Moore’s Law may become irrelevant before extinct

“There’s a law about Moore’s law,” Peter Lee of Microsoft recently joked to the Economist: “The number of people predicting the death of Moore’s law doubles every two years.” After almost five decades of predictable improvement, Moore’s Law appears to be plateauing.

Coined by Intel co-founder, Gordon Moore, the law holds that the number of transistors in an integrated circuit will double every two years. This has been an important driver for technological advancement. However, whereas the room for advancement in semiconductors was once massive, we are quickly approaching economic and technological limitations for packing more power into less space.  Handel Jones, CEO of International Business Strategies, predicts that a new semiconductor plant (a “fab”) now costs around $7 billion and could rise to $16 billion by the early 2020s, representing nearly 1/3 of Intel’s current annual revenue.

However, with the rise of mobile devices, cloud-computing, and the internet of things, Moore’s law may in fact become decreasingly relevant before it becomes extinct. Rather than developing new ways to double the number of transistors, chip makers are now focusing on integrating different manufacturing processes and technologies to support the diverse array of sensors and low power processors found in smartphones, tablets, and IoT devices.

While the end of Moore’s law will surely complicate the computer industry, we have reached a point where speed isn’t necessarily everything. While some burgeoning technologies including VR and driverless cars will continue to demand greater computing power, the everyday consumer likely doesn’t know what a transistor even does. They simply want their new devices to continuously provide an improved experience. And while the days of doubling performance are winding down, there are still plenty of ways to create even better and more useful computers

Is Dragon Boat the next AWS?

The speculation surrounding Amazon’s plan to launch a global shipping and logistics operation is fast becoming reality. Operating under the name Dragon Boat, Amazon has been gradually increasing its exposure in the global freight industry via jet leases, parcel delivery acquisitions, and freight forwarding licenses.

For international merchants in China and India, the prospect of this arrangement could be groundbreaking. With a few taps of a mobile app, merchants could summon Amazon trucks to bring their goods to ports for transport on Amazon-chartered ships to be plugged directly into Amazon’s distribution networks in the US and Europe.

Taking a broader view, Amazon’s participation in the global shipping market may increase pressure on incumbents to double-down on technology. As of January, ocean freight costs have reached record lows. Shipping a 40-foot container from Shenzen to Los Angeles costs less than $1,300. With freight pricing at these levels, a considerable portion of logistics costs are now labor-related. This is where Amazon may be able to exert its dominance. By using software to eliminate the costs associated with compliance and coordination of cargo handoffs, the company could create a significant competitive advantage over legacy freight operators.

Amazon has no pressure to introduce such capabilities to the public yet. As it did with AWS, the company can spend years perfecting its systems and processes internally before gradually bringing them to market. Will this be another industry laid claim by Amazon? One fact is certain, it’s increasingly difficult to bet against Jeff Bezos.

Paving the intricate path to 5G

Among the many topics covered at last week’s Mobile World Congress, 5G technology was on top of the agenda.

With the world preparing for a new age of connectivity, including driverless cars and an additional five billion connected devices, faster mobile broadband will be a necessity. 5G is expected to be 50 times faster than 4G with speeds of 10 Gbps and latency times of less than 1 millisecond.

In practical terms, that can be the difference between downloading an HD video in seven minutes versus six seconds or a driverless vehicle traveling 1.4m versus 2.8cm during the time needed to connect to the network. Unfortunately, new mobile standards take years to develop and implement. 5G is no different and may not be widely available until 2020.

If the history of mobile networks has taught us anything, it is that predicting the future can be a fool’s errand. To illustrate this, imagine attempting to predict the impact of the iPhone back in 2003. The mobile ecosystem has always been particularly complex, but with the addition of technology firms such as Apple, Google, and Samsung, the path to 5G is likely to be even more intricate.

Despite these intricacies, the opportunities catalyzed by 5G remain endless. Thus leaving the door open for OEM’s, tech giants, and budding entrepreneurs alike to exploit the many opportunities that arise when new technology can outstrip existing infrastructure.

Super Bowl Sunday’s black box

In just a few days, Super Bowl 50 will be hosted in Santa Clara. In honor of this, I’ve decided to dive into one of America’s most cherished traditions, Super Bowl ads.

Not surprisingly, there has been extensive research for and against the merits of spending $4.5M on a 30 second ad. A recent Stanford study found that advertising in the Super Bowl increased revenue per household by 10-15% in the eight weeks following the game. This would represent an ROI of 150-170%. Conversely, a survey by Genesis Media found that nearly 90% of respondents said they were unlikely to buy something tied to a Super Bowl ad and about 75% of respondents said they could not remember commercials from the year before.

