Curated Insights 2017.08.06

The data that transformed AI research—and possibly the world

Today, many consider ImageNet solved—the error rate is incredibly low at around 2%. But that’s for classification, or identifying which object is in an image. This doesn’t mean an algorithm knows the properties of that object, where it comes from, what it’s used for, who made it, or how it interacts with its surroundings. In short, it doesn’t actually understand what it’s seeing. This is mirrored in speech recognition, and even in much of natural language processing. While our AI today is fantastic at knowing what things are, understanding these objects in the context of the world is next. How AI researchers will get there is still unclear.

“One thing ImageNet changed in the field of AI is suddenly people realized the thankless work of making a dataset was at the core of AI research,” Li said. “People really recognize the importance the dataset is front and center in the research as much as algorithms.”

Apple Glasses are inevitable

There is room for Apple to create value by controlling both the hardware and software comprising AR glasses. The sum will be greater than its parts. Apple’s big bet on AR will represent the catalyst for turning glasses and sunglasses into something more. An engaged base of iOS developers experimenting with ARKit will give Apple Glasses a hospitable app environment.

Apple’s success with Apple Watch has done much to calm some of my fears and hesitation regarding face wearables. With 29 million Apple Watches sold to date, Apple has turned the dynamic of tech meeting fashion on its head. Apple has been able to get people to wear an item that was increasingly losing its place in a smartphone world.

The idea of a product having a “killer app” has been misconstrued over the years. The iPhone really doesn’t have a killer app. Instead, the device itself has turned into the killer app – the most valuable computer in our lives. In addition, the iPhone’s role in our lives has evolved over time – a true sign of value. Apple Glasses would provide an improved view of the world to its user. For some, this will come in the form of clearer vision plus additional context. Others will gain value just from receiving additional context.


The Priceline party, the world’s largest online-travel company

Over the past decade Priceline’s pre-tax earnings have grown at a compound annual rate of 42%, faster than Apple, Amazon, Netflix and Alphabet. It also boasts a 96% gross margin. Its share price has risen by more than 50% over the past 12 months, about four times faster than the broader stockmarket. On July 26th the firm’s market value rose above $100bn.

Priceline’s focus on accommodation helps explain why it is more profitable and more highly valued than Expedia, a rival online-travel company that operates sites such as Orbitz, Travelocity, Trivago and Hotels.com. Expedia does more business booking flights, but these are not as lucrative. Online-travel firms take a meaty commission of 15-18% of a hotel room’s price, compared with a slim 3-4% for airfares.

The most dangerous rival, however, may well come from somewhere else entirely. “We’re all waiting for the moment when a big Chinese company comes in and tries to take market share,” says Erik Blachford, a former boss of Expedia. Ctrip, a giant based in Shanghai and worth an estimated $30bn, is the obvious candidate. But if it indeed makes a move, Priceline will not necessarily suffer. Not only is its Chinese business growing nicely, but it has also invested nearly $2bn in Ctrip’s debt and equity. Small wonder that some analysts consider Priceline the best-run internet company after Amazon.


Why Alibaba could double in two years

China online advertising is $50 billion market, currently Alibaba has about 20% market share. Entire online advertising market will grow at 15% to 20% for next eight years, I expect Alibaba to take incremental share and possibly increase to 30%+ market share of online ads in five years.

AliCloud is No. 1 in China by a huge margin.

Alibaba has a ton of equity investments made over the years. Core holdings include a 33% stake in Ant Financial, 30% stake in Weibo, and 47% in logistics network operator Cainiao.


Amazon moves into self-distribution with Woody Allen’s ‘Wonder Wheel’

Amazon is moving into self-distributing its own movies, putting it on the path to becoming a full-fledged film studio.

With their deep pockets and big ambitions, Amazon and Netflix have upended the film distribution landscape, although they have taken different approaches. Netflix is solely focused on servicing its streaming service subscribers. Amazon believes in premiering movies in theaters before offering them on its Prime digital service. With the move into self-distribution, Amazon now offers all of the services that a traditional film studio boasts — from financing to production to rolling out a picture in cinemas.


Amazon’s ‘Beehive’, drone-carrying trains reinforce focus on logistics tech

CB Insights’ analysis shows that the retail giant has been focused on shortening the distance between warehouses and consumers for some time. They have considered various formats for expanded warehouse networks, including flying warehouses, mobile truck-based mini warehouses, underwater warehouses, local re-stocking stations for drones, and a multi-level drone-docking fulfillment center.


This Amazon threat just got even more real

Already, the price transparency that’s characteristic of Amazon’s consumer e-commerce platform has exposed major flaws in Grainger’s model, forcing the company to roll out price cuts that have squeezed its margins and darkened its EPS outlook. In the face of Amazon’s staggering customer growth, Grainger CEO DG Macpherson’s admission earlier this year that the company hasn’t been able to acquire a new customer under its namesake brand in years and has struggled to use digital marketing to draw business becomes even more worrisome.


