Robotics Growth, AI Sparring, Unicorns

Robotics Growth

We wrote a few weeks ago about how global businesses are deploying over 500,000 new robots annually. Amazon alone has 500,000 robots in operation today, along with 1.6m employees. So far Amazon’s pace of hiring and the total robot count has increased in unison, but don’t expect that to last much longer. Companies like Amazon are known for cost savings driven by scale. The marginal cost of robots is going down as the minimum wage and marginal cost of employment has increased. With these economic forces at play, the inflection point of more robots at Amazon than employees is within sight.

The definition of a robot is a grey area. Certain rehabilitation centers are using exoskeletons for gait/walking rehab. In any case, there are many applications for industrial robots. The global population of industrial robots is estimated at 4 million units. As a first mover, Amazon began growing its robotic population in 2013, starting with 1,000 units. You can imagine where these global numbers are heading from here given the Amazon trajectory. Warehouses are not the only use case. ****This translates to a general tailwind for robotics and for the underlying services that allow them to function like cloud computing, semiconductors, networking equipment, batteries, software development and brushless motors, for example.

AI Co-pilots, and the clash of the AI titans

Microsoft’s ChatGPT and Google’s AI model “Bard” are aggressively battling over the next phase of AI and its role in search. The stakes are incredibly high as are the costs of delivering novel AI solutions. Meanwhile, consumers are being force-fed more AI co-pilot models than they can handle. In general this is a great thing for consumers. If ChatGPT was not released by OpenAI in November, we wouldn’t be having this conversation and Google wouldn’t have issued “code red” on AI. Competition leads to better products.

• Artifact, a new start-up by the founders of Instagram, delivers AI-powered news aggregation
• Poe is a new app by Quora that offers a ChatGPT-like experience via iOS
• Runway Research has opened the door to AI-modified video. I recommend scrolling through their examples on that page to get a feel for where this is heading.

There’s no question that AI co-pilots will continue popping up in every facet of digital life over the course of the year. 30% of YCombinator’s latest start up accelerator class is focused on AI products.

Unicorns

Aileen Lee coined the term “unicorn” in 2013 when there were just 39 companies that met the description, including Facebook, LinkedIn and Twitter. It’s a reference to venture capital backed startups that achieve a valuation of over 1 billion. The US has the most unicorns at 853/1260 (67%). Stripe, SpaceX and Bytedance are the largest unicorns with valuations ranging from $100B to $300B.

January 2023 was the lowest month for new unicorn creation since 2017 with just 4 new unicorns minted globally. Two of those new unicorns are AI related: DeepL (multilingual search) and Asimov (genetic design). For context, In January 2022 we saw 55 new unicorns. This is another way of looking at the dramatic drop in capital markets. Many of those unicorns minted in 2021 and 2022 will likely lose their status when they eventually raise their next funding round in a down round.

High-growth companies staying private for longer have drawn negative attention for many years for reasons that are understandable. People don’t want to miss out on the good opportunities. The total value of Unicorns today stands at $3.9 trillion based on funding data, although it’s probably fair to assess a 50% discount to that number given the state of markets. By comparison, US public markets are valued at $45 trillion today. Given the global commitment to innovation by most business leaders today and the better access to capital markets, public market investors shouldn’t worry about missing out on unicorns.