Welcome to Stuff I Thought About Last Week, a personal collection of topics on tech, innovation, science, the digital economic transition, the finance industry, and whatever else made me think last week.

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In today’s post: learning to adapt to AI taking over creative and complex human tasks; increased real-world use of digital twins; robots will increasingly be a subscription-based service; manufacturing relocation and modernization will drive automation; new protein models; inspiration from ants; optimists control the future; and, much more below...

Stuff about Innovation and Technology
John Henry vs. Lee Se-dol
The Ballad of John Henry tells the story of a rail worker who died trying to beat a steam-powered drill at hammering steel spikes. Lee Se-dol was the world’s reigning Go champion until the AI program AlphaGo (from Google’s subsidiary DeepMind) beat Se-dol and changed the game as we knew it. Se-dol subsequently retired from the game in 2019. Why do I bring up these two seemingly distant examples? There’s mounting evidence that we will be bested by technology, specifically AI, at an increasing rate in the coming years, even for complex and creative tasks once thought to be uniquely human. If you’ve been following my thoughts on the accelerating changes coming to the world of art and design, artists and engineers may soon feel like Henry and Se-dol. At some point, perhaps nearly all of us will end up questioning our productive purpose. Do we quit like Se-dol? Or die like Henry trying to outsmart or out-create the next technological tidal wave? Neither path sounds ideal. Fortunately, there’s a third option, and it’s the one we’ve utilized as a species for hundreds of thousands of years: adaptation. The necessity of adapting and reframing our role in the world will become existential as we see AI and robotics repeatedly trounce us in an expanding array of tasks. I wrote the following a few months ago in #350, and it seems increasingly relevant to keep in mind as we feel diminished by technology surpassing us:
After watching the AlphaGo documentary, I noted, way back in #221, what a gut punch it can be when humans realize that AI can not only be smarter, but also more creative. It really shakes the ground under our feet. It’s not just about fry-making robots replacing humans, it’s about confronting what it means to be human. My favorite movie that tackles the question of what it would mean for AI to become sentient is Her (see #332). With larger and larger neural nets and advancing transformer models, it does feel like a milestone is approaching. We’ll be confronting many of these “we’re not special” situations at an escalating pace in the coming years. I think the key for the species will be to not get lost in the disillusionment of our natural-selection programming, but rather to focus on creating things and connecting with each other, trying to do something truly unique and special.
AI today is built on the back of accumulated human intelligence and creativity, or, perhaps more accurately (at least for now), AI is ripping off our creative works, as artist Greg Rutkowski and others have alleged. AI chat bots, virtual humans, and other human-like replacements are coming for a lot of different types of jobs. For example, Women's Wear Daily reports on the rise of virtual models, one of many harbingers of an AR world surrounded by AI-powered virtual humans. Fashion model agencies are designing avatars from scratch and creating digital versions of real models for clients to use. This type of technological displacement is a familiar problem for investors, as the machines came for us a while ago. Historically, successful investors took advantage of cognitive bias in other humans. There was a human buyer and seller on either side of every trade, and (assuming various consistent goals across the market for price appreciation) one of the parties was making a mistake. Discovering and capitalizing on those mistakes was the way to buy assets when they were undervalued relative to their long-term potential (or sell them when they were overvalued). More recently, however, the role of real, live humans has increasingly diminished in the investment markets, at least directly. Instead, we’ve programmed machines to read headlines, interpret signals (largely from other machines), and trade in circles. The rules of the game have changed as algorithms have taken over investing, and it’s no longer about being smarter than a biased human on the other side of the trade. Now, investors must adapt to outsmart algorithms, which have their own unique biases (which are still mostly manifestations of the skewed views of their human programmers; but, in the near future, these systems will be self-learning and create new, heretofore unseen biases). It’s a gut punch indeed when we lose our specialness; but, as I mentioned above, we have the option to adapt to new technologies and use them to prosper and enrich the human experience.

Lowe’s Digital Twin
Home improvement retailer Lowe’s is using Nvidia’s Omniverse digital twin technology and Magic Leap 2 AR headsets to improve store layouts using simulated customer movement based on data from real stores. Nvidia’s YouTube channel has a series of videos from their GTC user conference last week showcasing AI-accelerated achievements.

