Research

Welcome to the Exponential Age The New Industrial Revolution

Singularity University is a Silicon Valley think tank that offers educational programs and a business incubator. It was founded in 2008 at the NASA Research Park in California and is supported by NASA and Google.  According to its website, Singularity University focuses on scientific progress and “exponential” technologies. As technologies continue to advance, they accelerate the progression of seemingly unrelated technologies, exploding what is possible at a pace that’s difficult to fathom. This helps redefine what is possible today, and in our rapidly approaching tomorrow.

One of the founders of Singularity University is Ray Kurzweil, one of the world’s leading inventors, thinkers, and futurists, with a thirty-year track record of accurate predictions. Kurzweil was selected as one of the top entrepreneurs by Inc. magazine, which describe him as the “rightful heir to Thomas Edison.”  Bill Gates says; “Ray Kurzweil is the best person I know at predicting the future of artificial intelligence.”  The other founder is Dr. Peter Diamandis, the SU Executive Chairman who attended MIT where he received his degrees in molecular genetics and aerospace engineering, as well as Harvard Medical School where he received his M.D.

The Exponential Conference Series takes Singularity University’s unique vantage point and focuses it upon the exponentially accelerating technologies that are impacting industry such as Finance, Medicine, Healthcare, Education, Manufacturing, and food. This goes beyond just the effect of Moore’s Law.  The next generation of business leadership needs to be able to navigate these progressive changes and disruptive events faster and more effectively than any time in the past. The creative destruction of capitalism goes up by powers of ten when it goes exponential.  Udo Gollub from Berlin, Germany recently attended the Singularity University Summit and wrote some observations.  Note that these are all extrapolations of exponential technology trends by Singularity University. Nothing here is definitive and everything is in flux.  This paper is just to motivate and stimulate thinking and uses some of the key points from the Summit. 

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In 1888 George Eastman founded Kodak.  In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. Within just a few years, their business model disappeared and they went bankrupt. What happened to Kodak will happen in a lot of industries in the next 10 years – and most people don’t see it coming. Did you think in 1998 that 3 years later you would never take pictures on paper film again? Yet digital cameras were invented in 1975. The first ones had poor quality of only 10,000 pixels, but the technology followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before the technology advanced enough to gain mainstream acceptance in only a few short years. It will now happen with artificial intelligence, healthcare, transportation, energy, education, 3D printing, agriculture and jobs. Welcome to the New Industrial Revolution. Welcome to the Exponential Age.

Information technology grows in an exponential manner. It’s not linear, although our intuition is. When we hunted the savanna millennia ago, we made linear predictions where that animal would be and where to throw our spears. That worked fine back then, and linear thinking became hardwired in our brains. However, the pace of exponential growth better describes the path of information technologies. The difference between the two rates of growth becomes HUGE after a short while.

If you take 10 steps linearly — one, two, three, four, five — you get to 10. If you take 10 steps exponentially — two, four, eight, sixteen — you get to a 1024.  If human steps are about one yard, 1024 is about half a mile.  If you take 30 steps linearly, you have gone 30 yards.  If you take 30 steps exponentially, you hit a billion, which would reach the moon and back! (1 yard steps X 1B = 568,181 miles. Distance to moon is 250,364 miles.) It makes a huge difference, and that describes what is happening in information technology.2

