FYI - For Your Innovation

Today, Tasha Keeney sits down with Simon Barnett to talk about ARK’s valuation of Exact Sciences and to share our outlook about the company’s trajectory in the next five years. Exact Sciences is the cancer testing company that has brought to market both Cologuard and Oncotype. This conversation covers the prominence and acceptance of these two testing franchises, Exact Sciences’ product leadership, Exact’s recent performance in the market, the models that ARK has developed for gauging the company’s outlook, and the areas of risk that investors should be aware of. One of the main focuses of today’s chat is what Exact Sciences’ progress symbolizes in terms of the future of the cancer treatment field, with Simon making an argument for why he sees them holding onto their market-leading position for the foreseeable future. We also spend some time at the end of the episode considering what this means for healthcare and individual wellbeing in general, so make sure to catch it all in this episode of For Your Innovation! Please refer to the Exact Sciences valuation article for a more comprehensive explanation of ARK’s model, including its risks and limitations. “Cancer care is something that is totally divorced from interest rate changes or consumer sentiment. It’s something that’s very predictable, and it’s something that’s very important.” — @sbarnettARK Key Points From This Episode: Introducing Exact Sciences and its two biggest testing franchises: Cologuard and Oncotype. Valuation of Exact Sciences and how ARK has approached creating these models. Calculations for the price target of the company. Sales and marketing at Exact Sciences and the positive brand recognition they have built. Benchmarks for analyzing companies like Exact Sciences. Comparing ARK’s process and view on Exact Sciences to other opinions in the market. How the lowered price of genome sequencing has affected the outlook for the market. The route to the aggregate gross margin structure for Exact Sciences. Qualitative elements that matter most to ARK; how Exact Science fits into our rubric. Alignment between the expectations of Exact Science’s management and our estimations. A look at the three main areas of risk: competition, time, and financing. Simon explains how thesis risk applies to the healthcare space. Thoughts on the company’s net income and cash flow in the near future. Reasons to be excited about the next few years in the healthcare space.

On today’s episode of FYI, we will be featuring last week’s episode of In The Know, a monthly video series on which ARK CEO and CIO Cathie Wood discusses fiscal policy, monetary policy, market signals, economic indicators, and innovation. On this specific episode, Cathie weighs in on M2 growth, interest rates, inflation, auto sales, and bitcoin. Additionally, she highlights ARK’s Big Ideas 2023. “We’ve grown up in a linear world really the last 50 years, and if were right that we’re entering into an exponential growth world, then real GDP growth should kick up here.” – @CathieDWood The Big Ideas highlighted in this year’s report include: Technological Convergence Artificial Intelligence Digital Consumers Digital Wallets Public Blockchains Bitcoin Smart Contract Networks Precision Therapies Molecular Diagnostics Electric Vehicles Autonomous Ride-Hail Autonomous Logistics Robotics and 3D Printing Orbital Aerospace Watch February’s Episode of In The Know. Download the full Big Ideas 2023.

Video games have grown massively over time, commanding more and more leisure time for people all around the world. As video game popularity has grown, so has the use cases and popularity of blockchain technology and these two worlds are beginning to merge more frequently with blockchain based platforms for video games. To help us unpack this nuanced subject is Justin Hulog, Chief Studio Officer at Immutable X, a non-fungible token (NFT) minting and trading platform for video game developers. Justin has a wealth of experience as a general manager, operations leader, and people strategist, and mainly focuses on the intersection of strategy and organization to solve problems. In our conversation, we talk about how Immutable X started, the different sides of the business, details about his role, and what the company provides developers. We then delve into designing sustainable in-game economies, how to potentially leverage blockchain technologies, the idea of cost versus utility, and how to sustain a game’s user base. Hear about the different taxonomies of the space, balancing the business side and the developer side, the play-to-earn era, the silver lining of the recent crypto bear market, and much more. Tune in to discover how blockchain technology could be revolutionizing the video game industry! “Quality game loops and good game loops, so, actually good games, is something that the market wants to see now.” – @BathalaX Key Points From This Episode: Background about Justin and his current role at Immutable X. A brief overview of Immutable X and the underlying blockchain technology. The challenges that developers face working with blockchain-based platforms. How in-game blockchain-based economies are different. Details about the design approach at Immutable X. Ways in which the market and monetizing games have changed. The important underlying utility: making a fun game. Justin unpacks the different layers of a digital asset. How the out-of-game experience provides another platform for design. An overview of the exciting new possibilities of blockchain-based video games. What makes Immutable X different from the competition. An outline of the essential role the in-house development team plays. Justin shares his outlook on blockchain-based video games.

