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Big Ideas 2021 [pdf] (ark-invest.com)
87 points by jger15 38 days ago | hide | past | favorite | 43 comments

The best argument they could come up with for Bitcoin is "If all of the S&P 500 companies moved 1% of their cash into Bitcoin, it would go up by this much". No real explanation of why companies would move their cash into Bitcoin instead of literally any other investment.

This sounds a lot like the tired "If we could capture 1% of the TAM..." argument used by startups that haven't really fleshed out their value proposition.

Companies may move a portion of their cash into Bitcoin as a hedge against inflation.

I'm guessing they assumed the reader was familiar with Bitcoin and the narrative of "digital gold".

> Companies may move a portion of their cash into Bitcoin as a hedge against inflation.

Sure, but Bitcoin isn't even a particularly good way to hedge against inflation, given the wild volatility and speculative nature of the investment.

There are any number of other ways to hedge against inflation.

This is why "If we could capture 1% of the TAM..." arguments are flawed: They're worthless without an explanation for why this particular product is more likely to attract 1% of the TAM than comparable products.

Its volatile, but first principles says volume should shake this out over time as it scales and becomes adopted.

For now, its an asymmetrical bet with more upside than downside. For the right company (Apple? Tesla?), buying in basically guarantees instantaneous capital appreciation as it signals an endorsement to the market.

I don't think a large co. buying is necessary for Bitcoin to keeping growing, but if it does, game theory suggests other treasuries will look at that action and say, "well, why not us?"

If the best argument for an investment is "if other people buy it, it will go up"... that's a pretty unimpressive sales pitch.

The best argument for Bitcoin growing in value is it's a social phenomenon that will continue for some indeterminate time. Over half a trillion dollars buys a LOT of people becoming intellectually invested in Bitcoin. Almost like a religion, but it's like money so even better.

So, it's an irrational bubble. Got it.

The market cap is very misleading, as it values the entire pie based on what someone paid for the last slice. Much less than half a trillion has gone into BTC.

Absolutely. But people THINK they have half a trillion in Bitcoin “assets,” so that impacts their behavior. They will engage in all sorts of motivated reasoning to justify why it makes sense, to protect that and grow its a perceived value. And don’t underestimate the power of that, collectively.

I agree. It’s no different with other speculative “assets”.

That isn't even really practical, since the throughput is only a few transactions per second and each transaction costs $17USD. Other cryptocurrencies could be useful, but not bitcoin.

Putting hockey stick shaped lines on graphs with buzzwords on the x axis and dollars on the y axis does not a big idea make.

I am disappointed to see ideas that have failed to deliver for a decade like drone delivery (https://www.cbsnews.com/news/amazon-unveils-futuristic-plan-...) and 3D printing (https://www.economist.com/briefing/2011/02/10/the-printed-wo...) have a very long buzzword shelf-life, presumably because they are enduringly futuristic. First principles should tell us that most manufactured goods will never be 3D printed. There are entire fields of engineering dedicated to manufacturing processes, because the final material properties and cost of an item are affected by things like cooling rate, grain orientation, surface finish, tensile strength, and tolerances. 3D printing is another tool in the toolbox, not a replacement for the toolbox. I personally find them useful for ideation, but useless for creating finished products. It is worth considering that the entire market for 3D printers consists of rapid prototyping and Etsy knicknacks, and that it has been saturated.

A lot of these things are niche. Drone delivery is doing quite a bit for medical logistics in some African countries like Rwanda and Ghana. Expanding dramatically to the US depends strongly on regulatory improvement. But even incremental improvements to battery technology will be significantly enabling. A doubling of battery specific energy will enable a quadrupling of the area that a single drone site can service, for instance. I think it has significant potential if the FAA can get its act together.

I entered 3D printing 7 years ago professionally, but I've been surprised by how this has continually improved even in the last 5 years. Quality for entry level machines has improved dramatically and ease of use, etc. Which doesn't change your fundamental point that it'll remain niche. But there are some patents from Stratasys and others that will expire soon (it was a bunch of FDM patents expiring that led to the first wave of 3D printer hype starting ~10 years ago), and that should help expand the market significantly. But you're right we won't be manufacturing everything with 3D printing.

A lot of these things are over-hyped, but can still produce long-term value. Just not like trillions of dollars a year type of value.

In fact, if we had had a centralized Rwanda-like medical drone delivery network in place, I think COVID-19 vaccine distribution would’ve been much better. (Although that’s as much about centralization and organization than it is about flying electric robots...)

Last-mile delivery to medical clinics at 80mph night and day, rain or shine, straight line ignoring traffic or geography is a pretty massive advantage for just-in-time logistics... it makes the concern about deep cold chain for Pfizer much less pressing.

I don't believe that's the entire market. There are still some incredible advances happening, and the move toward fully finished production ready parts is continuing. SLA printing has had recent innovations pushing results ahead quite far, with automakers beginning to use parts in production vehicles straight from the printer.

There are heaps of other niche applications, from remote location manufacturing to automating customer configured products that couldn't be done with traditional approaches, to parts for small fabricators in a range of industries such as aviation and motorsports. Inconel printing is enabling some truly incredible parts for motorsport.

