How to Invest in the Singularity – It’s Near

If you’re reading this then the odds are that you’re probably in a high income bracket. We don’t control these things, that’s just what our metrics tell us. If you fit that demographic, that means you may have a private wealth manager who manages your money. If that individual suggests an optimal allocation across low-fee index funds, then you should probably just use a robo-advisor. If that individual tells you to make active stock selection bets, they’re probably taking you for a ride. We say that because active managers have a horrendous track record when it comes to beating benchmarks- like 80% fail at it. WTF are you paying them for? Probably this.

One thing that we’ve learned over the years is that a key factor in predicting the success of any given technology startup is by looking at the caliber of venture capital firms that invest in it. Venture capital firms have the resources and subject matter expertise needed to evaluate new technologies and most importantly, determine if they are economically viable. This “follow the money” approach can also be used in retail investing, with Warren Buffet being perhaps the best example of this.

While writing our recent article on Softbank, we learned about their $100 billion investment fund allocated to spending on emerging technology companies in the next 5 years. To put that number in perspective, the entire global venture capital “industry” is only $65 billion in size. When you hear about that much money being invested, you can’t help but wonder what their strategy is. Why? Because as retail investors, we’d like to pursue that strategy ourselves. To figure this out, we watched a 30-minute talk given by Masayoshi Son, CEO and Founder of SoftBank, so you don’t have to. What we learned was very insightful.

Mr. Son starts out his talk by saying he wants to share his 30-year vision (love the Japanese inclination towards long-term planning). He asks who knows what “the Singularity” is (about half the audience). The textbook definition is “the hypothesis that the invention of artificial superintelligence will abruptly trigger runaway technological growth, resulting in unfathomable changes to human civilization“. Mr. Son simply said “this is when computers surpass mankind brain” and he expects that in under 30 years. Time Magazine says about the same thing:

So we continue. He talks about average IQ being 100 and then later says he hopes the room has an average IQ of a little bit more than 100. People giggle. He says in 30 years a single chip will have an IQ of over 10,000. Did you know that neurons in your brain are binary? They assume on-off states to store information, just like transistors in silicon chips do. Mr. Son says people’s brains have 30 billion neurons (but it’s probably closer to 100 billion):

(Facts people. It’s the era of “fake news” and we always need to be on point.) So anyways, every human brain is equipped with roughly the same hardware and that’s not changing anytime soon. So, for us to get to an IQ of 10,000, we’d need roughly the capacity of 3 quadrillion transistors – a billion is (109) and a quadrillion is (1015). So, we can extrapolate that out based on what we know today about transistor growth and it tells us that the “birth of super intelligence” is expected to happen in 30 years.

It’s at this point in time Mr. Son provides the foundation of his strategy in a very endearing way that all but requires us to stop translating his Engrish and just quote him verbatim:

So this super intelligence, built in, integrate into the robot, smart robot, m’kay. We have PCs. We have smartphone, they don’t move, but if those super intelligence goes inside, the moving device. Robot, m’kay. Then the world, our lifestyle, dramatically changes.

Mr. Son expects the population of smart robots to surpass human population in 30 years and then he goes on to talk about the explosive growth of IoT devices. He says that the chip maker he acquired last year, ARM Holdings, is expected to ship over 1 trillion IoT chips in the next 20 years with ARM IoT chips commanding an 80% market share. This will allow him to plan the future direction of IoT which will also influence the direction of AI significantly:

He remarks that during some time in the next 30 years, the 2 chips in each of your shoes will be more than twice as smart as you are – and you will step on them every day.

He then says that the intelligence is not just at the client level (edge computing), but also connected in “the cloud”. All of those connections, lead into the “super intelligence” collective. Now that he has ARM, and therefore all the hardware for “the Singularity”, he has two main focuses:

  • Security
  • Connectivity

He talks about how one of his engineers was waiting for his wife at lunch time and hacked 1.2 million security cameras. This is why we need to start thinking about IoT security. (See our article on 19 Internet of Things IoT Security Startups). Today, your average car has over 500 ARM chips:

“None of those chips are secured today by the way” Mr. Son says. He knows because they’re shipping and he shows a video of a Softbank engineer taking control of a car by hacking it. The engineer is able to keep the car from braking and also turns the steering wheel. Mr. Son then talks about how all cars today are now connected to “the cloud”. (See our article on 10 Connected Car Technology Startups). Softbank is working right now on securing all their chips. They’re also working on low-power connectivity for all their chips. He then talks about how all of the infrastructure in society will be connected, including your home.

The conversation then goes on to talk about how the Softbank Vision fund now owns Oneweb. (See our article on Branson’s OneWeb: Cheap Satellite Internet Anywhere). In the past, satellites were far away at around 22,300 mile in elevation. Oneweb satellites are 30X closer to the earth at 745 miles high. OneWeb plans to shoot 800 satellites into orbit in the next 2 years and eventually increase that number to 2,000. All those smart devices can now communicate at speeds of 200 megabytes per second down and 50 megabytes per second up across the entire surface of the globe. He expects to have 1 billion human subscribers on that infrastructure.

