Mad Hedge Technology Letter
October 1, 2018
Fiat Lux
Featured Trade:
(ZINC AIR BATTERIES WILL REVOLUTIONIZE ELECTRIC CARS),
(TSLA), (NIO), (FB), (GOOGL), (NFLX)
Tag Archive for: (GOOGL)
As Panasonic ramps up its battery production at the Tesla Gigafactory 1 in Sparks, Nevada, the demand and business for renewable energy has never been more robust.
And as the world’s population balloons and man-made pollutants roil the natural ecosphere, business needs an answer to these potential apocalyptic bombshells or there will be nowhere clean enough to live.
Energy security and population growth will have a complicated relationship going forward and cannot be ignored for the sake of mankind.
This isn’t me being a tree-hugging, Birkenstock-trotting, save-the-earth, love and peace-type of guy.
This problem is real and whoever discovers the solution could reap untold profits.
The answer has been found - rechargeable zinc air batteries.
Spearheading this massive initiative is South African-born entrepreneur, sports team owner, Los Angeles Times owner, and more importantly the founder, chairman and CEO of NantEnergy Dr. Patrick Soon-Shiong.
This El Segundo, California-based company presented an utter game changer to the future of the world and the world’s economy.
NantEnergy debuted a rechargeable battery powered by oxidizing zinc with oxygen from the air for commercial use at the One Planet Summit in New York.
It also has the capability to store energy.
Not only is this technology and product cutting edge, but it has the cost basis to support broad-based scalability and adoption.
Ramkumar Krishnan, chief technology officer of NantEnergy claimed this revolutionary battery can “deliver energy for $100 per kilowatt-hour (kWh).”
Lithium-ion batteries have been the mainstay choice for clean energy or clean enough energy since 1992, and its usage varies in cost from $300 to $500 kWh.
Tesla, with its phalanx of superior engineers, has been able to suppress that cost all the way down to a level between $100 to $200 kWh level.
NantEnergy has already registered more than100 related patents in its name and envisions a $50 billion addressable market.
I believe the addressable market is substantially bigger.
For all the hoopla about lithium-ion batteries, there are severe drawbacks in its usage and application.
Let’s concisely run down the pitfalls of batteries of this ilk.
Once out the factory door, the performance starts to go downhill.
Lithium-ion batteries react poorly to high temperatures.
These batteries become inoperable if completely discharged.
There is a slight chance a battery could burst into flames and burn off your face.
Simply put, lithium-ion batteries incorporate cobalt, an extremely toxic material hazardous to human health.
If a Samsung Galaxy smartphone explodes, cover your mouth to avoid inhaling the cobalt-laced fumes.
Dr. Soon-Shiong characterized this new technology as the “holy grail” of renewable energy.
Wide-scale adoption would bring the need for cobalt to its knees.
No longer would tech companies need to scramble to secure a sufficient amount of cobalt supply from the deepest reaches of the Congo jungle.
It would be the end of cobalt as we know it.
At first, lithium would be required for a stopgap measure while engineers refine the battery on its way to a full-fledged zinc alone battery.
The lithium placeholder would only be temporary.
The clean energy movement must be grinning widely as the potential to finally do away with cobalt from renewable energy has pronounced social and economic consequences.
An estimated 1.4 billion people still live in the dark and do not have access to electricity.
This technology is being tested in villages in Africa and desolate communities in Asia as we speak.
The absence of electricity isolates these undeveloped communities in third-world Africa and Asia without access to health care, education, and technology.
It’s hard to kick-start your life as a sprouting little kid when you’re lost in the dark half the time.
Importing fossil fuel to put these communities online is unfeasible and just plain too expensive for communities that have a dire shortage of capital.
Currently, NantEnergy’s rechargeable zinc air batteries are online in 110 villages located in nine Asian and African countries.
The batteries have been combined to establish a microgrid system powering entire areas.
The company will start delivery this product next year widening its type of use to telecommunications towers.
The next step after that would be the home energy storage market targeting California and New York as the first American cities.
Engineers have pointed out that this development could transform the electric grid into a “round-the-clock carbon-free system.”
