Please enjoy ARK Disrupt Issue 106. 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. Hybrid Vehicle Sales Are Hitting the Wall
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The purported benefits of plug-in hybrid vehicles are that 1) with enough electric range for daily commutes, they offer significant gas savings, and 2) with a petrol engine, they solve for “range anxiety.” The reality is quite different.
ARK’s research on electric vehicles (EVs) concludes that hybrid vehicle sales should disappear during the next five to ten years as pure EVs scale. Unlike pure EVs, hybrid vehicles are not benefiting from the significant cost declines in battery cells because the battery cost is not a meaningful percentage of the total costs. Furthermore, hybrids do not enjoy the maintenance savings associated with EVs. Whereas an EV is 65% cheaper to service than a traditional gas-powered car, hybrid maintenance costs are higher than both, thanks to the complexities associated with both a gas engine and an electric drivetrain.
The media is beginning to recognize that something is wrong with hybrid vehicles. On Friday, the Wall Street Journal released its review of the ToyotaTM Prius Prime. The article noted “as the all-electric ChevyGM Bolt (238 miles range) hit showrooms in 2017, it started devouring Volt [plug in hybrid] sales. In November Bolt outsold Volt nearly 2-to-1.” Perhaps this year both the media and automakers will conclude that investments in hybrid technology will not pay off.
2. Two Security Bugs Send the Tech World Scrambling
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Security researchers have discovered two flaws that effect almost all computers and phones in use today. Dubbed “Meltdown” and “Spectre”, these two bugs trick microprocessors into revealing the contents of protected memory regions, allowing hackers to steal sensitive consumer and business information.
Meltdown primarily effects IntelINTC processors operating in cloud environments. Because cloud servers typically are virtualized and shared, a malicious program could steal information from any customer in the cloud. Service providers like Amazon Web ServicesAMZN already have issued a fix or are in the process of doing so.
Unlike Meltdown, Spectre has no quick or easy fix and it effects all modern microprocessors including Intel, AMDAMD, and ARMSFTBY. Because the bug is a hardware-centric, the only solution is to redesign the processor.
While Spectre has been the more malicious bug, Meltdown has tarnished Intel’s reputation as it is unique to Intel. If these bugs force a hardware upgrade cycle, AMD and QualcommQCOM may find an opening into the $50B global server market now dominated by Intel.
3. Facebook Wants to Harness Blockchain Technology. Really?
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Happy New Year from the Fintech team! As he does every year, Mark Zuckerberg published his New Year’s resolution, this year resolving to fix Facebook’sFB “errors, enforcing our policies and preventing misuse of our tools.” He also wrote:
With the rise of a small number of big tech companies — and governments using technology to watch their citizens — many people now believe technology only centralizes power rather than decentralizes it.
There are important counter-trends to this – like encryption and cryptocurrency – that take power from centralized systems and put it back into people’s hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.
We do not believe that Zuckerberg is interested in decentralizing Facebook and destroying its “valuable” role as a data aggregator, but cryptotokens could be integrated into the community and potentially become part of its capital structure. For example, a “Facebook Token” could be used to verify identity or to pay for content. While advertisers might not be thrilled to “pay for play”, users might enjoy a gamified system in which they exchange micropayments for posting and receiving content (though TwitterTWTR might be the more interesting play on that front). Facebook potentially could use the blockchain to track advertising impressions as well.
We are intrigued that a leader in the increasingly centralized internet space is focused on a technology that aims to decentralize and distribute economic power. Facebook is unlikely to destroy its economic model by giving users control over and the right to the monetization of their own data. That said, it could enhance its model if the gamification associated with micropayments increases user engagement, and if blockchain technology enables it to track that engagement more precisely.
4. The Total Addressable Market for CAR-T Therapies Could be $250 Billion Per Year
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Please enjoy a glimpse into ARK’s Big Ideas for 2018! We will release this report in the week ahead.
Chimeric-antigen T-cell (CAR-T) therapy is a novel immunotherapy that modifies a patient’s own T-cells to target and kill malignant cells while keeping healthy cells intact. While CAR-T therapy is in its infancy, CRISPR could enhance the safety and efficacy of next generation CAR-T therapies. Globally, CAR-T cancer therapy could generate $250 billion per year in revenues with royalties payable to CRISPR companies.
ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.