The latest wave of the industrial revolution is upon us and investors need to get to grips with how robots are reshaping business and work.
In 2011 Netscape co-creator-turned-entrepreneur and venture capitalist, Marc Andreessen, proclaimed, “software was eating the world”.
He made the statement in his capacity as a director of Hewlett Packard, as the computing giant announced it was looking to jettison its struggling PC business.
Andreessen predicted that technology would infiltrate and reinvent every single industry to such an extent that it would be difficult to define what a technology company is in the near future.
In the age of autonomous robots, the surface area of problems that software can solve will skyrocket.
Like water finding the lowest point, software started with virtual problems.
Software already helps businesses ‘think’ smarter. Brands rely on software to reach and measure communications with potential customers in the media industry. Banks deploy algorithms to make better credit decisions. Consultants turn to programs to figure out how knowledge workers in skyscrapers can be more productive.
Largely these are all problems where software operates neatly in the virtual world.
Advances in robotics are now allowing more and more physical world problems to be solved by software. This creates an exciting opportunity for investors, because the economic scale of real world problems automation can now solve dwarfs those in the virtual world.
Many possibilities pose many questions
Just consider the vast impact autonomous vehicles are set to have on society.
If cars are able to drive themselves, where will people live? If cars don’t crash, what will happen to the car insurance industry? If robot-taxi services are very cheap, why will consumers still buy cars? If network operators own most vehicles, then will vast systems of refuelling stations on high value real estate make any sense?
When cars start driving partygoers home what are the chances alcohol consumption will increase?
The rise of robotic cars will also change the lives of many workers.
Forget the taxi and truck drivers. Cars programed to follow the road rules and avoid crashes will also put many ambulance paramedics, hospital workers, and highway patrol officers out of a job.
Some of those Silicon Valley mobile push-a-button life services might make more sense in a world of robots. On demand clothes washing, grocery delivery and dinner services may actually turn out to be good businesses without the fragile, low-paid, contract labour they currently rely on.
Robotics in 2016 is an intriguing sector. The smartphone wars have decimated the price of electrical components and large advances are being made in machine vision (how robots interpret the world around them) and deep learning (how robots decide what actions they should take).
Old jobs lost but new ones created
Gimmicks of computers identifying cats and beating world champions at the ancient Chinese game of Go show just how sophisticated artificial intelligence has become.
Those same decision-making frameworks will be applied to anything from picking apples with robotic arms to completely automated warehouses run by robots.
The lurking question invariably veers towards what will happen to all of those people who lose their jobs. Human imagination is limited usually to seeing the first step and not the second step of what new careers are created.
In 1870 half of the US workforce was employed on farms, compared to less than 2 per cent today. In 1960 one third of Americans worked in manufacturing, compared to less than 10 per cent today.
No one laments these declines because who wants their kids working on farms or in factories?
The wealth of more creative and less-repetitious career options for workers will grow exponentially with time. For young Australians this means the impact of their work will be able to be seen across the globe and not just in their local neighbourhood.
Software is eating the world and now, with robotics and artificial intelligence, every single problem in the world is possible to solve more elegantly.
What a time to be alive.
Niki Scevak is a co-founder of Blackbird Ventures. He will be part of a panel discussion “The fourth industrial revolution – what can we expect?” at Conexus Financial’s Fiduciary Investors Symposium in Healesville Victoria, November 14-16. To register click here.
This article first appeared in the November print edition of Investment Magazine. To subscribe and have the magazine delivered CLICK HERE. To sign-up for our free regular email newsletters CLICK HERE.