How to Profit From World Peace
Yesterday, in our essay “Cleaning up Bathrooms and Battlefields,” we told you about “the Day of the Last Warrior” a time when military forces use robotics, and AI makes the American warfighter obsolete.
Specifically, we covered iRobot and Google.
iRobot has mil-tech that’s proven to be a big help to soldiers in dangerous situations overseas.
That’s why it goes along well with this idea of “the Day of the Last Warrior.”
But iRobot’s main focus is the home market.
Although one of our editors recommended selling recently for a hefty gain, it’s arguable that iRobot could be a decent short-term investment idea. For example, they unveiled a new version of its Braava floor mopping and sweeping bot, a product they launched in China last month and, according to management, will continue to roll out for the remainder of 2014.
Today, we pick up where we left off… at the king of search…
As you know, Google is powering future generations of robots. As we said yesterday, and covered in depth last month, they’ve been on an acquisition binge.
Here’s what they acquired last year alone:
- Boston Dynamics has provided Google with fearsome-appearing robotic creations for contracts with the U.S. Defense Department
- Bot & Dolly — Have you seen the movie Gravity? If so, you’re familiar with this company’s work: They developed software and safety features for the robotic arms used
- Holomni sell themselves on their website as an expert in “high-tech wheels and omnidirectional motion,” with applications for wheeled robots and driverless cars
- Meka Robotics, as anyone could guess, designs robots and the software they use to work in everyday environments
- Redwood Robotics — PC Magazine says Redwood Robotics is pretty specialized and focuses on robotic arms for personal service robots
- Industrial Perception claims that it’s “providing robots with the skills they’ll need to succeed in the economy of tomorrow,” manufacturing robots for consumer electronics, assembly or warehouse duties
- Schaft Inc. is a Japanese startup that spawned the 209-pound robot creation that won Google recognition at a DARPA disaster relief competition. The acquisition gave Google access to their two-legged robots. Watch out, PackBot!
In 2014, they’ve acquired Nest Labs, a home automation success story (and maker of the popular Nest Learning Thermostat). Their team of talented engineers includes former Apple VP and iPod visionary Tony Fadell.
But the most recent, most secretive and perhaps most important acquisition took place last weekend… and it could justify buying Google’s expensive shares: a private company called DeepMind.
DeepMind specializes in something called “deep learning.” Shocker, I know.
The thing is… major tech companies are highly competitive for talent in this space.
“IBM’s Watson supercomputer,” according to TechCrunch “is now working on deep learning.”
Likewise, “Yahoo recently acquired photo analysis startup LookFlow to lead its new deep learning group.”
And recently, Facebook hired celebrity scientist Yann LeCun to lead its new AI lab. He’s the guy who invented the optical character recognition tech that banks used throughout the late 1990s and early 2000s that made a scan whenever you wrote a check. Soon enough, Facebook’s facial recognition tech may recognize people in not just photos but also the videos you post … Kind of scary, eh?
But Google outdid Facebook. According to what The Information reported back in December, Google and Facebook vied to purchase DeepMind. Last weekend, Google CEO Larry Page led the deal himself to acquire the three-year-old company for $400 million, considered by some to be “the last large independent company with a strong focus on artificial intelligence.”
Talk about competing for talent… DeepMind’s founder Demis Hassabis is a rare seed, indeed. As a child prodigy, chess master, shogi and poker player, he won the World Games Championships at the Mind Sports Olympiad a record five times. Now retired, the latter hailed him as “probably the best games player in history.”
Multiple sources said the company has been applying their tech to various potential products such as recommendation system for e-commerce. In light of the high-caliber acquisitions for robotics and AI, Google — despite its priciness — is a great stock.
Google and its subsidiaries are a forced to be reckoned with and could be the biggest player bringing about “the Day of the Last Warrior,” despite the fact that they started in search.
As promised, I have one final company to tell you about before the weekend, a UAV specialist bringing about “the Day of the Last Warrior” that you should know about…
Here it is, from our colleague and mil-tech expert Byron King…
Ever since the U.S. Air Force armed spy drone, the MQ-1 Predator, was armed with guided missiles in the early ’00s, drones have been the source of a lot of fear, and rightly so.
The military space operates differently than the civilian, in that people are more willing to take an area where there’s already a problem — the cost of human life, whether it be from an exploding bomb or through computer code — and replace it with nonliving machinations.
If you’ve ever seen Captain Phillips with Tom Hanks, a movie based on a true story about the rescue of a hostage in an attack on a cargo ship by Somalian pirates… you might recognize this:
The drone is ScanEagle, made by Insitu Inc., a name inspired by the Latin term for “in position” — readiness, in other words. Compared with its big brothers, such as Predator, ScanEagle is tiny.
Its wingspan is 10 feet, and it weighs less than 50 pounds, including payload. The Predator, on the other hand, has a wingspan of nearly 50 feet and weighs in at more than a ton fully loaded. So where Predator requires an airfield to operate, ScanEagle can be launched from a small towed trailer. In theory, a horse could pull this thing (useful in parts of Afghanistan to this day).
But Insitu didn’t start as a big, bad drone maker. In fact, it started pretty small. In 1994, it was a little startup in Washington state, composed of a group of engineers who enjoyed windsurfing together. They set out to improve offshore weather tracking and then got to work improving deep-sea tuna fishing. Yawn.
But when they turned their hot new tech toward the problems facing the troops in Iraq after 2003, they caught the attention of the big three-letter agencies (CIA, FBI, NSA… if you catch my drift). Soon, the old “tuna hunter” was reincarnated as ScanEagle, and things really blew up. In fact, by 2010, revenues reached $400 million and sales of the ScanEagle platform passed 1,000 orders.
The DoD’s acceptance of their signature drone put Insitu on the map. Now everything from police agencies to oil and gas corporations want a piece of the action.
There’s just one catch. Insitu never went public. In 2008, just five years after their drone tech made them a mil-tech darling, Insitu was bought out by Boeing (BA:NYSE).
But they got the ScanEagle program up and running in the first place through technology sharing and collaboration. Boeing’s bigger initiative to supply the needs of a burgeoning defense sector with mil-tech production lines going far beyond drones like ScanEagle.
If there’s only one thing you should remember about this bad boy, it should be this: American Special Forces operators probably got their first up-close-and-personal look at Osama bin Laden’s secret compound in Abbottabad, Pakistan, using one of these.
Of course, I can’t prove that. The only people that know for sure have been sworn to secrecy, and rightly so. The details of Operation Neptune Spear are going to remain ‘need to know’ for a long time.
Josh’s Note: In today’s issue of Tomorrow in Review, I gave readers a chance to receive regular updates on Boeing and iRobot along with an entire investment blueprint of the Pentagon’s black budget portfolio, straight from Byron King. In order to ensure you get great investment ideas and opportunities just like this, sign up for the FREE Tomorrow in Review email edition, right here.