Today, we are happy to share the next essay in the autonomous vehicle series from our colleague Matt McCall, editor of Investment Opportunities. Matt has been covering one of the most significant trends and growth investment opportunities of our lifetime — electric and autonomous vehicles.
When investing in market-changing trends, some investments could take years to yield returns. Today, Matt is going to explain why that is not the case with AVs. Unlike so many other innovations, exponential change is right around the corner, and so are the profits.
We will be sharing the final essay in this series with you in a special send of the Digest very soon. In the meantime, I know you’ll find the essay below informative and entertaining.
How Exponential Progress Means More Money Faster
By Matt McCall
If you’re like a lot of people, you might assume that autonomous vehicles (AVs) are some kind of “Jetsons” idea that will take years – if not decades – to play out.
There’s good reason for that…
You see, conventional progress – the kind of advancement ingrained in the minds of most people – is like going for a walk…
You take one step, you advance one step.
After taking 10 steps, you are 10 steps away from where you started.
Pretty simple, right?
Well, exponential progress – the kind taking place in technology labs and businesses RIGHT NOW – radically changes the equation… and radically accelerates the pace of change we see in the world.
Each step is DOUBLE the step before it.
For example, if you make exponential progress while taking a walk, you take one step.
Now double that…
… and your second step is the equivalent of TWO regular steps.
By the time you get to the 10th step, your step is the equivalent 512 regular steps!
And by the time you get to the 20th step, your step is the equivalent of 524,288 steps!
The Tipping Point
Exponential progress is progress that “snowballs”… each step in the advancement is double the one before it.
The first stages of exponential growth aren’t incredible. The growth shown on a chart does not soar upward during the early stages.
As a result, disruptive innovations – like self-driving cars – may strike you as nothing more than a fantasy…
But computing power is advancing at incredible – and accelerating – rates. At the same time, the cost of computing power is plummeting.
But technological change does NOT progress in a straight line.
It happens like this…
There’s a key principle behind this incredible chart.
Start with the “linear” line. It shows us how most people expect technology to change.
But now look at the blue line.
This is what exponential change really looks like.
As you can see, there’s a gap between the degree of change we believe is possible – and what actually happens over time.
When progress reaches the point where disappointment tips to amazement – that’s when a technology really takes off.
It’s called “The Law of Accelerating Returns.”
And it was first observed by Google’s Director of Engineering, Ray Kurzweil.
If you haven’t heard of Ray, PBS called him one of the 16 “revolutionaries who made America.” He’s also been called a “genius” by The Wall Street Journal and “the ultimate thinking machine” by Forbes.
As a result of this law, it’s taking less and less time to generate incredible wealth.
Investors are enjoying the benefits because the time it takes for massive change is getting “compressed.”
These incredible industry shifts used to take 20-plus years to play out.
Now, they are playing out in less than five years.
It’s all thanks to the Law of Accelerating Returns… all thanks to exponential progress.
Investors must get in before the whole world realizes that this is happening with AVs.
Because frankly, that’s the moment when you stand to make the biggest gains.
I refer to that point when disappointment tips to amazement as my “red envelope moment.” Next time, I’ll share what that means (you Netflix fans may be able to guess) and what it tells us about the huge potential to generate wealth in AVs.
Matt McCall, Editor