing power—what are the red flags that a company has crossed from healthy value capture into fragility?
They run a barbell-like portfolio: a concentrated “resilience” bucket of durable compounders and a diversified “optionality” bucket seeking asymmetric payoffs, with occasional “root MOS” positions that combine both.
Get the full analysis with uListen AI
What are the three to four “key leverage points” you’d track for a typical optionality position, and how do those differ from resilience-position checkpoints?
A major lens is “non-zero-sumness” (NZS): favor companies that create more value than they take across customers, partners, employees, society—arguing this increases duration and long-term compounding.
Get the full analysis with uListen AI
You avoid the term “moat” in some cases—can you give examples where a traditional moat strengthened short-term economics but reduced long-term resilience?
They apply these ideas to semiconductors as foundational “oxygen” of the information age, discussing TSMC’s ecosystem role, ASML/EUV, Moore’s Law’s evolution (packaging/chiplets), and key differences among Samsung, TSMC, Intel, and catalog analog players like Texas Instruments.
Get the full analysis with uListen AI
When an optionality stock rallies sharply (e.g., Peloton-like dynamics), how do you decide whether it’s a true structural inflection versus a transient multiverse branch—and what triggers trimming?
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Transcript Preview
excitement, fun, brevity. [laughing]
[upbeat music] I love it.
For brevity is the soul of wit.
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs, and our venture fund, PSL Ventures.
And I'm David Rosenthal, and I am an angel investor based in San Francisco.
And we are your hosts. On our TSMC episode, one of the sixty-five sources that we used was an episode of The Knowledge Project with Brinton Johns and Jon Bathgate. Brinton and Jon are public equities investors at a hedge fund called NZS Capital, and they spend a lot of their time researching semis. It was packed so full of great content that I actually watched it twice to make sure that I understood everything.
It was so good.
It was awesome. And then, in a wild coincidence, the very next week, even before we shipped the TSMC episode, David and I were at Capital Camp, great event organized by Patrick O'Shaughnessy and Brent Beshore, and we ran into Brinton in person, and I was like: "I recognize that guy. Where do I recognize him from?"
It's like the Spider-Man, uh, gif. It's like, "You! No, wait, you!" [chuckles]
[chuckles] V- very, very much so. So after, like, nerding out the whole rest of the event on TSMC, geopolitics, semis, we decided to have Brinton and Jon on Acquired. And on this episode, we actually didn't even get into semiconductors for the first hour, since it was so fascinating to hear about their investment principles at NZS, which are just a real treat to learn about and, uh, and think through. And, uh, I've said this many times on the show, but yet again, new frameworks that have totally changed the way-
Yeah
... that I think about the world.
It's frameworks all the way down, Ben.
It is. Well, for our presenting sponsorship on this special episode, we have the SoftBank Latin America Fund. As many of you know from other specials this year, SoftBank LatAm is deploying huge amounts of capital into the burgeoning Latin America start-up ecosystem, and they just announced they have another three billion to invest in addition to their initial five billion.
Ooh.
We are talking today with the CEO of one of their portfolio companies, João Menin, CEO of Banco Inter, which is now a publicly traded digital bank based in Brazil.
João, welcome to Acquired. You have taken a publicly traded traditional bank and wholesale transformed it first into a digital bank and now into one of Brazil and Latin America's leading super apps. We're so excited to have you here, and tell a little bit about the story. And the bank, it was a traditional bank when you stepped in as CEO?
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