A generation ago students at MIT all shared one computer that took up a whole building. The computer in your cellphone today is a million times cheaper, a million times smaller, and a thousand times more powerful. That’s a billion-fold increase in capability per dollar that we’ve actually experienced. And we’re going to do it again in the next 25 years. Information technology progresses through a series of S-curves where each one is a different paradigm. One of the gages of the speed of technological advancement is “Moore’s Law”.  Per Wikipedia: “Moore’s law is the observation that the number of transistors in a dense integrated circuit doubles approximately every two years”.  Moore’s Law was not the first paradigm to bring exponential growth to computing. The exponential growth of computing started decades before Gordon Moore was even born. And it doesn’t just apply to computation. It’s really any technology where we can measure the underlying information properties.  People ask; “What’s going to happen when Moore’s Law comes to an end?” (Which the University says will happen around 2020) We will then go to the next paradigm. In the 1950s, technology was shrinking vacuum tubes, making them smaller and smaller. They finally hit a wall; they couldn’t shrink the vacuum tube anymore and keep the vacuum. And that was the end of the shrinking of vacuum tubes, but it was not the end of the exponential growth of computing. We went to the fourth paradigm, transistors, and finally integrated circuits. When that comes to an end we’ll go to the sixth paradigm: three-dimensional, self-organizing, molecular circuits.

Software will disrupt most traditional industries in the next 5-10 years. Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world. Airbnb is now the biggest hotel company in the world, although they don’t own any properties.  This disruption will create large growth opportunities as well as dangerous pitfalls.  Be prepared for both.

Artificial Intelligence:

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Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected. In the US, young lawyers face difficulty getting jobs because you can get legal advice from IBM Watson within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So far it is for more or less basic stuff, but if you study law, SU suggests you stop immediately. There will be 90% fewer lawyers in the future, only specialists will remain. Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses. Watson may be the key to the development of “Robo Advisors” in the financial services industry.  Facebook now has a pattern recognition software that can recognize faces better than humans. Singularity University predicts that by 2030 computers will become more intelligent than humans.  A new chip some call the “Virtual Processing Unit” or VPU is so powerful that it has the ability to performing up to 8 trillion tasks per second and create entire digital worlds faster than the speed of thought.

Autonomous Cars:

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In 2018 the first self-driving cars will appear for the public.  My Tesla will already drive me to Baton Rouge with its self-navigation system. Around 2020, the complete auto industry will start to be disrupted. The Mercedes InMotion F015 is pictured on the right >. You won’t need to own a car anymore. You will call a car with your phone, it will show up at your location, and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s license and will never own a car. It will change the cities, because we will need 90-95% fewer cars for that. We can transform former parking space into parks. 1.2 million people die each year in car accidents worldwide. We now have one accident every 100,000 km, with autonomous driving that will drop to one accident in 10 million km. That will save a million lives each year.  Like Kodak, most car companies may not make the transition and become bankrupt. Traditional car companies will try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels. The engineers from Volkswagen and Audi are terrified of Tesla.

Insurance Companies will have massive trouble because without accidents, the insurance will become 100X cheaper. The car insurance business model will change or disappear.  However, if accidents go down 100X, but the cost to purchase insurance only goes down 50X, the business may become more profitable.  Real estate will change because if you can work while you commute, people will move further away to live in a more beautiful neighborhood.

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Electric cars won’t become main stream until 2020. Cities will be less noisy because all cars will run on electric. Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can only now see the impact. Last year, more solar energy was installed worldwide than fossil. This represents a smooth doubling every two years of the amount of solar energy we’re creating, particularly as we’re now applying nanotechnology, a form of information technology, to solar panels. And we’re only eight doublings away from it meeting 100 percent of our energy needs. And there is 10 thousand times more sunlight than we need. The price for solar will drop so much that all coal companies may be obsolete by 2025.

Water: With cheap electricity comes cheap and abundant water. Desalination now only needs 2kWh per cubic meter. We don’t have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.

Health:

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The Tricorder X prize will be announced this year. QUALCOMM is sponsoring a $10 million competition to bring healthcare to the palm of your hand. There are already 312 pre-registered teams from 38 countries that are competing to build a medical device (called the “Tricorder” from Star Trek) that works with your phone.  It takes your retina scan, your blood sample, and you breathe into it. It then analyses 54 biomarkers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medicine, nearly for free.  The first completed X prize was the $10 million Ansari X prize awarded for the creation of a safe, reliable, reusable, privately-financed manned space ship to demonstrate that private space travel is commercially viable.  The prize went to the Mojave Aerospace Ventures team, led by famed aerospace designer Burt Rutan, with financial backing from Microsoft’s Paul Allen. The winning technology was licensed by Richard Branson to create Virgin Galactic. The prize competition itself launched a $2 billion private space industry.

