Hugo Scott-Gall recaps the technologies and topics discussed at the second-annual Goldman Sachs Research Innovation Symposium, including the evolving markets for drones, the surprising demographics of the sharing economy and the opportunity at the intersection of digital services and traditional healthcare.
This episode was recorded on March 18, 2016.
This podcast should not be copied, distributed, published or reproduced, in whole or in part. The information contained in this podcast does not constitute research or a recommendation from any Goldman Sachs entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. The views expressed in this podcast are not necessarily those of Goldman Sachs, and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs to that listener, nor to constitute such person a client of any Goldman Sachs entity.
Copyright 2016 Goldman Sachs. All rights reserved.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is exchanged the Goldman Sachs, where people from our firm share their inside some developments currently shaping markets industries in the global economy. I'm Jake, seaward global out of corporate communications here at the firm Goldman Sachs, recently hosted its annual research innovation symposium at the firms headquarters here New York, we can mean companies, industry, experts and academics to discuss the innovations shaping sectors from healthcare to the military. Today, I'm joined by Hugo Scott Gall, the head of thematic research shared common to discuss some of the key themes that emerged from the conference Hugo welcomed the programme budget. You will last year after the innovation symposium you sat down with us. We talked about the future of cars and manufacturing three d printing. What innovations dominated the conversation at this year's at the very short answer, I can give you, as we had a lawsuit
caution around mutant mosquitoes on iron man suits. I think I need to put some context around that we had panels discussing synthetic biology, which is where the mutant mosquitoes come in. They are engineered to breed with Zika virus, carrying mosquitoes to basely, produce genetic faults in the offspring, which then die. So you can break the breeding cycle and you begin to wipe out the zeal of ours carrying colony. We had the minister, the future, where we discussed a lot of exciting new technologies, including the iron man suits, and we also had discussions around blockchain, the internet of things and healthcare virtual reality: the sharing economy, the rise of big data and investing in the future of energy storage. In short, we struggle to keep it down to just
Pascal just so much to talk about, so we can spend in Qatar podcast on each of the topics you mentioned. I would give listeners Lilburn overview. Let's
get into the sharing economy. What is this new movement towards access over ownership mean for the traditional economy and who stands to benefit? The bathing has changed his twenty four seven,
Es previously has either own things or rent them. High friction costs in quite a bit of inconvenience. What a shame
the platforms of being created with inventory of displays and, as a result, our increasing the deep sharing markets with real time prices. Coveri think about how hard it was for someone to find a cheap room to stay in Manhattan twenty years ago, while the same song, it was hard, if not impossible, for someone else to discover if they,
stranger, they can trust who has prepared a rent thy call pay from idleness loafer. Now it's much easier for demand and supply to meet and discover prices, vondra, utilise assets or I lasses remember Carter Daisies lies, but only a most ten percent. The time this type of idle capacity
be accessed by almost anybody that essentially means that the economic rent, single sharing has become really attractive.
