Helmets Off, Unexpected MVPs, and the Innovation Playbook – Letter #19
“Bless me bagpipes! I hit the jackpot!” – Scrooge McDuck
In the very first Super Bowl in 1967, Green Bay Packers wide receiver Max McGee didn’t expect to play. In fact, he really didn’t expect to play—so much so that he broke curfew the night before, hit the town, and rolled into game day nursing a killer hangover. But when the starting receiver got injured early, McGee was called in, still half-drunk, and had to borrow a teammate’s helmet because he hadn’t even packed his own. What happened next? He caught seven passes for 138 yards and two touchdowns, helping the Packers win the game.
It’s proof that sometimes, even when you’re totally unprepared, you can stumble your way into a win.
Fallen MVPs
I watched Barry Levinson’s The Wizard of Lies for the first time over the weekend. Felt pretty apt. It dives into the Bernie Madoff story—how he pulled off the biggest Ponzi scheme in history and torched $65 billion along the way. I’ve got to say, Robert De Niro really knocks it out of the park. You didn’t get me down, Ray.
But one detail stuck with me for its pure insanity. When Madoff’s house of cards finally collapsed, it wasn’t just the mind-blowing scale of the fraud—it was the madness of his auditor. You’d think a big hedge fund operation would have a big-name accounting firm combing through the books, right? Nope. Madoff’s finances were “audited” by a tiny, no-name firm called Friehling & Horowitz, run by one guy in a 13x18-foot office tucked inside a strip mall outside New York.
The office was so small, it didn’t even have a computer!
Just let that sink in—the guy signing off on the books for a multi-billion-dollar fund, basically operating out of a frozen yogurt shop.
The analog auditor:
Madoff’s scheme wasn’t an isolated case. Many of you will recall schemes ranging from Theranos’ fake blood tests to WeWork’s ‘Community Adjusted EBITDA‘ (because nothing says profitability like just ignoring the losses), or the infamous Fyre Festival, where gourmet meals turned out to be cheese sandwiches in disaster relief tents.
For the younger readers, there are some less obvious frauds worth remembering. Take Lehman Brothers’ ‘Repo 105‘ trick, where they temporarily sold assets to make their balance sheet look healthy, only to quietly buy them back days later. Or Enron, which named four of its Special Purpose Entities—used to hide debt and inflate profits—after the velociraptors from Jurassic Park. Yes, the dinosaurs.
The Government Grift
But here’s the thing—these aren’t just stories from the private sector.
Public sector mismanagement operates on an even grander stage, with far less accountability and far more taxpayer dollars at stake.
Take DOGE’s findings this week:
But the absurdity doesn’t stop there. DOGE turned its focus to USAID, the United States Agency for International Development. Originally set up by JFK in 1961 to “make friends and influence countries in the American interest”, its budget ballooned from $26 billion to $45 billion under the last administration. DOGE uncovered a range of eyebrow-raising expenses: $8 million to Politico, one of the very media outlets meant to keep the government in check, and payments covering 8% of the BBC’s income for the fiscal year 2023/24—making the U.S. government its largest funder… 🤨
When DOGE tried to investigate, USAID pushed back—hard. Security officials reportedly attempted to block DOGE from entering the building, and a federal judge even issued a temporary restraining order. You’d think transparency would be the bare minimum, but not when the scheme runs this deep.
American money appears to be flowing out unchecked—no oversight, no reconciliation, no accountability.
Here’s a memorable throwback to an exchange between Jon Stewart and Deputy Secretary of Defense Kathleen Hicks on the defense budget: “I can’t figure out how $850 billion to a department means that the rank and file still have to be on food stamps”.
Sovereign Wealth Funds... American Style
Moving on, last week President Donald Trump signed an executive order to establish a U.S. sovereign wealth fund, directing the Treasury and Commerce Departments to get it off the ground. While countries like Norway fund their sovereign wealth vehicles through budget surpluses and oil revenues, the U.S. faces a very different scenario—servicing a $36 trillion national debt. But that hasn’t stopped Trump.
Details on how the fund will be structured weren’t provided, but Trump hinted at a surprising potential investment: TikTok. “We might put that in the sovereign wealth fund”, he mused, promising it would be up and running within 12 months.
The U.S. government has a history of stepping in to own critical infrastructure—telegraph lines, railroads, steel mills, even collapsing banks. But a sovereign wealth fund targeting a social media platform represents a new kind of strategy.
