7 min read
Ripe for Disruption… (Part-1)
Sep 1, 2015
We live in an age of disruption – and that's a good thing.
Industries will be transformed. Major companies will fall.
Old systems will collapse as entrepreneurs figure out how to optimize and reinvent inefficient businesses, products, and services to provide consumers (us) with all things better, faster and cheaper.
According to the Olin School of Business, 40% of today's Fortune 500 companies will be gone in the next 10 years.
This blog is a quick look at three industries (Healthcare, Finance and Insurance) that are ripe for disruption this decade due to big data and artificial intelligence.
Clearly big data and Artificial Intelligence will change almost every industry this decade... but none more than these.
Healthcare is so massively broken, that its disruption will come easy and happen fast. Hundreds of startups are working to make you the 'CEO of your own health' -- to augment (or replace) doctors and hospitals.
I expect new AI-enabled healthcare options to be free or near-free, and so much better, that people will forgo traditional medical care in favor of these superior options. This will cause today's healthcare system to crater.
Think libraries in an age of Google... Think traditional wired landlines in an age of mobile telephony... Think taxis in an age of Uber… Think long-distance in an age of Skype… the list goes on.
So what's coming?
The $10M Qualcomm Tricorder XPRIZE will give birth to devices (i.e. the Star Trek Tricorder) that allow you, the consumer, to self-diagnose, anytime, anywhere.
Sick of going to the hospital? Companies like Walgreens and CVS are working to become your healthcare center.
My company Human Longevity Inc. (HLI) will sequence all 3.2 billion letters in your genome, plus your microbiome and compare your data to a massive database of millions of consumers.
Such data mining will allow you (your AI assistant or your physician) to know in advance which diseases threaten you, and make your healthcare proactive and preventive.
HLI's goal is to enable "n of 1" care, where the medicine prescribed for you is the perfect medicine just for you. HLI's goal is also to add 30+ healthy years onto your life, making "100 years old the new 60."
Beyond genomics, there's a revolution in Stem Cell science unfolding, which to quote my friend and HLI co-Founder Dr. Bob Hariri, "will allow us to rejuvenate the regenerative engine of our body." Rather than treating chronic organ disease, we are not far off from growing a replacement lung, liver, heart or kidney.
As powerful as genomics and stem cells are, there is an equally important revolution in biometric sensors under development. If you can’t measure it, you can’t affect it, and companies like Google, Apple, Samsung and dozens of other companies are investing billions to lead the way.
These neural sensors will constantly monitor your health… heart rate, blood pressure, blood glucose, and even small molecules released from cancers or cardiac trauma.
Coupled to your genomics, this neural sensors data will be uploaded seamlessly to your health app, giving you the needed warning to stop disease or damage before it happens. To quote SU professor and friend Dr. Daniel Kraft, think of this as "OnStar for your Body."
Who will pay for it? Probably not you. Probably your insurance company, which makes a lot more money when you stay out of the hospital and live longer (they collect more fees and pay out far less).
Finance is another trillion-dollar industry that is in for a lot of interesting times ahead.
The days of a middleman financial advisor or broker will diminish this decade.
Big data-enabled AI technology is going to make everything cheaper, faster and better for you, the consumer.
As just one example, my friends at IBM Watson have been developing finance applications for the Watson ecosystem which, in my opinion, are excellent.
Imagine a service that can read through your social media posts from the past couple of years and determine from sentiment analysis which industries and values you like and which you don't. You love tech and fashion, but hate alcohol and violence. You love Europe, but are not a fan of Russia, etc.
In an age of millennials where what you stand for is as important as the profits you make. This gives the upper hand to an AI assistant that can sort through 10,000 possible companies and recommend to you those investments which are most aligned with your values on a risk-adjusted basis.
Plus, it can monitor your social media and the global marketplace and adjust your portfolio as often as you wish.
Another revolution upon us are AI firms (Sentient Technologies is just one example) that are using advanced machine learning and data mining techniques to perform algorithmic trades on the stock market that no human will ever match.
Even better is Artificial Intelligence trading based on massive big data. We’re heading towards a world of a trillion sensors, riding on top of a world filled with 100 billion connected devices.
This will give your AI a 'god-like knowledge,' allowing you (or your AI) to know anything, anytime, anywhere...
What do you I mean? Today there are companies that are using satellites to image and count cars in the Toys-R-Us or Home Depot parking lots every day, and based on that knowledge project the company's revenues ahead of quarterly earnings reports.
Now extend this concept of ubiquitous knowledge to everything (and I mean everything) and you can see how finance might change.
Insurance is an old business that deals with probabilities and imperfect knowledge. But in an era of 'perfect knowledge', a lot is going to change. Here are just a few examples.
Health and Life Insurance…
Today Progressive Automotive Insurance will offer you a rate discount (Snapshot) if you allow them to install a sensor in your car that reports speed and acceleration -- basically the data to show if you're a good or bad driver.
Now imagine the same for your body... Want cheap insurance? Allow the insurance company to monitor your health and sequence your genome.
Again, this is not about denying you insurance or giving you a higher rate if you have bad genes (there's actually a law against that called the Genetic Information Nondiscrimination Act of 2008, the GINA law, which prohibits prejudice again a single individual on behalf of their genome). This innovation is about giving you a discount if you'll allow the insurance company to assist you in living healthier and longer. A total Win-Win.
Here's another BIG scenario that could see the collapse of today's insurance industry.
Let's say that I have a genome relatively free of major disease, I don't smoke, I eat healthy and I work out every day.
Let's also say that I publish this information (validated by my sensors) to my social graph and say, "Hey, anyone else with good genes, healthy eating and workout habits who wants to self-insure along with me, let's do it… We're a low-risk partnership!"
If this was to happen, and the top 10% of the insurance pool pulled themselves out of the marketplace, this would crush the economics of the industry.
Up until now, this kind of knowledge and "peer-to-peer insurance" would never have been possible. It is now.
“Hold it,” you say… “There’s regulation that will stop you.” Yes, sure, there is, for the moment. But just like Uber versus the taxi industry, regulation can only be a stumbling block for so long.
Eventually the buggy-whip manufacturers die off as the automobile comes on the scene.
Above I already mentioned Progressive Snapshot Sensor Program, but imagine the next step...
In an era of autonomous cars, there may be no more need for auto insurance.
Autonomous cars don't (rarely?) crash, so why insure?
Even worse for the insurance industry, people will stop buying cars altogether.
You won’t own a car any more, but instead you’ll have access to a 24x7 autonomous vehicle service. Just like companies today that don't own their servers anymore; instead, they use the cloud from Amazon or Google.
If you don't own a car, there's nothing to insure.
Lastly, let's focus on farming and crop insurance. The following also applies to many other types of insurance that I haven't mentioned.
Today, when crops are insured for hail damage (for example), the process of assessing damage is expensive and inaccurate. It involves farmers or insurance assessors walking out into the fields and taking photographs.
But in an age of ubiquitous imaging (i.e. low-Earth orbit satellites and drones) and ubiquitous sensing (in-field sensors), this assessment is global, instant and effectively free.
An explosion of startups accurately and cheaply gathering massive amounts of data will reinvent every aspect of this particular niche, and in fact, every aspect of the insurance industry as a whole.
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