You may never knees own something he used to and because of this axis is almost guaranteed one. The idea
where asked about a law, is this notion of peaks stuff? That's not a particular technical term is the idea that people will gradually own less stuff because they can access things they want on demand everywhere. This is the vision of transport as a service that, along with the costs of ownership, like parking insurance times been drawing re, reduces the incense external costs are sharing, means buying less boring less as hard to measure benefits such as convenience. But these came as it benefits the technology accruing to users and don't get cash in traditional maturation measure economies. So what does it mean for the traditional economy? We think grating utilization of assets and I'm not reduce needs own is bad news for makers of things. What types of things anything that is expensive
an intermittently or predictably use as a candidate Solana can suicide is things like barbecue girls. Lawnmowers can be equipment and fashion accessories, so expanding the user basis under utilised goods is really the backbone of the sharing economy. What
areas might align well with that mandate? I think, is on industrial Cyrus becoming really interesting. The amount of capital, the Sith Idle, is enormous, creating marketplaces for things like bulldozers, which earning utilised around thirty percent the time it's just a huge opportunity and against the same principle of creating a market place where demand and supply can meet price discovery happens and telematics. Holdings like peer reviews, ashes trust systems dearest. The transaction for this very early stage of the sharing of industrial asses and equipment could change the nature of ownership and system under utilization and has the final points of making that follows on from those that high utilization means lower Catholics. Lower catholic Spanish is just think about hotels, room supply, Manhattan used to correlate one for one. They mounted captain invested motels. Now you can increase supply without increasing investment in supply
comes much more price elastic. So if there's a big events, save in your mouth and a price go up, the more people put their rooms apparent that is very different in them. What's happened to pass the demographics of sharing economy as a young
Technologically savvy people are the most common users of services today. Do you see this
This is less viable for other customers who may actually have more disposable income and just want certainty instability. Would you see
ultimately becoming something that everybody uses in the primary way they shop
I thing or two reasons why young consumers today are spending their money in markedly different ways to previous generations. An extended period of low growth has led to weaken job prospects and conference about the future. That's the first and primary driver. The second is in many western economies, younger people entering their prime spending age without having experienced a single year above three percent: real GDP growth or below six percent unemployment rate in the world,
There also probably found with high student at relative to previous generations. The second reason is less spending habits and methods of being moulded,
of new consumer technologies and really ubiquitous information together? We think these to finally giving youngsters
the reason, the motivation and the ability to trade down and spend less and some good since I was his relatives previous generations, also really shifting and asked you if it was the ownership of physical goods.
Rising popularity. The concept of sharing isn't by any means limited those millennials, but we think the advances of sharing platforms are likely to appeal to them, and this again reflects the willingness of consumers the tray down and pay only for the services they value a bed, a bathroom internet connectivity, but
to say the sharing common isn't for older people, the average age of and IBM be gas. If I asked you to guess you probably be, I think, to LOS thirty five years, why do you think the average age,
of an IBM behold his actually lightly much high, because ownership of how the asses excuse geared towards the older yeah demographic crap is acting on. So,
the sharing of common gets older people the opportunity to earn some extra income
extracting more out of otherwise under utilised assets and so
removing the gig economy. The idea there are lots of second jobs or small job, so
oh, I don't think there is something nice about young people. Millennials means they are more likely to share. I think it's just a phenomenon. That is
really brought around by economic circumstance, necessity and the confidence of technologies.
You mentioned the battery earlier is a key focus of the conference. Batteries today have gotten advance enough to power vehicles. So, what's next, what could the next generation of batteries help us to do what they were on the cusp of some really exciting protests in the batteries place? Firstly, battery costs are expected to have over the next decade, driven by both increasing scale. Manufacturing efficiency is at the same time, the technology performance has really improved to today. Demand for batteries mostly comes from consumer electronics, but that is changing. The growing
Electric vehicles is clearly a big countless, but among growth and investment lithium on batteries, autos team have, in their estimates, thing that electric vehicles, hybrids and plugin hybrid electric vehicles were account for twenty five percent of global, also cells by twenty twenty five, and that is up from just five percent last year that imply the forty two percent annual growth battery demand over the next ten years. With several other applications were stationary. Energy storage is not just vehicles. Its demand management is the integration of renewables and grid support, amongst other things,
we are dealing here with several times. The batteries is not just lithium mine, which is very good at having surgeon demand. Has we think pre promising applications for residential, mainly Juicer rooftop Sola, but is also flow bashers, which show a lot of potential in the area of grit support, helping Greece manage erratic supplies or anywhere in the world that is sunny with an old red system as a candidate for this kind of storage, and there has obviously dose implications positive ones for emerging countries.
Much of the discussion today is focused on the theme on given its maturity and early lead over other technologies, but there are hundreds of big companies start UPS university last pursuing all sorts of new chemistry's, especially for large scale. Large grid scale store solutions, and so that really is the photograph the energy complex, the real disruption,
thing is yet to come. Talking about large scale, you colleagues, injurious research of basely said powers, the one commodity that stop undistorted scale, why's, that such an exciting opportunity, and will this breakthrough come from school
going existing technologies or more likely something new as others. A grid scale storage is ready. The game changer head, the entire existing power infrastructure is set up on the basis of electricity can be stored at scale. Supply has to keep
with demand, but that is much harder to do now. You ve renewable energy, which is intermittent wishes and
currently intimate, and so as more
power generation comes from that source. You have to be able to manage them together.
