Hey friends, a new podcast episode has arrived.
I spent last week with one of those big strategy quarterlies. The kind that lands in every boardroom, gets forwarded twice, and is read properly by almost nobody. Charts, footnotes, careful hedging, a hundred pages of it.
One line reorganized how I think about the next five years.
Geopolitics stopped being a risk item on page forty. It became the variable that decides where your capital goes, what your supply chain costs, and whether your growth is real.
That is not a warning. That is a relocation of the entire conversation, from the risk register to the P&L.
Chart
Everyone spent last year forecasting a trade collapse. Tariffs, sanctions, export controls, the whole architecture of globalization apparently coming apart on live television.
It did not collapse. Global goods trade grew by roughly 6.5% in 2025, broadly in step with the world economy. US imports hit records. Chinese exports hit records.
What changed was direction, not volume.
The US-to-China corridor shrank by around 30% between 2024 and 2025, and the US replaced roughly two-thirds of it with trade to geopolitical allies in Europe and Asia.
AI-related goods, semiconductors, and data center equipment grew close to 40% and drove about a third of all trade growth. Energy resources went the other way, contracting around 9%.
The average geopolitical distance of trade fell about 7% between 2017 and 2024. Cargo is traveling further in kilometers and shorter in politics.
Read that again. Trade did not shrink. It picked sides.
Which means the risk was never “will the world stop trading.” The risk was always “will the world stop trading with you.”
Political beta
Here is the frame I want to give you, and the one I use in the episode.
In markets, every asset has a beta. It tells you how much of your return is really your own and how much is just the market moving underneath you. Operators obsess over it. Nobody invests without knowing it.
Your company now has a second one. Call it political beta: the share of your enterprise value that moves with the map rather than with your market.
Political beta is the part of your growth that was never yours. It belonged to a trade corridor, a tariff schedule, or a relationship between two governments you have never met.
And almost nobody has measured theirs.
The numbers say this is not a niche problem. More than 90% of multinationals are exposed to countries whose political and diplomatic positions diverge significantly from their own. Business leaders now rank geopolitical and trade instability as a bigger threat to growth than macroeconomic volatility, cybersecurity, or technological disruption. McKinsey & Company
The practical move is unglamorous and it works. Set tolerance curves by function. Asset-light units like sales can carry high geopolitical exposure because they can move. Capital-heavy units like manufacturing cannot, so they need a tighter tolerance. Then build the agility to sit further out on that curve than your competitors dare. McKinsey & Company
Agility is the hedge. Not retreat.
The advantage
The second thesis in the issue is about AI, and it is the one that will annoy people.
Roughly 88% of organisations now use AI in at least one function. About 6% report meaningful financial impact at the enterprise level.
That gap is the whole story. Everyone bought the same thing.
Same frontier models, same APIs, same tooling, same weekend of agent experiments. When every competitor has access to identical capability, capability stops being an advantage and becomes a cost of entry.
What survives commoditisation is boring and unbuyable:
Proprietary data generated by your own operations, not scraped from the same public web as everyone else’s.
Workflows with AI embedded so deep that ripping it out would mean rebuilding the company.
Trust and distribution, which take years and cannot be procured.
Companies that actually rewire around this typically improve EBITDA by 10 to 30%, averaging around 20%, and the gap between leaders and laggards has widened by roughly 60% in recent years. McKinsey & Company
I wrote about the mechanics of this in The Great Restructuration. The quarterly just put a balance sheet under it.
Where the growth is actually hiding
Third thesis, and the most fun one. The next decade of growth is not evenly distributed across the economy. It is concentrating in a handful of arenas.
Quantum. Over 300 companies are now working with quantum vendors. Quantum firms generated more than $1 billion in revenue in 2025, projected to reach $4.4 billion by 2028, with up to $2.7 trillion in economic value by 2035. Consulting.us
Space. Commercial spending is expected to outspend government by two to one or more in every end market except Earth observation in the second half of this decade. The customer changed. The whole industry follows the customer. McKinsey & Company
Biotech. mRNA stopped being a vaccine and became a platform. Once you have a platform, the economics flip from one product at a time to one process, many products. That is the same shift software went through, arriving thirty years late and carrying far more upside.
Across all these arenas, industries grew roughly four times faster in market cap and ten times faster in revenue than everything else over the past three years. mckinsey
Growth is not scarce right now. It is just standing somewhere very specific.
What gets overlooked
Everyone reading this issue will take away “build a geopolitical dashboard.” Fine. Necessary. Not the insight.
Here are the two things almost nobody flags.
One. In quantum, the money changed hands, and that is the real signal. Public sources supplied around a third of quantum investment in 2024. In 2025 that fell to three percent, with private capital taking over. Forget the market-size projections, they are always wrong. Watch who is paying. When private money replaces grant money, a technology has crossed from research to product, and it usually crosses before the press notices. all-about-industries
Two. Intelligence is not the bottleneck. Decision speed is. Most companies now have plenty of geopolitical insight. What they do not have is a named person who can act on it inside 48 hours without three committees. Fragmentation does not punish the uninformed. It punishes the slow.
I made a version of this argument about markets back in Boring Bet, and it holds here. Resilience is not the absence of shocks. It is the ability to debug in real time.
My take
I run companies across three continents from an office in London. Every quarter, some line item moves for a reason that has nothing to do with my product, my team, or my customers.
For years I filed that under bad luck. It was not bad luck. It was beta, and I was not measuring it.
Here is what I would do this month if I were starting from zero. Take your revenue and split it into two columns. What would still be here if the map changed. What would not. Do not model it, do not hire anyone, just look at the two columns honestly.
Most operators have never done that exercise once. The ones who have tend to sleep better, and move faster, because they finally know which half of their business is actually theirs.
Fragmentation does not kill companies. Slowness does. The map is going to keep moving, and the only question that matters is how fast you can move after it.
I go deeper on all of this in the episode: the trade chart everyone got wrong, how to actually run a tolerance curve, and why the frontier arenas are further along than the headlines suggest.
Give it a listen. Then go look at your two columns.
Post-Credit Scene
A few things worth your time this week:
The Great Global Transformation by Branko Milanovic (University of Chicago Press, March 2026) – Milanovic argues the US and China are on opposite trajectories, and names the era that follows “national market liberalism,” where liberalism survives inside domestic economies but not necessarily between them. The best long-form context for everything in this episode.
Odd Lots: The Tungsten Market Is Warning of an Upcoming War (August 3, 2026) – David Fickling calls tungsten mining a century-old prediction market for war, and explains why it has been so hard to sustain production outside China. Political beta made physical, in one small metal.
The Race Takes Off in the Next Big Arenas of Competition (MGI, March 2026) – The “AI foundation” set of industries has added $500 billion in revenue and $11 trillion in market cap since 2022. If you only read one thing from the frontier section above, read this.
BlackRock Geopolitical Risk Dashboard (updated August 2026) – A live indicator tracking market attention across their top ten risks. The current read: fragmentation accelerating, with governments and companies pushing capital toward security, resilience, and sovereignty. Free, and a decent starting point if you want a beta reading without building your own
Thanks for listening and reading.
Vlad
