Scientists, technologists, engineers and visionaries are building the future. Incredible things await us. These are huge developments. But you already know these things. We are familiar with these speculations. What we are less familiar with is the scale of it.
How much of the big can really be considered big?
At Singularity University's Exponential Finance event in New York, Catherine Wood said: "Silicon Valley, Silicon Alley, Silicon Dock and all the Silicon around the world are dreaming the dream; they are innovating. And we are scaling opportunities. That's what we do."
Catherine Wood speaking at the Exponential Finance event.
Wood is the founder and chairman of ARK Investment Management, a research and investment firm focused on the growth potential of today's disruptive technologies. Prior to ARK, she spent 12 years at Alliance Bernstein as head of information technology for Global Thematic Strategies.
"We think innovation is the key to growth," says Wood. "We're focused on the future, not the past. We think there are incredible opportunities in the market because the move towards passive [investment] has led to risk aversion and huge inefficiencies."
In a new research report, ARK examined seven disruptive technologies and assessed their magnitude. Here are the results
(See ARK's website and free report "Big Ideas of 2017" for statistics, graphs and details).
Deep learning is a subcategory of machine learning, which is itself a subcategory of AI. Much of the excitement about AI today is about deep learning (you know you're in a bubble when the commercials at Sunday golf matches start screaming about AI).
Behind the bubble, however, there are big tech companies that are engaged in deep learning for very practical purposes. And while the internet, with its market capitalization in the trillions, has transformed various industries - news, entertainment, advertising, etc. - deep learning will do much more, according to Wood.
As deep learning advances, it will lead to automation and improvement in technology, transportation, manufacturing, healthcare, finance and many other areas. And, as is often the case with new technologies, it will open up entirely new jobs that we haven't even thought of yet.
"Bill Gates has said that the breakthroughs in machine learning will be worth 10 Microsoft. Microsoft is worth $550-$600 billion," says Wood. "We think deep learning is worth twice that. The market value will approach $17 trillion - that's 35 Amazons."
Wood doesn't mince words when he talks about a future where cars drive themselves.
"This is the biggest change the automotive industry has ever faced," he says.
Today, automakers have a trillion-dollar share of the global market. On the other hand, "service-based transportation" companies (e.g. car-sharing systems) are worth about $115 billion. Add in the prospects for a driverless future, and the figure is even higher.
The value of the "service-based transportation" market, which would significantly reduce the cost of point-to-point travel, could be worth more than today's automakers combined, says Wood. More precisely, twice as much. As gross sales rise to $10 trillion by the early 2030s, Wood's company estimates that 20% of that will go to platform providers. That could mean a $2 trillion opportunity.
Wood says a handful of companies will dominate the market, and Tesla is a strong candidate to be one of them. They develop both the hardware - electric cars - and the software - self-driving algorithms. And while analysts currently treat them as if they're just automakers, that won't last.
"If [Tesla] took even 5% of the global market for autonomous taxi networks, that's worth another $100 billion today," says Wood.
3D printing has entered the purview of the average citizen thanks to the possibility of owning desktop printers at consumer prices. But the technology is still imperfect and the idea of reproducing at home is still a dream. But the manufacturing sector is much closer to putting 3D printers to good use.
We recently wrote about Carbon's partnership with Adidas to mass-produce shoe midsoles. This is a very important development, because while industrial 3D printers have so far focused on producing prototypes, as cost, quality and speed improve, their use for final products is becoming more likely.
According to ARK, 3D printing could grow into a $41 billion market by 2020. Wood points to a McKinsey forecast that predicts $490 billion by 2025. "If 3D printing really becomes part of the industrial manufacturing process, McKinsey will be right," says Wood.
According to ARK, the cost of genome editing has decreased 28-52-fold (depending on the marker) over the last four years. CRISPR is the technique that is driving the genome editing revolution, drastically reducing time and cost while not compromising editing efficiency. Despite its potential, Wood says the technique has not yet attracted enough interest from investors.
"There are roughly 10,000 monogenic or single-gene diseases. Today, only 5% of them are curable," says Wood. ARK estimates that treating these diseases is worth $70 billion annually worldwide. Other areas of interest include stem cell therapy research, personalized medicine, drug development, agriculture, biofuels, etc.
However, the big names in this field - Intellia, Editas and CRISPR - are not yet on the horizon.
"If there was a company with a strong intellectual property position in this field, you know. Like Genentech in 1980. Then the growth rate could be tremendous," says Wood. "But you don't hear those names and that's quite interesting to me. We think the expectations in this area are too low."
According to ARK, 75% of the world's population will own a smartphone by 2020. Among the many functions of smartphones, mobile payments will be one of the most impactful. Accompanied by enhanced security measures (biometrics) and wider adoption (near field communication and point of sale), ARK predicts that mobile transactions will increase 15-fold, from $1 trillion to $15 trillion by 2020.
In addition to facilitating sharing economy transactions, they are often essential for financial inclusion in emerging and developed markets, according to ARK. Major emerging markets such as India and China are at the forefront of this, thanks to favorable legislation.
"Asia is leading the way here," says Wood. "You look at companies like Tencent and Alipay. It's going mobile really, really fast and they're basically showing us the way."
Automakers are no longer the only ones using robots. Thanks to steadily declining costs and easier programming, more and more businesses are adopting robots. Amazon's robot workforce in warehouses has grown from 1,000 to nearly 50,000 since 2014. "And they haven't laid off anyone in distribution centers, with exceptions for performance reasons," says Wood.
But he also understands concerns about unemployment.
This is just the beginning of a huge automation movement, driven by cheaper, smarter, safer and more flexible robots. Wood acknowledges that there will be a lot of layoffs. Yet some critics overlook the productivity gains in this area. Wood says that by 2035, US gross domestic product will be $12 trillion higher than expected without robotics and automation. That's a $40 trillion economy instead of a $28 trillion economy.
"This is the history of technology. Productivity. New products and services. Our job as investors is to understand where that $12 trillion is," Wood says. "We can't even imagine that right now. In the early '90s, we couldn't imagine how the internet would change us."
Blockchain-based cryptoassets like Bitcoin, Ethereum and Steem have caused quite a stir in recent years. There are now some 700 cryptoassets of various kinds besides Bitcoin. According to ARK, Bitcoin still leads the way with a market capitalization of nearly $40 billion (up from just $3 billion two years ago). But that's only half of the total.
"This is a nascent market. There are a lot of growing pains in the crypto world right now, but the promise is there," Wood said. "It's a very hot space."
ARK believes that, like all young markets, the character of the crypto asset market is one of "euphoria, uncertainty and speculation". Chris Burniske, the company's blockchain products lead, uses Twitter to sniff the air - which, in his view, is where the whole community comes together. In a recent Twitter poll, 62% of respondents said the total value of the market will exceed a trillion dollars within 10 years. In a follow-up poll focusing on those who think so, 35% of respondents predicted $1-$5 trillion, 17% $5-$10 trillion, and 34% $10+ trillion.
Speculation aside, Wood believes there is at least one major area where blockchain and cryptoassets will infiltrate: The $500 billion, fee-based business of sending money across borders, known as remittances.
"If you look at the Philippines-South Korea range, 20% of the remittance market is already Bitcoin," Wood says. "Migrant workers sending remittances don't know that such low-fee transactions are thanks to Bitcoin. Everything is going smoothly. They only see the money transfer. We think this is going to be a very exciting market."
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