I do agree it will unlikely replace mass manufacturing of cheap products, but I think it's role in manufacturing has far from peaked. You are right about Etsy knicknacks, but I think even prototyping hasn't reached saturation yet.

You seem to be more qualified than I am, but Relativity is 3D printing the entire rocket, which to me is really impressive [0]

Small launch market is a tough one, especially given SpaceX's cost advantage, but Relativity keeps racking up investment. It's been rumored that their 3D expertise make them future-proof in case plan A, launching rocket, doesn't pan out.

[0] - https://spectrum.ieee.org/aerospace/space-flight/the-worlds-...

Why do these decks always contain truly innovative stuff like the next generation of IT systems, massive breakthroughs in ML, stuff like EVs and self driving, etc alongside.... cryptocurrency. Just the financial bias or what?

2 crypto mentions in the TOC but EVs get only one slot in the toc and a bunch of truly innovative stuff happening in biotech stuff gets zero mention.

I don’t get it.

Crypto is profitable for a lot of people. ARK is an investment firm.

Interesting to see some of their work here.

The strongest suit of ARK Invest in my opinion is their marketing, which is clearly demonstrated by the high inflows into their ETF.

Curious to see how they will perform on the long term, given that their portfolio is pretty heavily weighted into medium and small caps stocks.

I wonder if their profits are basically the result of a momentum strategy? Since their investment thesis is based on investing in future technology and after a few years those ideas become mainstream which will lead to an increased investor apetite for that particular technology which will lead to a price appreciation.

Could very well be. My guess is that the inflows generated by their clever marketing is enough to move the market in their favor, and thus, creating a positive feedback loop.

See the inelastic market hypothesis (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686935).

Yup! By listing their trades, they encourage others to follow suit, giving them a buying a selling edge

This reads like...Big Ideas from the past decade. I came away with nothing. And Bitcoin mentioned twice? No thank you.

I mean arkk has massive credibility given their recent etf performance. What is your credibility and why should we trust you? Easy to criticize but tough to come up with well thought out ideas (even if you don't agree with them).

My point is don’t advertise your fund as “disruptive technology” and then proceed to list technology trends from the past decade. Not really disruptive is it? More like trend and momentum following.

You think that ARK is late, but we're actually still very early. Guarantee you that "technology trends from the last decade" will be bigger than ever before in the next one.

In a Bull market everyone is a genius. I would take your performance argument in a Bear market

Just want to note that GPT-3 does not understand anything, It has no logic, it is a language model.

Also, the rise of deep learning is based upon the rise of big labeled data.

If you had a language model whose responses were indistinguishable from a human, would you call that understanding?

I agree GPT-3 is * just * a language model, but then again, so are you.

Not correct. I can write a computer program (logic) and gpt-3 can't.

GPT3 can write correct computer programs. There are many demos online.

Stepping back it is just a translation problem e.g. English idea -> Python code, which an ideal language model would be able to do.

I think what I’m picking a gripe over is that “language model” is a very general term. Calling GPT3 just a language model is like calling a human just a bunch of atoms. It’s not actually limiting.

What I’d love to talk about is how useful of a language model is GPT3? And how useful do you think GPT4, 5, etc. are going to be?

No, GPT-3 is a lang model. I can call it like than since there is a logical definition of a lang model. We do not yet have model of human or human brain definition

This wouldn't be my list, but that's fine. I saw delivery drones on the list. I'm skeptical of this idea for consumers but could see the military using it for resupply logistics or something like that, but what always surprises me is how they use quadcopters (or some other type of multicopter with no swashplate). Seems like you'd want something like an autonomous Chinook (scaled down obviously) or other heavy lift helicopter if you were really going to pursue this idea. And while electric is sexy, from a cost perspective some sort of piston or turbine engine seems more reasonable unless distances traveled are really short and the batteries are swappable.

I think most people who think drone delivery is going to be huge don’t realize how loud drones are. Once it reaches any level of scale there will be noise pollution groups wanting to shut it down.

They missed the biggest idea of 2021 - Gamestop!

Power of the hive mind - the cloud of angry bees killing a bear. The WSB today is a fascinating read, kind of a small window into that mind. One thing when crowd decides to virtually character/twitter assassinate somebody, and another when they intentionally impact several $B losses to hedge funds (classic asymmetry - a bee can lose all its money, few grands, etc. and the loss of a number of bees wouldn't really affect the power of the hive while the single loss of a few $B can be a mortal wound to the bear). A power just a couple steps below say changing a government. No wonder that the best minds in tech are working on harnessing that power.

Did anyone catch this:

>Beyond financial services, digital wallets could become lead generation platforms for offline and online commerce, potentially adding another $9,000-$10,000 to the net present value of their revenues.

That's a privacy nightmare.

Even though it's good marketing - they have some good points.

Does anyone has other white papers in similar directions?

Would be interesting to compare that stuff.

Missing: psychedelic therapeutics

This is super conservative.

Where are the ideas that are seemingly impossible?

I have a serious question. In sight of technologies like GPT3 and investment preference toward AI, why we are telling kids thats important to learn to code?

I genuinely don't follow why GPT3 and investment in AI would make coding ability obsolete, if that's what you're suggesting?

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