Henry Ellenbogen on productivity gains from AI

You can’t understate what is going to happen to productivity in this country.  Based on where AI is now, the marginal cost of intelligence in white-collar work is going to zero over the next several years.  I’ll give you some examples.  MercadoLibre is doing seven times the number of transactions it did several years ago, even as the number of customer service specialists has fallen to 7,000 from 10,000.  Rocket Mortgage has said that it can serve 50% more clients per loan officer.  In the physical world, trucking companies are using AI to leverage better data systems... 

Knowledge workers are using AI – in our case to do investment research – or look for novel drug targets, or improve productivity in coding.  Enterprises will continue to pay a premium for better intelligence powered by frontier models, which continue to advance at a rapid rate.

Those who say capex is going to implode may be looking at consumer-oriented AI technology, which has become commoditized.  They aren’t taking into account advances in intelligence that will drive advanced applications and scientific breakthroughs.  Over the next 10 years, we may have 50 years of advances in medical science.  Companies that climb the productivity curve first will be able to cut costs, reinvest in their customers, drive revenue growth, and reinvest capital to create enduring competitive moats.

Companies don’t all climb the curve at the same pace.  I foresee an unequal playing field.  The Mag Seven will do well, and a lot of smaller companies born in this era will climb the curve and unlock productivity gains.

~ Henry Ellenbogen, "The Roundtable: Part 1," Barron's, January 10, 2026

 

Henry Ellenbogen on migration trends and location independence

As a result of the pandemic, there has been a significant change in how and where Americans want to work.  I discussed this at last year’s Roundtable, and the past year has confirmed it: We are on the move in ways we haven’t been in many years.  People largely are moving to the Southern and mountain states, and Florida and Texas. 

We are monetizing the scale of America.  As we move from high-cost to low-cost locations, that unlocks productivity.  In addition, as people spread out, companies need to innovate to serve them.  That means innovating not only on digital platforms but also digitizing the U.S. enterprise.  That speaks to deflation.  It also unlocks innovation.  As people move away from medical centers, we are seeing telemedicine increase.  We need to provide better education and training remotely.  Last year, in recommending Intuit [INTU], I discussed the spread of remote tax and accounting services around the country.  What is happening in America is unique.  Most other countries are just countries.  We are basically a continent.

~ Henry Ellenbogan, CIO and managing partner, Durable Capital Partners, Barron's 2022 Roundtable, January 15, 2022

Henry Ellenbogen: "Companies are like biological organisms"

Companies are like biological organisms.  They're either fundamentally healthy or out of balance.  If they're in balance with their employees, customers, shareholders and the greater community they can grow and thrive.  If not, they can seem in sync for a while, but eventually there will be an imbalance.

~ Henry Ellenbogen, Durable Capital Partners