Regardless, year after year, companies funnel resources into campaigns that reached over 114M viewers in 2015 alone. While the audience is unrivaled in terms of size and concentration, it is also completely unattributable. In other words, Super Bowl ads represent a black box. Success on Sunday is not driven by A/B testing, analytics, and advanced segmentation so much as creating a memorable experience. So, in an environment with a seemingly endless variety of marketing tools, are Super Bowl commercials worth the cost? For giants like Pepsi and Anheuser Busch, a few million dollars is a small price to pay for brand awareness and customer engagement.

For smaller companies, the decision is not as clear. SoFi, the San Francisco-based lending marketplace, is said to be allocating 20% of their annual marketing budget on a television and digital ad effort surrounding this year’s game. Whether that investment will emulate GoDaddy’s success or Pets.com failure remains to be seen.

We’re not as digital as you think

Research from McKinsey suggests that the US only operates at 18% of its digital capacity, theoretically leaving $2 trillion worth of untapped GDP on the table.

While it’s fair to argue that the switch to digital has become commonplace amid technology, financial services, and media, the divergence of digital sophistication between these sectors and their laggard counterparts in government, healthcare, and local services continues to expand. In fact, the most digitally advanced portions of the economy have been able to boost profit margins by 3x the average rate of other sectors over the last two decades.

This growing digital chasm should not be blindly attributed to just risk aversion, lack of investment, or reluctance to change, but also complications associated with implementation and culture. Simply asserting intentions to implement digital strategies is only the first step. It also requires a strong and adaptive culture to take those strategies and align them with management, hiring, funding, and KPI tracking among other areas.

Furthermore, sizable alterations in the IT organization are likely required to promote more rapid development, testing, and iteration. All things being equal, converting legacy processes and strategies is not nearly as simple as some like to believe. This rings especially true for large organizations with teams spread over multiple offices and geographies.

But given the growing pressures from agile, tech-centric startups, what alternatives are there? Between 1965 and 2012, the rate at which incumbent companies have forfeited leadership positions within their respective markets increased by nearly 40%.  This shift highlights not only the challenge to remain competitive among a constant stream of disruptive technologies, but also the size of the opportunity that lies ahead.

P2P lending, meet purchase finance

In 2006, there were only two countries that supported digital lending, today that number has grown to 67. In the United States alone, peer-to-peer (P2P) lending volume reached almost $5.5B in 2014. Yet despite this fervent growth, many believe that digital lending platforms have only begun to hit their stride.

Currently, 85% of P2P loans are issued for refinancing, with a large portion of that representing student loans and credit card debt. With that, there remain large untapped opportunities within purchase finance to challenge credit card companies and traditional lenders that have remained relatively untouched.

Putting each side into perspective, the average digital lender’s APR is more than 5% lower than the average credit card rate. Additionally, the average NPS for digital lenders is 8.1x higher than the average credit card provider. The latter is particularly relevant because industry experts agree that success in this space will be driven by capturing lifetime value rather than simply chasing the second loan product. With that, a continued emphasis on customer experience and support will not only separate digital lenders from their traditional counterparts, but also from one another in what has become a highly competitive and fragmented market.

Companies have already begun to emerge to service a variety of consumer spending verticals including medical procedures, health care, and weddings. What then, will the future hold for banks and credit card companies? Essentially, the possibilities can be distilled down to three options: directly partnering with P2P platforms, white-label partnerships, and direct competition. While all three arrangements are plausible, it is worth noting that coordinating them will not come without their share of challenges. Those challenges aside, expect to see continued advancement in the digital lending space that includes new technologies, startups, and partnerships taking full aim at purchase finance.

Advice to startups: Old dogs can still learn new tricks

A recent study by consulting firm A.T. Kearney estimates that assets under management by robo advisors will reach $2.2 trillion by 2020. With typical fees hovering around .25%, investors of all demographics have flocked to automated advisors to rebalance their portfolios with algorithms rather than humans.

Startups including Wealthfront and Betterment have led the charge in this space, raising a combined $235 million and removing the cost and psychological barriers that have traditionally prevented many individuals from investing. However, while automation enables lighter fees, it also requires higher volume to reach profitability. With an AUM of $2.9 billion, Wealthfront’s annual revenue may be still be lower than $10 million. Further, growth is said to have decelerated to 5%. Part of this lapse can be attributed to increased

Part of this lapse can be attributed to increased competition from traditional players including Charles Schwab and Vanguard, each of whom has introduced automated tools within the last year. And they are growing quickly. Charles Schwab and Vanguard’s platforms already represent $4.1B and $10B in AUM, respectively. Differing from their startup counterparts, these industry veterans have much broader product portfolios that allow them to offer automated services at lower fees. Startups in this space may need to consider raising fees or expanding their service offerings. While financial services incumbents have seen many tech-based challenges from startups, some old dogs may have learned new tricks.