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A note from Raoul…
My thesis on the Exponential Age is that the internet, computing, and mobile revolutions were just the early enablers of what is to come; an age where multiple technologies all exhibit Metcalfe’s Law exponential adoption all at the same time, feeding off each other to create the only example in history of Reed’s Law — which is sort of a Metcalfe’s Law of Metcalfe’s Law, a double exponential.
In a nutshell, my thesis is that humanity and society are going to go through the fastest, most disruptive technological change in all human history.
At first, I came from this at an investing angle. But soon I began to realize that this was much bigger than just investing — it was going to completely upend society, money, business models, and the economy.
It was at that point I knew I had to help people navigate this because it is going to affect ALL of us. I also knew that as a macro guy, I could join the dots, peer into the future, but I just didn’t have the deep knowledge needed, and everything is moving too fast for me to ever catch up fully.
This led me to reach out to David Mattin, author of the wonderful New World Same Humans newsletter, who seemed to truly understand what I was talking about (which was a good start!) and could explain it clearly but with a foundation of profound knowledge.
As soon as we met, we knew we had to help as many people as possible to navigate these incredibly complex, fast-changing times. And therein lay the birth of the Exponentialist, co-created by David and me.
Below is an excerpt from the inaugural essay from the Exponentialist.
Intelligence in the world
by David Mattin
The Exponential Age will host multiple technology revolutions all unfolding at once.
But amid all that, there’s something special about machine intelligence. So how should we best understand AI? What is it, at heart?
Typically, we model AI as part of the Productivity Layer. As, fundamentally, a tool. One that will allow us to unlock new scientific understanding, enhance our engineering, accelerate creative outputs, and much more.
And that all makes sense. In the decades ahead AI will function this way: as a tool.
But we all know that this conceptualization of AI leaves much unaccounted for. Ordinary tools can’t use themselves, for example. A phone is a wonderful tool, but it’s never going to make my calls for me. Or design me an even better phone. What’s more, we don’t talk about the possibility that we might lose control of other tools; that they might develop goals of their own, start a nuclear war, or enslave us all (all highly unlikely scenarios for AI, admittedly).
Intuitively, we can all see that AI is different. That it’s best understood not as a tool, but something else. So what, then?
To answer that, we need to go one step down to a deeper question: What is intelligence? There’s nothing close to a scientific or philosophical consensus answer, and clearly this essay isn’t going to change that.
But here’s a broad definition of intelligence that aligns with much mainstream thinking on the subject: just as energy does useful work on physical systems, intelligence is the ability to do useful work on information. When we clarify intelligence in this way, we take a step closer to understanding the role it will play in the Exponential Age.
That’s because of the fundamental role that information, that data, will play in the Exponential Age. The EA means an interconnected world that runs, above all, on truly staggering amounts of information. Understanding this is crucial if we’re to understand the role that AI plays in the decades ahead.
According to the International Data Corporation, global data creation is going exponential:
And some excellent analysts believe that even these numbers are a vast underestimate (more on all that and its implications in an essay to come).
What’s driving that insane data explosion?
It’s happening because information is breaking out of the digital realm and into the physical world. We’re weaving a layer of information, of data, through every part of the world around us. Every building, vehicle, household object, and person; all of them will be connected and streaming a constant tsunami of data that reports on their status, and the status of the world’s physical environment in which they’re situated.
Just look, for example, at autonomous vehicles (AVs); multiple forecasts have numbers going exponential across the coming years. This forecast is from Next Move Consulting:
Each AV will be a rolling supercomputer, constantly streaming vast quantities of data about itself and the world it is moving through.
Meanwhile, the number of connected objects — from kitchen appliances, to wearable devices, to industrial tools — is forecast by research firm IoT Analytics to surpass 27 billion in 2025.
Some consider even that a huge estimate. In 2020 Softbank-backed chip maker ARM forecast 1 trillion connected devices by 2035.
