• Bringing AI to a business near you…
  • Don’t look a gift horse in the mouth… unless it’s from Facebook…
  • We’re witnessing the birth of a new collectibles market…

Dear Reader,

It was the blockchain industry’s dot-com moment…

In December of 2017, an executive from the Long Island Iced Tea Corp. held in his hands the press release announcing the company’s strategic plans for growth.

I’m sure some readers have enjoyed the company’s products in the past.

Long Island Iced Tea’s Product Lineup

Source: Ars Technica.

The company was well known for producing a range of iced teas and lemonade. And that’s what made the strategic plans so odd.

The contents of the press release announced that the company was changing its name to Long Blockchain Corp. And it would be refocusing its energy on blockchain technology.

We couldn’t have asked for a more obvious signal of a speculative bubble than that.

Not surprisingly, the stock jumped more than 400% when the press release was published.

That wasn’t the only signal of a speculative bubble, but it was elegant in its simplicity. I knew it was a top, and I advised my subscribers of the imminent collapse in the cryptocurrency markets.

A two-year “cryptowinter” followed. It was ugly. Many speculators lost everything.

Ironically, that didn’t dissuade the team at Long Blockchain. In 2019, the company announced that it was going all in on blockchain by selling off its beverage business to a Canadian entity.

But there was a problem lurking in the background. In 2018, the Securities and Exchange Commission (SEC) subpoenaed documents from the company, as there was an investigation into the possibility of insider trading.

And on July 9 this year, the SEC charged three executives from the Long Blockchain Corp. with exactly that.

They determined that the original draft of the press release was shared with a friend and stock broker, which was then shared with another person. This non-public information was acted on, and profits were made. Well, illicit profits as determined by the SEC.

Earlier this year, the SEC delisted the company’s shares because it hadn’t published any financial reports since September 2018. And immediately after that, an Australian firm acquired the brand Long Blockchain, probably for an insignificant amount.

And so the story ends for Long Island Iced Tea. There’s no more Long Island-branded iced tea or lemonade… Or Long Blockchain to enjoy, for that matter.

But hopefully we can take this example with us as a reminder of what to watch out for.

When we see this behavior in some kind of exciting new technology or product, it’s time to pocket profits. Then we can step back, relax, and maybe even enjoy a nice glass of iced tea.

This company is putting AI into the hands of regular people…

We will start off today with an early stage company that I doubt anyone has ever heard of. It’s called DataRobot.

DataRobot has been around since 2012. And it operates in the business process automation (BPA) industry. I’ve always been a big fan of BPA technology, but the markets tended to think of the tech as boring. This just hasn’t been an area high-tech investors cared much about.

BPA is simply the use of software to automate tasks and processes. We can think of this as optimizing tasks that have processes defined by a normal set of rules. These tasks can be automated rather than performed manually. The most advanced forms of BPA use artificial intelligence (AI) and machine learning (ML).

That’s why the BPA industry has become such a hot area for investment over the last year or so. And we can see that in the rapid rise of DataRobot’s valuation.

DataRobot raised $206 million in its Series E venture capital round back in September 2019. That valued the company at $1.3 billion, making it a unicorn.

DataRobot followed this up by raising $317 million in its Series F round in December of last year. That put the company’s valuation at $2.8 billion.

And DataRobot just completed its Series G round, raising a cool $250 million. The company is now valued at over $6.5 billion. So DataRobot’s valuation has shot up 5X in less than two years.

I wasn’t at all surprised to see this huge spike in valuation after watching UiPath, another player in this space, go public this April. It now trades at a $31 billion valuation, which equates to a ridiculous 47 times annual sales.

What DataRobot does is very interesting. The company has created a graphical “drag and drop” interface that allows users to work with artificial intelligence and machine learning algorithms without needing to know any computer code. This approach is now often called “nocode,” and it has become an industry in itself.

It used to be that only highly trained software engineers could work with advanced technology like this. Not anymore. DataRobot is putting this tech into the hands of regular people. This will absolutely accelerate the adoption of AI and ML applications.

