Please enjoy ARK Disrupt Issue 116. 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. Drake and Fortnite Create a “Crossing the Chasm” Moment for Gaming
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This week Drake took to Twitch, the game streaming platform owned by AmazonAMZN, to play the popular game Fortnite. In doing so, he caused an internet sensation, attracting more than 600k viewers at its peak, a new record for Twitch.
While the gaming market is large, generating $100 billion in revenue globally, it reaches relatively few people compared to the music market. Interestingly, music touches almost everyone on earth but generates only $16 billion in revenue per year.
As a gamer, Drake is helping the gaming industry cross the chasm, so to speak. With almost 50 million followers on Spotify, he is setting a trend in a way few other people could. His livestream has been a boon to Fortnite, a game developed by Epic Games and partially owned by China’s TencentTCEHY.
Twitch is the other beneficiary, of course. Twitch is cementing its position as a modern-day ESPNDIS with 15 million daily viewers who spend on average almost two hours per day on the platform.
2. Blockchain Technology Plays a Role in Sierra Leone’s Election
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Elections anywhere in the world could benefit from the ability to store records securely and immutably. Last week, Sierra Leone used Agora’s permissioned blockchain to conduct its election.
According to its white paper, Swiss-based Agora has developed an end-to-end verifiable voting solution for governments and institutions. Traditionally, elections have been slow, costly, and vulnerable to corruption that limits their ability to be free and fair. Blockchain-based elections should be tamper-proof and transparent to voters, third-party auditors, and the general public, eliminating the need for polling stations, paper ballots, and electronic voting machines.
Agora bolstered its permissioned blockchain with Bitcoin to provide decentralized immutability. According to the white paper, it used its own Cotena, a tamper-resistant logging mechanism built on top of the Bitcoin blockchain, to guarantee the security of the data while minimizing data storage requirements and transaction costs.
Perhaps one day, thanks to blockchain technology, elections around the world will be secure, transparent, and convenient, fostering the cause of freedom.
3. GM Reveals More About Its Production Plans for Autonomous Vehicles
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This week, GMGM announced plans for a $100 million investment to upgrade two factories that will produce the autonomous Chevy Bolt. According to ARK’s research, $100M should be enough to produce roughly 7,000 cars per year given the current capital efficiency of plants producing gas-powered vehicles in the US, and perhaps 14,000 given the expected efficiency gains from the manufacturing of electrical vehicles (EVs). Alternatively, if EVs were to require increased customization and other modifications to the manufacturing process, annual production capacity could drop to 3,000. For context, Google’sGOOG self-driving project has fewer than 1,000 autonomous cars on the road in Arizona today.
GM is making this investment as its autonomous vehicle division, Cruise Automation, gears up to launch its own autonomous taxi service. The Information released a report this past week describing the difficulty that Cruise Automation is experiencing as it tests its self-driving cars in San Francisco. Quite simply, its cars are having trouble navigating the roads.
Cruise Automation’s difficulties highlight the difference between its robotics approach and Tesla’sTSLA deep learning approach to solving the challenges associated with autonomous driving. The two approaches are not mutually exclusive: the robotics approach is deterministic, powered by logic as programmers write rules for autonomous cars to follow, whereas deep learning relies on data and algorithms to “learn” the rules. While Cruise asserts that it is safer and easier to audit, the robotics approach neither scales nor handles uncertainty as well as the deep learning approach. ARK believes that deep learning, while nascent, should lead to a more robust solution in the long term but that a network of remote operators could control cars having navigation trouble in the short term.
As Cruise, Tesla, and Waymo all demo and roll out their autonomous vehicle offerings during the next year, ARK anticipates that many more investors and prospective car buyers will begin to understand how self-driving cars could change everything.
4. Arbor Biotechnologies and the Salk Institute Both Claim a New CRISPR System
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On the same day this week, but in separate peer-reviewed publications, two groups of researchers announced that they had discovered a new CRISPR system targeting RNA instead of DNA, enabling reversible nucleic acid edits and protein modulation. Scientists at the Salk Institute claim to have discovered Cas13d through bioinformatics mining, correcting protein expression associated with dementia. At the same time, scientists at Arbor Biotechnologies claim to have characterized Cas13d using their proprietary, artificial intelligence (AI) powered platform.
To make these announcements more interesting, Arbor Biotechnologies was co-founded by Harvard’s Feng Zhang and Illumina’s co-founder, David Walt. Feng Zhang is one of the key scientists embroiled in a heated patent dispute with UC Berkeley’s Jennifer Doudna and the University of Vienna’s Emmanuelle Charpentier over the revolutionary CRISPR-Cas9 system. Feng Zhang also co-founded Editas MedicineEDIT, one of the three CRISPR pure plays with direct exposure to CRISPR’s foundational IP. The other two CRISPR pure plays are Intellia TherapueticsNTLA and CRISPR TherapeuticsCRSP, founded by Doudna and Charpentier, respectively.
Both CRISPR Therapeutics and Intellia Therapuetics sold off this week after Arbor, co-founded by Feng Zhang, emerged from stealth mode. ARK does not believe that Arbor poses a threat to the public CRISPR companies. While perhaps a powerful CRISPR enzyme, Cas13d probably will not cure diseases but will treat them chronically, editing RNA as opposed to the underlying instruction code in DNA. Instead, Cas13d could compete directly with RNA interference (RNAi) technology generally and AlnylamALNY specifically. On another front, Salk Institute’s response to Arbor’s claims will be most interesting.
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.