Good news.
It seems most Capital and Conflict readers are sharp enough to go toe to toe with a computer in an intelligence test.
At least, that looks to be the case given all the notes I got after yesterday’s issue.
Only one person showed themselves up: me. As I said yesterday: “What will the technology be capable of in five years’ time, three doublings away, when computing speeds are six times what they are today? When the same technology is a fraction of the cost or size? When it’s cheap and portable enough to be accessed by everyone on the planet?”
As many of you pointed out, three doublings means computing power will be eight times what it is today, not six.
As one reader wrote in:
“The answer to the question you posed today is “yes” (I am smarter than you).
“Cos I know that in Moore’s law – as indeed all exponential laws – three doublings is 8 times, not 6 as you suggest which would be merely linear growth.”
And another:
“Hi Nick
“Enjoyed your thoughts on AI.
“You said, “What will the technology be capable of in five years’ time, three doublings away, when computing speeds are six times what they are today?”
“Well, three doublings = 2 to the power of 3 = 2 x 2 x 2 = 8 times faster. J
“But, assuming Moore’s law still holds at 18 months, then 5 years is not exactly 3 doublings (=4.5 years), but 3.33 doublings = 10 times faster!”
Both are spot on. I made a mistake. You caught me. Apologies for that. But I actually think I inadvertently raised an important issue, I just got my maths wrong. In the wider sense, people often find exponential growth deceptively hard to get their heads around and understand.
Let me demonstrate my point.
Find a piece of A4 or A5 paper. Now, holding that sheet of paper in your hand, answer me this: If you were to fold it precisely in half five times in a row, how thick would the resulting wedge of paper be? (Of course you could fold the paper yourself and then measure it with a ruler. But try to resist the temptation. This is all about mental perception.)
Any guesses?
Well, folding the paper five times wouldn’t result in a very thick wedge. It’d be less than 1cm thick.
Now, how thick would the wedge be if you folded the paper in half 42 times?
A metre? Ten metres? A hundred?
Surprisingly, the resulting wedge of paper would stretch 380,000 kilometres into the sky – enough to reach the moon. Fold the paper 50 times and it’d reach the sun. Fold it 100 times and it’d be wider than the entire known universe.
How close did you get?
If you were within 100 miles you’re well ahead of most people. The reason is simple. This is exponential growth – a repeated doubling. And the simple fact is, the vast majority of people find it almost impossible to comprehend the scale and speed of exponential growth.
Ray Kurzweil is famous for his predictions about the incredible advances of technology. But when you boil it down, what he’s really an expert at is first spotting an exponential trend (like Moore’s Law) and then understanding just how powerful it’ll become over time.
Kurzweil uses one particular story to illustrate what he means. Let’s call it the mathematician and the king.
The story goes that the mathematician had invented the game of chess. After discovering the game, the king was delighted and called the mathematician before him in order to give him a reward.
He told the mathematician he could have any reward he liked.
The mathematician replied that he wanted a grain of rice placed on the first square of the chessboard and then be doubled on each subsequent square.
The king protested, saying that such a reward wasn’t big enough. You know where this is going: the king couldn’t see the power of an exponential trend. By the 32nd square – half way across the board – the reward amounted to several acres worth of rice production. That’s a lot… but not an unimaginable amount.
But once you get onto the second half of the chessboard, things get out of hand very quickly indeed. By the 64th and final square, you’d need a pile of rice bigger than Mount Everest – more than all the rice in the world.
It’s just a story, of course. But Kurzweil uses it to make a point. The second half of the chessboard is where things change at an unimaginable rate. After nearly fifty years of exponential growth in in computing power (Moore’s Law), we’re heading into the second half of the board right now.
When we’re talking about folding a piece of paper, or rice on a chessboard, being deceived by exponential growth might not seem like such a problem. But this isn’t just some theoretical issue. It affects almost everyone, even some of the world’s most intelligent people.
For proof of that, just consider the example of the Human Genome Project. As Salim Ismail’s best-selling book Exponential Organisations explains:
“In 1990, the Human Genome Project was launched with the aim of fully sequencing a single human genome. Estimates called for the project to take fifteen years and cost about $6bn.
“In 1997, however, halfway through the estimated time frame, just 1% of the human genome had been sequenced. Every expert labelled the project a failure, pointing out that at seven years for just 1%, it would take seven hundred years to finish the sequencing.
“Craig Venter, one of the principal researchers, received calls from friends and colleagues imploring him to stop the project and not embarrass himself further. “Save your career,” he recalls them saying. “Return the money.”
“When Ray Kurzweil was asked his perspective, however, his view of the “impending disaster” was quite different. “1%,” said. “That means we’re halfway done.””
Kurzweil could see what others couldn’t. He’d recognised that the amount of the human genome being sequenced was growing exponentially – doubling every year. The project had completed 1% so far. It had seven years left to complete its task.
Double one percent seven times and what do you get?
That’s right: 100%. It turned out that completing 1% of the project was the halfway mark.
The project was completed early. And under budget. As Ismail says, “The so-called experts had missed the end point by 696 years”.
Or, to put it another way, they were deceived by exponential growth. They looked at what had been achieved and saw linear growth. “They’ve only completed 1% of the project. They only mapped 0.5% of the genome in the whole of last year. Things are moving too slow! This is going to take forever!”
They were blind to what was really happening.
As investors, that creates opportunity for us. It means things can change at crazy, almost incomprehensible speeds. That can translate into huge returns for people with the ability to foresee what’s happening and the skill to invest in it.
That’s something I’m working on right now. I’ve been meeting with all sorts of people from all over the world looking for the person who can help you tap into the potential of this kind of mega change. It’s been a long search. But I think we’re almost there. More on that soon.
In the meantime, if you have a view, a prediction or a forecast about how exponential growth is going to change the world… please – write in! I’d love to hear what you think. Write to me at [email protected]
Category: Investing in Technology