In addition, with cooperation with Duke Energy, a major utility, NantEnergy’s batteries have been powering communications towers in America for the past six years.
The design is mind-boggling utilitarian - plastic, a circuit board, and zinc oxide wrapped up in a briefcase-size shell.
One charge can offer 72 hours of battery life.
The charging process is easy - electricity from solar installations is stored by converting zinc oxide to zinc and oxygen.
The discharge process is straightforward, too - the system produces energy by oxidizing the zinc with air.
The pursuit of energy reduction is in full throttle, and this is the next leg up for energy aficionados.
Your lithium-ion-run Tesla could become a legacy company in a matter of years if this technology disrupts Elon Musk’s brainchild.
Lately, Musk has been falling behind the eight ball with fresh innovators hot on his heels.
This is the latest company to enter into its market even though still in the incubation stage.
Competitors have popped out of nowhere and are coming for his bacon.
Shanghai headquartered electric car manufacturer Nio (NIO) went public and raised more than $2 billion.
Even though it is not yet a threat to Tesla, it shows that Tesla isn’t the only game in town anymore.
In any case, NantEnergy has the magic to unlock the “holy grail” of renewable energy. And if it can promise on its cost projections, I see no reason why this won’t be furiously adopted by corporations worldwide.
As it is, America has been losing out in the Congo, as China has cornered the cobalt market there.
And, as the evolution of fracking technology quelled the Middle-East situation, it could also have the same effect in the Congo.
More excitingly, it could put online an additional 1.2 billion new customers to devour iPhones and watch Netflix (NFLX).
Companies such as Facebook (FB) and Alphabet (GOOGL) have been developing a way for these remote and poverty-prone places to use Internet from a satellite.
They would need electricity first to power their devices unless Mark Zuckerberg has found a way to use a smartphone without electricity.
NantEnergy’s renewable batteries have already cut the need of 1 million lithium-ion batteries, and warded off the need to release 50,000 metric tons of carbon dioxide since 2012.
California is the flag-bearer in renewable energy policy by forcing its populace to be at 100% carbon-free electricity by 2045.
Musk is on record by saying he expects to break the 100-kWh level, which would contribute to better power storage and expedited electric vehicle (EV) adoption.
In contrast, energy storage analyst Mitalee Gupta at GTM Research has retorted that he’s “unsure $100/kWh is achievable this year.”
Musk, being a naturally optimistic entrepreneur, sets targets then does everything he can to break them.
Either way, two South African born visionaries are doing their part to crater the cost per kWh in the renewable energy market, and Elon Musk might not be the biggest disruptor from South Africa.
Time will tell if this market will become zinc-based or lithium-based – the higher-grade technology eventually wins out spelling doom for Musk.
But it appears that Musk has other things to worry about now.
NantEnergy plans to inaugurate a battery manufacturing facility in California next year.
As for Tesla, buy the car and not the stock.
And for Nio, don’t buy the car or the stock.
Disrupting the Disrupter
Global Market Comments
September 26, 2018
Fiat Lux
SPECIAL CAR ISSUE
Featured Trade:
(SAY GOODBYE TO THAT GAS GUZZLER),
(GM), (F), (TSLA), (GOOGL), (AAPL)
Do you want to get in on the ground floor of another major new trend?
Well, here’s another new trend. Get this one right and your retirement funds should multiple like rabbits.
There have been some pretty amazing announcements by governments lately.
The United Kingdom has banned the use of gasoline-powered engines by 2040.
China is considering doing the same by 2035.
And now the State of California is targeting 100% alternative energy use by 2040. That’s only 22 years away.
The only unknown is what such a planned obsolescence program will look like, and how soon it will be implemented.
With 20% of the U.S. car market, don’t take the Golden State’s ruminations lightly.
California was the first state to require safety glass, seat belts, and catalytic converters, and the other 49 eventually had to follow. Some 20% of the market is just too big to ignore.
The death of the car is now upon us, and it is still early, very early.
This is a very big deal.
Earlier in my lifetime, car production directly and indirectly accounted for about one-third of the U.S. economy.