The amount of DNA data we’ve sequenced has doubled every year. The cost has come down by half every year. And this has been a smooth progression since the beginning of the genome project. And halfway through the project, skeptics said, “Well, this is not working out. You’re halfway through the genome project and you’ve finished one percent of the project.” But that was really right on schedule. Because if you double one percent seven more times, which is exactly what happened, you get 100 percent. And the project was finished on time.

There are about 20 regions of the brain that have been modeled, simulated and tested: the auditory cortex, regions of the visual cortex; cerebellum, where we do our skill formation; slices of the cerebral cortex, where we do our rational thinking. And all of this has fueled an increase, very smooth and predictable, of productivity (GDP). Fueled by this information technology, we’ve gone from 30 dollars to 130 dollars in constant dollars in the value of an average hour of human labor.  Charlie Munder of Berkshire Hathaway states that productivity in the USA has gone up 6X in his lifetime.

3D printing:

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The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster. All major shoe companies started 3D printing shoes. Spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large number of spare parts they used to have in the past.  At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home. In China, they already 3D printed a complete 6-story office building. By 2027, 10% of everything that’s being produced will be 3D printed.

Business Opportunities: If you think of a niche you want to go in, ask yourself: “in the future, do you think we will have that?” and if the answer is yes, how can you make that happen sooner? If it doesn’t work with your phone, forget the idea. And any idea designed for success in the 20th century is doomed in to failure in the 21st century.  There is an app called “moodies” which can already tell in which mood you are. By 2020 there will be apps that can tell by your facial expressions if you are lying. Imagine a political debate where it’s being displayed when the politicians are telling the truth, and when not.

Work: 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a small time.  Incoming freshmen at SMU are taught that after graduation you may not go find a job; you may have to go make a job.

Agriculture:

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There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all days on their fields. Aeroponics will need much less water. The first Petri dish produced veal is now available and will be cheaper than cow-produced veal in 2018. Right now, 30% of all agricultural surfaces are used for cows. Imagine if we don’t need that space anymore. There are several startups that will bring insect protein to the market shortly. It contains more protein than meat and will be labeled as “alternative protein source” (because most people still reject the idea of eating bugs).

Fiat Currency:

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Bitcoin will become main stream this year and might possibly become the default reserve currency in the future.  Last year Western Union averaged $282 M in wire transfers per day.  Bitcoin averaged $171 M.  In June of this year, the market cap of Bitcoins eclipsed the market cap of Western Union stock. Should the inscription say: “In Encryption We Trust?”

Longevity:

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Right now, the average life span increases by 3 months per year. Four years ago, the life span used to be 79 years, now its 80 years. The increase itself is increasing and by 2036, there will be more than one year increase per year. So we all might be able to live healthy lives for a long, long, time, probably way more than 100 years.

Education:

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The cheapest smart phones are already at $10 in Africa and Asia. By 2020, 70% of all humans will own a smart phone. That means everyone has the same access to world class education.  Every child can use an online academy for everything a child learns at school in First World countries, so that within a year children in Africa can become fluent in English.

It is a fast moving world and getting faster.  There will be both opportunities and pitfalls along the way.  The next generation of business leadership needs to be able to navigate these progressive changes and disruptive events faster and more effectively than at any time in the past. We note again that these are all extrapolations of exponential technology trends made by the Singularity University of California.  Nothing here is definitive and everything is in a state of change.  The purpose of a think tank is to motivate and stimulate thinking.  We hope this paper helps accomplish that goal. 

Welcome to the Exponential Age.

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