And we can imagine that many companies will want to employ DataRobot’s platform. It will essentially turn regular employees into highly skilled programmers. There are massive productivity gains to be made there.

So this is a company that needs to be on our early stage watchlist. And given the late-stage investors that participated in DataRobot’s Series G raise, I’m confident this company will go public within the next 12 months. Let’s keep an eye on it.

Facebook is making The Matrix a reality…

Facebook just put out some interesting research on what it calls Habitat 2.0.

This is a next-generation simulation platform that teaches robots and AIs how to navigate inside of a home environment. This includes how to interact with objects that are commonly found in kitchens, dining rooms, and other rooms in the house.

In other words, Habitat 2.0 creates a virtual simulation of the average home. Robots then enter this simulated environment to rapidly train to become home assistants.

This reminds me of the movie The Matrix, which I just recently watched again. Habitat 2.0 is eerily similar to the training dojo in which Morpheus and Neo fight in this virtual environment.

When Neo needs to be trained in the movie, he beams his consciousness into a simulated environment where he can practice the skills that have been uploaded to his mind.

Well, that’s what Facebook is doing with Habitat 2.0 – except it’s only for robots and AIs. Who knows… Maybe Habitat 3.0 will work for humans, too?

And this platform is incredibly effective. Habitat 2.0 can train robots at a rate of 26,000 simulation steps per second. That’s about 850 times faster than a robot could train in the real world.

So there’s no doubt that this will lead to some big advancements in the area of home robotics.

But there’s a major red flag here…

Facebook made Habitat 2.0 open source and put it out there for anyone to use. This will allow researchers to experiment with it on their own.

That may sound benevolent, but we must ask… Why would Facebook put this bleeding-edge technology out there for everyone to freely use? It’s clearly something that will accelerate the development and use of robots in our homes.

To me, this looks like a Trojan horse.

When consumers buy a home-assistant robot, that robot is going to collect all kinds of data from inside the home. If the robot is equipped with a software stack from Facebook, that software will route all this data back to the company.

This would give Facebook an incredible window into our lives that it doesn’t have now. And Facebook would make a fortune selling access to what it learns from this surveillance to advertisers.

These tactics are why we’re up 141% on Facebook’s stock in our Near Future Report portfolio. We may not agree with the social media giant’s methods, but it’s very effective at what it does…

So Habitat 2.0 is a technological advancement that will accelerate the production and adoption of assistive home robots. But this will likely come at the expense of consumer privacy. Facebook is relentless in its pursuit of data surveillance.

More evidence that the NFT market is on fire…

Readers may remember Tim Berners-Lee. He was the computer programmer who wrote the original code for the World Wide Web back in the early ’90s.

Well, Berners-Lee just dove into the non-fungible token (NFT) market. He created an NFT of the World Wide Web’s original source code, autographed it, and sold it through Sotheby’s auction house.

The take? A cool $5.4 million. That makes this one of the most valuable NFTs sold to date.

As a reminder, NFTs are digital assets that are cryptographically secured and authenticated on a blockchain. They are basically the digital versions of collectibles.

The most valuable NFT remains Beeple’s collage of digital art that sold for $69 million, which we talked about back in March. That sale was the catalyst that put the NFT market on the map.

And perhaps the NFT that received the most mainstream press was Twitter CEO Jack Dorsey’s original tweet. It sold for $2.9 million.

So Berners-Lee beat out Dorsey here. And we should note that he and his wife will donate the funds to their favorite charities. They won’t be pocketing the money.

Bigger picture – this is more proof that the NFT market is getting too big to ignore.

Last year, I predicted that NFTs would become a multibillion-dollar market in 2021 on the back of trading volume of about $250 million in 2020. It seemed like a ridiculous prediction to some… But it has already happened, and we’re only halfway through the year.

We are witnessing the birth of the next generation of the collectibles market that will rival – and likely surpass – its physical counterpart.

This is a trend we’ll be tracking closely here at Brownstone Research.

And we’re working hard behind the scenes on ways for investors to capitalize on it. Readers can expect to hear more about that in the coming weeks.


Jeff Brown
Editor, The Bleeding Edge

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