Solar wind and now around five percent of new generation in the U S compared to less than one percent ten years ago, and that not everything is only gonna go up. The Rhine up huge opportunity, Magritte stored, is still very nascent: storage applications. Typically, a focused on back up power, pick shaving uninjured
renewables, owing to a small extent, where's exciting! I guess, is that batteries array enabling consumers to go off the great you can generate around power solar panels.
installer unease can use and later in the night. So we think in the longer term, battery technology that allow large scale power, storage for longer durations will bring our power costs significantly and could be very. Very disruptive in terms of demand for fossil fuels are endless estimated. A connected small power grid would require batteries were somewhere between a hundred and fifty billion dollars today, and that is more than all other battery applications put together. Even talk about defence, a lot of today's most ubiquitous in
I'm altering technologies from the internet to GPS beget as military projects. So this is an area that gets a lot of attention when you talk about future applications of technology. What developments are most excited too in the military base? Today, pair of some of the cool thing is that came up the first one was exoskeleton, so think I'm answers,
These are suits made of compensate. The soldiers were, I'm all they do. Is they transform safety strength? Germans because they
different materials in them, but they also that connected and that's a big difference. They have connectivity, so intelligence can be delivered to the soldier. Improved communication, they really are transformative soldiers,
fighting acid, and so the spill over upon whom you mentioned innovation, coming from the military and into broader commercial use. You can use these Susan industrial sectors. You can use of the disaster response that the very cool the rice lighting, but to have great power.
To have answers. Secondly, Jose Lasers, also known as directed energy
Evans, lasers, already been deployed on Navy ships, and our panel thought they could ultimately be used on every single fighter plane. They have precision, offensive and d
their capabilities. They can disable an engine, blot with no collateral damage and they can easily
an environment, but perhaps the most interesting
nothing really where there was a most interest was around drugs. We think that this could be a seventy billion dollar global market over the next five years and limits what nothing today
actually it's now is minimal, and then this is probably the fastest area of growth in the defence budget. So we think about drugs can do in terms of data collection, competent Safian, also, cost reduction. You can understand
military sites, ice about them so moving beyond the military, where the broad civilian applications of drones and why my drones provide real value, indifferent industries yeah. This is not just the military. We see potential application in industries such as
construction, agriculture, energy, mining and, to a lesser extent, assurance for gas
journalism real estate utilities can engine even cinematography, that's an awful lot of industry that can be changed and helps and benefit.
using this technology. Delivery is an area that is widely discussed. The idea that a motion of imagined getting our online shopping delivered to adore press a button and the drone shall be your door
we probably fall down the walls go to the Modena. Buenos Aires show that's in those, even though it's called little talk about it. It doesn't do any of the companies potentially involved any harm by talking about it. For the big driving attraction here is efficiency, speed and costs, as well as one of the inspection company said what we can capture in five days. Using a drone could take eight weeks with you and respects women talk about a little race
You really think about mining where they ve gotta, go in and actually explore the ground and a drunken take a picture like that obsolete
absolutely among the most interesting things I read about it,
in drawing the hardship eyes, while the oldest industries getting transformed electronic shepherds electronic episode of rural exodus.