There seem to be two schools of thought on how this fund could take shape.
The first is a more traditional route: raising capital to invest in great American innovation and companies. While a noble endeavor, the challenge is the cost of financing. With interest rates near 5%, borrowing to fund such investments becomes expensive and less practical compared to countries with budget surpluses.
The second, and arguably more likely, approach is monetising assets already on the country’s balance sheet. This could include natural resources—oil, gas, lithium, rare earth elements.
The returns from these assets could then be used to help pay down the national debt. Whether that becomes the fund’s primary goal remains to be seen, but in a country grappling with mounting liabilities, this approach might prove more pragmatic.
Policy Balancing Act
Speaking of pragmatism, Treasury Secretary Scott Bessent’s messaging this week struck a careful balance. Bessent made it clear there will be no pressure on the Federal Reserve to cut interest rates. Instead, his focus is on lowering yields on 10-year Treasuries, which have broader implications for the economy. To achieve this, Bessent outlined a three-pronged strategy: shifting government borrowing to the short term, curbing inflation, and reducing the budget deficit.
Reducing the deficit is essential for bringing down long-term rates, but Trump’s proposed tax cuts are likely to widen the deficit in the near term. That makes alternative revenue streams, like import tariffs or DOGE-related savings, increasingly important. The challenge? Even aggressive tariffs and cost-cutting measures won’t generate enough revenue to meaningfully shrink the fiscal gap—you still need robust economic growth and productivity gains to make a lasting impact.
Signals of the Next Surge
This is where the outlook becomes more promising. The combination of rising liquidity and an accelerating ISM suggests positive momentum ahead.
A weakening dollar, especially if it mirrors the pattern from beginning to the end of 2017 when Trump declared the dollar was too strong early in his first term, should ease financial conditions. This outcome is more likely if tariffs are deployed strategically as incentives rather than punitive measures.
Second, there’s increasing evidence of a forthcoming reacceleration in China, which would benefit from a weaker dollar as it gives the People’s Bank of China more room to implement additional easing measures. Despite Chinese 10-year bond yields hitting record lows, which has already injected liquidity into the east, more stimulus is needed. A rebound in China should ignite a resurgence in cyclicals—industrials, materials, financials, and energy sectors—and reignite commodity markets.
Closer to home, a powerful growth engine is emerging: AI and its transformative impact on labour productivity across industries. McKinsey estimates that AI could add $13 trillion to global GDP by 2030. In the U.S. alone, generative AI applications are projected to increase GDP by nearly $7 trillion.
This aligns with ARK’s research, which forecasts a step-function increase in economic growth, with AI, autonomous mobility, and robotics expected to turbocharge productivity. We anticipate that real GDP growth could surge from an IMF-projected 3.1% to 7.3% by 2030, marking the most significant macroeconomic inflection since the Industrial Revolution.
AI is unlocking transformative market opportunities. Neural networks are accelerating advancements in autonomous mobility, precision medicine, and energy storage, creating compounding effects across the economy.
The software industry is poised for exponential growth as AI dramatically lowers development costs and accelerates the production cycle. We forecast that global software spending could grow from an annual rate of 14% over the last decade to as high as 48% annually through 2030. This surge will permeate all layers of the software stack, shifting value towards platforms that leverage AI to drive efficiency and innovation. This should supercharge knowledge work.
Robotics further extends this productivity revolution. We believe robotaxis will be one of the most transformative areas.
Moreover, the deployment of generalisable humanoid robots is projected to unlock over $26+ trillion in global revenue opportunity.
Humanoid robots are expected to transform industries from manufacturing to healthcare, decoupling physical labour from output and expanding the capacity for economic growth.
Energy innovation is also playing a critical role in this growth narrative. Declining battery costs are making renewable energy sources more viable, with large-scale stationary batteries and distributed energy generation expected to transform energy. This will enhance the resilience of the grid and reduce energy costs, creating additional tailwinds for energy-intensive industries, including AI data centres.
While fiscal policy and geopolitical shifts will shape the near-term outlook, the true catalyst for sustained economic growth lies in technological innovation. Innovation promises not just incremental gains, but the ability to redefine productivity, reshape industries, and propel the global economy into a new era of growth.
Just like Max McGee’s unexpected win, the markets can surprise us when we least expect it.
[For deeper insights into these transformative trends, explore ARK Big Ideas 2025.]
Feel the pulse, stay ahead.
Rahul Bhushan.