Apr 12, 2019

Axios Future

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Any stories we should be chasing? Hit reply to this email or message me at steve@axios.com. Kaveh Waddell is at kaveh@axios.com and Erica Pandey at erica@axios.com.

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1 big thing: How to not replace humans

Illustration: Rebecca Zisser/Axios

AI and robots are capable of both decimating and improving human work. By and large, they're doing the former. That’s in part because AI researchers are mostly creating systems that leapfrog human abilities, rather than do what humans cannot.

Kaveh writes: By changing incentives that currently encourage the development of technologies that compete with people, experts hope to redirect the future of work away from widespread automation-fueled job loss.

The big picture: As we reported this week, economists Daron Acemoglu and Pascual Restrepo have found AI and robotics are destroying more jobs than they are creating.

  • But "it doesn't have to be this way," the pair wrote. AI has the potential to improve work and create new jobs — but for that to happen, researchers and companies would need to shift the direction of their work, and quickly.

Details: Most progress in AI and robotics is measured against humans.

  • Every researcher wants to be able to say their invention can beat grandmasters at an age-old game, or drive more safely than the average adult. That extends to basic research, too. From machine vision to speech synthesis, the big question is: Can you do it better than a person?
  • These tasks are easier to benchmark and they’re easier for computers to master, says Andrew Ng, a Stanford professor who founded Google's and Baidu's AI efforts.
  • So for an expert deciding what problem to tackle next — one that, if solved, would bring them honor and glory at a top AI conference — all arrows point toward making a system that beats humans at their own game.

The problem with this obsession: "If your goal is human-level capability, you're increasing the probability that you're doing substitutive work," says James Manyika, director of the McKinsey Global Institute. That is, you're replacing humans.

  • "If you were trying to solve this as an economic problem, you'd want to develop AI algorithms or machines that are as different from humans as possible," Manyika tells Axios.
  • That's the sort of research that would move computers from an automating, human-replacing role to enabling new, labor-intensive work — these complementary systems would require humans.

Some examples of current research that would not replace humans:

  • Augmented reality, a fundamentally assistive technology that can boost a wearer's productivity in a way that's hard to measure.
  • AI systems that can predict how proteins are folded, or how to route trucks better — problems that are just too complex for humans to ever figure out on their own.
  • Robots that can see around corners, or register sounds outside our hearing range.

Two weeks ago, Manyika and MIT economist Erik Brynjolfsson convened top economists and AI researchers, including Ng, at Stanford to discuss how to encourage work in complementary AI. Manyika and Brynjolfsson will publish some of the resulting ideas in a forthcoming paper.

The bottom line: Both complementary and substitutive AI will end up entering, and fundamentally changing, the workplace. In many cases, substitutive technology will likely be cheaper — and much less fussy — than human workers.

2. The Uber value risk

Photo: Drew Angerer/Getty

Uber is seeking an eye-popping valuation of $90 billion-$100 billion in its IPO —even north of $120 billion, if senior executives are to receive a bonus payday.

  • What's happening: While the buzz around the company is likely to continue, serious questions about its core businesses create risks for Uber's share price once it's publicly traded.

The big picture: Uber's main business is of course ride-hailing. It's second-biggest is Uber Eats, its food delivery service. The growth of both, however — while tremendous overall — slowed considerably the second half of last year:

  • Uber's base of active monthly ride-hailing and Uber Eats users grew by 33.8% last year, down from 51% growth the prior year. And its revenue, while up 42% last year, slowed from 106% in 2017, reports Reuters' Joshua Franklin.
  • Uber Eats alone had $7.9 billion in gross bookings for 2018, up from $3 billion in 2017, Axios' Kia Kokalitcheva reports. But its adjusted net revenue, which takes into account added incentives they are paying drivers to deliver the food, fell from $218 million in the second quarter last year to $165 million in the fourth quarter, writes Bloomberg's Eric Newcomer.

Let's focus in on ride-hailing: For years, Uber's main argument for its high valuation was that it was transforming itself into an autonomous ride-hailing service, and would thus be astronomically profitable by saving on driver costs. Co-founder Travis Kalanick called the shift to driverless "existential" in terms of Uber's success and value.

  • But fully driverless technology has proven far more difficult to develop, and almost no one thinks it will be commercialized before the 2030s, if not a decade or more after that.
  • Yet even when it does happen, Uber's regulatory filing singles out the possibility that rivals could commercialize driverless systems before it can, and it that case, it would be hurt financially.
  • Tasha Keeney, an analyst with ARK Invest, predicts in an email analysis that that is precisely what will happen: Uber will end up relying on rival technology companies. She said fees will rake off a large share of Uber profits, seriously reducing the ride hailing company's take.

When it isn't shockingly frank about its challenges, the Uber filing is astonishingly hubristic: Uber says its total addressable market in its various businesses is all money spent, period, report the FT's Richard Waters and Shannon Bond.

  • It has a shot, it says, at all $5.7 trillion spent on personal mobility everywhere in the world, even though it no longer operates independently all over the world; at all $2.8 trillion spent at restaurants; and at $3.8 trillion on freight trucking.
  • As a reality check, Brent Thill, an analyst with Jefferies, puts the total U.S. food delivery market at $200 billion, but says it won't be a "winner-take-all industry," per Bloomberg's Cristin Flanagan.

Pay attention to this — Lyft, Uber's smaller U.S. competition, debuted on April 1 at $72 a share and rose to $78.29 on its first day of trading. Today, it's trading at $59.97, a 16% below its initial price.

Go deeper:

3. What you may have missed

The D.C. subway. Photo: Getty

Long week? Never mind. Here is the best of Future.

1. A global push for AI ethics: The EU's wishlist

2. The problem with automation: More jobs have been lost than gained

3. When middle class isn't: The false promise of "middle" jobs

4. Colleges are upending majors: Bucking a 19th century system

4. Worthy of your time

Illustration: Lazaro Gamio/Axios

For 60 big companies, a year of zero taxes (Kathryn Kranhold — NBC)

How Big Tech's rise fuels inequality (Jim VandeHei — Axios)

We're not a monopoly (Jeff Bezos — Amazon blog)

The incredible Japanese shrink accelerates (Robin Harding — FT)

Help to stranded robots (Marc Vartabedian — WSJ)

5. 1 caffeine thing: The non-coffee Swiss future

Photo: Tristan Fewings/Getty

Switzerland — among the top ten coffee-drinking nations in the world — takes its java obsession seriously, going so far as to stockpile beans for a rainy day. But now, it's debating getting rid of its reserves.

Erica writes: Switzerland started hoarding coffee beans in the early 20th century, to prepare for potential shortages. Today, the government has 15,300 tons on hand— enough for three months, reports BBC.

  • But now, the government argues that the practice ought to stop because coffee is not in fact "essential for survival."
  • The average Swiss person, who drinks about 5 cups of the stuff per day, might beg to differ.