Sippy Joins Flippy and Chippy
Robots may increasingly be sold as a service. I’ve highlighted Miso’s Flippy and Chippy fry-cook-bots before, which have a monthly cost of $3500. Essentially, robots can be value priced as an ongoing subscription against the cost of human labor. The robots can even cost the same as an employee because they come with fewer pesky issues, like needing healthcare benefits or time off for vacation/illness/family, and they can work 24 hours a day. Further, the complexity of humanoid replacements necessitates ongoing upgrades and maintenance. WaPo has a detailed report, including several videos of Miso’s kitchen-bots, aimed at replacing the dull, dirty, and dangerous jobs humans would rather not do. Miso also has a new robot, Sippy, which can make fountain drinks with new spill-proof lids faster than humans.

Robot Density
Nearly half of all industrial robots installed last year were in China, according to the WSJ. As China's working-age population shrinks, automation is the only choice for manufacturing, even with reduced volume due to onerous pandemic policies and geopolitical concerns forcing some exits. China lags other countries with the 9th most dense installation base of industrial robots at 246 units per 10,000 employees. In contrast, South Korea has the highest density at 932 machines per 10,000 employees. As production is modernized and relocated around the world, automation is likely to play an increasing role.

Miscellaneous Stuff
Antspiration
There are 2.5M ants for every person on Earth, totaling around 20 quadrillion according to new estimates. Ants are one of our favorite examples of a resilient species that exhibits qualities we look for in investments, as we wrote [PDF] nearly a decade ago:
When it comes to Resilience, we have a lot to learn from ants – masters of Resilience. When we think about ants most of us would describe them as industrious. We’d certainly not think them lazy. Stanford University professor Deborah Gordon offers a different take. She’s been studying the same group of ants for the past 30 years and may know more about the behavior of ants than anyone. What she found is surprising: most of the time about half the colony is just sitting around doing absolutely nothing. Why? Certainly they could gather much more food if they all pitched in, right? Going back to complex systems, in nature, we see extreme events happen with some regularity. What if a flash flood destroys the part of the colony out harvesting or destroys the nest? Conversely, what if someone sets up a picnic nearby? No problem, call out the reserves! Ants have adapted to be Resilient to extreme events, even though most days it costs them from a productivity optimization perspective. Ants have survived millions of years precisely because they DO NOT optimize around productivity – that type of behavior would have knocked them out long ago. Ants are built for Resilience. In the world of business and investing, Resilient companies are less optimized for maximizing immediate returns and more focused on the ability to adapt and evolve to changing conditions – able to quickly recover from or capitalize on extreme events.

Accelerating Protein Design
Powered by machine learning, protein design tools are proliferating. We wrote about ProtGPT2 in #359, and MIT Technology Review discusses a new program, ProteinMPNN, which was recently published in Science. The protein race was sparked by DeepMind open sourcing the complete AlphaFold database, which contains the structures for all known proteins. The new open-source ProteinMPNN design tool “is another proof of this paradigm shift, designing proteins for specific tasks”, according to DeepMind’s head of AI for Science.

Stuff about Geopolitics, Economics, and the Finance Industry
Protopia
Kevin Kelly discusses protopia, the idea that humans are inching toward a better future, 1% at a time. He also highlights the Amish rubric for deciding whether or not to adopt new technology based on its potential to strengthen the community. The policy led the Amish to adopt certain uses of cell phones (but, probably not the Twitter app!) to help geographically dispersed groups maintain connections. The solution to problems from new technologies, according to Kelly, is new – better – technologies: “in the long term the future is determined by optimists.” The video is one of many reports in the new Big Think Progress Issue, including this article that identifies many positive pivot points over the next couple of decades. Set against the backdrop of pessimism at every turn, the doses of optimism are inspiring.

✌️-Brad

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The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC.  This newsletter is an informal gathering of topics I’ve recently read and thought about. I will sometimes state things in the newsletter that contradict my own views in order to provoke debate. Often I try to make jokes, and they aren’t very funny – sorry. 

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