He then reinforces his absolute certainty that the Singularity is coming in 30 years and pivots into a “good or bad” discussion. A bunch of smart people at Oxford came up with 12 threats to the world and AI was one of them right alongside things like nuclear war and super volcanoes. He says that AI could actually be the solution to the other 11 threats. It’s up to us whether or not we choose to use super intelligence for good or bad. The time is now and we need to act fast.

While watching this talk, we couldn’t help but think we were looking at an Asian version of Steve jobs. It’s not just because they dress the same:

It’s because these two gentlemen are both visionaries, and Mr. Son’s vision is picking up from where Steve Jobs left off and looking 30 years into the future.

So back to our original thoughts about “following the money”. What can retail investors do here? Well, we’ve shown you before how to make diversified investments in cyber security, and in robotics. These two themes follow Masayoshi’s thesis very closely. We’ve also looked at a few companies to make bets on AI chips with; NVIDIA and Xilinx. (Masayoshi himself is buying NVIDIA as we speak.) There’s also a very compelling investment thesis in Softbank itself.

The Singularity is coming in the next 30 years and Masayoshi Son has shown us his strategy. Ignore all the background noise and you’ll realize that in fact it’s a very exciting time to be alive. We may also have an unprecedented opportunity to make money as investors but that comes with risks. Masayoshi Son himself will tell you that, having lost $70 billion in the dot-com crisis. The difference this time though is we’re not talking about e-commerce. We’re talking about one of the most fascinating scientific concepts that has pervaded science fiction for decades. We’re talking about investing in “the Singularity”.

Tech stocks are volatile investments during the best of times. Here at Nanalyze, we complement our tech holdings with a dividend growth strategy that performs extremely well during recessions. Find out which 30 dividend growth stocks we're holding in our report - Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium Subscribers.

One thought on “How to Invest in the Singularity – It’s Near

  1. I’m a 44 year old Canadian man who sees how A.I. can benefit the human race and that the way to get Singularity to succeed you have to come up with a Crypto Currency that’s main objective is to get acceptance from society and the majority of people think that A.I. will lead to eventually confirming the Christian view of accepting the mark of the beast in your right hand so it is mandatory that you come up with a way to have people choose the way they feel comfortable with how their wealth is measured. The only way to create a general acceptance of a valued currency is to start with a bank. But value is usually measured in precious gems or gold so, create a virtual bank that is based on creating an eventual point where the softwares objective is to even out the value of the Omega Point of universal monitary equality and an understanding that a division in our society based on monetary value can’t lead to our prosperity as a whole so a law has to be passed globally where every country has to use this theory of sharing its wealth with the rest of the planets weak points monetarily and any hoarding of resources that don’t lead back to the virtual bank of monetary value throughout the world and it’s main objective to create an equal valued society where one entity’s excessive value must be divided up to even out the worlds valuable resources until an Omega Point of the extinction of a monocracy ever manifesting is reached and a one world value, not government is realized and mechanization is developed to help even out resources as well as luxuries available to all if one desires. The only Crypto Currecy that will work, is one that is created with the objective of self destruction once the One World Value is expirienced and the highest positions are those who intend on teachiong and those who help with the mechanization of Law Enforcement and the production of raw materials into material goods is created. Once you create a bank that’s created to eventually self destruct in order to have a One World Value evenly spread out to all individuals equally. Nobility is measured by your contribution to the world as a whole or as ONE! Curtail you’re currency to create the assurance that no one has to take a mark of measure or hold a precious material supply with the intentions of hoarding it for supiriority status or opression of another because of it. If you can come up with a robot that can crush nobility by materials and made to serve mankind with the Power and Promise of Equality. Create the company THE OMEGA POINT which has the mandate of the obolishment of classes and the development of global compassion will always touch people because our main objective as adults is to teach our children to love us and each pother without conflictions and the education through real life senerios that involve compassion as the unknown value and the explaination of dark atter. Create our first currency to express the unknown value of compassion or love. If you think I’m crazy then explain the gift of laughter and explain it’s measure to me. Create a robot to help clone compassion. Love one another as you yourself would want to be loved and our neighbours even more. The message has always been clear just our indiference of what we name the messenger is our own right to believe or worship and any ill feelings towards this right should be addressed when we’re children and made to destroy as a measure of supiriority. Please feed all this to an A.I. made to learn love and you’ll find investment in that. The future is never set but the way we serve the time we’re given to help with it’s advancement is antagonistic and should be our objective to optimize in this universe of physical matter governed by compassion. Get a robot to unite compassion and time into an algorhythm and solve the problem with it’s harmony together. Everything that prospers is always accompanied with an opposite and it’s our mission to harmonize them both. Take this message and develop a currency to change the revelation described in the bible. The future is always unpredictable unless we decide to optimize every nano-second of it.

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