Invest In The Future Today
Innovation should displace industry incumbents, increase efficiencies, and gain majority market share. While we believe the threat to existing businesses is grave, the long-term opportunities for companies and investors participating in this change could be measured in the trillions.
ARK Identifies More Innovation Than Ever Before
In the late nineteenth century, three innovation platforms evolved at the same time and changed the way the world worked. Thanks to the introduction of the telephone, automobile, and electricity, the world’s productivity exploded as costs dropped, unleashing demand across sectors. Today, we believe the global economy is undergoing the largest technological transformation in history thanks to five innovation platforms evolving at the same time.
Impact of Innovation
Impact of Innovation on Economic Activity
*Source: ARK Investment Management LLC, 2019. Relative impact of an innovation scaled by the degree of consensus between economic historians. The underlying data assumes that all innovation platforms follow a characteristic investment and realization cycle of similar duration. Data Sources: Helpman, E. (2010). General Purpose Technologies and Economic Growth.; Brynjolfsson, E., & McAfee, A. (2018). The second machine age.; Kurzweil, R. (2016). The singularity is near.
ARK Believes Innovation Must Meet Three Criteria
Experience dramatic cost declines and unleash waves of incremental demand
When a technology crosses certain cost or performance thresholds, its addressable market can widen and diversify dramatically. ARK uses Wright’s Law to better understand the potential scope of a transformative technology.Wright’s Law
Cut across sectors and geographies
A technology that cuts across industries and geographies can enjoy dramatic increases in addressable markets as applications are “discovered” by different business sectors. Spanning across sectors also provides better product-market fits, insulates against business cycle risk, and garners attention from multiple disciplines.
Serve as a platform for additional innovations
A technology upon which other innovations can be built may expand its use-cases in ways that are almost impossible to imagine. As a result, innovation platforms are typically underestimated over expansive time horizons because successful forecasts require anticipation of the scope of new products and services.
What Are The Major Innovation Platforms Evolving Today?
We believe that artificial intelligence (AI) learning systems will transform not only retail, media and telecom, as did the Internet, but all sectors in the economy, even those previously thought impervious to disruption, notably health care and financial services.
Underlying technologies include: Neural Networks, Mobile Connected Devices, Cloud Computing, Streaming, and Internet of Things.
Declining battery costs should cause an explosion in mobile form factors. These innovations should increase the demand for electrical energy, displacing fossil fuels and reducing not only the vulnerability of grids but also operating expenses and the capital intensity of transmission and distribution.
Underlying technologies include: Battery Systems, Electric Vehicles, and Autonomous Mobility.
Advances in software and sensors should enable robots to operate alongside humans in all sorts of environments. If their unit costs decline by more than 50% while their capabilities increase, as we anticipate will be the case, robots should transform every business that depends upon physical processes and workflows.
Underlying technologies include: Adaptive Robotics, 3D Printing, Drones, and Reusable Rockets.
As the cost to sequence a whole human genome falls precipitously, DNA Sequencing, a test once limited to the research lab, should see widespread clinical adoption and a hundred-fold increase in volumes, transforming health care completely.
Underlying technologies include: Sequencing Technology, Gene Editing (i.e. CRISPR), and Immunotherapy.
With blockchain technology, we believe that more of everything in the world will become money-like: fungible, liquid, and quantified. Every corporation and consumer will likely have to adapt, calling into question the very structure of a corporation.