Why Investing in Disruptive (Frontier) Tech Is Your Best Hedge

I was lucky enough to attend the Grammy Awards this week. Being at the enormous Staples Center and having an immersive experience with the packed stadium, I was thinking about virtual/augmented reality (VR/AR). Would consumers pay to have this experience if they could not be there?

The Grammys is the kind of show that looks just as good, if not better, on television. The only difference is sitting with the crowds in the dark. But it’s not like going crazy at a concert — you are told when to sit down, when to clap, and when the commercial break is over…it’s a production. So I was thinking — what experiences will consumers will pay for in VR/AR? And how do we capitalize on this as investors?

Virtual Reality’s Hype

I come from a media background, having worked at NBC Universal and AOL Time Warner, where I was evaluating technologies like WebTV — who remembers that? We spent our days investing in technologies we thought would change media, like commerce TV. Everyone would want to buy whatever Friends stars were wearing, so we thought. But they never did. Consumers are fickle.

Most of what is hyped right now in VR/AR are gaming, sports, and travel experiences. And you could just listen to Facebook’s last earnings call to know that they want to dominate communication; thus the investment in Oculus VR (which accounts for three-quarters of the $3 billion VR global investment to date). It is widely believed that delays in hardware and overhype on consumer applications will lead to early failures. Eventually, though, winners will emerge and the technology will stick.

In the meantime, there will be more focus on enterprise applications that can use the technology to solve mission critical issues — education, healthcare, construction, real estate, agriculture — to name a few. These technologies have a positive social impact, which attracts many investors.

A Tale of Two CoastsTo visit Silicon Valley is a rocket ride to the future, where there is breathless talk of surge in technological innovations. In addition to VR/AR, “Frontier Tech” has been coined to include machines and technologies relating to space, drones, robotics, driverless cars, 3D printing, machine learning, artificial intelligence, blockchain, etc. Turning on the TV while visiting is to crash back to earth with a H-U-G-E thud, as you hear about the presidential election, income inequality, the collapse of the middle class, and the market correction. The optimism of entrepreneurs clashes with the pessimism of politicians. Metaphorically, we all have this internal struggle as consumers, but we should also try to look from the investor view.

The reality is that tech innovates alongside market correction, largely powered by the supercomputer smartphones in our pockets and the lower cost of remote sensors. Even if consumers are fickle, this continuous pace of innovation and social impact is why I am continuing to invest in early-stage disruptive tech.

Frontier Tech Gets Funded

Frontier Tech startups have raised $3.2 billion since 2014. Investment shows no signs of slowing down despite current market conditions.

It’s global as well. For instance, in an attempt to become a tech superpower, China is also making sure it isn’t left in the dust as money pours into frontier tech. The country’s already made a significant investment in robotics for its new tech initiative, Made in China 2025.

Mark Suster of Upfront Ventures noted that there are many industries that are waiting to be disrupted: transportation, computational biology, food and agriculture, aerial and space, and of course VR/AR. The beauty of these disruptive technologies is that they cut across industries.

What most people don’t realize about Lady Gaga’s David Bowie tribute is that it was was powered by Intel’s RealSense 3D computer vision cameras. In the performance Gaga starts out with Bowie’s classic “Space Oddity,” with a digital spread of red paint pouring down on her face to form Ziggy’s iconic lightning bolt face tattoo. A spider emerges from her eye and crawling across her face before dissolving into nothingness. Gaga’s use of RealSense is a perfect example of how AR is currently being integrated into the next generation of storytelling. So all of us might be virtually attending the Grammy Awards in the future via on-demand VR headsets, glasses or other post-pc devices. Right now, there are so many forces driving adoption of of Frontier Tech, including the autonomous evolution we are passively accepting with Mobileye and other driver assist technologies in our cars. As astute investors, we would be wise to take a good look to become proactive contributors in the next industrial revolution.