ARK Client Portfolio Manager Ren Leggi and Chief Futurist Brett Winton discuss why ARK believes investors should consider an allocation to disruptive innovation in 2023 in today’s episode of FYI. Ren and Brett discuss the potential size of the disruptive innovation opportunity, why ARK focuses exclusively on investing in innovation and what some of the major breakthroughs were in 2022 that the market might have missed while focusing closely on macroeconomic headwinds like interest rates and inflation. Ren explains why investors shouldn’t think of volatility negatively, and Brett answers the question: “Why should investors hold innovation strategies through downturns in the market?” “Volatility is a sign of how early we are. Volatility feels bad on the downside, but it feels great on the upside.” – wintonARK Key Points From This Episode: Everything Brett’s role entails as Chief Futurist as ARK What the size and scale might be for the disruptive innovation opportunity Why ARK focuses exclusively on investing in disruptive innovation Why Brett believes ChatGPT was a major breakthrough Some of the major breakthroughs the market might have missed in 2022 Our belief that the market might be too focused on macroeconomic headwinds What Brett would tell investors concerned about the inherent volatility in innovation Making the case for an allocation to disruptive innovation in an investor’s portfolio Why the broad-based benchmarks might be short innovation The importance of maintain a long-term investment time horizon when investing in innovation What innovation is happening in the private equity markets Why ARK never changes its investment philosophy even in market turmoil Answering the question: “Why should investors hold innovation strategies through downturns in the equity markets?” Why investors should not try to “time” the market Ren explains why volatility should not be considered a bad word Companies seem to be holding elevated levels of cash on their balance sheets

There are many speculations about the future of artificial intelligence (AI), and in this episode, we hear the opinions and predictions of a player in the inner folds of the AI space. Naveen Rao is the CEO and Co-Founder of the machine learning (ML) training platform, MosaicML, and the former CEO and Co-Founder of Nervana Systems. Naveen shares insight into the thesis behind Mosaic and the practical applications of Large Language Models (LLMs), as well as the Generative Pre-trained Transformer-2 (GPT-2) to GPT-3 transition and the challenge of training models with the constraint of data limits. He predicts the evolution of AI models in terms of quantity, size, and function, and the future of computers in general. If you’re curious as to whether it makes sense to build smaller models or own your own model, this episode is for you. Tune in to hear Naveen’s opinions on the impact of AI on the economy, the danger of centralizing resources, what constitutes sentience, and much more. “What we’re doing at Mosaic is building tools to enable more people to have access to these technologies. When it’s all centralized in one or two or three players, that creates a huge power dynamic.” — @NaveenGRao Key Points From This Episode: Naveen Rao’s educational background and interest in synthetic intelligence. What led him to start his first AI company, Nervana Systems. The thesis behind MosaicML. What MosaicML offers customers. What Naveen considers to be 2022’s most exciting breakthrough in AI. The innovation of ChatGPT. The GPT-2 to GPT-3 transition. The challenge of training models with the constraint of data limits. Naveen explains the concept of synthetic data. He predicts the evolution of AI models in terms of quantity, size, and function. Why it makes sense to build smaller models and own your own model where possible. Data as a moat component. Practical applications of LLMs. Naveen’s opinion on whether AI will disrupt the economy or increase Gross Domestic Product (GDP). The danger of the centralization of resources. How MosaicML is making trading more efficient given the limits AI is facing. The efficiency improvements MosaicML customers are seeking out. Naveen’s prediction for the rate of cost decline. The history of the computer password. The future of computers. The question of what constitutes sentience. Naveen recounts the acquisition process of selling Nervana Systems to Intel. How the innovator’s dilemma will play out among competitors in the AI space. Naveen’s advice for his past self.

