What an absolutely wild week it has been…
And I’m not talking about the silly politics surrounding the current U.S. government shutdown. This too shall pass.
What is incredible is the latest news of a secondary sale of OpenAI’s private shares at a $500 billion valuation. OpenAI opened up a window for up to $10.3 billion worth of private shares to be traded, allowing OpenAI investors and employees, current and past, to sell some or all of their OpenAI equity.
In total, $6.6 billion worth of OpenAI stock traded hands at a $500 billion valuation, making OpenAI now the most valuable private company in the world.
OpenAI has now overtaken SpaceX in terms of valuation. SpaceX shares last traded this summer at a $400 billion valuation.
This is the new normal.
With private companies now staying private for a decade or more rather than going public, it is becoming far more common for private companies to open up windows for investors and employees to gain some liquidity in the equity they hold to diversify their concentration risk in a single asset and take some money off the table.
The irony of this situation isn’t lost on me. OpenAI began about a decade ago, positioning itself as an altruistic non-profit entity. And now its investors and employees are cashing out as millionaires and billionaires at a $500 billion valuation.
Even more ironic is that Elon Musk himself is currently suing OpenAI for breaching its founding agreement (which it did – Musk is right).
SpaceX, which has been around for more than two decades, has accomplished feats far more difficult than OpenAI’s achievements. SpaceX will generate about $15.5 billion in revenue this year, and OpenAI is on target to reach around $13 billion.
All SpaceX seems to do is win, so it is very possible that if shares were to trade today in a secondary transaction, they might very well trade at or above the $500 billion mark.
No matter what happens, both executives are leading the charge in two revolutionary companies that are already changing the trajectory of the human race.
Have a wonderful weekend,
Jeff
I have a question for AMA. I’m struggling to get comfortable with the idea of glasses because of what it feels like it’ll force my eyes to do. There’s something called the Vergence-Accommodation Conflict that happens with AR glasses – it’s been studied. It’s the forced mismatch that the glasses force your eyes to do between physically verging to the perceived depth of virtual objects, while still needing to stay locked on the near display plane.
Is this an overcomeable constraint on the path to mass adoption? And do you predict Musk will come up with a new interface?
– Lindsey H.
Oooh Lindsey,
What an interesting techy question. Very specific and speaks to one of the largest challenges in developing AR glasses.
So that we’re all on the same page, it is easier to understand this vergence-accommodation conflict (VAC) with an easy-to-understand visual.
Vergence is the rotation of the eyes in opposite directions in order to focus on an object. In the picture above on the left, we can see how our eyes rotate inward to lock in on the correct distance of the object being viewed. Accommodation is the adjustment of the focal power of the lenses within our eyes.
In the real world, the vergence distance and the accommodation (focal) distances are the same. That feels “normal” to us. And it doesn’t matter whether we’re viewing a stable object or a moving object like a ball being thrown at us. Our eyes can rotate and adjust their focal power seamlessly, as the two distances are the same.
But with an augmented or virtual reality display, the vergence distance and the accommodation (focal) distances are typically different. The technology is creating various depths of vision which are different than the depth of the display screen (i.e., the lenses in the AR glasses) that is being used to project images and data.
This is the “conflict” caused by vergence-accommodation differences. It can be discomforting, cause fatigue, and even make us feel like we want to puke.
Now, to your question, there are some application design techniques that can be used to reduce the impact of VAC on a user. Keeping the two distances as similar as possible helps a lot, as does avoiding moving objects in and out of depth too quickly, giving the eyes enough time to adjust.
One of the smart things that Meta has done is that it doesn’t leave the lenses on the whole time that you’re wearing them. The graphics or text only come up when you need them, which is less taxing on our eyes and reduces the effect of VAC. It also saves on battery life.
And the reality is that AR glasses or AI glasses are designed to present useful information and not something visually immersive like a virtual reality game. Therefore, there are far fewer side effects related to VAC. With virtual reality (VR), this is a much bigger problem that limits the amount of time we can spend using a VR headset.
As for Musk, I doubt that he’d enter the race for AR glasses or some new kind of wearable display. I actually think that he has something far more interesting in mind.
Musk’s Neuralink has developed a new product called Blindsight. And as the name suggests, it is designed to give sight to the blind. Blindsight has already received an FDA breakthrough device designation, and Neuralink is already taking patient registrations for clinical trials, which you can find here.
The concept is simple. Our retinas receive the light from what we are looking at in the real world, which is converted into electrical signals that are fed to our brains. Then our brain takes those signals, processes them, and creates an image of whatever we’re looking at.
For those with a loss of eyesight, this isn’t possible. That’s what Blindsight is for. Blindsight will take an image from a camera viewing the real world, translate that into electrical signals, and transmit those signals to the part of the brain responsible for visual function via a neural implant.
Here’s where it gets interesting…
While early versions of Blindsight will provide the user with low-resolution images, Musk believes the technology will evolve to a stage where the vision quality will exceed normal human vision.
