Dear Reader,
It must be the season…
Something is happening at a longtime fintech (financial technology) favorite of mine – Square. To my subscribers, investing in Square has been the gift that just keeps on giving… and there is even more to come.
But the season I’m talking about doesn’t concern presents or profits. This is about another major name change.
Going forward, Square will now be known as “Block.”
Square Becomes Block
Source: Block
The rebranding is reminiscent of Facebook’s recent evolution to “Meta.” Much in the way that Facebook wants to claim the METAverse as its own, it appears that Square wants to own the BLOCKchain.
I can’t wait to see who’s next.
Square became a major player in financial services through its well-designed point of sale (PoS) terminals that simplified credit card transactions for small- and medium-sized businesses.
Square built upon its success in payments to add a wide range of services that helped its customers automate and simplify their businesses.
In many ways, Square understood its customers’ businesses better than they did. With the use of machine learning, Square could analyze transactions in real time and even provide loans to businesses with a few keystrokes on a Square terminal… No human underwriter was required.
But in the background, Square quietly launched the Cash App years ago. Most people didn’t even know it was from Square. Its simple design and ease of use made it one of the fastest growing peer-to-peer payment applications on the market.
That, however, was just a trojan horse.
It wasn’t too long before Square added the ability to purchase bitcoin through the Cash App. And then came the ability to trade stocks, get a credit card, or even deposit paper money into your digital wallet on the Cash App.
Naturally, the Cash App has been on a far faster growth trajectory than Square’s original core business. In fact, Cash App-related revenues were responsible for almost 63% of Square’s business last year, up from just 24% in 2019. I expect the percentage for 2021 to be even higher.
Like Facebook, Square is going all in on Web 3.0. Facebook – sorry, “Meta” – will be focused on building a metaverse with a strong emphasis on social media. Square is going all in on the financial services side of blockchain technology with a strong focus on bitcoin… hence “Block.”
In addition to continuing to build on the success of Cash App, Square is building a hardware wallet so that its users can safely custody their bitcoin and, potentially, other digital assets (NFTs?). And there is even talk of Square designing and producing a bitcoin mining rig.
This is interesting to me because Square actually has expertise in designing and manufacturing its PoS hardware terminals.
That experience, combined with Square’s clean and simple user interface, could make for an amazing consumer product. Imagine having the status of your bitcoin mining rig running at home visible in the palm of your hand on your Cash App. Nice…
Square really went all in on this new Block theme. The new company website can be found at block.xyz. It’s pretty cool actually… Very Web 3.0-esque. And here’s a quick snapshot from the investor relations site about the management team:
On this point, I think that they may have gone a bit too far…
Capital continues to pile into nuclear fusion projects. Commonwealth Fusion Systems just raised $1.8 billion in its latest venture capital round.
Readers will remember we wrote about Helion Energy last week. The company raised $500 million in funding with the potential to secure an additional $1.7 billion if it can meet certain milestones.
That raise was a record for the industry, and here we have Commonwealth shortly after raising an even greater sum.
As a reminder, nuclear fusion involves taking two separate nuclei and combining them to form a new nucleus. This produces an enormous amount of energy that is 100% clean, with little to no radioactive waste. And it is not to be confused with nuclear fission, which involves splitting atoms.
The technology works by heating a plasma to incredible temperatures and using strong magnets to safely control the reaction and manage the heat.
Commonwealth’s approach to nuclear fusion employs a tokamak reactor. This company, which was spun out of the Massachusetts Institute of Technology in 2018, uses a compact, doughnut-shaped design to create a circular plasma reaction. We can see initial design concepts in the graphic below.
Commonwealth Fusion Systems’ SPARC Design
Source: cfs.energy
The tokamak reactor design and the recent raise have made Commonwealth Fusion Systems one of the biggest players in the industry.
The $1.8 billion raised will help the company design the prototype. And with this prototype, it hopes to produce a net positive energy reactor. Net positive energy means the reactor produces more energy than what is required to run the reactor.
And Commonwealth looks to showcase this by 2025 – just about three years away. Incredible.
This technology has such global benefits that this latest raise attracted notable names like Bill Gates and George Soros, the two largest investors.
It’s not surprising that Commonwealth is receiving such attention. Clean and limitless energy would be revolutionary and the best solution to migrating away from carbon-based energy production. The company that builds this technology will quickly become one of the most important and valuable companies on the planet.
