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Disruptive Innovation: ARK Invest's Nine Big Ideas of 2019 (w/ Cathie Wood) | Real Vision™ - YouTube
Channel: Real Vision Finance
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I founded ARK Invest in 2014 for one reason,
and that was to focus solely on disruptive
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innovation.
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We believe that there are five innovation
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platforms evolving at the same time.
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This has never happened in history.
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You have to go back to the late 1800s to see
three innovation platforms evolving at the
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same time-- back then, electricity, telephone,
and the internal combustion engine.
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For the 50 years through 1929, because of
those innovation platforms, we experienced
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a booming economy and very low inflation.
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We see that happening with these five platforms,
which are all ready, we believe, for prime
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time.
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The five innovation platforms upon which we
base all of our research are DNA sequencing,
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robotics, energy storage, artificial intelligence,
and blockchain technology.
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These platforms cut across sectors.
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They cut across geographies.
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They cut across markets.
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And importantly, they are converging with
each other to spawn new innovation.
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A really good example of that is autonomous
taxi networks.
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What are autonomous taxi networks or autonomous
vehicles?
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They are robots.
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Autonomous vehicles are robots.
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They will be electric.
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So they'll be run by batteries, and transportation
will be moving onto the grid.
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And they are powered by artificial intelligence.
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So those are three platforms converging.
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Now, just think about traditional research
departments.
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Who's going to follow those stocks?
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These are platforms which cut across sectors
and geographies.
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Only with a new kind of research effort do
we believe that capital markets will fully
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be able to exploit these transformational
opportunities.
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So we have an open research architecture.
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We are sharing our research throughout the
world, especially on social media.
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We are living in the communities we're researching.
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So we are pushing our research into Twitter,
into LinkedIn, into Facebook, into Medium,
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into any social network that we think will
help our analysts and our investors live in
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the communities we're researching.
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In the spirit of our open research ecosystem,
I hope you enjoy the big ideas of 2019.
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Deep learning is software that writes itself
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using large amounts of data.
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So all of a sudden, you don't need programmers
to do this anymore.
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You just feed it lots of data.
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And the end result is so much more powerful
than anything that a small team of humans
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can write.
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Each wave of software disruption adds a huge
amount of value to our economy.
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When you look at the PC-driven software evolution
of that decade, that added about $4 trillion
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to the economy.
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The internet, which created the FANG companies,
added about $10 trillion.
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By our estimates, deep learning is going to
add $30 trillion to the economy.
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And this is really a testament to each wave
being larger than the next because software
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is eating more and more industries.
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PC era only ate a few industries like desktop
publishing.
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With the internet, it was maybe media.
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With deep learning, it's going to be every
industry, everything from heavy construction
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to energy to retail to health care.
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All the big-ticket items were going to be
captured by deep learning.
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If you thought the internet was disruptive,
you haven't seen anything yet.
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Basically, if you hear the term digital wallet,
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you're probably thinking of a small application
on your phone with your card storage and to
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make your payments easy.
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But that's just the beginning.
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So digital wallets are soon going to emerge
as a financial ecosystem that are going to
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support a number of financial services.
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It could be your taxes.
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It could be your investing.
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It could be in your insurance or even access
to crypto assets.
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So they're going to become a financial hub.
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In terms of digital wallet opportunity, if
you look at the growth of digital wallets
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in the US, it's already 30 million users are
using digital wallets as of today.
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And we believe about 75% of the US adult population
will be using the digital wallet by 2023.
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Once the bank branch opportunity is realized,
around $200 billion of market capital will
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be attributable to digital wallet companies
like Credit Cash or Venmo that are playing
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in the space right now.
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So with digital wallet, it's essentially a
bank branch in your pocket.
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So an access to financial services is as simple
as making a phone call.
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Hey, there.
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Hi.
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Throughout the history of civilization, we've
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never really had the ability to transfer and
store value without relying on an intermediary
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or a centralized governing body.
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In 2008, Satoshi Nakamoto, the anonymous creator
of Bitcoin, proposed an alternative monetary
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system that was free from top-down control,
governed by the decentralized masses.
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So with Bitcoin, for the first time, we have
the opportunity to have true ownership of
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our wealth.
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And this, for the first time, allows us to
openly, globally, and borderlessly have an
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economy separate from existing monetary systems.
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Fast forward 10 years, and Bitcoin, as a network,
process is over $1 trillion of value annually.
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When you compare that to Western Union or
PayPal, Bitcoin surpasses that and is within
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an order of magnitude of Visa's.
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So 10 years in, Bitcoin being volatile is
normal.
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This is not a six-year get-rich-quick scheme.
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This is a multidecadal shift in how we perceive
money and monetary systems today.
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Lithium-ion batteries have been around since
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the early 1990s.
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But we're approaching some really exciting
tipping points.
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The costs are coming down faster than anyone
anticipated.
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And they're not just enabling electric vehicles
and energy storage.
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But they're also changing the way we travel.
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We believe that, by 2023, there are going
to be 26 million electric vehicles sold globally.
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An electric vehicle will be cheaper to the
end consumer than a comparable gas-powered
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car.
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So to that end consumer, you'll be deciding,
am I going to spend more for a gas-powered
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car that also costs more to refuel and has
higher maintenance costs?
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Or are you going to spend less on an electric
vehicle that also probably accelerates faster?
