Please enjoy ARK Disrupt Issue 87. 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.
1. Tesla Is Developing Self-Driving Electric Trucks
This past week Reuters covered leaked emails between Tesla and the Nevada DMV that discussed self-driving and platooning electric trucks. Many people doubt that electric semi trucks, let alone autonomous electric trucks, are feasible. The criticisms are that batteries are too expensive, too slow to charge, and too heavy to be economically incorporated into a long-haul truck.
ARK’s research suggests that though EV semis will have a higher upfront cost, they will have a significantly lower total cost of ownership. The two biggest factors contributing to an acceptable efficiency (kWh/mile) for the truck are multiple motors and regenerative braking. Multiple motors allow each motor to operate in its most efficient range at different power draws, and they provide enough capacity to capture almost all of the trucks kinetic energy through regenerative braking. ARK also believes that the trucks will have a range of ~150 miles when fully loaded which probably will be extended by battery swapping. Given the traffic density of certain corridors for trucking, battery swap infrastructure could be built out relatively efficiently.
If TeslaTSLA is able to launch autonomous trucks, ARK estimates the cost per ton mile of trucking could drop by more than half, as autonomous trucks will have much higher utilization rates than manually driven trucks today. Platooning potentially could make the economics more compelling. ARK is curious to hear more about Tesla’s platooning plans and how it will maintain fuel efficiency advantages as autonomous truck platoons mix with human-operated vehicles.
Keep your eyes out for our upcoming published research on electric and autonomous trucks.
2. Cryptomining Becomes a Real Business for NVIDIA
This week NVIDIANVDA delivered strong second quarter results: revenue grew 56% to $2.2 billion, boosted by strong gaming and data center sales. The real surprise though was in its original equipment manufacturer (OEM) segment. For more than two years, NVIDIA’s OEM business has been in decline, following the trend of the PC industry and the unwinding of IP royalties from Intel. In the second quarter, however, OEM sales jumped 54%. According to CEO Jensen Huang, cryptomining accounted for roughly $150 million, more than all of the growth of the division, as GPUs are used to ‘mine’ cryptoassets like ether. When asked about the long term opportunity, Jensen said:
Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large. It is very clear that new currencies will come to market, and it’s very clear that the GPU is just fantastic at cryptography.
Up until this quarter, NVIDIA has been conservative when talking about the cryptomining opportunity. This change of tone and the new cryptoboards it launched in June suggest that now NVIDIA is taking this business seriously…as it should. Cryptomining, like deep learning, is a greenfield opportunity, and the GPU’s mix of high performance, fast local memory, and programmability makes it uniquely suited to the task.
As a side, the addressable market for GPUs continues to expand, as cryptomining joins the ranks of gaming, computer aided design, scientific computing, artificial intelligence, and autonomous driving. NVIDIA is to this age what Intel was to the computing age.
3. Safaricom Ventures Into Ecommerce With its Masoko Platform
Safaricom recently announced plans to introduce an ecommerce platform named “Masoko”. Currently in test mode, the portal soon will offer a range of products including electronics and household goods.
Safaricom is in a position to replicate successful ecommerce models like AmazonAMZN and AlibabaBABA. Besides its deep knowledge of the Kenyan market and its consumers, Safaricom has several competitive edges:
- Payments Ecosystem: Safaricom’s M-Pesa already has a significant presence in Kenya, processing more than 50% of all mobile commerce transactions. In the first quarter alone, M-Pesa facilitated more than $4.2 billion in mobile transactions as it offered frictionless ecommerce payment options for many Kenyans already familiar with the service.
- Data: Safaricom has unique access to transaction data, enabling it to target financial products to its customers. With the launch of the ecommerce platform, it will collect additional data, gain a deeper understanding of online retail trends, and be able to offer Amazon-like services and loyalty programs.
- Logistics: Safaricom has been making investments in logistics to facilitate its ecommerce plans. Its recent investment in Sendy, an on-demand delivery company, highlights its efforts to lower the average ecommerce delivery time from 72-96 hours toward same day. Furthermore, it is considering partnerships to reduce supply chain inefficiencies.
Safaricom is becoming the platform company in Kenya. As a result, it should gain a treasure trove of data on the Kenyan consumer.
4. Salesforce.com Expands Einstein Artificial Intelligence Into Image Recognition
On August 8th, SalesforceCRM launched a new AI-based product, Einstein Vision for Social Studio, based on artificial intelligence algorithms, specifically Image Classification. Salesforce believes that Einstein Vision will “provide a way for marketers to search for pictures related to their brands on social media in the same way they search for other mentions…” with a “set of powerful new APIs that allow force.com and Heroku developers of all skill levels to bring image recognition to CRM and build AI-powered apps fast.”
Einstein Vision’s tools are aimed at Social Studio, Salesforce’s platform for marketers on social media. They provide insights into how customers are using a product, track trends by frequency of posts, and track product consumers, such as influencers or celebrities.
Einstein Vision currently recognizes two million logos, 60 scenes, 200 foods and 1000 objects. At the moment, it is compatible with Twitter feeds only, though two APIs are available for developers on other platforms, Einstein Image Classification and Einstein Object Detection.
Salesforce is taking the lead in incorporating deep learning technology into its applications, harvesting data from social media, especially for marketing. As early as 2011, it purchased social media monitoring company Radian6, enabling it to analyze and engage in FacebookFB conversations. As a result, Salesforce has a plethora of longitudinal data on consumers which it can integrate with public data from services such as TwitterTWTR.
Saleforce’s focus on deep learning is a boon to its customers, particularly those who don’t have the in-house talent and rely on it as a one-stop solution for product innovation and a competitive edge.
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.