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Mo’ Money Could Be Related to Waymo’ Problems

Follow Tasha on Twitter @TashaARK


This week the Information reported that Waymo is looking to access outside capital to fund the next phase of its development. Not coincidentally, some of its early employees have compensation agreements with bonuses tied to Waymo’s valuation and paid out every four years, the next one due this year. Waymo could be on the hook for a sizable payout, judging by the $120 million that Anthony Lewandowski received before his departure several years ago, especially now that Morgan Stanley has valued it at $175 billion.   


Last week we wrote about Waymo’s latest distraction, as it has decided to sell its LiDAR units to outsiders. This week’s news on compensation highlights another obstacle that Waymo must overcome as it continues to struggle to create a fully autonomous car.  


NGS Error Correction Improves Test Accuracy and Lowers Costs

Follow Simon on Twitter @sbarnettARK


Using next-generation sequencing, “NGS”, researchers run genetic material through sequencers multiple times to eliminate error. This coverage balances between the cost and the error associated with such tests. 


In a recent study, researchers used artificial intelligence to evolve an algorithm by tracking the specific errors associated with each step in the NGS workflow—from sample prep to data analysis. Understanding the errors, the system anticipated and compressed them in silico,raising the gold standard for sequencing accuracy. This standard, called quality score, used to peak at an error rate of 1 in 100,000, but the novel algorithm generated an error rate of only 1 in 10,000,000. 


With artificial intelligence, NGS should be able to profile a whole human genome with lower coverage and costs during the next few years. As a result, sequencing applications with very low error rates, such as liquid biopsies, are likely to scale much more rapidly than expected.  


Nvidia Doubles Down on the Data Center With a $7 Billion Acquisition

Follow James on Twitter @jwangARK


Nvidia is acquiring leading network interconnect provider Mellanox for $7 billion in an all cash deal. The rise of big data and artificial intelligence has created unprecedented demand not just for faster processors but also network interconnects. Mellanox is the Nvidia of networking, its adaptors powering the world’s fastest supercomputers and AI training systems. With Mellanox, Nvidia will combine the world’s leading GPU and networking design teams under one roof.


Key to this acquisition, Nvidia is combining forces against a common foe—Intel. Having conquered the server CPU market with its Xeon processors, Intel has expanded into storage, networking, and accelerators, putting it in on a collision course with Nvidia and Mellanox.


Intel’s control of the CPU and motherboard allows it to promote its own products while boxing out competitors. With bundling, Intel is leveraging its CPU business to drive sales of adjacent products. Alternatively, Nvidia and Mellanox compete on merit, which is why their data center revenues of $3 billion and $1 billion respectively pale in comparison to Intel’s $23 billion.


We believe combining with Mellanox, Nvidia will be the most potent competitor that Intel will have faced in more than a decade. Merging the hardware and software stacks associated with the GPU and network adaptor, Nvidia should be able to deliver higher performance at a greater scale—unencumbered by the CPU. We will learn more about Nvidia’s strategy at its annual GPU Technology Conference in San Jose this week.



Bitcoin’s Long-Term Security Model Was a Key focus at MIT’s Annual Bitcoin Expo

Follow Yassine on Twitter @yassineARK


This week ARK had the pleasure of attending the 6th Annual MIT Bitcoin Expo.  Our discussions ranged from assessing the security of open source hardware wallets to funding cryptocurrency development as well as a framework for Bitcoin’s long-term security model. During the discussion of Bitcoin’s long-term security model, Nic Carter, partner at Castle Island Ventures, laid out a framework for security spend. 


Given bitcoin’s disinflationary supply schedule, miner revenue will evolve from newly issued bitcoins toward transaction fees. The question is: What level of transactions fees will be necessary to support spending that maximizes security


At the highest level are three broad security models:


·      Threshold: At a given threshold of security spend, Bitcoin is assumed secure. 

·      Stock: The returns from attacking bitcoin are a function of the value of bitcoin, so security spend should grow with the aggregate value. 

·      Flow: Fees must be large relative to transactional volume.

Whatever the answer, a vibrant fee market will be necessary for long term security. For a deeper dive, we invite you to tune into the discussion here.  In addition, MITBitcoinClub will post a video of the talk during the next few weeks.



Mobile Phones Offer Bank Branches to the Unbanked

Follow Max on Twitter @mfriedrichARK


Those unbanked fell from nearly 50% of the global population in 2011 to 32% in 2017, giving nearly 600 million adults around the world access to the basic financial services. More than a coincidence, as the unbanked rate decreased, mobile phone penetration increased, as shown in the left chart below: for every percentage point added to mobile penetration, the unbanked rate decreased by roughly one percent point.


The latest World Bank Findex report provides some perspective on the relationship between mobile penetration and the unbanked. As shown in the right chart below, the biggest increase in mobile money accounts in low income countries has been correlated with the steepest drop in the rate of the unbanked. In Sub-Saharan Africa, money mobile account penetration nearly doubled between 2014 and 2017. More than a coincidence, Sub-Saharan Africa is home to all 10 economies in which more adults have a mobile money account than have an account with a traditional financial institution. 


The impact of mobile technology on financial inclusion is not limited to Africa. Other countries such as Chile, Iran and Mongolia have seen mobile money account adoption rise from the low single digits in 2014 to more than 20% in 2017.  Today, two-thirds of the 1.7 billion who are unbanked globally own a mobile phone, putting them within reach of a “mobile” bank branch. 


In the US, Square’s Cash App is helping to bank the 20 million people who still are unbanked. ARK believes that providing financial services to the unbanked is one of the major driving forces behind fintech. 

Source:World Bank DataBank Global Financial InclusionGSMA

ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.



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