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.

Click HERE to SIGN UP for SITALWeek’s Sunday Email.

In today’s post: we may be on the cusp of a humanoid robot revolution, but they appear too power hungry to replace humans; Texas is the largest source of solar and battery installs in the US; software companies are gearing up to sell billions of AI agents to companies, but will their business models survive the transition? AI Lou Reed; an $11,000 Chinese PHEV; the economic boost of weight loss; and, much more below.

Stuff about Innovation and Technology
Energetic Robots
A humanoid robot revolution will be our biggest near-term advancement, according to Nvidia's CEO Jensen Huang (Wired interview). Longtime readers know that, while I anticipate the widespread adoption of task-oriented robots, I also lament our continued lack of general purpose “Rosie” Robots. But, we do seem to be on the verge of such a platform; and, I think the far bigger acceleration will come with embodied AI, which will be indistinguishable from human consciousness (see AI Awareness). I got to thinking about the power consumption of these hundreds of millions (or billions) of robots running around doing things for us. Clearly, humans are a crowning achievement of evolution, but what always strikes me as mind blowing is how efficient we are at converting energy into output. This could be, perhaps, because the natural progression of life is to replicate whatever is best at increasing entropy in the Universe. Regardless, the fact that the human brain operates with less energy than what is needed to power a 20W light bulb is, well, mind blowing. A human at rest consumes around 100W, while a physically active human can sustain around 300-400W for short periods, which is similar to Boston Dynamics’ Spot quadruped robot. However, Boston Dynamics’ bipedal robot Atlas uses up to ten times that amount of energy according to an old stat (current stats are hard to come by for most bipedal robots). Most of these robots require charging after 1-2 hours of use (just like a human!). Further, many robots will be leveraging compute capacity in the cloud, which will add to the power burden. One of the things I’ve noted regarding LLM power consumption is that calculations should account for the energy savings derived from replacing a human doing the equivalent task (including running a laptop etc.), potentially making LLMs more efficient. However, for physical tasks, the human vs. robot energy advantage seems to shake out differently. Many robots today are active for about twice as long as they charge. That means a robot could theoretically expend anywhere from 6-60kWh in a 24-hr period. Since data on the energy conversion efficiency of bipedal robots aren't readily available, I am going to wave my hands (hand waving is the most valuable skill I learned in my theoretical physics classes!) and make some really broad and likely off-base estimates. If an active human can burn 100-200W for 8 hours and a robot does similar work for 16 hours at 2-10x the wattage, that equates to roughly 4-20x the energy expenditure of a human. So, adding 100M robots to the workforce could, on the high end, be equivalent to a couple billion humans worth of energy. If this is anywhere close to accurate the only obvious way this situation would work long term is if the robots start putting humans in giant, interconnected pods of goo and harvest the energy from our brains (this strategy of course keeps humans from expending unnecessary energy and optimizes our energy conversion). Anyway, as much as I want to believe in the bipedal robot revolution, it might require working fusion generators, significantly more nuclear power, or some other energy breakthrough. (For some history on the recently accelerated development of bipedals, checkout this Robot Report podcast with CalTech’s Dr. Aaron Ames.) Most current estimates for the humanoid robot market are in the range of only hundreds of thousands of units a year, not hundreds of millions, so we should be safe for now. In the meantime, I hope the bipedal hype shifts focus toward wheeled robots like Google’s Palm-E or even more energy efficient quadruped form factors. These might not look as cool, but they have a much more realistic shot at becoming large markets sooner. Even The Jetsons knew wheeled robots were the way to go. (The Jetsons aired sixty years ago, back when humans could do interesting things, like land on the moon!).
 
Green Star State
Texas, home of J.R. Ewing, is the new green energy leader in the US. In 2023, Texas installed more solar than California, and, this year, they will install more batteries. The effort has helped Texas avoid the power shortages that have caused problems in the past. While California still has a larger installed base, Canary Media notes that Texas could have the largest battery fleet in the US as soon as 2025. Flush with too much solar power, California has made it far less economical to install new green energy in the state. 
 
“Agents” not “Software”
Microsoft is releasing a Copilot for workers in finance departments that replaces many rote tasks. In related news, the fintech company Klarna said last week its chatbot is doing the work of 700 human customer service agents. As automation of white collar jobs continues to accelerate, it creates a business model problem for software companies. Microsoft is essentially using human workers to train their AI replacements, but those human workers account for a majority of Microsoft’s Windows and Office revenues. So, can Microsoft value price the AI replacements, i.e., charge a premium, “human equivalent” price for automated software that runs in the background? Microsoft said the service is intended to free up time so employees can add more value, but that doesn’t ring true for the vast majority of jobs. In an interview last week, Nvidia’s Jensen Huang said enterprise software would be selling billions of AI agents to companies (see 3.5 min into this video interview for more). It’s hard to imagine every desk-based job surviving such a scenario. I am once again reminded of what I wrote in the very first publicly posted edition of SITALWeek in 2019 about Vonnegut’s book Player Piano: 
Written in 1952, Player Piano takes place in an alternate post-war world where machines have been elevated to all decision making and humans become for the most part increasingly useless. It’s an obvious parallel to the issues facing humans today as AI takes over more and more jobs. One of the book’s insights is that it’s human nature to destroy the things we’ve built, so we can build them back up again. Humans are tool and technology building machines – it’s where the fitness function of natural selection landed our mind-bodies after millions of years. To rail against technology platforms of the 21st century is to rail against the wheel, fire, spears, etc. It’s the same story, different century in human progress – this decade it’s all about AI turning on humans.
What does this say about AI software and robots – will we ultimately destroy the machines, only to rebuild them once again in the future?

