Please enjoy ARK Disrupt Issue 103. This blog series is based on ARK Brainstorming, a weekly discussion between our CEO, Director of Research, thematic analysts, ARK’s theme developers, thought leaders, and investors. It is designed to present you with the most recent innovation takeaways and to keep you engaged in an ongoing discussion on investing in disruptive innovation. To read the previous issue, click here.
1. Nissan Will Test Autonomous Taxis…But Toyota Could Have a Competitive Advantage
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This week Nissan NSANY announced that in partnership with DeNA DNACF it will test an autonomous taxi service in Japan next year. According to the Wall Street Journal, Nissan will begin with just two vehicles, each with safety drivers. At the Consumer Electronics Show (CES) in January, Nissan announced that DeNA would “provide its expertise in creating online and mobile user experiences to build and lead the information technology systems to provide a mobility service platform.” In other words, Nissan will be responsible for the core self-driving technology.
Nissan has tested autonomous technology in the US, the UK, and Japan. In this Guardian video, Nissan’s rate of intervention – with the driver taking the wheel from the autonomous system – seemed to be once every few miles, suggesting a very early stage of development.
Among Nissan’s Japanese autonomous driving competitors – ToyotaTM, ZMP, and HondaHMC – Toyota is the most advanced in data collection which, in ARK’s view, will be critical to building natural geographic monopolies for autonomous taxi networks. Today, TeslaTSLA is the only automaker in the world installing an autonomous sensor suite in its cars, collecting detailed video data from thousands of cars and training its autonomous driving system. Next year Toyota will be collecting video feeds and building a data library for its autonomous driving software from 500 Japanese taxis. Toyota also could have an advantage with breakthroughs in solid state batteries, enabling it to produce the most cost effective and longest range electric vehicles in the world. In contrast, Nissan sold its battery business earlier this year.
Among the plethora of announcements in recent weeks, perhaps in preparation for the 2020 Olympics in Japan, Honda partnered with SenseTime, a Chinese AI startup valued at over $1 billion. Interestingly, Honda also has partnered with Alphabet’sGOOGL Waymo, hedging its bets.
ARK estimates that the autonomous mobility-as-a-service (MaaS) opportunity should be valued at more than $2 trillion dollars globally today, more than ten times the $100-150 billion valuation of ride-sharing companies in the private market, and that it will submit to natural geographic monopolies. Needless to say, we will be monitoring the emerging MaaS opportunity closely as Japan prepares for the 2020 Olympics.
2. Flying Cars (eVTOL) Could Debut as Early as 2020
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Buzz has been building around electric vertical take-off and landing (eVTOL) passenger drones as AirbusEADSY, BoeingBA, GeelyGEELYF, Uber, and Larry Page have made investments in them. ARK’s research suggests that a commercial eVTOL drone service could launch as early as 2020 as these companies increase the energy and power density of batteries and go autonomous.
A Volocopter drone has the potential to cut the cost and time of short range air travel. As shown below, the cost of a Volocopter trip from Manhattan to JFK would be significantly cheaper than that of a traditional helicopter. In fact, while the cost would not be much more than that of a taxi, an eVTOL would take a fraction of the time.
According to ARK’s research, as autonomous cars gain traction thanks to cost and convenience, traffic could triple, placing a premium on travel time. eVTOL drones will be one solution to this challenge. We look forward to publishing a blog featuring a deep dive into the opportunity for eVTOL drones during the next few weeks.
3. DeepMind’s AlphaZero Masters Chess in Four Hours
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DeepMind, an Alphabet company focused on artificial intelligence (AI), has mastered two new games. After defeating the world’s best Go players with its AlphaGo program, DeepMind released an updated version called AlphaZero that beat champion chess and shogi (Japanese chess) players in hours, eclipsing the performance of previous state of the art AI programs.
Provocatively, Alphabet is demonstrating that AlphaZero can generalize learning. Traditional AI required years of expert programming to master a new game. AlphaZero mastered two new games with minimal code changes. DeepMind’s goal is to create general AI algorithms able to master a wide variety of tasks, including human intelligence.
AlphaZero is another example of software transitioning from programming to training. By using deep reinforcement learning, AlphaZero discovered all of the classic moves of chess champions, as well as undiscovered moves, in a matter of hours without human programming.
4. Have Your Bitcoin, and Use It as Collateral?
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SALT provides investors in the crypto asset space with a platform for bitcoin- and other crypto-backed loans. By purchasing a membership with ERC20 SALT tokens, individuals can use bitcoin and other cryptocurrencies as collateral for fiat currency loans.
As bitcoin and other cryptoasset prices have levitated, loan to crypto-value ratios have dropped, creating a virtuous cycle…which, of course, could reverse if crypto prices take a dive. For example, if the bitcoin price were to drop precipitously, sending loan to value ratios soaring, borrowers would have to add more bitcoin to collateral to prevent the SALT smart contract from liquidating enough of it to return the loan-to-value ratio to equilibrium. Complicating the outlook for SALT, its smart contracts need to be air-tight, as a glitch could create chaos.
ARK Invest is quite optimistic about the potential for cryptoassets, while cognizant that the burgeoning ecosystem will experience growing pains as it evolves. Survival of the fittest!
5. The Salk Institute Advances the Safety of CRISPR Gene-Editing Technology
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As described in the most recent issue of Cell, researchers at the Salk Institute have altered the course of disease using CRISPR technology, without cutting and editing DNA. In its early days, genome-editing has been hampered by the off-target effects caused by CRISPR guides with inadequate specificity and efficiency. At the Salk Institute, without changing DNA sequences researchers used CRISPR technology to regulate the disease-causing protein expression of genes in vivo. The new CRISPR activation (CRISPRa) system pares the steps required for trans-epigenetic remodeling.
In one mouse model, scientists cured muscular dystrophy using the new mechanism of action. CRISPRa upregulated the gene coding for utophin, offsetting the abnormal dystrophin protein production causing the disease.
This new technology could hold the cure for diseases, most of which are caused by more than one gene. By regulating proteins without changing the underlying genetic code, CRISPRa should overcome the limitations of the first generation of CRISPR technology.
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