It is officially the golden age of TV: no matter how and what you want to watch, there is a platform for you to find it. Nick Grous, Associate Portfolio Manager at ARK, is here to comment on the ongoing wars between Netflix, Disney +, Hulu, Amazon Prime, and other streaming platforms. It seems it is back to the basics for many of these platforms: a change in their digital approaches highlights adaptations in the advertising world. Nick looks at Netflix, the poster child subscription-based platform, and its struggle with users sharing passwords, and, how advertising may be used to mitigate losses. Nick explores the impacts of the pandemic, how the streaming platforms individually deal with competition, global advertising opportunities, advertising proficiencies, and so much more! Plus, you will hear why Nick thinks that Connected TV (CTV) could be the way of the future! “In terms of competition, Netflix doesn’t just compete against HBO Max or YouTube, they compete against all leisure activity.” — @GrousARK Key Points From This Episode: The subscription-based format of Netflix. When the “streaming wars” began. How Netflix managed continuous growth, despite speculation and doubts. How streaming platforms are managing the ‘COVID hangover’. Ad-supported video-on-demand (AVOD) versus subscription video-on-demand (SVOD). Why Nick thinks Netflix will start AVOD. How consumers approach and react to the advertising in their streaming services. Advertiser’s approach to changes in the market. The over-the-top (OTT) and Connected TV (CTV) advertising landscape. Nick discusses Roku TV: a streaming media player. Short-term turbulence versus long-term struggles in the streaming sphere. The impact of the 2008 and 2009 recessions on advertising platforms. Why cable and broadcasting are being left in the past. Nick’s five-year predictions. Nick’s show recommendations and his opinions on streaming pricing.

On this episode of the For Your Innovation podcast, we feature a special year-end episode of “In the Know” with ARK CEO/CIO, Cathie Wood. In the episode she answers investor questions ranging in topics including general market conditions, inflation, deflation, corporate earnings, interest rates, disruptive innovation, ARK’s investment process, supply-chain, and the outlook for 2023. As always, she discusses fiscal policy, monetary policy, market signals, economic indicators, and innovation. Specific questions Cathie addresses during the episode: Please share your thoughts on the 2022 market. What is your market outlook for 2023 including the impact of innovation? Given ARK’s strategies have fallen >70% from their peak in February 2021, why don’t you turn defensive as most managers would do? You have been buying more Tesla and other stocks during the downturn. However, the stocks that you have increased your purchases have fallen further, and the overall decline in performance has accelerated. With interest rates and prices fluctuating so widely, will an investment focus on innovation work? Investors appear hesitant to invest now for long-term growth, given the supply chain disruptions and the expected economic downturn due to rising interest rates. Why do you believe that now is a once-in-a-century investment opportunity? To watch the video version of In The Know, click here.

