Brad Neuman: A Peek into the Future
Recently I had the chance to attend a “Master Class on the Future” given by Ray Kurzweil, Chief Engineer at Google. Kurzweil has been called “Edison’s rightful heir” by Inc. magazine. His most famous idea may be that of the technological singularity, a point in time when machines are able to iterate improvements to themselves so rapidly that advances leap forward and humans cannot keep up. The underlying concept that drives his belief in this idea, and has helped the success of his inventions by timing them to coincide with advances in necessary technology, is his theory of exponential or accelerating growth. He showed many examples of it during the presentation, from computer processing speed, to the spread of democracy, to wealth creation in real terms. Indeed, his mentee, Peter Diamandis, the author and creator of the technological competition XPrize, forecasted that there would be more wealth creation in the next decade than in the past century.

The area that Kurzweil sees as making the fastest, most disruptive progress is artificial intelligence. I have often said data is the new oil and nowhere is that more true than in artificial intelligence, where computers need to learn by studying data and practicing. If artificial intelligence is a rocket, data is its fuel. ​For example, Google’s AlphaZero was simply given the rules of chess and after practicing and creating its own vast array of data of what worked and what didn’t in various circumstances, it was able to defeat any human or machine in less than a few days. The more data that the machine analyzes, the better it gets at the task. So it is extremely powerful that technological advances are allowing artificial intelligence machines to double the rate of data they can process every three to five months (figure 1)​ - that is much faster than Moore’s Lawi, which drove incredible advances in technology, productivity, and wealth.

But humans think linearly and it is hard to fathom what exponential growth can mean. To understand, take the precursor to the game of chess, invented in ancient Persia and called shahmat, which literally means “dead king.” The story goes that the king was so thrilled with the game that he offered to reward his advisor, who created it, with anything he wanted. The advisor said he wanted a grain of rice for each of the 64 squares on the board, with the stipulation that it double for each square. The king laughed and suggested the advisor take jewels or land instead, but the advisor reiterated his request and the king granted it. At first the king paid no attention as his men brought one grain of rice, then two, then four, then eight, and so on. But then the bags of rice started getting heavier to the point at which the first half of the board was equal to 220,000 pounds of rice. The math dictates that the next square itself is more than the sum of the all the preceding squares. By the end, the amount of rice was equivalent to Mount Everest and more rice than existed in the kingdom. The advisor had essentially seized the kingdom simply by understanding exponential growth.

The point is that our brains have difficulty thinking non-linearly and we must change our thought process about what is possible when advances are happening exponentially as they are in artificial intelligence. In fact, Kurzweil is seeing artificial intelligence beating humans in new areas virtually every week. Just the other week, artificial intelligence tackled the field of radiology and the machine was able to make the correct assessment better than 80% of the professional radiologists.

Kurzweil believes that humans will be able to leverage computers to make better decisions. Already Google has a service called “talk to books” that allows you to ask the computer a question. The computer reads about 120k books in a second and gives you the answer. With exponential increases in computing power, those answers are likely to vastly improve over the coming months and years, improving outcomes for individuals and companies.

Think exponentially or risk being left in the wake of accelerating change.
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​​​​Moore’s Law is the observation that the number of transistors in an integrated circuit doubles about every two years.​

The views expressed are the views of Fred Alger Management, LLC as of January 2019. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, LLC. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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