So Goldman Sachs Research also published a piece recently. They talked about the growing militarization of space. What kinds of technologies
celebrating what you might call asset protection in space spaces, increasingly critical for the military for things like intelligence connectivity, GPS with space assets are also vulnerable, and hence security around them is increasingly a focus, as is at the same time,
Faster and better launching satellites, when a rocket blows up, you lose a very expensive payloads. Improving the success rate is critical. His grandfather, Jp S, requires a signal from forced satellites to accurately pinpoint location, equally satellite costs about a quarter of a million dollars
you have to be able to protect these things, one related to Nautilus on the development of servicing satellites in space,
and this is a really interesting example. Is the crossover application of treaty printing way who actually make the Parson pieces on site and violence? I may mean in space role and a ship them up from us is also research me down space talks, which they like tugboats, where you can move satellites around and always extend their lives and Osborne. Another is superficially is, paradoxically, spaces. Ready crowded, doesn't make sense, but it is
not so that its things like debris from spent rocket boost isn't that satellites collisions cause significant damage. Hundreds of millions of dollars spent every trying to maneuver spacecraft around of all these collisions the air force currently only tracks twenty thousand objects are not coming. Programme will be able to track one two hundred thousand objects which would help reduce
this traffic jams, space traffic jams, so that they can use the lasers to eliminate the debris. Eventually, let's finish up with health.
More and more devices connect to the internet. A lot of people excited about the possibilities
reception of digital services and traditional healthcare offerings. How big that opera
Henry and what are some of the potential benefits that can come out of this combination. Digital health is a huge opportunity for this part of an urgently needed solution, so the health costs
and you can under him in all aging economies. In the? U S, health care expenditure is either a staggering eighteen percent of GDP has grown fastening gdp for forty three, the last fifty years. This inflationary wine is an urgent need to solutions and we think digital health is very much part of that. So consider this. Eighty percent of healthcare dollars spent
in the. U S goes towards chronically ill patients as it stands now. Doctors can only react to rather than predict escalation in a patient symptoms which usually involves an expensive visit to hospital, so devices and applications that the latter is to keep them
some high risk patients remotely that enables early intervention and prevent further complications. This in turn reduces the need for hospitalizations and emergency room visits, which the big chunk of healthcare spending behaviour modification is another opportunity coming from connected help devices platforms to help patients change the
and adopt healthier lifestyles by continuously reading, interpreting and individuals, vital signs, they can help prevent illnesses and adverse outcomes. Obesity costs the U S and the region of a hundred and fifty billion dollars a year
they number the FDA already approved over a hundred mobile apps for medical use them around us think that this will help is gonna grow into a thirty billion plus market opportunity over the next ten years, which could save as much as three hundred billion healthcare costs that
a big number. So at the conference this year you talked about drones. Iron man suits you
kiddos looking ahead to the next three to five years? What topics do you think will be at the front and centre of future innovation? Symposium.
tough question. By definition, we almost don't know this year we had a superficially panel on synthetic biology, but twelve months ago I was sitting here. I wouldn't predicted that you asked me formulations that hey goes wireless electricity, Crisper was Christmas, a gene, editing technology, augmented reality, cobalt. What a covert calamity Robles Cyber security is not new, but cyber security does come
time and time again increasingly important via declares more devices get connected here, and we rely on them for health and other things out later totally. Thirdly, I guess data licit still seem a little fanciful, but are becoming a real, especially around things like prediction that came up a lot on military power of importance are prediction: the Penniless nations threat. You have to understand the days and get better producing.
Fighting some vertical started coming down the piper on the and really anything. I think a lot of all symposium was around
this idea that actually ever rising computing power into setting with ubiquity devices just create so many new potential business walls, but maybe if I can make a very bold
if one wishes in five years time at our innovation symposium, I think, are still be human beings they ought in Sudan has forever.
Thank you very much thanks for join me tonight.
like you, I must not concludes
Episode of exchanges of Goldman Sachs Objects, your we hope you join us again. Next time. This part cast was recorded on March Eighteenth, two thousand. Sixteen, this podcast should not be copied distributed, published or reproduced in whole or in part. The information contained in this box ass does not constitute research or recommendation from any golden,
tax entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast in any liability, therefore, including in respect of direct indirect or consequential loss or damage, is expressly disclaimed. The views expressed in this podcast, or not necessarily those of Goldman Sachs and Goldman Sachs, is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs too. That listener, nor to constitute such person a client of any Goldman Sachs Entity
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