As the year comes to an end, we would like to thank everyone who listened to the FYI — For Your Innovation podcast. In this final episode of 2022, we compiled some of our most interesting podcast episodes for you. Please enjoy this summary and tune back in when we return in 2023. 1. Space, Business, and the Business of Space with Jared Isaacman from Shift4 Payments (Ep. 127) Chief Futurist Brett Winton and Autonomous and Robotics Director of Research Sam Korus interview Shift4 Payments CEO and Chairman Jared Isaacman. Brett, Sam and Jared discussed the Polaris Dawn mission, Jared’s passion for spaceflight to further human space exploration, and some of the tangible philosophies that he took from SpaceX. (Listen to the full episode) 2. The Future of Web3 Games and Digital Ownership with Polygon Studios CEO Ryan Wyatt (Ep. 146) Next Generation Internet Director of Research Frank Downing and Associate Portfolio Manager Nick Grous sit down with Polygon Studios CEO Ryan Wyatt to unpack The Future of Web3 Games and Digital Ownership. Ryan also comments more generally on the buy-in to decentralization, interoperability concerns, and his perspective on the realities of the metaverse. (Listen to the full episode) 3. Personalizing Private Wealth with Titan CEOs Joe Percoco and Clay Gardner (Ep. 151) Analysts Max Friedrich and William Summerlin talk to Titan co-Founders and co-CEOs Joe Percoco and Clay Gardner about their mission to personalize private wealth. In that episode, you’ll hear how Joe and Clay met and founded their online investment platform, their mission and vision, how they remove the ‘middleman’ in hedge-fund-like investing and more. (Listen to the full episode) 4. Breaking Down Biotech Innovations with Dr. Bob Langer (Ep. 156) Analyst Ali Urman and ARK advisor Dr. Charlie Roberts are joined by MIT professor, chemical engineer, scientist, inventor, and investor Dr. Bob Langer. Dr. Langer has over 1,400 granted or pending patents, has been cited 374,000 times and counting, and was a co-founder of Moderna. In the episode, Ali, Dr. Langer and Dr. Roberts discuss emerging biotechnologies, the potential of artificial intelligence (AI) in healthcare and potential time-to-market accelerators for new therapies and vaccines. (Listen to the full episode) 5. Innovation is the Ultimate Leveler with Steve Case (Ep. 164) Steve is one of America’s most renowned entrepreneurs as a co-founder of America Online (AOL). Currently, Steve serves as chairman and CEO of Revolution LLC, which focuses on investing in the next generation of founders, especially in the 47 states outside of California, New York and Massachusetts. In the episode, Steve and our CEO Cathie Wood discuss why he thinks entrepreneurs are vital, the value of research toward innovation, why Steve thinks you should be optimistic for the future of America. (Listen to the full episode) “Check out the FYI – For Your Innovation Podcast ‘Best of 2022’. Because investing in innovation starts with understanding it. #FYIpodcast”