Foursquare eyes Amazon Alexa partnership as its tech is quietly built into Snapchat and Apple Maps

In the past four years, the company has been shopping its technology around to other companies, a task that turned out to be surprisingly easy. In an interesting development, Foursquare has found that a lot of companies looking for data or location tech come to Foursquare before Facebook or Alphabet’s Google because those two giants are trying to kill those companies who need help. “We’re like the independent broker of this awesome technology and you’re not tying yourself to Google or Facebook, yet you get these great tools to build competitive products,” Crowley explained.

The partnerships take different formats, with Foursquare sharing its tech in exchange for exposure, revenue or partnership deals, he explained. Facebook and Google haven’t teamed up with Foursquare due to competing products and because the Silicon Valley players have built up their own ecosystems, he said. But that’s a rare exception. Snapchat, Twitter, Uber, and Pinterest are using a version of its geotagging tech. Samsung’s new Galaxy S8 phone, launched in April, has Foursquare baked in to tell users where their photo was taken and what it was taken of. Finally, Apple is using Foursquare in its Apple Maps product.


Redfin set out to disrupt real estate—it was harder than it looked

Zillow and Trulia make money by referring customers to independent real estate brokers. Redfin, in contrast, aimed to disrupt the real estate business by becoming a real estate brokerage itself.

In a traditional real estate transaction, the agent on each side of the deal gets a three percent commission. Redfin offered a do-it-yourself model where buyers would do more of the work themselves, lowering Redfin’s costs and allowing it to pay thousands of dollars in rebates.

This approach sounded great in theory, but there was a big problem: customers hated it. Buying or selling a home is a complex, stressful, and often once-in-a-lifetime transaction. People wanted a personal agent who had plenty of time to understand their situation, answer questions, and guide them through the steps of the home-buying process. Redfin’s early approach—with an ever-changing cast of agents showing homes and writing offers but not doing much else—left most customers unsatisfied.

…some of the biggest opportunities for innovation were on the seller’s side of the market, because sellers ultimately set the terms of real estate transactions. And because home sellers tend to be older and more risk-averse, it has taken longer for Redfin to build up a customer base on the seller’s side of the market.


A look back in IPO: Google, the profit machine

Sources are saying that Microsoft was previously courting Google, pursuing options ranging from a kind of merger to an outright takeover. It appears that their overtures failed to materialize any deal, so now the Redmond will have to wait; Google is headed in the IPO direction, and if there’s a merger to be had, it’s likely going to be with a post-IPO Google.

“It’s still expensive at these levels,” said Will Dunbar, managing director with Core Capital Partners, a venture capital firm with no stake in Google. “There will be substantial competition in the near future and that’s one of the things that gives me pause about the price.”

Janco’s Pyykkonen adds that he was hearing it was difficult for traders interested in short-selling Google to find shares to borrow from the banks and brokers involved in the auction.

And according to an informal poll on CNN/Money, 85 percent of more than 23,000 respondents said that they did not plan on buying shares of Google once it began trading.

Inside Jeffrey Katzenberg’s plan to revolutionize entertainment on mobile screens

Katzenberg’s plan involves nothing less than the creation of a whole new species of entertainment targeting 18- to 34-year-olds: short-form video series produced with budgets and production values you might expect from primetime TV, along with top-shelf creatives on both sides of the camera. For example, imagine a drama akin to “Empire” or “Scandal” but shrunk to 10-minute episodes made for mobile consumption. Or a five-minute talk show, or a two-minute newscast — all with high-profile talent attached.

Disney CEO Bob Iger, whose company is considering producing for what Katzenberg has tentatively dubbed New TV, sees the merits in the idea. “The explosion of short-form video is obvious to all of us, but a lot of what we’ve seen is the production of amateurs — user-generated content,” Iger says. “Taking a professional approach to this kind of content, we haven’t seen that yet in a concerted way, and I think that’s a smart thing to try.”


Alphabet wants to fix renewable energy’s storage problem — with salt

It can be located almost anywhere, has the potential to last longer than lithium-ion batteries and compete on price with new hydroelectric plants and other existing clean energy storage methods. “If the moonshot factory gives up on a big, important problem like climate change, then maybe it will never get solved,” said Obi Felten, a director at X. “If we do start solving it, there are trillions and trillions of dollars in market opportunity.”

X is stepping into a market that could see about $40 billion in investment by 2024, according Bloomberg New Energy Finance. Roughly 790 megawatts of energy will be stored this year and overall capacity is expected to hit 45 gigawatts in seven years, BNEF estimates. Existing electrical grids struggle with renewable energy, a vexing problem that’s driving demand for new storage methods. Solar panels and wind farms churn out energy around midday and at night when demand lulls. This forces utilities to discard it in favor of more predictable oil and coal plants and more controllable natural gas “peaker” plants.

