⚡ Deep learning could be worth $30T


February 2, 2021

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OK, this will be our only $GME-related update today. Robinhood — the trading app that’s come under fire for restricting trades on popular Reddit names — raised $2.4B (in addition to an emergency $1B it previously raised from existing investors) to help buoy the business.

The Big Idea
brain

Ark Invest believes deep learning will create $30T of value over the next 15-20 years

Ark Invest is one of the finance industry’s most interesting money managers.

Led by Cathie Wood — who predicted that Tesla would be a trillion-dollar company when it was valued at only ~$40B (it’s worth ~$796B today) — the firm is known for its unique investing approach.

Instead of hiring traditional MBAs, Wood staffs her firm with scientists and researchers, who help to construct exchange traded funds (ETFs) for next-generation investing ideas including fintech, genomics, and space.

Ark just released its closely watched Big Ideas 2021 report…

… and the top prediction this year is that deep learning (DL) — an “AI function that mimics the workings of the human brain in processing data” — will create $30T in market value in the next 15-20 years.

We know that’s a comically huge number (equal to ~15 Apples), but here’s the case:

  • The transition from humans writing code: DL algorithms already power social media and recommendation engines. Soon, they will be able to write code for extremely complex and large addressable markets like self-driving cars and drug discovery (and every industry in between).
  • From vision to language: 2020 was the first year that deep learning algorithms demonstrated truly good conversational AI (OpenAI’s GPT-3). Further development in language understanding will unlock huge value in every industry.
  • The democratization of AI: The world’s biggest tech firms (Amazon, Facebook, Google) are spending billions of dollars on specialized deep learning processors and data centers. Once all of this technology is deployed, the full power of AI will be available to industry players of all sizes (not just Big Tech).

Taken together, the Ark team believes that the market cap creation from DL will hit $30T by 2037, more value than the internet will create.

We should all take these projections with a grain of salt… but it wouldn’t be the first outlandish prediction Wood made that came true.

Deep learning to create $30T in market cap value by 2037? (Source: Ark Invest)

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Snippets
  • Facebook’s frustrated to the core: Before Apple changes its privacy policies, Zuck plans to release an in-app screen educating users about data collection and asking them for permission to use 3rd-party data.
  • The EU is going Apple picking. By that, we mean the EU is claiming that a $15.7B regulatory tax victory handed to Apple in July should be overturned because the court’s decision contained legal errors.
  • Public’s public announcement: The social trading app announced it’ll stop participating in Payments for Order Flow to remove conflicts of interest between brokerages and users. (Check out our Q&A with Public’s co-CEO Leif Abraham).
  • Government demands for data were up 800% in the last six months of 2020, per Amazon. Interestingly, Germany held the top spot at 42% of requests, with the US tied for 3rd at 11%.
  • Ford Mustang: Powered by Google. The 2 companies agreed on a 6-year deal worth hundreds of millions, in which Google will be responsible for in-vehicle connectivity, cloud computing, and AI.
  • Top it off: Ecomm firm Asos acquires Topshop after a £330m deal… the digital transition could put 1000s of brick ‘n’ mortar jobs at risk.
  • Knotel no more: Real estate startup (and kind of WeWork competitor) Knotel has filed for bankruptcy and will receive $20m from Newmark to help it through the process.
Q&A
Garry Tan headshot

Investor Garry Tan tells us how he got started in tech, why he’s teaching on YouTube, and his thoughts on Clubhouse

Garry Tan is a Silicon Valley veteran.

Currently the managing partner for venture firm Initialized Capital, Tan was employee No. 10 at Palantir and an investor at Y Combinator, where he funded 600 startups.

Over the past year, Tan has taken his hard-earned lessons to YouTube, where ~60k subscribers watch his takes on investing and entrepreneurship (check it out here).

The Hustle recently spoke with Tan, and here are some excerpts:

On why he wants to pass on his experience to others

Tan grew up in a food-insecure home and, as early as 14, was coding and pitching projects. As a teen, his work helped his family put a down payment on a home.

“I know there are a lot of people out there like I was growing up, and I don’t want them to stay in that situation,” Tan says. “I want them to rise.”

On why he is doing YouTube instead of writing

“YouTube is definitely much harder than just writing,” Tan says of making videos. “But I think it’s way higher bandwidth. It’s a way to give people the real deal in 15 minutes or so a week.”

On why he keeps his Instagram DMs open

“Having the DMs open helps me get out of my bubble,” Tan says. “If I’m not careful, I know it’s very easy for me to close the door to others.”

