SPRINGER BRIEFS IN APPLIED SCIENCES AND TECHNOLOGY  COMPUTATIONAL INTELLIGENCE Francesco Corea Artificial Intelligence and Exponential Technologies: Business Models Evolution and New Investment Opportunities 123 SpringerBriefs in Applied Sciences and Technology Computational Intelligence Series editor Janusz Kacprzyk, Warsaw, Poland About this Series The series “Studies in Computational Intelligence” (SCI) publishes new develop- mentsandadvancesinthevariousareasofcomputationalintelligence—quicklyand with a high quality. The intent is to cover the theory, applications, and design methods of computational intelligence, as embedded in the fields of engineering, computer science, physics and life sciences, as well as the methodologies behind them. The series contains monographs, lecture notes and edited volumes in computational intelligence spanning the areas of neural networks, connectionist systems, genetic algorithms, evolutionary computation, artificial intelligence, cellular automata, self-organizing systems, soft computing, fuzzy systems, and hybrid intelligent systems. Of particular value to both the contributors and the readership are the short publication timeframe and the world-wide distribution, which enable both wide and rapid dissemination of research output. More information about this series at http://www.springer.com/series/10618 Francesco Corea fi Arti cial Intelligence and Exponential Technologies: Business Models Evolution and New Investment Opportunities 123 Francesco Corea Rome Italy ISSN 2191-530X ISSN 2191-5318 (electronic) SpringerBriefs inApplied SciencesandTechnology ISBN978-3-319-51549-6 ISBN978-3-319-51550-2 (eBook) DOI 10.1007/978-3-319-51550-2 LibraryofCongressControlNumber:2016963290 ©TheAuthor(s)2017 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodologynowknownorhereafterdeveloped. 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Printedonacid-freepaper ThisSpringerimprintispublishedbySpringerNature TheregisteredcompanyisSpringerInternationalPublishingAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland To my dad, who taught me what intelligence means To my mom, who taught me how to use it To my brother, who taught me when not to use it And to Lucia, who showed me that the greatest intelligence is the intelligence of the heart Acknowledgements The author is grateful to Susan Kish, Sam Arbesman, and Erica Young for the revisionandusefulcomments.Someofthecontentshavebeenpublishedonline,so theauthorwantstothankanyoneelsewhocontributeddirectlyorindirectlythrough comments or feedbacks. The author has obtained a Crunchbase Research License that allowed him to complete the dataset with relevant missing information of several companies. vii Contents 1 Introduction.... .... .... ..... .... .... .... .... .... ..... .... 1 1.1 Basic Definitions and Categorization .. .... .... .... ..... .... 1 1.2 A Bit of History. .... ..... .... .... .... .... .... ..... .... 4 1.3 Why AI Is Relevant Today.. .... .... .... .... .... ..... .... 6 References.. .... .... .... ..... .... .... .... .... .... ..... .... 8 2 Advancements in the Field..... .... .... .... .... .... ..... .... 11 2.1 Machine Learning.... ..... .... .... .... .... .... ..... .... 12 2.2 Neuroscience Advancements. .... .... .... .... .... ..... .... 15 2.3 Technologies ... .... ..... .... .... .... .... .... ..... .... 17 References.. .... .... .... ..... .... .... .... .... .... ..... .... 18 3 Business Models. .... .... ..... .... .... .... .... .... ..... .... 21 Reference .. .... .... .... ..... .... .... .... .... .... ..... .... 26 4 Investing in AI.. .... .... ..... .... .... .... .... .... ..... .... 27 5 Discussion . .... .... .... ..... .... .... .... .... .... ..... .... 39 References.. .... .... .... ..... .... .... .... .... .... ..... .... 44 6 Conclusions .... .... .... ..... .... .... .... .... .... ..... .... 45 ix Chapter 1 Introduction Abstract Inthisfirstchapter,wearegoingtodefinewhatAIisandwhatisnot,as well as when it was born and how it changed from the fifties up today. More in details, we are going to even specify the exact event that triggered the current AI wave and we are going to discuss the importance of artificial engines in our world today. Artificial Intelligence (AI) represents nowadays a paradigm shift that is driving at the same time the scientific progress as well as the industry evolution. Given the intenselevelofdomainknowledgerequiredtoreallyappreciatethetechnicalitiesof the artificial engines, what AI is and can do is often misunderstood: the general audience is fascinated by its development and frightened by terminator-like