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What a lot of people don't realize is that
battery cost declines aren't going to just
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stop.
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Battery costs are going to continue to fall
and make endless applications available.
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We think that autonomous taxis are one of
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the largest opportunities in the public equity
markets today.
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We expect autonomous taxis to be available
to consumers within the next year or two.
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And they'll be extremely cheap.
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So the price of personal travel actually hasn't
changed in 100 years.
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Since the Model T, It's been about $0.70 per
mile to drive a personal car.
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That's coming down to less than $0.30 per
mile.
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That's an extremely dramatic decrease.
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And that's less than a tenth of the cost of
a taxi.
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So there are many companies working on autonomous
travel today.
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And we expect a select group of those to be
the winners.
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This is a natural monopoly market.
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And we actually think the auto market, as
a result, will consolidate.
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We think that autonomous taxi networks should
be valued at $2 trillion today in the equity
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markets.
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And it's virtually unaccounted for.
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In the next 10 years, the value of autonomous
taxis could grow to $7 trillion, which is
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actually larger than today's energy sector.
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Personal travel is about to get much safer,
much more convenient, and, most importantly,
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much cheaper.
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Next-Gen sequencing affects humans, plants,
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and bacterial life in a bunch of really interesting,
novel ways.
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For human beings we're able to develop new
types of screens and tests and therapies for
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patients that have a whole broad spectrum
of different types of diseases.
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For plants, we're able to increase productivity
and yield of different types of mainstay crops
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across the world.
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And we can also be able to develop new types
of computational techniques to run atop that
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data to be able to really give us new insights
into the progression of disease.
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So 2003 was the scientific community's first
attempt at sequencing the entirety of the
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human genome in which we discovered that it
cost roughly $3 billion to perform that task
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and about 13 years of computational power
do the same.
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So flash forward to nowadays, we've cumulatively
sequenced about 2 million whole human genomes.
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And we expect that number to get up to around
100 million in 2023, which would expand the
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addressable sequencing market from about $3
billion today to a little bit north of $20
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billion in five years.
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With all of this new data that we're generating,
we can leverage new computational techniques
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running off of deep learning or machine-learned
architecture to be able to go in and yield
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actionable information that beforehand wasn't
possible.
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Only 5% of all monogenic diseases have any
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available treatment today.
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In most cases, we are addressing the symptoms
of disease rather than addressing the underlying
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root cause of disease.
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Enter CRISPR.
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CRISPR is a powerful editing tool for DNA
that can easily and inexpensively correct,
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delete, or repair genes with precision.
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CRISPR is emerging is one of the most promising
ways to cure disease from cystic fibrosis
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to sickle cell anemia and from cancer to childhood
blindness.
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So with CRISPR, addressing all 10,000 monogenic
diseases could total more than $75 billion
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per year in addition to $2 trillion in built-up
latent demand.
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Health care today addresses the symptoms of
disease.
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With CRISPR, we'll be addressing that root
cause of disease.
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When people typically think of robotics, they
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think of traditional industrial robots which
are caged off.
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But collaborative robots, they have sensors
on them.
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So if they bump into you, they're not going
to knock you over.
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They'll stop moving.
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And they're very simple to program.
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Some of them are as easy as, you can take
the robot arm, you can move at one place,
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tell it to pick something up, move it somewhere
else, and tell it to drop it.
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Anyone could learn to program it within a
few hours as opposed to a traditional robot,
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which sometimes takes weeks or even months
to get set up.
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In 2017, roughly 400,000 industrial robots
were sold.
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Traditionally, almost all robots have been
sold into the auto industry.
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But what we're seeing is, with the lower cost
of collaborative robots and the ease to retrain
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them, this is going to expand far beyond just
the auto industry.
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And so we'll start seeing it in all types
of manufacturing.
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ARK forecast that there will be 3.4 million
robots sold in 2025.
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That's going to supercharge productivity and
boost the economy.
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3D printing is totally revolutionizing manufacturing.
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With 3D printing, complexity is free.
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So you're allowed to create these structures
that you could have never created before with
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traditional manufacturing.
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So the interesting thing about 3D printing
is, a lot of people think the opportunity
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is over.
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There was this period in 2014/2015 where everyone
thought there'd be a 3D printer in all of
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our houses.
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And that never happened.
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We don't think it ever will.
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The real opportunity for 3D printing is industrial
use cases-- so markets like the aerospace
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industry or health care, for instance.
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Aerospace engines actually, in particular,
have lots of complex parts.
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And when you 3D print them, you can actually
reduce the number of parts that you need.
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So GE, for instance, has one part that goes
in the turbo prop engine.
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It used to be over 800 pieces.
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And now it's just 12 with 3D printing.
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And with that reduction, you also get 20%
less fuel burn.
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3D printing is roughly a $7 billion market
today.
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And we think it could go to over $90 billion
in the next five years.
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3D printing is going to allow for innovation
like we've never seen before in manufacturing.
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It's going to allow for new parts with new
designs that humans could have never imagined.
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So now you've heard our nine big ideas for
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2019.
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These ideas are at their tipping point.
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They're investable today.
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They're about to take off.
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They may not take off in terms of revenues
and earnings right away.
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But the market is beginning to understand
that there is so much innovation out there
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that is not being priced into the market that
valuations, multiples are beginning to rise
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in anticipation of these transformational
opportunities.
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