What does this mean?
It means that an implant like this could be used for visual augmentation. It can be used for producing high-resolution images, video, and text delivered straight to our brains, and we would “see” this as if we were looking at some kind of display. That means that no display hardware would be necessary. No AR glasses, no AI glasses, no VR glasses, no 3D display.
Imagine that, in theory, with this kind of neural implant, we wouldn’t ever need a screen of any kind ever again. Our user interface, our visual display, would be entirely through our neural implant.
So, the answer to your question about Musk is that he has already developed it. It’s a work in progress, but if successful, it will be the most advanced augmented reality system ever built.
I find the potential of these advanced AR glasses very intriguing, likely to progress to a significant level of excitement, at least with respect to investment possibilities.
However, I never see any of these concept discussions address the elephant in the room… the fact that the majority of likely users are shut out of this market because they require nearly full-time use of prescription lenses. Has Meta already calculated that they can live without that high %-age of the world population and still make all the profits they need?
The true market potential of this utility will come when they can electronically adjust the lens material to one’s required prescription while overlaying the desired AR world. Are you aware of anyone working on this concept? Perhaps a more accessible solution would be a design that will allow snapping conventional Rx lenses into the frame behind the AR lens.
Thanks again for delivering incredible information that few of us would have access to otherwise.
– Brent R.
Hi Brent,
I have some good news for you. Meta already enables their smart glasses and AI glasses to use prescription lenses. The range of prescriptions that Meta can support with this technology is from -6.00 to +4.00 total power.
For more information, you can go right here for more details from Meta.
But I think that you’ll actually be surprised to know that there are other companies working on what you envisioned. Namely, lenses that can electronically adjust on the fly for anyone’s prescription.
A very cool Finnish company, IXI, is positioning itself as the world’s first autofocus eyewear. IXI appears to be making good progress and just last month acquired a lens manufacturing facility in Finland, which suggests the company is gearing up for production.
IXI Prototype Eyewear Design | Source: IXI
It appears that IXI is using liquid crystal lenses, which allow the refractive properties of the lenses to be adjusted using an electrical field, just as you suggested. What this means is that the lenses can autofocus for your eyes regardless of what you are looking at (or how close up or far away it is).
The implications are fantastic. No need for reading glasses or glasses for far away. One pair will meet all your needs and even adjust as your own prescription changes.
There is also an Israeli company, DeepOptics, that is doing something similar. It calls its version Adaptive Liquid Crystal Lenses. There appears to be limited activity at DeepOptics for some time, so I’m not sure if product development efforts have stalled.
And perhaps a wildcard in the mix is Apple. Last November, Apple filed a patent for a “tunable” lens that serves the same purpose, to automatically tune the lenses to meet certain prescription needs of the user.
Given the progress being made, what you envisioned is an inevitability. And there is no reason that these autofocus or tunable lenses can’t be applied to AR glasses or AI glasses.
Hello Brownstone,
Now that the big hype of Trump signing the Clarity Act did not happen and was not even close to being signed yesterday, will you be sending out an email to the investors who just spent $2000?
As I dig in, it is clear that it was never close to being signed yesterday. It is stuck in the banking committee and not close to being presented to the Senate, and if approved, signed by the President.
It would be helpful for investors to understand how you thought it would be signed [on September 30] and what you expect to happen going forward. Thank you.
– Thomas S.
Hi Thomas,
I appreciate you writing in.
Predicting how quickly, or not, legislation makes it through various committees and gets voted on is never a perfect science. There are simply too many moving parts, and developments can change by the day.
Prior to Congress going on August break, the digital assets industry and many key policy makers were all working aggressively towards the end of September as their target to get the CLARITY Act finalized.
Naturally, for a piece of legislation with this kind of complexity, there can be delays or additional cycles spent in committee on various key points. But what has been remarkable has been the speed with which the CLARITY Act has been moving. It was originally introduced on May 29 to the House of Representatives, and by July 17, it was passed by the House.
It’s remarkable to have made this kind of progress in less than two months. And this came on the heels of the GENIUS Act regarding stablecoins, which was passed into law in an incredibly short period of time.
In the last several days, we have seen a notable shift in mindset centered around the pending government shutdown and silly politics being played in Washington, D.C. right now. Obviously, we see this only as a short, temporary delay.
My perspective is that while we clearly can’t control how legislation flows through committees and Congress, we can be prepared for that happening.
And I am confident, with 100% certainty, that the CLARITY Act will get signed into law. My working assumption is that it will continue to move with the same speed that the GENIUS Act moved into law, and that the CLARITY Act has been moving over the past few months.
While the speed of implementation is highly unusual (i.e., it usually takes much longer), it is representative of just how much momentum there currently is for digital assets and innovation around blockchain technology.
From an investment perspective, my strategy is simple. I want to make sure that my subscribers are positioned well in advance of major catalysts.
I have to assume the probability that the speed of the legislative process continues and stays on track. If I wait until it is signed into law, it’s too late. There will naturally have been a run-up in asset prices, as there is no longer any risk that it doesn’t get signed into law.