Much of the growth during our earlier Golden Ages, in the 1920s and the 1950s, were driven by a never-ending cycle of upgrades of our favorite form of transportation, and the countless ancillary products and services needed to support them. Tail fins, radios, and tons of chrome assured you always had to have the next new model.
Today, 253 million automobiles and trucks prowl America’s roads, about half the world’s total, with an average age of 11.4 years.
The demise of this crucial industry started during the 2008 crash, when (GM) and Chrysler (owned by Fiat) went bankrupt. Only more conservatively run, family owned Ford (F) survived on its own.
The government stepped in with massive bailouts. That was the cheaper option for the Feds, as the cost of benefits for an entire unemployed industry was far greater than the cost of the companies absorbed.
If it hadn’t done so, the auto industry would have decamped for a new base near the technology hubs in California, and today would be a decade closer to their futures than they are now.
And remember, the government made billions of dollars of profits from its brief foray into the auto industry as an investor. It was one of the best returns on investment in history in major size.
I’ll breakout the major directions the industry is now taking. Hint: It doesn’t have much to do with traditional metal bashing.
The Car as a Peripheral
The important thing about a car today is not the car, but the various doodads, doohickeys, gizmos, and gadgets they stick in them.
In this category you can include 24/7 4G wireless, full Internet access, mapping software, artificial intelligence, and learning programs.
(GM) is now installing more than 100 microprocessors in its vehicles to control and monitor various functions.
Good luck doing your own tune-ups.
The Car as a Service
When you think about it, automobile ownership is a wildly inefficient use of capital. It is usually a family’s second largest expense, after their home, running $30,000 to $80,000.
It then sits unused in garages or public parking for 96% to 98% of the day. Insurance, maintenance, and liability costs can be off the charts.
What if your car was used 24/7, as is machinery in well-run industrial plants? Your cost drops by 96% to 98% to the point where it is almost free.
The sharing economy is the way to accomplish this.
We are already seeing several start-ups attempting to achieve this in major U.S. cities, such as Zipcar, Car2Go, Getaround, RelayRides, and City CarShare.
What happens to conventional car companies when consumers shift from ownership to sharing? Demand plunges by 96% to 98%.
Perhaps that is why auto shares (GM), (F) have performed so abysmally this year relative to technology and the main market.
Self-Driving Technology
This is the hottest development area in the industry, with Apple (AAPL), Alphabet (GOOG), and the big European carmakers committing thousands of engineers.
Let’s say your car is now comfortably driving you to work, allowing you to read the morning papers and catch up on your email. Or maybe you’re lazy and would rather watch the season finale of Game of Thrones.
What else is possible?
How about if, instead of parking, your car drops you off, saving that exorbitant fee.
Then it joins Uber, picking up local riders and paying for its own way. It then dutifully returns to pick you up at your office when it’s time to go home.
Since the crash rate for computers is vastly lower than for humans, car insurance rates will collapse, gutting that industry.
Ditto for life insurance, as 35,000 people a year will no longer die in car crashes.
Half of all emergency room visits are the result of car accidents, so that business disappears too, dramatically shrinking health care costs in the process.
I have been letting my new Tesla S-1 drive me since last year, and I can assure you that the car can drive better than I can, especially at night.
What better way to get home after I have downed a bottle of Caymus cabernet at a city restaurant?
Driverless electric cars are totally silent, increasing the value of land near freeways.
Nor do they require much maintenance, as they have so few moving parts. Exit the car repair industry.
I could go on and on, but you get the general idea.
For more on the topic, please read “Test Driving Tesla's Self Driving Technology” by clicking here.
Virtual Reality
After 30 years of inadequate infrastructure budgets, trying to get into any America city center is a complete nightmare.
Only last week, a cattle truck turned over on the Golden Gate Bridge, bringing traffic to a halt. Fortunately, a cowboy traveling to a nearby rodeo was able to unload his horse and lasso the errant critters (no, it wasn’t me!).
Even if you get into the city, you will be greeted by a $40 tab for a parking space. Hopefully, no one will smash your windows and steal your laptop (happened to me last year).
Why bother?
Thirty years ago, teleconferencing services pitched themselves as replacing the airplane.
