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A Universal Basic Income For When the Robots Come

A Universal Basic Income For When the Robots Come

This note was originally published on Barron’s.

Over the next several decades, human labor will be augmented then replaced by robots.

We already have robots that can see and hear. They can roughly process those inputs to define and “understand” what they see and hear. We have robots that can learn. Not in the same exact way as a human, but potentially in a far more scalable way for specific domains. We have robots that can manipulate objects in the real world, some already with speed and strength greater than any human.

 Given our progress in robotics, which should increase exponentially through advances in machine learning, it’s logical to assume that in the future, robots will be significantly more capable than they are today. We may not reach artificial general intelligence (robotic intelligence on par with a human) in the next few decades, but we don’t need to. Through specialization to a single task, robots will be capable of performing that task better than a human. They’ll also perform it cheaper than a human given that robots need only electricity to function, can work 24/7, don’t get distracted, don’t need health insurance, etc. And, as with most technology, the cost of robots will decrease over time.

If we agree on the above as our current and future state of automation, then we agree that robots will eventually be the most competitive option for the majority of what we call “work”. In a free market, that means robots should perform as much of the available work as possible, otherwise market resources will not be allocated with maximum efficiency. In other words, humans should not perform work that robots are capable of because it’s an inefficient use of resources. Therefore, detractors of long-term automation are detractors of free market capitalism. If you want the automated future to include human labor because you think humans need to work even if a robot can do it more efficiently, that’s socialism.

How will humans survive without income from jobs? Robots will create income for us. Money is just a store of value that can be traded for goods and services. Today, humans create value through work and receive money for their efforts which they then trade for survival and recreation. If robots are creating value through work in the future, and they don’t need money for survival or recreation (other than energy, maintenance, and replacement), then the incremental value they create after those costs can be transferred to society through a universal basic income. This is the most efficient way to transfer the benefits of automation to society while advancing the capitalist ideal. By providing no-strings-attached income to a society that no longer has traditional jobs, you allow individuals to choose how to spend their income, encouraging continued competition and innovation in the free market.

What do humans do in the future, if not work? How do we find purpose? We will focus on what separates us from robots: creativity, empathy, and community. In fact, the greatest human legacies are built on those pillars. Martin Luther King Jr., Nelson Mandela, Mahatma Gandhi, Leonardo Da Vinci, Shakespeare, the Dalai Lama. Can you name many people that spent their lives working at jobs that are more revered than names like those just listed? That have done more for society? Maybe Steve Jobs comes to mind, but he built a business on creativity first. Apple products are modern works of art at scale. Jobs was the artist behind it. Maybe Elon Musk comes to mind, but his guiding light is to save humanity — the ultimate act of empathy. Whether reducing carbon footprint, flying to Mars, or augmenting humans to compete with AI, his businesses are groups of people trying to save our species. Not everyone needs to find purpose on such a grand scale, but everyone will have the ability to in the future if they don’t need to worry about survival.

“Work” is much more than any job. It’s the value you create for yourself and others. For most of us, that means being a good parent, a good friend, a good neighbor. You won’t be remembered for that report you wrote or that deal you closed or that car you fixed. In the Automation Age, people will have more time to be creative, foster empathy, and build community — the things that have a truly lasting impact on society. Humans will still work in the automated future, but they won’t have jobs.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Robotics
3 min. read Show less
Swinging for Grand Slams

Swinging for Grand Slams

If we had to sum up our investment approach in one word, it would be non-incremental. Venture capital is a power law game: the vast majority of venture returns come only from a few investments. We believe we have to have the chance to hit a grand slam on every investment we make. Therefore, we look for great teams doing something a little more out there than most. Things like brain-computer interface, or connected fabrics, or creating the future of retail. And we actually think that investing in non-incremental businesses is safer than investing in incremental ones.

Before we get to why, let’s define the difference between incremental and non-incremental.

Incremental companies build for obvious or established markets. They create products and services that are 10% or 50% or even 100% better than what’s on the market now, but they don’t create products that are 10x better. They don’t create products that transform industries and change how consumers interact with the world. And that’s ok! Incremental businesses are important to the progress of the overall ecosystem and see good exits all the time.

Non-incremental companies create products and experiences that are 10x better; those that revolutionize, not merely improve. They establish new markets that are obvious only in hindsight. They create entire ecosystems of companies trying to play in the sandbox they built. It takes a founder with a big vision and a dedicated team to build something non-incremental.