sce- narios; investors are mobilizing huge amounts of capital but they have not a clear picture of the competitive drivers that characterize companies and products; and managersarerushingtogettheirhandsonthelastsoftwarethatmayimprovetheir productivities and revenues, and eventually their bonuses. Even though the general optimism around creating advancements in artificial intelligence is evident (Muller and Bostrom 2016), in order to foster the pace of growth facilitated by AI I believe it would be necessary to clarify some concepts. The intent of this work is then manifold: explaining and defining few relevant terms, summarizing history of AI as well as literature advancements; investigating further innovationthatAI isbringing both inscientificandbusinessmodelsterms; understanding where the value lies for investors; and eventually stimulating dis- cussion about risk and future developments driven by AI. 1.1 Basic Definitions and Categorization First,let’sdescribewhatartificialintelligencemeans.AccordingtoBostrom(2014), AI today isperceived inthree different ways:it is somethingthat might answer all your questions, with an increasing degree of accuracy (“the Oracle”); it could do ©TheAuthor(s)2017 1 F.Corea,ArtificialIntelligenceandExponentialTechnologies: BusinessModelsEvolutionandNewInvestmentOpportunities, SpringerBriefsinComputationalIntelligence,DOI10.1007/978-3-319-51550-2_1 2 1 Introduction anything it is commanded to do (“the Genie”), or it might act autonomously to pursue a certain long-term goal (“the Sovereign”). However, AI should not be defined by what it can do or not, and thus a broader definition is appropriate. Anartificialintelligenceisasystemthatcanlearnhowtolearn,orinotherwords a series of instructions (an algorithm) that allows computers to write their own algorithms without being explicitly programmed for. Although we usually think about intelligence as the computational part of our ability to achieve certain goals, it is rather the capacity to learn and solve new problems in a changing environment. In a primordial world then, it is simply the attitudetofostersurvivalandreproduction(Lo2012,2013;BrennanandLo2011, 2012). A living being is then defined as intelligent if she is driving the world into states she is optimizing for. Nomatterhowaccuratelywedefinedthisconcept,wecanintuitivelyunderstand thatthelevelofintelligencemachinesareprovidedwithtodayisyearsfarfromthe average level of any human being. While human being actions proceed from observing the physical world and deriving underlying relationships that link cause andeffectinnaturalphenomena,anartificialintelligenceismovedentirelybydata andhasnopriorknowledgeofthenatureoftherelationshipamongthosedata.Itis then “artificial” in this sense because it does not stem from the physical law but rather from pure data. Wethenhavejustdefinedwhatartificialintelligenceisandwhatmeantous.In addition tothat, though,there aretwoother conceptsthat should be treated aspart of this introduction to AI: first of all, how AI is different and/or related to other buzzwords(bigdata,machinelearning,etc.);second,whatfeaturesasystemhasto own to be defined intelligent. I think of AI as an interdisciplinary field, which covers (and requires) the study ofmanifoldsub-disciplines,suchasnaturallanguageprocesses,computervision,as wellasInternetofthingsandrobotics.Hence,inthisrespect,AIisanumbrellaterm thatgathersabucketofdifferentaspects.WecansomehowlookatAItobesimilar toafully-functionallivingbeing,andwecanestablishcomparisonstofigureoutthe degree ofrelationship between AIandother(sub)fields.IfAIandthehuman body are alike, it has to possess a brain, which carries out a variety of tasks and is in charge of specific functions such the language (NLP), the sight (computer vision), and so on so forth. The body is made of bones and muscles, as much as a robot is madebycircuitsandmetals.Machinelearningcanbeseenasspecificmovements, actionorthoughtswedevelopandthatwefine-tunebydoing.TheInternetofthings (IoT)correspondstothehumansenses,whichisthewayinwhichweperceivethe worldaroundus.Finally,bigdataistheequivalentofthefoodweeatandtheairwe breathe,i.e.,thefuelthatmakesustick,aswellaseveryinputwereceivefromthe externalworldthatiscaptured byoursenses.It isaquiterough comparison,butit conveys a simple way on how all the terms are related to each other. Although many other comparisons may be done, and many of them can be correctsimultaneously,thechoiceofwhatkindoffeaturesasystemshouldhaveto be a proper AI is still quite controversial. In my opinion, the system should be endowed with a learning structure, an interactive communication interface, and a