---
title: "Part VIII: Alpha and Omega"
part_of: "The Commanding Heights"
part_of_url: https://commanding-heights.com/commanding-heights.md
authors: ["Will Manidis", "Joe Roberts"]
date: 2026-10-29
url: https://commanding-heights.com/#part-viii
summary: "Investors will find false security in owning the last era’s Commanding Heights and financing this era’s inventions, because both miss what comes next. Even Buffett mistook one era’s economic settlement for a permanent position, buying newspapers through 2012 and selling them all in 2020 for less than half of what he paid. Only reconstructed portfolios, composed of re-mandated managers, will have a chance at laying claim to the new Commanding Heights while they can still be purchased."
---

## Part VIII: Alpha and Omega

> *Investors will find false security in owning the last era’s Commanding Heights and financing this era’s inventions, because both miss what comes next. Even Buffett mistook one era’s economic settlement for a permanent position, buying newspapers through 2012 and selling them all in 2020 for less than half of what he paid. Only reconstructed portfolios, composed of re-mandated managers, will have a chance at laying claim to the new Commanding Heights while they can still be purchased.*

The past we describe is still today.

Today, risk capital remains primarily allocated to the high-quality businesses whose compounding created it, the last era’s Commanding Heights. Those forward-thinking enough to reallocate into the avant-garde have backed this era’s inventions. We have shown that the durable gains do not accrue to the invention, and the specter of capital destruction will visit each who brushes off the necessary reconstruction of their portfolio. The time to turn destruction into salvation is now: the Commanding Heights of the intelligence era remain undiscovered, and unpriced, whether deep in a seed portfolio or trading in the light of day on the NYSE. It is finally time again to buy DoubleClick and Android, not Alphabet or Anthropic.

We recognize these Commanding Heights as businesses that capture a durable toll that every participant in the era must pay, a booth ever more frequented as the era grows and grows and grows. Lenin commanded the railroads, factories, and telegraph lines. Alphabet, every query asked online. Once recognized for what they are, the Heights get priced to perfection, their owners canonized.

Just as Google Ads took an unbelievably large and enduring vigorish on the entire old internet economy, and benefited from every dollar spent by others to advance it along the way,[^145] XXXXXXXXXXX takes the same from an exponentially larger Cambrian intelligence economy. But the corresponding Google Ads multiple has yet to take hold. And XXXXXXXX, staid and trading in the light of day, plods along at a sleep-inducing valuation, accurate only to the world we have just bid farewell to.

[^145]: *United States v. Google LLC*, No. 1:23-cv-00108, memorandum opinion, April 17, 2025, 77–80.

These eras can be decades, or even centuries, but none lasts forever. When a new era comes, investors in the present will find they own a failing business at the richest possible multiple. The Pennsylvania Railroad was the most valuable corporation in the world in 1912. But the Height soon left to enter the information era, and just ten years later, the crown belonged to AT&T. The railroad’s workforce peaked at 279,787 in 1920, and fifty years of decline ended in the largest bankruptcy in American history, filed June 21, 1970.[^146]

[^146]: Bryan Taylor, “Four Centuries of Global Leadership,” Global Financial Data, March 27, 2018. ExplorePAHistory, “The Railroad in Pennsylvania,” timeline, 1920 and 1970.

In 1984, Mr. Buffett wrote that the economics of a dominant newspaper were “among the very best in the business world,” and that quality had little to do with it: “the profits of third-rate papers are as good or better -- as long as either class of paper is dominant within its community.” A Height the paper could Command from. Mr. Hearst had built the largest media business in the world by tolling the spread of news and culture, and Berkshire, in the twilight of that era, was proven right for a generation. The Washington Post stake was purchased for $10.6M in 1973 and was worth $221M by 1985.[^147] But the era turned, and the Heights shifted. Still pursuing these familiar very-best economics, Buffett spent a combined $344M buying dozens of dailies all the way through 2012. The fruits of those old Heights met their end upon his exit from the papers in 2020, for a total consideration of just $140M, less than The News alone had cost him back in 1977, when adjusted for inflation. Even the best allocator of the century could anchor to the last era’s Height. He had made so much on it, after all.[^148]

[^147]: Warren E. Buffett, 1984 letter to Berkshire Hathaway shareholders, February 25, 1985, “Buffalo Evening News.” Buffett, 1985 letter to shareholders, March 4, 1986.