Today, we are taking the next step, using Skype and GoToMeeting to conduct even local meetings, as we do at the Mad Hedge Fund Trader.
Virtual reality is clearly the next step, providing a 3D, 360 degree experience that makes you feel like you and your products are actually there.
Better to leave that car in the garage where it can get a top up on its charge. BART is cheaper anyway, when it runs.
New Materials
We are probably five years away from adopting the carbon fiber technology now used in the aircraft industry for mass-market cars. Carbon has one-tenth the weight of steel, with five times the strength.
The next great leap forward for electric cars won’t be through better batteries. It will come through a 70% reduction of the mass of a car, tripling ranges with existing technology.
San Francisco Becomes the Car Capital of the World
This will definitely NOT happen, as sky-high rents assure that the city by the bay will never attract large, labor-intensive industries.
Instead, the industry will develop much as the one for smartphones. The high value-added aspects, design and programming, will stay in California.
The assembly of the chassis, the body, and the rest of the vehicle will be best done in low-cost, tax-free states with a lot of land, such as Texas and Nevada.
What will happen to Detroit? It has already become a favored destination of new venture capital financial start-ups - the cost of offices and housing is virtually free.
Seems Alive to Me
Global Market Comments
September 25, 2018
Fiat Lux
Featured Trade:
(AI AND THE NEW HEALTH CARE),
(GOOGL), (XLP), (XLV), (MRK), (BMY), (PFE),
(MONDAY, OCTOBER 15, 2018, ATLANTA, GA,
GLOBAL STRATEGY LUNCHEON)
Mad Hedge Technology Letter
September 25, 2018
Fiat Lux
Featured Trade:
(AMAZON’S HOME INVASION),
(AMZN), (GOOGL), (HBB), (PG)
In another resplendent display of corporate expertise, Amazon (AMZN) debuted its stunning new lineup of smart home products aiming to dominate your inside walls.
In total, Amazon gave consumers 15 new devices to dabble with – an unprecedented amount.
Amazon Echo, Amazon’s smart speaker, also received a software update.
Jeff Bezos’ company is traversing where they have never been before, infiltrating the car with the Echo Auto, executing location-based routines such as directing drivers running on a brand-new operating system.
Other products in the shop window were smart devices related to security, a clock, an upgraded Echo Dot, and a microwave.
The biggest nugget delivered in this release event was the advent of the Amazon Echo-on-a-chip – Amazon Connect Kit.
Essentially, it would allow any third-party manufacturer that vies for smart home supremacy to embed an Amazon produced chip into its product and design the architecture around it.
This foray has already turned heads with appliance companies already raving about this new development.
Consumer product companies such as Hamilton Beach (HBB) and Procter & Gamble (PG) are in the midst of engineering its own products centered around the Amazon connect kit.
North America sales and marketing senior vice president at Hamilton Beach Scott Tidey said his company has been “surprised at how easy it is to use the Alexa Connect Kit to prototype devices and create Alexa commands with just a few lines of code.”
In the near future, consumers could be maneuvering around their homes with products possessing a legion of these new Amazon proprietary chips.
Amazon is bent on penetrating your home and turning it into the smart home you always dreamed of, and this is one of the in-roads that will take them to the holy grail.
This hard-charging approach has been effective.
Wait to see which products go viral, then go after market share like crazy.
This approach made the Amazon Kindle a favorite of many tablet goers.
It helps that Amazon products are crafted with intense precision and great attention to detail.
As more consumers devour new Amazon devices, the synergistic effects benefit its comprehensive eco-system.
Once a customer becomes entirely drenched in Amazon products, it becomes the backbone to a customer’s existence.
Ask the millennial generation, and a good portion of them entirely depend on Amazon to fuel their daily routine.
Any replacement services would waste them hours and be a whole lot pricier.
As the voice assistants become widely adopted, it could blow a hole in Google (GOOGL) search.
Google search is still reliant on its desktop search, even though more and more people are migrating to its mobile search platform.
But if Amazon can stay ahead of Google in the voice assistant race, it could supplant Google as the premier search engine.
It might be an existential crisis for Google search and the minions of Google ad tech engineers.
