FYI - For Your Innovation

Please note: as of 2/28/23, ARK’s clients own greater than 1% of the shares outstanding of Drafkings Inc. Fantasy sports and sports betting are now well-known and developed markets that serve hundreds of millions of people, and today’s guest has found a way of bringing the two into the Web3 space. We are joined by the Co-Founder of DraftKings, Matt Kalish, as he gives us a sense of the moments surrounding his company’s venture into daily fantasy and mobile sports betting. Then, we learn about DraftKings NFT game Reignmakers, how it’s pushing new frontiers in Web3, how it works, and how it stacks up against other daily fantasy products. We also hear about how players and league associations have received DraftKings, as well as some key insights into some of the partnerships they have formed. Our guest explains his perspective on Web3 interoperability and the transfer of utility, why DraftKings chose to partner with Polygon, what he and his team hope to achieve in the next five years, and what excites him the most about the Web3 space. At the end of today’s episode, Matt gives us his assessment of his Boston Celtics season so far and why he thinks they are real title contenders. “DraftKings doesn’t play in the super speculative space like that. We’re not a startup that can just bet the house on one little venture. We only want to do rational things.” — @mattkalish Key Points From This Episode: An introduction to the Co-Founder of DraftKings, Matt Kalish. Matt’s professional background and how he became a founding member of DraftKings. When they launched their daily fantasy product and how they got into mobile sports betting. How DraftKings is pushing new frontiers in Web3 with Reignmakers. The way Reignmakers matches up to daily fantasy products, and how it works. How players and leagues have received DraftKings, and the partnerships they’ve formed. What Web3 interoperability means to Matt and his thoughts on the transfer of utility. Why DraftKings chose to work with Polygon. What Matt and his team hope to achieve in the next five years. How the introduction of NFTs in fantasy sports has impacted private betting behavior. What excites Matt the most about exiting the NFT winter and the Web3 space as a whole. Matt’s thoughts on the Boston Celtics season so far and where he thinks they’ll end up.

Robotics are both deeply tied to artificial intelligence (AI) and machine learning (ML), and also somewhat distinct in their practicality and material application. Built Robotics is a great example of this duality, and in today’s conversation with the CEO and Co-Founder of the company, Noah Ready-Campbell, we hear about how the company is positioning itself in relation to current construction industry needs and also for the wave of possibilities in the near future. Noah talks about the process of transition to autonomy, comparing other related sectors such as transportation, the strong bonds Built Robotics has created with the burgeoning solar power space, and also his belief in the capability of automation to aid us in constructing a better world. We discuss the refining of machine learning models, safety and security at Built Robotics, the need for supervision, and other sectors that the company might move into in the future. So to hear it all from Noah in this insightful chat, make sure to join us. “The thing that I think determines scaling a success for us is less about the technology barriers and more about how do we make something that’s easy and efficient for the customer.” — Noah Ready-Campbell Key Points From This Episode: The history of Built Robotics, the initial hypothesis, and their focus in the last few years. Noah talks about what they offer their clients in the construction business. Renewable energy and solar power; why Built Robotics has found a good fit in this space. Unpacking the usual costs of construction and how Built Robotics’ prices compare with this. The sensor suite at Built Robotics; computers, cameras, GPS, and more. Noah’s perspective on the question of autonomy and the trajectory of the construction industry. Thoughts on safety and regulation, and the eight-layer safety system in place at Built Robotics. Considering the limits on how fast and efficiently the machine is and will be able to operate. Necessary supervision and the possibility of the complete removal of human involvement. The skills involved in the utilization of machine capabilities. Noah shares the comparisons of efficiency and work hours between human labor and robotics. The vision for Built Robotics, and Noah’s ambitions around longevity. Factory integration of machines and where Built Robotics system is headed. The elements of Built Robotics that make sense to outsource. Noah’s expectations for the company to move into sectors beyond construction. The influence and impact of the latest wave of AI advancements on the company. The importance of the Inflation Reduction Act on the construction industry. Noah talks about the robotics possibilities he is most excited about currently.

Urban air modality is coming to life a lot faster than we may expect, and joining us today is the CEO of Volocopter, Dirk Hoke, to discuss their new Electric Vertical Take-Off and Landing (eVTOL) vehicle service launching in 2024. Tuning in, you’ll hear all about how Dirk joined Volocopter, the different aviation authorization bodies and why they’re important, the aviation safety regulations in testing new aircraft, mistakes companies are making, and the global regulators’ reaction to new technology. Dirk talks us through how Volocopter is designed, why it is designed the way it is, and how it will change urban air modality over the next decade. You’ll also hear about the hurdles they are facing, their hopes for their launch, and the cost of these models. Autonomy is not a technological issue but is rather an issue of certification and public support and in this episode, Dirk highlights the importance of recognizing that air taxi travel is going to happen much sooner than we think. Tune in now to hear about this exciting innovation. “Our systems can be applied to any city in a very short-term manner, once we have demonstrated that we are safe and low level on the noise side.” — @HokeDirk Key Points From This Episode: An introduction to today’s guest, Dirk Hoke. What led Dirk to join Volocopter. Dirk explains the importance of the aviation authorization bodies, Federal Aviation Administration (FAA) and International Aviation Aviation Assessment (IASA). Why you can only have a serious problem in civil airspace after one billion operational hours. How to ensure safety when creating an aircraft. What makes this such a rigorous process and the mistakes he sees other companies making. How global regulators have reacted to the huge wave of new technology being created. Why air traffic management needs to go through the next step of digital transformation. Dirk tells us why Volocopter is designed the way it is. Dirk explains how this model will change flying in the next decade. The price structure dynamics in this industry. What discussions are being had about increasing landing sites. How congestion is changing and why we need new modalities without waiting for new roads. How and why the business model for making aircrafts has changed. Why Dirk wants President McCall to launch the product at the 2024 Paris Olympics. The hurdles Volocopter is facing as they journey to commercial launch. Why one design cannot cope with all the requirements of all the different markets. Why autonomy isn’t a technological issue but rather an acceptance and certification problem. Why humans will be used in the loop of automated air travel for quite a while. The importance of understanding that air taxis will fly sooner than we think they will.

On today’s episode of FYI, we will highlight another segment from Big Ideas 2023; Technological Convergence. To watch Chief Futurist Brett Winton walk through his section, click here. To download the full Big Ideas 2023, click here. “Future historians could look back on this business cycle and say we can’t believe that all of these technologies were hitting critical stages of inflection at the same time.” – @wintonARK According to ARK’s research, five innovation platforms are converging to create unprecedented growth trajectories. Artificial Intelligence is the most important catalyst, its velocity cascading through all other technologies. The market value of disruptive innovation platforms could scale 40% at an annual rate during this business cycle, from $13 trillion today to $200 trillion by 2030. In 2030, the market value associated with disruptive innovation could account for the majority of the global equity market capitalization.

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.