Household and personal robots are going exponential, too:
I could go on (and on), but you get the idea.
The Exponential Age will be characterized by the deep merging of information and physical reality. A merging, that is, of the realm of bits with that of atoms. Via a wave of sensors and microchips, we’re weaving a layer of data through every object, sidewalk, building, factory, vehicle, person, and more. An always-on supernetwork is blinking into life around us, and it’s happening now.
And with that idea in place, we’re empowered to make more sense of the role machine intelligence will play in the years ahead.
Because while that supernetwork is emerging, another monumental shift is underway. For the first time ever, intelligence is becoming abundant.
Throughout history, intelligence in its highest and most usable form has been the preserve of we humans. In other words, it’s been rare. Now, that truth is about to be flipped. There’s going to be super-abundant intelligence, on tap, everywhere.
You can catch an indirect glimpse of this via the insane exponential increase in the parameter size of AI models across the last couple of decades:
Jensen Huang, the CEO of NVIDIA, predicts we’ll have AI models 1 million times more powerful than ChatGPT within the next ten years.
With all this in place, we’re on the verge of an awakening moment; that flash of white light where you finally realize, wait, I see something new…
So we’re seeing the deep merging of information and physical reality — the emergence of a unified digital-physical field. Meanwhile, for the first time in history intelligence is becoming superabundant.
What role does intelligence play in that new world? Here’s my best answer. When information becomes part of the physical world around us via the unified digital-physical field, then intelligence becomes something akin to a new form of energy, which does useful work inside that field.
Under this view, AI isn’t best understood as a tool; as part of the Productivity Layer.
Instead, it belongs in the Foundation Layer, alongside energy, data, and compute. We need to understand AI as part of the foundational infrastructure that drives everything going on above it — the Productivity, Value, and Human Layers — in the Exponential Age.
This phenomenon is so strange and counter-intuitive, it’s hard to find language to fully describe it. We are thrown, instead, into the realms of metaphor; or, to put it another way, the realm of models.
In the Exponential Age, abundant intelligence is best modeled as akin to a strange new form of electricity. That is, as a source of energy that fuels an army of industrial and household robots, billions of AVs, 3D printers, connected factories, smart cities, and more.
This is a non-standard analysis.
We’re used, after all, to thinking of intelligence as something intangible and abstract; the apex characteristic that differentiates we humans from all other beings. When we realise that in the decades ahead intelligence becomes foundational and a form of infrastructure, we’re uncovering a deep and counter-intuitive truth about the manifestations of AI the Exponential Age, and one we’ll return to time and again in future essays.
But before I move on to the magic side of my AI framework I want to go one step deeper, to the bedrock of the electricity side.
Nowhere is the power of this framework more evident than when we look at a specific phenomenon set to unfold across the coming years. That is, the special relationship set to emerge between machine intelligence and (real, physical) energy.
It’s via this relationship that AI really achieves its most fundamental incarnation as infrastructure — as itself akin to a form of fuel.
The relationship I’m talking about is at the very foundation of the entire Exponential Age. It’s the most important technological relationship inside the new world we’re building.
In fact, it might just be the most important technological relationship ever…
Thank you for reading this excerpt from Electricity and Magic, the inaugural essay in the Exponentialist.
In the behind-the-paywall version of this essay, David digs into what AI really is, the AI/Energy flywheel, the 4 layers of the Exponential Age, and everything from virtual companions to the commodification of authenticity.
A note on the Exponentialist…
The Exponentialist, co-founded by Raoul Pal and David Mattin, is the only service in the world that looks at the Exponential Age not just from an investor’s perspective, but from the perspective of how it’s going to permanently change the world on every level, including your day-to-day life.
Because while we’re all investors and need guidance on how to invest in this new world (and you’ll find that in the Exponentialist), this is so much bigger than that…
If you’re interested in joining (and taking advantage of charter pricing, as well as quarterly or annual memberships), please follow the link below for details.