Dear Reader,
In the last few days, I’ve been sharing some recent trips with readers. If you’re wondering why, I’ll explain soon. And for those readers who just want tech, that’s no problem at all. We have our regular insights as well.
There won’t be any fish tales here in The Bleeding Edge, only the real thing.
The end of summer reminds me of one of my favorite adventures a few years back… helicopter fishing in the remote wilderness of British Columbia. It wasn’t an easy place to get to, but it was certainly well worth the trip.
A group of friends flew into Vancouver to meet up and start our journey. We were traveling to Nimmo Bay, where a small, family-owned resort hugs the coastline of a small bay.
The main lodge, in fact, is floating on the bay itself. It’s a place where past U.S. presidents and other dignitaries have visited… The list is too long, but we were in good company.
Departing Vancouver, we flew to Port McNeill on the northeastern tip of Vancouver Island. After that, we split up into a few helicopters for another 45-minute ride to get to Nimmo Bay. The property has a few small helipads on stilts to land on.
There’s nothing there at all – just remote wilderness. It’s a spectacular spot.
After breakfast and once the fog lifted, we’d hop into our helicopters and fly out through the mountains even deeper into the wilderness. We’d typically land on a sandbar in a river… packed with wild salmon.
We’d fish in threes, and the helicopter pilot kept an eye on us with a shotgun. Bear sightings were normal… After all, they were there for the food.
The fish weren’t small… quite the opposite. I had a hot streak on that trip. And to my friend’s dismay, I just about lost count of how many I caught.
I’m fortunate to travel with a group of friends in a private club that I’ve been intimately involved with since 2012. It’s not business-related at all… nothing to do with investment research. It’s just about exploring the world and having extraordinary experiences with fantastic people.
For those who like adventure and expanding their own personal networks, this might be something of interest.
I’ll share some more details on Friday. For now, let’s turn to our insights.
Facebook is in the dating game…
Facebook is officially in the dating business now. It just launched its dating service in the U.S.: Facebook Dating.
Facebook Dating is a platform to help single people meet one another. It will match people up based on their location, interests, and a host of other factors.
And this is an incredible business…
Top dating service Match.com did about $1.7 billion in revenue in 2018. I expect Facebook Dating should get up to those levels quickly. And this spells trouble for the competition. That’s because Facebook has a big advantage over Match and its top competitor, eHarmony.
Facebook has years of behavioral data on all its users. And it has even collected data on people who don’t use its service. Facebook does this by installing web trackers on roughly 80% of the top 100 websites. Any consumer who goes to those sites unknowingly downloads the web trackers without knowing it. Then the tracker follows them around the internet… sending information back to Facebook.
For this reason, Facebook has a comprehensive file on nearly everyone who uses the internet. Facebook will use artificial intelligence (AI) and this rich database to match singles up.
In some ways, it doesn’t matter what users enter into their dating profiles… Facebook already knows our preferences and interests better than we do ourselves. This should provide an even better service than what’s on the market today.
So this is a very natural move for Facebook. I’m surprised it took it this long to get into the business.
And though I do not agree with the company’s methods, this is another reason why Facebook remains a solid large-cap investment right now.
The future of payments…
Making payments with a smartphone is relatively new here in the U.S.
Many of us are probably familiar with services like Apple Pay that allow us to buy something just by putting our phone near a credit card reader. It uses near-field communication technology and a form of digital wallet to complete the transaction. And it is quite convenient. No need to pull the credit card out…
Well, an even more convenient way just rolled out in China. An all-in-one software application called WeChat just launched a new payment device called “Frog Pro.”
This is a point-of-sale machine that looks like an iPad that allows customers to pay with their face. It uses facial recognition technology. Consumers just smile for the camera… and their credit card is charged. This is even simpler than paying with a smartphone.
And Frog Pro isn’t the first of its kind in China. WeChat’s top competitor Alibaba has deployed facial recognition for its Alipay service. So two of the largest Chinese tech companies now offer facial payments.
And we can expect biometric identification for payments to grow…
Whether it’s facial recognition or even voice recognition, this is the future of payments. In fact, I believe biometric identification will be used for everything that requires verification of identity.
For one, it enables a seamless experience. There’s less friction. Consumers have shown over and over again that they value convenience above all else.
For investors, this is a technology sector that needs to be on our radar. The size of the biometrics market in the U.S. was $4.9 billion last year. And it is expected to grow to nearly $15 billion by 2024. That’s a threefold increase in just a few years.
This is certainly an interesting area for future investment recommendations.
AI and machine learning are on the rise…
One of the most prestigious conferences on AI and machine learning (ML) is creating a frenzy.
The Conference on Neural Information Processing Systems is held each December. And this has become one of the most important conferences in the industry.
So important, in fact, it’s now hard to get in. I am on the waiting list for this year’s conference because it is so oversubscribed.
I am hoping to get an official invite between now and December. If not, I may just show up. Maybe I can find a way in.
But in the meantime, I am watching the technical papers that are coming in. These research papers represent the latest and greatest innovations happening in AI and ML.
And the sheer volume of papers coming in shows us how rapidly this industry is growing. Think about this…
Back in 2015, the conference accepted 403 technical papers. Last year, that number eclipsed 1,000. This year, 1,429 papers have been accepted. That’s 3.5 times the number of papers in just four years. And I should mention, it is hard to get a paper accepted. The conference has strict criteria.
This increase in technical papers is an indication of how much technological development is happening with AI and ML. The growth is exponential.
There are now so many papers that no single person could absorb all the information. Each expert in the field only has the capacity to know a fraction of all there is to know. That’s striking.
When analyzing an industry, I look for clues like this to tell me when an industry has substance behind the hype. We know AI has become a buzzword this year. There’s a ton of excitement around it.
And by looking at the tremendous development taking place… and the massive level of investment pouring in… I can see the incredibly rapid progress being made.
What’s more, this development is moving at a pace nobody can keep up with. That tells me the cat is out of the bag. AI’s time is now. For investors, AI/ML-related investments are some of the most exciting opportunities right now. And early stage AI/ML start-ups are getting acquired left and right by larger companies looking to get an advantage by using AI in their businesses. I’ll have a perfect example for readers in tomorrow’s Bleeding Edge.
Regards,
Jeff Brown
Editor, The Bleeding Edge