Your invoice from Google

How much have you paid for your Google use this month?

How about Facebook? Twitter? Whatsapp? Email account?

Unless you’re getting a very raw deal indeed, your answer to those questions will be the same as mine. Nothing. Zero.

Which is the secret, isn’t it? The secret to enormous scale and extraordinary wealth. Drive your costs down. All the way to zero, if you can.

It’s a business model many of the biggest tech firms have used to grow and dominate new markets in the last 20 years. It connects to the point I made in yesterday’s essay: the real secret to exponential growth opportunities is collapsing cost.

I went into this in detail yesterday. But the short version is this. We’re used to seeing exponential growth as something like increasing computing power. But really, it’s the simultaneous reduction in costs that leads to real wealth.

Here’s the paradigm as I see it.

Exponential advances create new possibilities – they push the frontiers of what is possible wider and wider.

But collapsing costs are what create new commercial markets – and opportunities for investors.

I’ll use two charts to demonstrate that point. Both concern the field of genetics in one way or another. The first chart represents the rapid growth of new papers on gene editing being published…

This is frontier pushing stuff. It’s research: by definition it is out there on the bleeding edge. It doesn’t directly create a new consumer or commercial market. Not today.

Cost is different. Here’s the price of sequencing a human genome. I showed you this yesterday but it’s important so I’ll share it again.

This isn’t particularly bleeding edge. It likely won’t lead to an extraordinary breakthrough. But it will create new and growing commercial markets. There’s a price at which it becomes viable for everyone to have their genome sequenced. That creates a very deep market for businesses to tap. And therein lies the investment opportunity.

Here’s a crazy thought: the price of mass adoption may be free. It may even be better than free. We may be paid to have our genomes sequenced. The cost could collapse so far that it becomes viable for a firm to waive the cost in order to build out the market.

This is precisely what we’ve seen happen with major social media firms.

It’s part of the “Three Ds” of exponential disruption. Once costs start collapsing at an exponential rate, three important things happen. In order, these are: demonetisation, dematerialisation, and democratisation.

Three technical words like that won’t help my readability statistics. So let me explain.

Those three terms effective describe what happens to a technology on its path to mass adoption (and disruption of existing business models).

Demonetisation: a technology decreases in price so rapidly it becomes free. You cease to see it as something you need to pay for: see Google, Skype, Whatsapp, etc, etc, for more.

Dematerialisation: the technology is consumed within other products. Where’s your camera gone? It has “dematerialised” – disappeared within your phone. Many “apps” you’ll find on your phone adhere to the same principle.

Democratisation: steps one and two allow for widespread adoption. Everyone can access the technology. It’s free and easy to use for all. Thus the market is at its absolute broadest.

This is the path many technology firms have walked on their way to commercial behemoth status. Not everything has fit the pattern perfectly (for instance, a smartphone isn’t free, but is cheap enough to be “democratised” in the West and contains lots of “dematerialised” other technology within it). But in a broad sense, this is what’s happening.

As I’ve shown you over the last couple of days, I think genetic sequencing – and ultimately editing – will be another industry to walk this path in the coming years.

My research team and I have put together a book detailing this technology – what it is, why it’s so earth-shaking, and most importantly, what it means to you.

In it, you’ll see why we’ve spent hundreds of thousands of pounds to truly understand this breakthrough – and how you can prepare for a revolution and potential millionaire-making field even bigger than bitcoin. To find out more go here.

Expect it to go from a bit “out there” to be sequenced… to commonplace. Expect the technology involved to be consumed by other tech. Expect the price to be… free. At least.

What other technologies fit the pattern?

Well, 5G springs to mind. It’s rolling out now, as we speak. That process will start slow. But in the blink of an eye it’ll be everywhere.

I saw yesterday that in the US a $10 add on with one provider enables customers to access 5G – a 10 to 100 increase on existing speeds and latency.

Read that back. $10… for a 100 increase. That’s a massive reduction in the cost of accessing supercharged internet.

Now, a prediction: that $10 fee will disappear. Soon it’ll be effectively “free” to access 5G. Then it’ll be less than a 4G connection today costs.

One day… perhaps it’ll be free. A public convenience. Mass adoption.

May sound silly. But it’s collapsing cost that drives market growth. And here’s how the 5G market is expected to grow in the coming years… a 6,000%+ increase:

Until next time,

Nick O’Connor
Publisher, Exponential Investor

Category: Technology

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