Said another way, I’d rather be a little early and positioned ahead of legislation being passed than be too late and scrambling to get in after the fact. So the legislative delay that we’ve just seen in the last week or two does not in any way negatively impact our investment thesis.
Hopefully, the shutdown is resolved quickly, and Congress gets back to work. Either way, I do not believe that we’ll have to wait long for the CLARITY Act to get passed into law.
The impacts of this happening will be profound for the entire industry. Implementation will happen quickly with a clear regulatory framework in place for the digital asset market structure. All industry players will know what the rules are and invest and implement accordingly.
We’re just ahead of the game…
Hi, Jeff,
I just finished reading The Bleeding Edge article on mortgage industry disruption, and I have a somewhat related question about another disruption – identity verification.
I read your opinion on World Coin and agree that I have no desire to have my retinal image floating around the Internet. However, the morass of IDs and passwords we live in is a mess. The trend toward passkeys is an improvement, but I would like to have a simple, secure way of providing verification of my ID, with just the necessary information about myself for a specific transaction to take place. That doesn’t seem possible at the moment, but…
There is a crypto project called Civic (CVC). I’ve been tracking CVC via a small investment in the project since 2018. I believe that some form of secure ID will eventually be adopted Internet-wide, and I liked Civic’s approach.
Civic has been pretty quiet until recently, when they announced some new projects that seem relevant to a recent Permissionless Investor recommendation.
Specifically, Civic seems to be proposing a single sign-on (SSO) across the entire blockchain and maybe the entire Internet. They also claim that their verification technologies can provide easily managed, secure, and speedy access for AI agents to workflows and databases.
I’d love to hear your thoughts on this idea and CVC in particular.
– Joseph B.
Hi Joseph,
You are absolutely right. It feels like we’re living in the Stone Age with how we are dealing with ID verification. We have all the technology to solve this problem, and yet we’re still doing things the old way.
Blockchain technology is the perfect technology to enable zero-knowledge ID verification. To use a simple example, when a young woman goes to a bar and has to show her driver’s license to gain entry, she is providing her home address and birthday. A bad actor can take that information and follow her home.
The same is true for just about any kind of ID verification. The information contained on our driver’s license can be used for identity theft or worse. It is dangerous and completely unnecessary.
How can this be solved? With blockchain technology, it is easy. A single entity can verify an individual, and that verification is proof of ID.
In the case of ID verification, all someone needs to know is if you are who you say you are, or, in the case of a bar, that you are old enough to be there.
A blockchain-enabled application can provide exactly that. It can tie a biometric print, like a facial scan, with any information required by someone who needs to confirm ID. A simple biometric scan is all you need to prove you are who you say you are.
For anyone who has used CLEAR in an airport, the concept is very similar.
CLEAR is a secure identity verification platform that operates biometric-based verification systems for travel documents. It’s mostly popular for breezing people through airport security checks.
I pre-registered with CLEAR and verified my identity with CLEAR years ago, and now I never have to show my ID at an airport. My face is enough.
While CLEAR is not blockchain-based, it could easily evolve into that. And to your point, Civic is proposing something similar.
Civic is another company that aims to bring cohesion and simplicity to identity verification via a blockchain-based ID management system. The idea is that users, after a one-time verification through Civic, would be able to use their verified identity wherever Civic’s services are used.
I wish I could give a positive perspective on Civic. It was one of the original projects in this space. As much as we like the original vision of Civic, we just don’t see the project having any legitimate momentum that would positively impact its native token CVC. And if you go to the website, we don’t see any mention of the token – CVC – at all.
There are many cases where a company is working on useful technology, but the value of that technology doesn’t accrue to the token. This is what we believe to be the case with Civic.
This speaks to this interesting dynamic in the blockchain industry of equity versus a digital asset and how they relate to one another. For example, Ripple Labs is a corporation with equity investors, and it has a valuable native token – XRP. There are two ways to gain exposure to the company.
Decentralized projects like Bitcoin or Ethereum aren’t corporations, so the only way to gain exposure is by buying the native token.
Civic may very well go on to be successful as a company deploying its blockchain-based technology, but it doesn’t need CVC to do that. We’ll be tracking the company to see which direction they go, but right now, I’m bearish on CVC as a digital asset.
And it pains me to see the progress that Worldcoin, now World, is making, given our previous dives into its technology. Given Sam Altman’s backing, the project will have as much in the way of resources as it needs. Another interesting project in the space that we’re keeping our eye on is the Human Network (note: not a recommendation, just mentioning that we’re tracking the progress).
Joseph, what you are looking for will happen. It’s just a matter of time. Like you, we are very keen for a company to solve for this and become widely available for consumers. And whether it is a public company that cracks it, or a blockchain project, I’m confident that we’ll be covering it in either Exponential Tech Investor (equity) or Permissionless Investor (cryptocurrency).
Thanks again,
Jeff
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