[^148]: In the last quarter of his tenure as chief executive, Berkshire began buying shares in the New York Times. By mid-2026 it owned nearly a tenth of the company. Buffett, 2012 letter to shareholders, March 1, 2013, 16. Blue Chip Stamps, *Annual Report 1977*, 15. Bureau of Labor Statistics, “Historical CPI-U.” Lee Enterprises, “Lee Enterprises to Buy Berkshire Hathaway Newspaper Operations,” January 29, 2020. Berkshire Hathaway, Form 13F information tables, quarters ended December 31, 2025, and June 30, 2026.

The ad money the newspapers lived on went online, and Google followed in Mr. Hearst’s footsteps to become its largest toll collector. As with each advancement, the toll became richer, and orders of magnitude larger.[^149] But the lifetime of the era also continued to compress. Trillions in internet-era market cap are watching the queries leave for an agent, the ad inventory shifting, being made anew. Perhaps the diversification paid for by Ads cash flows will save them; perhaps founder-mode Brin will inject enough verve for the necessary reinvention, but in Fred Wilson’s words, “If all they had was search… they’d be in a world of hurt right now.”[^150]

[^149]: Google, IPOing at a valuation of $23B in 2004, was roughly the same size as America’s largest newspaper company, Gannett. On October 16, 2026, Alphabet was worth more than $4T. Google Inc., final prospectus, August 18, 2004, cover and 2. Gannett Co., 2004 Form 10-K, cover and 4. Stock Analysis, “Alphabet Market Cap,” October 16, 2026.

[^150]: Fred Wilson, interview by Molly O’Shea, “USV’s New $900M Fund,” *Sourcery*, October 8, 2026, 1:07:21–1:07:38.

Businesses sometimes do try to renew their Heights with each era, both staid and flashy. W. R.’s successor Hearst Corp., once forcibly reorganized under the weight of its interest expense, used newspaper cash flows to take over the licensed guild Fitch Ratings, now the Cosmo-owner’s biggest profit source.[^151] Alphabet’s long history of investment into its other businesses is giving it the freedom to kill the golden goose in service of the new era, an utterly rare remit for a public company.

[^151]: W. A. Swanberg, “Lord of San Simeon,” *American Heritage* 12, no. 5 (August 1961). Sara Fischer, “Majority of Hearst Profits Now B2B, CEO Says,” *Axios*, November 26, 2024. Steven R. Swartz, “2025 Annual Letter,” February 17, 2026.

Your portfolio’s Commanding Heights are the intelligence era’s newspapers. The smartest companies will disembowel themselves in reinvention; the rest will wither and file. You will de-rate the smartest for taking an uncertain swing, and laud the rest for being steady compounders. Review your portfolio construction. Does intelligence open a new route around your holdings’ tolls? Have you attempted to “stay with the times,” allocating to the exciting names, monitoring their ARR bogeys? Your defensive core is fighting a losing withdrawing action. Your avant-garde is stuck in Genesis, pretending it is a Height. You will not find those old compounding returns hidden somewhere in there.

Capital will be destroyed in the old Heights. Everything that remains will inflate away. The last K split the owners off from the earners. This one will split the owners themselves. You will want to be on the top leg.

None of the intelligence era’s Heights are priced as such. Yet. The toll booth is still to be built. But we know you can feel them coming. That is why so many ape into the latest timeline launch, a self-soothing repeat of dotcom. But no matter your present portfolio, opportunities like buying Android for $50M in 2005[^152] will come again, very few and far between. The Heights are never common, nor offered.

[^152]: Daniel Roth, “Google’s Open Source Android OS Will Free the Wireless Web,” *Wired*, June 23, 2008.

Their cash flows will multiply with the expansion of their underlying era’s economy, and its market activity will keep pace with the debasement of the currency. Each era is far larger and more violent than the past, and the riches inconceivably greater.

Those well-known Commanding Heights were the greatest businesses of their time, but don’t be caught holding Old Reliable when the new King is being made. Simply bidding the AI basket and fire selling your old-economy stakes will not cut it. Neither will your star manager’s best efforts, bound by the structures you negotiated them into.[^153]

[^153]: The indices buy Heights only once they are valued as such. Venture managers hold minority stakes in inventions. Buyout funds borrow against old cash flows and plan stasis-predicated exits in five years’ time. The labs constantly refill their narrowing moat.

Sell your Heights while they remain so. Do not put the proceeds into TIPS. The embarrassment of riches available to you is far too great to abstain from the fight.