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Elon Musk is a larger-than-life titan of industry — the modern equivalent of Gilded Age figures such as Carnegie, Vanderbilt, and Rockefeller. The style may have changed, but the essence is the same: bold innovators and visionaries who identify epochal technological and social trends and position their enterprises to ride the wave. While the barons of the Gilded Age were known for industries typical of the first industrial age (e.g., railroads) or the second industrial age (e.g., electrification), entrepreneurs like Elon Musk (and Steve Jobs, and Bill Gates) are known for third industrial revolution technologies — artificial intelligence, the internet, and the other converging components of 21st-century disruption. But what’s common between the two eras is technology and the embrace of its mass distribution and application as the driver of business success.
That’s why it was so surprising to hear Musk’s skepticism about artificial intelligence back in 2014, in a now-famous interview where he stated:
“I think we should be very careful about artificial intelligence. If I were to guess what our biggest existential threat is, it’s probably that. So we need to be very careful with the artificial intelligence… With artificial intelligence we are summoning the demon. In all those stories where there’s the guy with the pentagram and the holy water, it’s like, yeah, he’s sure he can control the demon. Didn’t work out.”
A tech titan expressing such reserve about one of the key technological developments of the era? It was almost as jarring as it would have been to hear Jay Gould meditating on how traditional rural American life would be disrupted and ultimately destroyed by railroads.
In later interviews, Musk has elaborated on his point. He believes that the development of intelligent machines and networks is inexorable and inevitable, and that these machines will be so superior to human beings in the speed and capacity of their “thinking” that they will reduce us to the status of being their “pets” — at best. He views this “human obsolescence” as a problem and a danger.
Therefore, the creator of PayPal (PYPL), Tesla (TSLA), SolarCity (SCTY), and commercial spaceflight outfit SpaceX has added a new startup to his roster: a company registered in California called Neuralink.
Musk has been teasing his Twitter (TWTR) followers with talk about something called “neural lace” — a term coined by science-fiction author Iain Banks to describe an interface between humans and computers. In a recent interview, Musk got more explicit. He noted that the human brain has two basic “layers”: the limbic system, which is the locus of primal autonomic, instinctive, and emotional function; and the cortex, which is the locus of “higher” mental function, reasoning, logic, speech, and so on. He wants to add a third layer, a digital layer, to augment human brain function so that it can compete in speed and power with artificial intelligence. And the additional layer would be implanted surgically and permanently. That’s “neural lace.”
Science, or Science Fiction?
Far-fetched? (Not that the far-fetched would faze Musk, who has been doing things that critics initially called impossible for years.) To find out, we looked at some of the recent scientific literature, including a review of the field of neural implants published in Nature earlier this year (“Neural recording and modulation technologies,” Nature Reviews Materials, 2017), and a description of one innovative technique for introducing nanoscale electronic components into neural structures in a minimally invasive way (“Syringe-injectable electronics,” Nature Nanotechnology, 2015).
The bottom line is that the technology is not as outlandish as you’d think. The main problems have to do with materials. Until recently, the only way to connect electronic components to the brain was through highly invasive and cumbersome devices that essentially cover the head with electrodes. The connections to brain tissue tended to create glial scarring, which interferes with the ability to read neural function or send signals. The focus now is on innovative materials, such as advanced polymer substrates that don’t cause a rejection response by the body’s immune system, and on nanoscale technologies. New flexible micron-scale meshes are essentially “neurophilic” — intermeshed with neural structures on a cellular level, accepted by the body and not disturbing its normal function. New technologies are also being developed for powering these devices, and for wireless communication, so that no permane nt breach of the blood-brain barrier is required.
In reviewing the literature, we noted that the basic concerns of investigators are not on Musk’s grand, existential scale of robotic threats to human supremacy. Rather, they’re fundamentally concerned with the treatment of neurological disorders, including Parkinson’s and Alzheimer’s, and the repair of trauma to the brain and nervous system.
With advances in materials technology in particular, the future for the development of neural interfaces for therapeutic purposes is bright. The precision of analytics and of neural stimulation, repair, or prosthesis promised by these new devices is qualitatively different from the clumsy methods pursued so far. Alzheimer’s remains one of the most pressing unmet needs in chronic illness, with many researchers believing that drug therapies have reached a dead end, in part because of inadequate understanding of how the disease functions. The development of “neural lace” may provide that understanding — and may also provide effective treatment through neuromodulation. “Neural lace” has the potential to revolutionize the treatment of currently untreatable brain conditions and spinal cord injuries.
Whether Musk is right about the dangers of artificial intelligence or not, we’re glad that he’s thinking about the problem, because we believe that a byproduct of his concern will be the development of technologies that improve human lives. Indeed, when we look at the “solution” he envisions for avoiding the rule of super-intelligent robots, we’re not sure that this solution — making us all into cyborgs — is without its own existential dangers. As we wrote early last year when discussing the economic impacts of artificial intelligence:
“There will always be a need for humans; computers will never render us obsolete. Within any discipline, profession, or entrepreneurial activity, there will be aspects of the work where brute-force calculation processes are most significant, and where the assistance of mechanical thinking will enable humans to work more quickly and effectively. But there will also be aspects of the work where human flexibility, intuition, and non-rational insight are critical — and these capabilities are likely, in the end, to be decisive.”
With all that said, however, investors would be foolish to overlook the technology Musk wants to develop — because even if it isn’t needed to defeat some future robot overlords, it will provide excellent opportunities for investors.
Investment implications: As with any emergent technology, the time frame for these technologies to become operative is unknown but it may take many years. Nanoscale neural interfaces will present opportunities to both speculative and more conservative investors. Speculative investors should begin by familiarizing themselves with the current scientific literature and making a list of prominent scientists in the field, and then finding companies that those scientists have founded or whose boards they sit on.
The very long-term conservative investor might want to begin to look at the stocks of chemical companies, particularly those who develop advanced polymers (companies such as Eastman Chemical (EMN), Celanese (CE), Chemours (CC), Dow (DOW), or BASF [Germany: BAS]; the stocks of technologically innovative medical device companies (companies such as Becton Dickinson (BDX), Thermo Fisher (TMO), Edwards Lifesciences (EW), Boston Scientific (BSX), or Medtronic (MDT); and the stocks of technology companies with life sciences emphasis (companies such as Alphabet (GOOG) through its Calico division). We are not recommending any of these today, but over the long term some of the above may become participants in this new trend.
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