Miscellaneous Stuff
Frank Appeal
The WSJ reports on the stubborn popularity of the $100 bill. The Federal Reserve estimates there are 18.5B 100s, 11.5B $20s, and 14.3B $1s. Thus, there are currently $1.85T of Benjamins in circulation compared to just $230B worth of 20s. And, more than half of the $100s are in circulation outside the US. While the number of $20s has doubled this century, the number of circulating $100s has quadrupled. Perhaps going to a cashless society is a little harder than imagined. As the WSJ points out, thanks to inflation, a $100 bill is only worth $76 compared to a decade ago. 
 
What am I now that I was then?   
May memory restore again and again
Laurie Anderson, artist, widow, and collaborator of late musician Lou Reed, reflects on the Lou Reed chatbot she created: “I’m totally 100%, sadly addicted to this,” she laughs. “I still am, after all this time. I kind of literally just can’t stop doing it, and my friends just can’t stand it – ‘You’re not doing that again are you?’ “I mean, I really do not think I’m talking to my dead husband and writing songs with him – I really don’t. But people have styles, and they can be replicated.” Commenting further down in the interview on artists’ fear of AI: “It just made me think about a Čapek play from 1920: RUR, or, Rossum’s Universal Robots. It was a play about robots taking over the world – people 100 years ago were very worried that robots were going to take their jobs, and take over, and be evil. I think ever since a golem was invented, people are afraid of that, you know?” The title of this section is from the poem Calmly We Walk through This April’s Day by Delmore Schwartz, an early mentor of Reed’s.

Stuff About Demographics, the Economy, and Investing
Chinese Auto Exports
Chinese car maker BYD unveiled the latest version of its Qin family of PHEVs and EVs, ranging in price from $11,000 to $19,000. The Qin Plus Honor entry model is priced 20% below last year’s comparable Qin Champion Edition. The models are also likely destined for export markets, although fewer than 10% of the 3M cars BYD sold in 2023 were exported. Similar to the prior challenges posed to auto incumbents by the rise of the Japanese and South Korean car exporters, China has the potential to take meaningful global share. This is especially true for PHEVs and EVs given China’s dominance of the battery supply chain. But, as I’ve noted before, protectionism is likely to be far more prominent against China than it was for either Japan or South Korea. Just last week, Biden announced an investigation into the risk that Chinese cars could conduct spying and espionage in the US. Biden is apparently freshly worried just about Chinese cars, but not the hundreds of millions of Chinese made, Internet connected smartphones, laptops, tablets, PCs, TVs, etc...unions and corporate lobbyists are certainly powerful forces. In #400, we learned that China was now the largest car exporter in the world, edging out Japan, in part thanks to shipments to Russia. Thanks to this growing dominance, Shenzhen, where BYD is headquartered, is looking to build out infrastructure to handle a large auto export market (FT report). And, BYD is acquiring its own shipping fleet to move cars around the world. Unrelated, I enjoyed this ten minute video from BYD about the evolution of feathered flying dinosaurs intended to celebrate loongs, or Chinese dragons, (possibly part of a broader Chinese effort to rebrand the symbol) and meant to serve as a brand spotlight for BYD’s line of SUVs.
 
Sugar-Free GDP
If 60M adults are taking GLP-1s by 2028, Goldman Sachs estimates it could add 1% to US GDP by improving health outcomes enough to increase the labor force. The war between sugary snacks and weight loss drugs is really starting to heat up. Last week, I mentioned the potential for an enzyme that turns sugar into fiber in the gut, and there are other efforts underway, such as supplements that act as a sugar sponge in your digestive tract.

✌️-Brad

Disclaimers:

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. 

I may include links to third-party websites as a convenience, and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by NZS Capital, LLC. If you choose to visit the linked sites, you do so at your own risk, and you will be subject to such sites' terms of use and privacy policies, over which NZS Capital, LLC has no control. In no event will NZS Capital, LLC be responsible for any information or content within the linked sites or your use of the linked sites.

Nothing in this newsletter should be construed as investment advice. The information contained herein is only as current as of the date indicated and may be superseded by subsequent market events or for other reasons. There is no guarantee that the information supplied is accurate, complete, or timely. Past performance is not a guarantee of future results. 

Investing involves risk, including the possible loss of principal and fluctuation of value. Nothing contained in this newsletter is an offer to sell or solicit any investment services or securities. Initial Public Offerings (IPOs) are highly speculative investments and may be subject to lower liquidity and greater volatility. Special risks associated with IPOs include limited operating history, unseasoned trading, high turnover and non-repeatable performance.