Google is still wholeheartedly reliant on advertisement revenue, which is its profit engine.
Although, the cash cow digital advertisement business has made the company famously rich, regulation is a ticking time bomb, as the government has a bull’s-eye marked at this Silicon Valley mainstay.
Amazon has smartly moved up the value chain of search, and believes voice-activated search will be the revolutionary search function in the next few years.
It’s hard to argue with its prognosis.
Providing enough high-caliber accoutrements that mesh with its voice supported portfolio will expedite adoption and put strenuous pressure on Google to evolve faster.
Even worse, the golden years for digital advertisement have passed and the pressure on margins could exacerbate.
Fighting Amazon would provoke the margin bears and in one fell swoop, Alphabet, which is waiting on Waymo to take off, could get hip-checked by the Seattle-based company.
As the FANGs start to bleed over into each other’s business, these new product events take on a more important meaning.
The Amazon-effect has the tendency to destroy smaller company’s stocks, but going forward, large companies will be just as badly affected as Amazon branches off into new spheres spearheading revolutionary initiatives.
This speaks volumes to the innovation of Amazon, and why the best innovators will always stay one step ahead.
Amazon is rated the No. 1 company by the Mad Hedge Technology Letter and after this stellar debut of various IoT products, it’s hard not to like them even more.
And if Amazon’s connect kit catches fire and Google is forced to concede this hardware to Amazon, it would be a kick in the midsection to Google whose IoT strategy is not sticking as strongly as it would like.
Amazon does not want to co-exist with other companies. However, it smartly concedes certain segments until it is confident in taking that segment over.
This is why Amazon’s in-house brands are starting to wreak havoc on the third-party sellers on its e-commerce platform.
Amazon ingenuously chose to make a microwave because the technology hadn’t changed much in a generation, yet it was in dire need of simplification.
Seize the low-hanging fruit before you tackle the more difficult challenges.
Once Amazon masters the simpler devices in the home, watch out!
The rest of the home will be up for grabs too because of the same reason many companies heed way to Amazon – it does it way better than any other company for a fraction of the cost.
The multiplier effect will be in full force when Amazon finally constructs its shiny new headquarter somewhere outside of Seattle giving Amazon more manpower to fulfill Bezos’ vision.
My bet is that it will be placed smack dab in the middle of Washington D.C. – a stone’s throw away from the White House where Bezos has been increasingly active adding to his army of lobbyists.
With regulation on the verge of breaking social media’s back, Bezos is acutely aware of protecting his assets as if his life depended on it.
Bezos also has a house in Washington and owns the Washington Post.
Amazon doesn’t rest on its laurels because it doesn’t dominate 80% of the Android market, and it must be the aggressor and the disruptor at the same time.
Rolling out 15 smart products blew away the drooling audience and left them befuddled and craving for more.
Amazon must do it another way than Google and its way; the Amazon way, is the winning strategy.
It’s hard to imagine that Google is still reliant on a legacy business to print them money. And as the digital ad industry sinks, Google will sink, too.
Google still hasn’t found the next answer that can marshal it to safe waters.
Its eggs are still in one basket – unlike Amazon.
As Amazon steamrolls the little companies that never had a chance, the threat of them taking out a Google- or a Facebook-size company grows exponentially.
Ironically, Amazon’s digital ad business is set to surpass $4 billion by the end of the year, and it’s not even the main aim for Bezos.
The digital ad business is a side business for Bezos.
His visions are grander and awe-inspiring, and this product rollout affirms this vision.
This is the beginning of something much more powerful. Any investor who thinks Amazon shares are expensive is crazy.
The report of bribery in Amazon’s system and the subsequent short-term weakness in the shares is a great chance to buy Amazon on the dip because this stock is going higher.
Anybody would be a fool to short Amazon.
This company exudes quality, and many would agree with me.
Just The Beginning And More Smart Products On The Way
Last quarter’s earnings report sent Netflix shares nosediving to the depths of the ocean floor, and the wreckage saw Netflix’s stock down 24% in 5 weeks.
The short-term weakness in shares was justified after Netflix miscalculated on their quarterly subscriber numbers.
Netflix is still a buy because the wreckage can be salvaged.