On Clubhouse’s prospects

As an early and active Clubhouse user (as well as a personal investor), Tan is bullish on the social audio app.

“I do think it probably is the next Twitter,” says Tan. “It’s another place on the internet with a conference, house party, boardroom, and everything all tied into one product.”

On Elon’s Clubhouse debut, which Tan moderated

“This is definitely a true ‘Clubhouse-made-it’ moment,” he says of the Jan. 31 event. “Vlad Tenev of Robinhood coming in and being invited up and live-interviewed by Elon Musk was an incredible moment that was totally unplanned.”

(Read the full Q&A here.)

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Small Business Feature
Imprint Engine founders

How Imprint Engine built a $7m+ business disrupting print and promotional products

In 2012, Minneapolis-based marketing professionals Travis Veit, Caleb Gilbertson, and Zach Sussman were frustrated.

At work, they spent so much time coordinating printers, suppliers, ecommerce sites, and warehouses that they were left with little time to actually do… marketing.

So they sat down (literally, back-to-back in the alcove of a tiny apartment), and invested their savings in building a solution — an end-to-end platform that helps marketers save time and money by moving the wide range of vendor services under one roof.

Since then, their organic growth has taken off

One successful early partnership with a local Uber marketing manager led to 7+ years of global projects with the company.

As Uber contacts have left to work at other companies, “they brought Imprint Engine with them,” Sussman, a company partner, told The Hustle.

To find other clients, the team’s go-to tool has been cold email. It’s how they landed GoPro, GitHub, The Hustle (yes, this Hustle), and countless others.

COVID was a challenge, but good for business

In 2020, Imprint Engine quickly pivoted to meet demand for virtual event kits and home office swag. “The complexity of projects has increased dramatically as companies want to deliver an experience, not just an item,” Sussman says.

The company also used its assembling, sourcing, and distribution infrastructure to deliver $115k of PPE gear to front-line healthcare workers, on its own dime.

“We were incredibly grateful to not only survive, but thrive, throughout 2020,” says Sussman, “so we felt it was our responsibility to give something back.”

  • Founders: Travis Veit and Caleb Gilbertson
  • Employees: 22
  • Year of launch: 2012
  • Cost to launch: $20k
  • Funding methods: personal savings
  • 1st-year revenue: $30k
  • Current annual revenue: $7m+

Want your company featured? Fill out our SMB survey. See financials on hundreds of companies by subscribing to Trends.

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Other Big Ideas of the day
VR dancing

When the metaverse converges with reality (Source: Giphy)

Ark Invest’s Big Idea 2021 report has a total of 15 ideas. We covered the top idea (deep learning); here are a few other interesting ones:

  • The reinvention of data centers: Increased usage of AI will make graphic processing units (GPU) the workhorse processor of tech with the industry reaching a run rate of $41B by 2030.
  • Virtual worlds merging: Today, VR worlds are largely independent. In the future, they can become “interoperable” and merge into one metaverse layer; revenue for VR worlds can reach $390B by 2025.
  • Digital wallets: Apps like Venmo and Cash App are valued at a max of $1.9k per user. As more banking services are moved online, Ark believes that each user for a digital wallet could be worth $20k.
  • Bitcoin to $40k?: A few publicly listed firms (MicroStrategy, Square) have put Bitcoin on the balance sheet. If all of the S&P 500 companies put 1% of their cash to Bitcoin, the cryptocurrency’s price could rise to $40k.
  • EV car ownership to explode: New battery designs will make EV vehicles more affordable. Ark predicts this will lead to huge growth in EV sales, from ~2m units in 2020 to 40m units in 2025.

TRENDS

90%+ margins and endless niches…

In 2014, two business school students posted a review for a cordless DeWalt drill on their new project, BestReviews.

It was their first review, and their first step into an incredibly profitable world of review sites.

Last month, Nextar Media group (which owns over 200 TV stations) purchased BestReviews for a reported $160M.

The acquisition got our team of analysts thinking, and the more we dug into the profitability of review sites the more we realized just how many opportunities are out there (especially for niche product categories).

So, Trends analysts compiled a full guide on building and monetizing a review site.

When you read through, you’ll learn:

  • The top opportunities and niches our analysts have identified
  • How to build and grow and audience, including SEO and viral growth tactics taken right from the playbooks of the biggest players in the space
  • How review sites monetize to achieve 90%+ profit margin
  • And much more.

If you’re not already a member of Trends, sign up today for a $1 trial to get access to the full newsletter.

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