Please enjoy ARK Disrupt Issue 71. This is a blog series 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. Facebook’s Pivot to Augmented Reality
Mark Zuckerberg is betting the future of Facebook on augmented reality (AR), the key takeaway at F8, the company’s annual developer conference in San Jose.
ARK believes the best AR platform today is the smartphone. With apps like Snapchat and Pokémon Go, the smartphone camera can capture the physical world and overlay it with fun and creative virtual content. Camera-based AR currently is embedded in a few applications. Facebook’s new Camera Effects platform, announced at F8, allows developers to incorporate new effects into the Facebook camera, opening up AR to ordinary developers without computer vision expertise who can target 1.9 billion Facebook users worldwide.
ARK believes that the camera has become a platform supporting multiple apps: Instagram, Snapchat, and Prisma transform the camera’s raw output into vintage, fun, and artistic images, respectively. The next generation of camera apps will be more intelligent, understanding the content and context of scenes and incorporating virtual objects to enable augmented reality.
Fun camera effects not only should drive Facebook engagement but also stimulate demand for hardware and software. The AR experience depends importantly on smartphones, camera sensors, motion sensors, and System on Chips (SoC). More sophisticated AR apps could spur the renaissance of smartphone.
2. Huge Arbitrage Opportunities in Bitcoin
Currently, bitcoin on some western exchanges is trading at a premium of nearly 30% to bitcoin on Chinese exchanges, for two reasons. First, because of regulatory intervention in China—where most investors cannot move their bitcoin off exchanges and instead must convert them to yuan in order to withdraw funds— bitcoin trades at a significant discount on Chinese exchanges. Second, recent anti-money-laundering (AML) changes, as astutely described in this blog post, have pushed bitcoin at Bitfinex in Hong Kong to trade at a premium. Hence, bitcoin is trading at roughly $1,050 in China while it trades at nearly $1,350 on Bitfinex.
Despite fears around China, scaling, AML regulation, and more, bitcoin continues to climb the proverbial wall of worry, nearing all-time highs on many exchanges. Meanwhile, ether is holding strong, and the other cryptoassets are hot on its tail.
3. Tesla Roundup
Elon Musk tweeted that Tesla’s semi truck will debut in September, sparking a slew of analyses primarily around the range such vehicles would need to become attractive to potential owners. ARK believes that most of the current analyses do not incorporate the high probability of battery swaps. We are in the process of modeling this opportunity.
Tesla is recalling 53,000 vehicles voluntarily because of faulty gears in parking brakes which could leave the Model S and Model X stuck in park.
Unionized employees at Tesla Advanced Automation Germany have threatened to strike. The dispute revolves around both compensation and job security since Tesla dropped all of Grohmann’s existing clients except for Tesla. After Elon Musk intervened, the odds of a strike went down. That said, even with a strike, Tesla boldly maintains that it would not impact the production of the Model 3.
Autopilot 2.0 Lawsuit
Three Tesla owners have filed a class action lawsuit claiming the new autopilot is dangerous. Tesla has responded to the lawsuit, which seems frivolous given the transparency and warnings around Autopilot.
Settlement of Sterling Anderson Lawsuit
Sterling Anderson, a former director of the Autopilot program, left Tesla to work at Aurora Innovation LLC, the self-driving startup founded by Chris Urmson, the former head of Google’s self-driving car program. With no findings of wrongdoing or damages, Tesla only received $100,000 in the settlement.
4. Project Baseline
Verily, the life sciences and healthcare-focused subsidiary of Alphabet, announced the first study of Project Baseline on Wednesday. Project Baseline will be a “longitudinal study that will collect broad phenotypic health data from approximately 10,000 participants.” At this point, the study is slated to last at least four years.
What is the aim of this study and why should we care? Project Baseline aims to collect a “baseline” of data to help scientists study the transition from health to disease. The study will collect vast swaths of data from its participants, including clinical, imaging, environmental, sensor, molecular, and genetic data. Participants also will wear the “Study Watch” with sensors to collect physiological data such as cardiovascular information.
Project Baseline, much like the longitudinal Framingham Heart study, potentially could surface the precursors of disease. Verily hopes to learn much more about biomarkers associated with various diseases. Sanjiv Sam Gambhir, MD, PhD of Stanford University, notes that “currently, most of what we see as treating physicians are short snapshots in time of an individual and primarily after they are already ill. We are effectively missing a lot of valuable information years prior to illness.”
Verily hopes that its data will “serve as a single query source,” potentially a boon if it is able to sell the data to researchers nationwide after its two year period of exclusivity with Stanford and Duke ends. This study represents a notable step towards mapping human health comprehensively.
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.