In fact, it was never a wreckage to begin with because Netflix boasts the highest grade online streaming product in the industry.
An industry that is benefitting from massive secular tailwinds at its back, from cord cutters and the widespread pivot to mobile platforms.
Netflix has the best product on the market because they have the best strategy – throw $8 billion on content alone and hire the best production team money can buy to churn out content.
The method to their madness has worked and the haul of 23 Emmy’s was a result of this winning formula.
The 23 Emmy’s tied HBO, whose premier series Game of Thrones is still captivating audiences with its mix of graphic sexual exploits and violent tropes.
Several of Netflix’s award winners saluted Netflix’s hands-off approach, who allow these highly paid production specialists the creative freedom to inspire audiences.
For all of Hollywood’s razzmatazz, director’s and actor’s number one major gripe has been that the leash is tight with minimal wiggle room.
It’s not straightforward to change a culture that has developed over a century.
Cross-pollinating Silicon Valley’s lean business model with Hollywood top-grade content was the trick that removed the shackles from the director’s ankles.
The end-product has been the main beneficiary.
Scoping out Netflix’s end of year lineup has viewers drooling.
The tail end of the year sees Netflix reintroduce some hard-hitting content from Orange Is The New Black, Ozark, Daredevil, Narcos, and Making a Murderer, side by side with fresh content involving Simpsons creator Matt Groening and blockbuster names like Jonah Hill and Emma Stone.
As well as shelling out $8 billion for original content, Netflix upped its marketing budget from $1.28 billion to $2 billion in 2018.
The $2 billion budget is a classy touch but at this point, this product more or less sells itself.
The brand awareness is that far-reaching.
The platform is optimized by tweaking Netflix’s proprietary recommendation algorithm herding the audience into viewing more content that the algorithm deems likely viewable.
The man who is in charge of this is Greg Peters - Netflix chief product officer.
Kelly Bennett, Netflix chief marketing officer, will work with Peters to wield the massive $2 billion marketing budget in the most effective way possible.
To insulate the company from any potential Facebook-like data slipups, Netflix poached Rachel Whetstone from Facebook to head up the public relations division.
Who said there were no winners from Facebook’s PR disaster?
Whetstone’s professional year of hell offers valuable insight into how not to pull another Facebook (FB) stinker.
She previously worked for Google and Uber and is a veteran PR spinner.
Earlier this year CEO Reed Hastings detailed the possibility of using ads in Netflix’s ad-less platform by saying this about why Netflix has no ads:
“It is a core differentiator and again we're having great success on the commercial-free path. That's what our brand is about. So we're going to continue to expand the relevance of a commercial free service around the world and make that so popular that consumers are very used to it and appreciate Netflix.”
The relevancy of his statement is more meaningful now after a recently released report confirming that Netflix is testing the usage of ads to promote its content.
This would be a huge shift in the company’s ethos, and if the algorithms give Hastings the green light, this could alienate a big chunk of their subscriber base.
In a survey conducted about the implementation of ads, 23% said they would quit the service if ads are rolled out onto Netflix’s platform.
Only 41% said they would “definitely” or “probably” keep Netflix if ads are introduced.
In the same survey, if Netflix lowers the monthly cost by $3 while integrating ads, the cancellation rate falls from 23% to 16%, and half said they would keep Netflix.
The most important number of the survey was that only 8% would cancel if they increased monthly prices by $2, but if it went up by $5, 23% would say goodbye to the streaming service.
All signs point to an incremental price increase in the near future, partly helping to offset the mind-boggling amount of content spend this year.
Netflix subscribers are still willing to absorb price increases which is a great sign for future profitability.
But it is also worth mentioning that Netflix is a profitable company now, and margins have been slowly creeping up for the past few years.
The tests demonstrate that Hastings is serious about profitability at a time when the premier profit machines in tech are Apple (AAPL) and Alphabet (GOOGL).
These two behemoths blaze the trail for the tech sector and offer important lessons on the potential future profitability of Netflix.
It will take time for Netflix to reach that level of profitability, but the pillars are in place to ramp up the monetization drive.