In contrast to the massive ITER project in Europe that also uses a tokamak design, Commonwealth’s approach enabled fusion reactors to be built at a fraction of the cost and a fraction of the size. A compact fusion reactor can be put on the bed of an 18-wheeler or placed inside a room. This would enable many of these devices to power a decentralized power grid.
It’s very exciting that so much capital is entering this space. Fusion technology is no longer science fiction or a dream. And the fact that venture capital firms are starting to write very large checks means that there is a clear path in a few years to commercial fusion reactors capable of net energy production.
Many have doubted my predictions about nuclear fusion in the last couple of years, but I feel more confident than ever that we are going to see not only major breakthroughs in fusion reactors, but the commercialization of this technology within the next few years.
I expect what we see today is only a glimpse of what is to come in 2022 in terms of attention and capital.
Retail giant Walmart has unveiled a new partnership with a company called Gatik. Gatik specializes in a specific use case for driverless technology – which Walmart now employs to solve a problem it experienced due to COVID-19.
In response to the pandemic, fewer consumers were going into Walmart’s stores. Instead, Walmart witnessed a massive uptick in its customers picking up groceries without leaving their cars. To keep pace with this change, Walmart created “dark” stores.
Dark stores allow Walmart to prepare orders ahead of time at a separate facility and bring them to the main store for pickup. This helps move inventory away from the main store while making it easier to prepare the orders for pickup.
Gatik comes into the picture because the drive from the dark store to the main store is time-consuming and monotonous. So Walmart has been testing Gatik’s autonomous driving technology on the seven-mile loop from the dark store to the retail location.
Two trucks have been operating 12 hours a day since August. This means the trucks are loaded up with customer orders, a button is pressed, and the truck shuffles off to the retail location to drop the deliveries off.
After the truck is unloaded, it automatically returns to the distribution center. That’s one less thing to worry about, and it saves Walmart 12 hours of labor a day. This is a fantastic enterprise application of self-driving technology.
The need for this kind of technology is dramatically increasing as these kinds of dark sites are proliferating for both online and brick-and-mortar retailers in order to meet consumer expectations of fast delivery.
It’s a similar concept to another trend we’ve covered before – ghost kitchens. Nobody really knows what’s going on in the buildings if they look at them from the outside. They are nondescript.
But inside, these large kitchens produce food for multiple restaurant chains. They have multiple menus and prepare the food for couriers like Uber Eats.
It is clear this business model of moving part of the inventory off-site is starting to spread. And Gatik looks to be a great option for Walmart’s use of this model.
While the solution here is very niche, I expect to see it start catching on. The Gatik-Walmart partnership is currently happening in Arkansas. But I wouldn’t be surprised to see it expand over the next year.
And this is more affirmation of the growing power of the self-driving trend. We’re going to see some excellent investments over the coming months and years enabling us to profit from this technology. And to learn about one current opportunity on my radar, simply go right here for more.
Andrew Ng just raised $57 million for his artificial intelligence company (AI), Landing AI.
Ng is at the forefront of AI research. I’ve talked about his work in e-learning platforms like Coursera before. And in addition to leading Landing AI, he is the co-founder of Google Brain, one of Google’s AI research divisions.
He is also an adjunct professor at Stanford, where he formerly served as director of the university’s AI Lab. In other words, he is a major name to follow in the industry.
And in his startup’s recent Series A financing round, Ng raised capital for a software platform for business process automation.
I have previously written about how the pandemic accelerated the adoption of AI in the workforce. When applied to repetitive tasks like we see with assembly lines, it can be a labor force multiplier.
And Landing AI can make it easier for manufacturers to adopt this kind of AI.
Typically, each application of AI has been a massive programming effort requiring a team of software engineers. Some AI models are immensely complex like OpenAI’s GPT-3, which has been trained on billions of parameters.
But not all applications of the technology need to be this complex, and there is a need to make AI accessible even to those with no computer science background.
Landing AI employs a “no code model.” Instead of requiring someone to write software (code), the software, which uses AI, can learn directly from images provided by anyone. No software programming is required.
In the case of a manufacturing or quality inspection process, a business can feed the AI examples of defects and problems, annotate them, and help teach the AI. This method is straightforward, doesn’t take much time, and immediately improves productivity.
And for the manufacturing industry as a whole, Landing AI can help address the labor shortage. This kind of machine learning can help perform the manual jobs that no one wants to do.
It can also perform work where humans are prone to error. This is a big part of the manufacturing renaissance currently underway.
So Landing AI is a very promising company led by one of the thought leaders in artificial intelligence. This is a company I would absolutely invest in if I had the opportunity.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
