ARK Disrupt Issue 91: The Equifax Hack, AI, Payments, CRISPR, and The Self Drive Act Bill

Please enjoy ARK Disrupt Issue 91. 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. The Equifax Hack: What Happened, and How Could Blockchain Technology Address The Problems?

EquifaxEFX, one of the three major consumer credit reporting agencies, has been hacked in large scale.  According to its press release on Thursday, 143 million consumers in the US could be at risk.

While criminals hacked its website software from mid-May to July, Equifax discovered it only on July 29, and reported it on September 7. The stolen information included names, social security numbers, birth dates, addresses, drivers’ license numbers, and credit card numbers.

Consumers have reason to be upset.  As noted in The Atlantic, “Those whose information has been compromised never asked to have their information collected in the first place.”  In order to build credit reports, “all major credit reporting agencies receive data directly from a host of financial companies.” Equifax failed to protect information that consumers had not opted to give away in the first place.

Consumers should take more control of their data, with the help of blockchain technology.  Serafin Lion Engel, Founder of DataWallet, joined our brainstorm on Friday and presented a way to “reclaim the profits made with your data.”  Individuals can opt-in to share their Facebook, Pinterest, Amazon and other social history and data with DataWallet, a service using blockchain technology as its backbone for metadata which points to consumer data repositories. DataWallet gives consumers not only more control over their data but also the ability to monetize it.  It also gives companies access to a more holistic picture of consumers and an ability to target them more efficiently and effectively.

2. IBM Watson Needs More Investment, Less Hype

Among the many products under IBM’sIBM Watson umbrella, Watson for Oncology (WfO) is one of the most compelling and well developed. Unlike other artificial intelligence (AI) based health care projects from AlphabetGOOG, MicrosoftMSFT, and others, WfO already is a working product in a number of hospitals around the world.

This week, Stat interviewed hospitals and doctors to get a sense of how WfO is faring. Stat found that WfO shows promise, but falls short of IBM’s overzealous marketing.

The results of this survey illustrate that products and services based on a subset of artificial intelligence called machine learning are sensitive to local training protocols. Trained by doctors at Memorial Sloan Kettering (MSK), WfO strongly reflects their preferences and treatment conventions. Consequently, WfO works well in countries like Taiwan which have adopted US standards, but less so in countries like Denmark which follow European conventions. WfO also is more successful in India, Mongolia, and other countries without well developed protocols.

In effect, IBM may have selected too complicated a challenge for Watson’s early days in health care:  even doctors struggle to deal with cancer treatment regimens.  In our view, radiology – with a market potentially worth $16 billion – is a better fit for Watson’s machine and deep learning algorithms.

3. New Zealand’s Xero Will Provide Users With Veem’s Bitcoin-Based Payments System

XeroXRO is a cloud-based company focused on digital financial solutions for small and medium businesses. From New Zealand, the company now offers its services in countries like Australia, Singapore, and the UK to more than one million small and medium-sized businesses (SMBs).

Xero now plans to address payments, one of the most serious pain points for businesses. Wire transfers often hit SMBs with high foreign exchange and bank fees, not to mention security lapses. To address these challenges, Xero is integrating with Veem, a blockchain based payments platform.

Like IntuitINTU, fintech startup Veem uses blockchain technology to transmit funds across borders, much like sending information on the web. Using Bitcoin blockchain “rails”, Veem avoids human intervention and makes payments faster, cheaper, and safer. With Veem, Xero will be able to consolidate customer invoices and payments on one platform, bypassing cumbersome bank-to-bank international transfers, manual entries, and middleman…streamlining global payments.

4. Does CRISPR Edit Mutations Out of Human Embryos, or Does Natural Selection?

In July, a group in Oregon documented, for the first time in US history, the successful editing and correction of mutations in human embryos using CRISPR.  The Nature study not only described the correction of a mutated gene causing severe heart disease in all of the fertilized embryos, but also delineated a new biological process through which CRISPR facilitated the correction.

Now, a group of scientists from Columbia University is calling into question the validity of the results, suggesting that they were misinterpreted. In the original study, Mitalipov fertilized eggs that carried a healthy version of the gene with sperm that carried the mutated version. After fertilization, researchers used CRISPR to insert the correct version into the fertilized eggs, hoping that CRISPR would detect the paternal mutated gene, slice it out, and correct the mutation. Mitalipov did find that CRISPR targeted the mutated gene successfully, but used the maternal as opposed to the paternal gene as the template for correction, and concluded that the result was a novel repair mechanism.

Having reviewed the study design for flaws, critics are offering explanations.  Among them are three alternatives:

  1. The correction did occur, but not through the use of maternal template, suggesting the discovery of no novel self-repair mechanism.
  1. The correction did occur, but cells used a process known as parthenogenesis.
  1. The correction did not occur, as the genetic test was flawed and the “absence” of a mutated gene was misread as correction.

In summary, critics suggest that the correction may have occurred away from CRISPR or that it did not occur at all in embryos that used maternal DNA as the repair template. That said, a minority of embryos with a corrected paternal gene were mutation free:  even if the original claim that 100% of the human embryos were corrected does not hold true, the fact that any of them were corrected is provocative and potentially profound.

5. The US House of Representatives Approved The Self Drive Act Bill

This week the House approved the Self Drive Act Bill, establishing federal regulations for testing autonomous cars. The Bill empowers the National Highway Transportation Safety Administration (NHTSA) to regulate the design and performance of autonomous cars, superseding state authority and granting exemptions to Federal Motor Vehicle Safety Standards (FMVSS) which apply to cars operated by human drivers. Currently NHTSA can grant 2,500 exemptions to FMVSS per year, but the new Bill will allow for 25,000 in the first year, scaling up to 100,000 per year in four years time.

This Bill suggests good progress in the autonomous car space. It gives General MotorsGM, WaymoGOOG, and others the opportunity to test more vehicles on public roads, collecting data to train and advance their autonomous systems. Interestingly, it puts TeslaTSLA at a slight disadvantage:  Tesla does not need exemptions from NHTSA because it collects data from its installed base of passenger cars and adheres to FMVSS.

Now the Senate must vote on the Bill before it becomes law, also deciding on September 13 whether or not to include autonomous trucks in the Self Drive Act.  Previously, the Teamsters’ Union had convinced Congress to insert language preventing the bill from covering autonomous trucks.

The economic argument supporting self-driving trucks is unassailable.  ARK estimates that autonomous electric trucks will cut the cost per ton mile to ship goods in the US by over 70%.

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