The treasure trove of data will surely help decision making for the management, but to make their platform more like Facebook (FB) would be a huge error of epic proportions.
It’s proven that digital ads are annoying like a swath of mosquitoes trapped in your bedroom at 2am.
To dilute the quality of their product would fly in the face of what the company represents.
So how on earth will Netflix’s shares go from the mid-$300’s and reach the glorious heights of $400-plus and stay there?
One word – India.
It’s no secret that Netflix has been charging hard to rev up international business.
India is the trump card.
India boasts around 78 million middle class dwellers who can afford Netflix’s service.
In the next two years, it’s feasible that 10% of this socioeconomic class could be tuning into Netflix.
That foothold into India could mushroom, and potentially expand with an audience whose DNA is comprised of a strong film culture.
As broad-brand broadband expansion and smartphone penetration heating up in India, Netflix’s timely arrival could make Netflix look genius.
Their arrival coincides with a slew of American tech companies looking to tap revenue out of the largest democracy in Asia.
The unrealized potential cannot be ignored.
Netflix has primed their strategy by focusing on locally-produced content that will resonate with the Indian viewer.
Netflix’s India strategy started red hot with crime thriller Sacred Games imbued with a level of unfiltered, real filmmaking unseen in India.
The dark crime drama is already facing a legal battle concerning its lusty, foul-mouthed content that presses on the outer limits of what modern Indian society can handle.
The stereotype breaking series directed by Vikramaditya Motwane and Anurag Kashyap is Netflix’s first Indian feather in their cap as Netflix looks to accelerate the momentum.
Netflix has not produced back to back quarters where they failed to meet subscriber growth forecasts since 2012.
I firmly believe Netflix will continue this successful streak and beat subscriber estimates in the third quarter.
Initial indications show that Indians have gravitated towards Netflix’s original content, and with the 2018 Russian World Cup in the history books, the path has opened up for some nice surprises to the upside.
NETFLIX’S FUTURE - INDIA
________________________________________________________________________________________________
Quote of the Day
"Health care and education, in my view, are next up for fundamental software-based transformation." – Said Silicon Valley Venture Capitalist Marc Andreessen
Mad Hedge Technology Letter
September 13, 2018
Fiat Lux
Featured Trade:
(THE THREAT TO YOUR DIGITAL LIFE FROM CHATBOTS),
(FB), (GOOGL), (MSFT)
Not all tech will survive.
Come hell or high water, chatbots are not going away today but have an ugly fate with the tech graveyard of past technologies in the near future.
The rise of pervasive technology has brought consumers a wave of modern technology – some useful and some that go straight rogue.
Microsoft (MSFT) was on the receiving end of tech gone bad when its Tay bot was duped into spewing anti-Semitic and racist blather.
Bill Gate’s brainchild allowed Tay to behave according to what it learned from fellow users with which it interacted.
The developers forgot that not all Internet speak is nice and bubbly.
In another humiliating episode, cyberhackers wielded a chatbot to masquerade as a woman asking men to hand over credit card information in order to become verified on the raunchy dating app Tinder.
Manipulating an app platform has been a favorite of cyberhackers where users blindly trust these brands with which they have become familiar, and barely question the motives behind these strange developments.
As cybercriminals endlessly hunt for monetization and opportunities ramp up, chatbots represent a critical vehicle to pillage prospective victims.
These examples are just two that were publicly reported.
In reality, flashpoints are widespread, and users are usually completely unaware that they are being victimized.
Some chatbots are even out just for data harvesting among other targeted activity.
The dark web is the perfect marketplace to sell hijacked data.
Many Internet users believe they can feel safe and secure behind the auspices of end-to-end encryption.
However, users seem to forget that this type of foolproof security has its limitations.
The easiest way to become exposed is by the other person on the other end of the message.
They can turn you in.
Paul Manafort found this out the hard way when the FBI seized messages from the people he sent them too.
WhatsApp, owned by Facebook, along with chat app Signal are the best ways to keep chats confidential if you trust the other party. This is where the conversation disappears in about ten seconds.
However, just because WhatsApp is secure now, does not mean it will be secure tomorrow.