We are pleased to introduce the ARK Crypto Brainstorm; a quarterly conversation between a rotating group of experts in the crypto space, The ARK Crypto Brainstorm will be published through the For Your Innovation podcast channels and aims to be an informative and in-depth conversation on the current state of the ever-changing crypto landscape with experts offering diverse viewpoints. In the first episode of the ARK Crypto Brainstorm, ARK Cryptocurrency Analyst Yassine Elmandjra and Chief Futurist Brett Winton hosted five leaders in the crypto space including: Alex Gladstein CSO, Human Rights Foundation Alex Gladstein is Chief Strategy Officer at the Human Rights Foundation. He has also served as Vice President of Strategy for the Oslo Freedom Forum since its inception in 2009. In his work, Alex has connected hundreds of dissidents and civil society groups with business leaders, technologists, journalists, philanthropists, policymakers, and artists to promote free and open societies. Chris Burniske Partner, Placeholder Chris Burniske is the Partner at Placeholder VC, a venture capital firm that invests in decentralized networks and web3 services. Chris is also the author of Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond, and he formerly led Crypto research at ARK. Dhruv Bansal Co-Founder and CSO, Unchained Capital Dhruv Bansal is the Co-Founder and CSO at Unchained Capital, a bitcoin native financial services company offering collaborative custody multisignature vaults and loans for bitcoin holders. Prior to Unchained Capital, Dhruv was the co-Founder and CSO at Infochimps, a cloud service that streamlines building and managing complex big data environments and distills analytics. Eric Wall Crypto Blogger Eric Wall is a Stockholm-based software engineer and cryptocurrency trader. He works at a financial IT infrastructure provider as a blockchain and cryptocurrency domain expert and holds a M.Sc.Eng. in Information and Communication Engineering Technologies from the Faculty of Engineering (LTH), Lund University, where he specialized in blockchain technology. Nic Carter Founding Partner, Castle Island Ventures Nic Carter is a founding partner at Castle Island Ventures, a venture capital firm focused exclusively on public blockchains. Before founding Castle Island, Nic worked for Fidelity as their first cryptoasset analyst, where he devised research perspectives on public blockchains. He is the cofounder of Coin Metrics. He holds a degree in philosophy from the University of St Andrews and an MSc Finance and Investment from the University of Edinburgh. Key Points From This Episode: Potential sources for additional fallout in the cryptocurrency market Why might Binance’s auditor have quit Binance’s current situation generally, and what might the company’s future look like Game theory on calling out crypto scams What the future could be for Tether How US Treasury assets could be instrumentalized Would a potential collapse of Tether be positive for Bitcoin? How crypto regulation plays a role in the long-term How Fidelity can impact Bitcoin What the future might hold for the decentralized finance (DeFi) industry Bitcoin’s relative strength among a variety of other crypto crashes The prospects for Bitcoin’s price movement in the near term General thoughts on the collapse of FTX Is Solana dead or can it come back into favor? How the NFT ecosystem compares to the rest of the Ethereum ecosystem What are some optimistic viewpoints in crypto despite considerable recent volatility How government policy and regulation could shape the crypto market

He is one of America’s most renowned and accomplished entrepreneurs and helped make the internet what it is today. Steve Case’s entrepreneurial journey began in 1985 when he co-founded America Online (AOL), the largest internet-access subscription service company in the United States. He stepped down as CEO of AOL in 2000 after negotiating the largest merger in business history. He has an immense passion and appreciation for business, helping start several companies since leaving AOL. Steve has also helped shape government policy regarding issues relating to entrepreneurship and supports legislation that catalyzes startup ecosystems. One of his exploits is Revolution, where he serves as the Chairman and CEO. Revolution is a company focused on investing in the next generation of founders and helping startups grow. In our conversation, we talk broadly about innovation in America, his book Rise of the Rest, and the power of government policy. Learn about his professional background and journey at AOL, his achievements after leaving AOL, and why innovation is fundamental for the future of America. We also unpack the current thinking around government policy concerning crypto and tech, how he thinks the government will handle it, and what policy reforms to expect in the future. Hear about his company Revolution and how the company is helping drive and support entrepreneurial spirit in the country. We also discuss why he thinks entrepreneurs are vital, the value of research toward innovation, why Steve thinks you should be optimistic for the future of America, and much more. “Following the money is one way to make investments, but following the talent is probably the better way in the venture capital world.” — @SteveCase Key Points From This Episode: A brief background about Steve’s professional career journey at AOL. Whether the market bust of 2020 was caused by the collapse of tech stocks. Find out why the business model of AOL was daring in the early days. How Steve got involved in helping shape government tech policies. His opinion regarding government policy in the tech sector. Whether government policy will encourage innovation within tech and crypto. Learn how innovation can be the greatest leveler of opportunity and success. We discuss Revolution and his motivation for starting the company. Discover details about his book and the insight it provides readers. Steve outlines some of the companies in the Revolution growth portfolio. We unpack the shift toward passive investing that has occurred in recent years. Steve shares what he thinks will be the long-term trend in investment of capital. We discuss and compare private and public markets. Reasons for the brain drain and the concentration of capital in a handful of cities. The innovation that is happening around the country and why this is good. Learn about an interesting new application to help you invest properly. Where the biggest inefficiencies are concerning the various stages of venture capital. Differences in terms of companies needing assistance concerning fixed assets. Hear why you should be positive for the future of business in America.