With that distinction in mind, we see three reasons why investing in non-incremental companies is safer than investing in incremental ones:

First, it’s just as hard to create a great non-incremental company as a great incremental company. Either way, the entrepreneur has to convince talented people to take a risk and come work for him or her. The entrepreneur has to retain that talent as other companies come calling with better offers. The entrepreneur has to convince skeptical customers to use his or her new product. The entrepreneur has to persevere through the rollercoaster of survival as a new business. We think that last point is the death knell for most incremental companies: the entrepreneur is beaten into submission and loses interest in the business. It’s easier to stay engaged working on non-incremental ideas than incremental ones.

Second, non-incremental companies tend to have less relative competition than incremental ones. It’s red ocean/blue ocean strategy. Since incremental companies are attacking obvious problems, the market will be full of other businesses trying to solve the same thing. A non-incremental company will have less direct competition because they’re focused on something less obvious. This means that non-incremental markets look smaller than incremental ones at first, but the early non-incremental markets tend to morph into new markets that encompass larger legacy markets over time. Airbnb is an example. Air mattresses on a stranger’s floor is a weird, non-incremental market, but a platform to rent unused housing space competes with the legacy hospitality market.

Third, non-incremental companies tend to develop things that the world needs most. What’s truly valuable about the 5th food delivery company? Or the 10th ride sharing company? Or the 100th photo sharing app? Yes, there are great potential markets there, but they’re obvious markets with lots of competition and, for the most part, undifferentiated technology that creates modest incremental value. We believe that companies tend to get rewarded in proportion to the value they create in the long term. This means that some companies can be overly rewarded in the short term (see many social plays). These short-term wins are harder to predict and are more driven by luck through rapid user adoption than true value creation. Investing in things the world really needs gives us a tangible reason for future reward.

Our downside is still zero when we invest in non-incremental businesses, but the probability of zero is lower for the three reasons mentioned above, and the potential for a unicorn-sized return is greater. Even better, and cliché as it might sound, non-incremental companies are the ones that actually change the world and shape it in our vision of the future. That’s why we swing for grand slams.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Audio, Augmented Reality, Loup Ventures Podcast, Robotics, Startup, Virtual Reality
3 min. read Show less
AR Is Coming To Life via Apple’s ARKit

AR Is Coming To Life via Apple’s ARKit

At Apple’s Worldwide Developers Conference in June, the company announced ARKit for developers to create augmented reality-driven apps. Apple describes ARKit as a platform that, “combines device motion tracking, camera scene capture, advanced scene processing, and display conveniences to simplify the task of building an AR experience.”

Now that ARKit has been available to developers for over a month, app demos have started popping up. Apple will likely select a few of the best ARKit apps and highlight them during the fall launch event for iOS 11 and the new iPhone. Until then, we’ll be tracking the demos that surface. Here are a few of our favorite applications:

Measuring Tool. The most-watched ARKit demo shows an AR tape measure.  Users can measure objects in the physical world using an iOS device.  Applications of the technology for remodeling, manufacturing, design, and home repair will be transformational within those sectors.

Ikea recently confirmed a development partnership with Apple to co-build an app that will allow customers to see what Ikea furniture would look like in their homes.  ARKit allows Ikea customers to make “reliable buying decisions,” according to executive Michael Valdsgaard. We see this partnership as the tip of the iceberg for consumer brands and online retailers to solve a real problem that exists today in online shopping.

Gaming.  Developers are keenly aware that AR provides a massive monetary opportunity for gaming, the gaming and entertainment spaces have generated the most ARKit demos to date. Developers, eager to try to replicate the success of the wildly popular Pokémon Go, are diving into game demos. Some of the most noted demos are AR Minecraft and portal travel.

Drawing and Sketching. ARKit will give iOS users the opportunity to draw in 3D using only their device. Laan Labs gives us an insight as to what this could look like.

Ordering Food. The use case for AR in restaurants surprised us. How many times have you ordered something and, once it is set down in front of you, immediately regretted your decision? One ARKit developer has tried to solve that problem.  The app allows customers to explore dishes on the menu before placing an order.

After just 30 days, developers have made a ton of progress with ARKit. For more, and to track developers’ progress, check out the Twitter feed @madewithARKit.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Apple, Augmented Reality
2 min. read Show less