A new book ranks the top 100 solutions to climate change. The results are surprising.

The number one solution, in terms of potential impact? A combination of educating girls and family planning, which together could reduce 120 gigatons of CO2-equivalent by 2050 — more than on- and offshore wind power combined (99 GT). Also sitting atop the list, with an impact that dwarfs any single energy source: refrigerant management. Both reduced food waste and plant-rich diets, on their own, beat solar farms and rooftop solar combined.

Our models include a lot of things that were excluded from other models. One is land use. It’s given passing reference, but hasn’t been given much credibility by the IPCC. They don’t include, for example, farmland restoration — over a billion hectares of abandoned land all over the world. We know how to regenerate that, using animals, using cover, using no-till. Is there a transition cost? Yeah. But it’s a big sink.

First of all, let’s be honest: The US has never led in this area. Ever. When they’ve tried on an executive level, they’ve never been supported by Congress. States have led, cities have led, but never the federal government. Now the federal government is what it is. When [Trump] was elected, I went over every one [of the Drawdown solutions]. I said, “What can the [US federal] government do?” And it really isn’t that much.


The world’s first floating wind farm could be a game changer for renewable power

The first floating wind turbine has been placed about 20 km (12 miles) off the coast of Peterhead in Scotland. Another four turbines will be added to the farm, which together will generate enough energy to power 20,000 households.

Floating wind turbines cannot currently compete with fixed turbines, which have seen their cost plummet by more than 30% since 2012. However, Statoil believes that as floating wind farms are built at scale, they will soon be able to compete with traditional offshore wind turbines without subsidies.


It goes completely against what most believe, but out of all major energy sources, nuclear is the safest

Based on historical and current figures of deaths related to energy production, nuclear appears to have caused by far the least harm of the current major energy sources. This empirical reality is largely at odds with public perceptions, where public support for nuclear energy is often low as a result of safety concerns.

Whilst the share of energy production from renewable technologies is slowly growing, 96 percent of global energy production is produced from fossil fuels, nuclear and traditional biomass sources. Our global transition to renewable energy systems will be a process which takes time—an extensive period during which we must make important choices on bridging sources of energy production.

 

In fund management, churn is not necessarily burn

What may be more surprising is that we found no evidence of any relationship across all other styles of US equity fund, even in small-caps where the costs of trading are noticeably higher. On average, high turnover US equity funds have been able to add at least enough value to offset the additional transaction costs they incur. The moral is that pursuing a reduction in transaction costs without considering the consequences is misguided. Consistency between investment process and turnover is more important than the level of turnover itself.


Cities’ success leaves them vulnerable in the next downturn

But the specialization of high-end jobs and wealth in cities could end up being their undoing. The city model of old was like a grocery store — a balanced mix of all types of different products, from milk and bread to a pharmacy to some splurge items like cupcakes and Champagne. In tough times, cupcake and Champagne sales might fall, but people are still going to buy their milk, bread and toiletries, keeping the store afloat.

Cities today increasingly resemble endless aisles of Champagne and cupcakes. If tough times strike again — perhaps in a tech downturn, or in a stock market crash — the pain will be concentrated here. And while the well-paying white-collar jobs migrating to cities now are coveted, there’s no guarantee the best jobs will always be urban. The next economic cycle may well bring a different pattern.


Many Indians don’t know the real architect behind the country’s economic reforms

On that monsoon day in Hyderabad in 2015, no one could recall that a long-time inhabitant of that city, Pamulaparthi Venkata Narasimha Rao, PV as he was always known to the Telugus, was, in fact, the author of the most radical shift in India’s economic policy since Jawaharlal Nehru’s famous Industrial Policy Resolution of 1956. Nehru’s resolution had declared that India would strive to establish a “socialistic pattern of society”. In 1991 PV moved away from that pattern to unleash private enterprise.

PV was India’s first “accidental” prime minister, and a path-breaking one. He took charge of the national government and restored political stability; assumed leadership of the Congress, proving that there was hope beyond the Nehru-Gandhi dynasty; pushed through significant economic reforms; and steered India through the uncharted waters of the post-Cold War world.


NASA has a way to cut your flight time in half

…NASA will begin taking bids for construction of a demo model of a plane able to reduce the sonic boom to something like the hum you’d hear inside a Mercedes-Benz on the interstate. The agency’s researchers say their design, a smaller-scale model of which was successfully tested in a wind tunnel at the end of June, should cut the six-hour flight time from New York to Los Angeles in half.

Over the next decade, growth in air transportation and distances flown “will drive the demand for broadly available faster air travel,” says Peter Coen, project manager for NASA’s commercial supersonic research team. “That’s going to make it possible for companies to offer competitive products in the future.” NASA plans to share the technology resulting from the tests with U.S. plane makers, meaning a head start for the likes of Lockheed Martin, General Dynamics, Boeing, and startups such as Boom Technology and billionaire Robert Bass’s Aerion.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.