WhatsApp co-founder and CEO Jan Koum quit in a vicious row against Facebook’s upper management flipping off the rogue ad-seller as the relationship came to a screeching halt.
He later said he was quitting to collect “rare air-cooled Porsches” and play “ultimate frisbee.”
Facebook plans to weaken WhatsApp’s encryption levels and is intent on harvesting the data to eventually install a digital ad business to this ad-less messenger.
Facebook has shown a blatant disregard to privacy. Plan on everything you have ever sent on WhatsApp being privy to all the workers in the Facebook office at some point in the near future.
In some eerie way, Facebook mimics the hackers that maneuvered around Tinder’s developers, but in a completely legal way showing zero concern for its end user.
That is a scary thing.
Facebook has become borderline criminal in the court of public opinion in Europe. And that sentiment has seeped into the hearts of minds of Americans as well, and rightly so.
In short, the tidal wave of junk tech such as chatbots and Facebook spinning your information to the hills will end badly.
The public has smartened up and cannot be misled by Facebook’s privileged management spouting out that its “values” are different as an excuse for obvious debacles.
The global chatbot market was $369.79 million in 2017, and by 2024, this industry will balloon to $2.17 billion.
Chatbots will have a ubiquitous presence in work and daily life.
Companies desire to curtail rising costs, and are doubling down on the chatbot revolution.
The current obstacle is that artificial intelligence (A.I.) is just not good enough yet for chatbots to comprehensively serve customers and never will be.
The chatbots rely on the data in their systems to solve problems to difficult questions, but humans need to receive answers on the fly in the case of multi-part complications.
Chatbots spectacularly fail at this endeavor.
Even worse, chatbots cannot empathize with a furious customer and feel out customers’ emotions to properly optimize the perfect solution.
And in some instances, humans do not feel at ease to discuss certain topics with software code.
Then there is the generational difference of age groups preferring to use what they are familiar with.
For older generations, this absolutely means speaking to a real human who lives, breathes, and sleeps at night.
Younger generations who grew up never going outside but instead addicted to a screen have an easier time routing their lives through technology.
Granted, chatbots are effective when answering rudimentary questions to direct the customer to a department where they will soon be talking to a human. But chatbots are not the solution to every customer service problem.
Then there is the question of whether a rogue chatbot is going to disperse your data to a nefarious hacker or even behave like Microsoft’s Tay chatbot.
Facebook is already a legal entity that disperses personal data for money.
As the tech sector advances, the weak technology will crash and burn.
Low-quality social media platforms such as Facebook and inferior technology-like chatbots will succumb to the same fate as the woolly mammoth.
Investors are experiencing this massive migration up in quality as the public and investors are doing everything to insulate themselves from the dark side of technology.
In a further blow to user-generated platforms Facebook and Alphabet’s Google (GOOGL), Brussels voted in favor of a law that would force tech companies to actively filter out copyrighted content uploaded to their platforms.
This will crimp profitability for the two giants, as the data and content received for free is being put under a stronger microscope.
Europe is doing everything it can to disrupt these two companies from their free lunch, and they are fed up with the negligence and arrogance in which they run their platforms.
This was evident when Europe slapped Alphabet on the wrist with a $5 billion antitrust penalty earlier this year.
Chatbots will eventually face the public opinion death squad, as fatigued Internet users will completely avoid chatting with software code and move their businesses to the competitor.
The ultimate problem tying chatbots and Facebook together is the utter lack of attention to the customers’ needs.
These two phenomena exist to make more corporate money in a myopic fashion.
Every shortcut available will be taken and has been taken.
Facebook will never be able to monetize its website like the pre-Cambridge Analytica scandal days. It will take a sweeping reset, most importantly dethroning Mark Zuckerberg from his perch in Menlo Park, California, to reinvigorate this lost firm.
Chatbots will not exist in a few years and technology will move on to more effective solutions.
It is the end of bad tech as we know it, as technology is evolving so fast, yesterday’s conquerors become todays pariah’s in just a few years.
Chatbots – A Flash in The Pan Tech
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Quote of the Day
"Our goal has never been to make the most. It's always been to make the best,” said CEO of Apple Tim Cook.
