#381: Is Text-Based AI On The Path To Intelligent Voice And Video?, & More

Enabled by the launch[1] of ChatGPT and the performance gains of large language models over the past three years, most generative AI applications use text interfaces. As an example, Character.ai is a consumer-facing entertainment platform offering customizable AI companions. Founded by former Google AI engineers Noam Shazeer and Daniel De Freitas, the platform aggregates curated and user-generated chatbots. Some mimic celebrities and fictional characters, while others serve as assistants. After launching[2] it as a website last September, the Character.ai team expanded[3] into mobile apps and found early product-market fit with 19 million unique users in just eight months, as shown below. In March, Andreessen Horowitz led Character.ai’s Series A pre-revenue funding round at a value of $1 billion. Since May, however, Character.ai’s unique user base has dropped 16%.

While some investors are placing high odds on the market potential of text-based chatbots, history suggests that they should encourage their companies to pivot to voice and video in the consumer AI space. In 1980, Infocom released[4]  Zork, a text-based adventure game that ran on mainframes and early personal computers. After hitting peak revenue at ~$10 million in 1984, Infocom’s star dimmed rapidly because it did not pivot its games from text to voice and video. By the end of the decade, it had ceased operations. Meanwhile, Nintendo[5] and Sega[6] rolled out audiovisual video games like Super Mario Bros and Sonic the Hedgehog that offered more immersive experiences and, for the past 30+ years, have capitalized on the superior growth of the video game industry. As in the mid-1980s when computer graphics disrupted the video game industry, AI-based entertainment could transition from text to voice and video.

ARK is especially interested in the impact of generative AI on education, particularly the potential of text, voice, and video optimized for individual learning. As AI evolves in education, will students be able to leverage these tools to cultivate critical thinking? As it scales, will students scrutinize AI output with healthy skepticism? Will AI homogenize or individualize education? ARK looks forward to researching and sharing our thoughts on AI’s impact on education.

During ARK’s research brainstorm last week, Signum Growth Capital CEO Angela Dalton shared insights on bitcoin adoption from her recent trip to El Salvador. More than two years ago, El Salvador declared bitcoin legal tender[7] nationwide. Now, Angie observes, “Awareness is high, yet usage is still low,…but there is a general sense of pride in the population that El Salvador is an early adopter of new technologies.” Dalton also noted that bitcoin usage seems most prevalent in tourist destinations like Bitcoin Beach[8] in the Pacific coast city of El Zonte.

Understandably, the citizens of El Salvador prefer to transact in USD, which became legal tender in El Salvador in 2001[9] and has protected purchasing power from the inflation and devaluations that have ravaged other countries in the region. In contrast, the price of bitcoin has been quite volatile in the face of growing pains as it endeavors to evolve into a monetary system with increased liquidity and global adoption.

In Argentina, however, the bitcoin adoption story is quite different. Inflation is expected to reach 147% in 2023,[10] which seems to have primed the population to favor Javier Milei, the pro-bitcoin, libertarian presidential candidate whose victory in the primaries[11] this summer seemed to trigger a steep appreciation in the price of bitcoin on the black market in Argentina.[12] If Milei were to win the general election on October 22, bitcoin and the purchasing power of the Argentine people could be prime beneficiaries.

Last week, Walmart announced[13] a partnership with Wing for drone deliveries from two of its Dallas Supercenters. As is often the case with its investments in new technologies, Walmart is experimenting with a number of drone companies, including Zipline, Flytrex and DroneUp. Thus far, it has completed 10,000 drone deliveries across 36 locations—which account for less than 1% of Walmart’s US stores but a meaningful percentage of US drone deliveries.[14] In contrast, and surprisingly, Amazon has completed only 100 drone deliveries.[15]

Interestingly in Dallas, Wing’s drones are operating “beyond visual line-of-sight,” though they may be facing other requirements like ground observers.[16] In our view, removing the beyond line-of-sight requirement will be critical to achieving a delivery pricing[17] model that could disrupt the exorbitant ground delivery fees unleashed during the COVID crisis.

[1] OpenAI. 2022. “Introducing ChatGPT.” https://openai.com/blog/chatgpt.
[2] Character.ai. 2022. “Introducing Character.”  https://blog.character.ai/introducing-character/.
[3] Perez., S. 2023. “Character.AI, the 16z-backed chatbot startup, tops 1.7M installs in the first week.“ TechCrunch.
[4] Briceno, H. et al. 2000. “Down From the Top of Its Game The Story of Infocom, Inc.” InfoCom.
[5] Britannica. 2023. “Nintendo Console.”
[6] SegaRetro. 2023. “History of the Sega Master System.”
[7] Renteria, N. et al. 2021. “In a world first, El Salvador makes bitcoin legal tender.” Retuers.
[8] Munawa, F. 2023. “Bitcoin Beach’s Pioneering Circular Economy Is Making a Global Impact.” Coindesk.
[9] Swiston, A. 2012. “Official Dollarization in El Salvador as an Alternative Monetary Framework.” Book Chapter in Piñón-Farah, M. A. et al. (Eds.) Central America, Panama, and the Dominican Republic. International Monetary Fund.
[10] Lopez, J. 2023. “Argentina’s inflation to reach 147% in 2023, GDP could fall up to 3.5% – economist.” Independent Commodity Intelligence Service.
[11] Politi, D. 2023. “Far-Right Populist Javier Milei Wins Argentina’s Presidential Primary Election” Time.
[12] Partz, H. 2023. “Bitcoin soars in Argentina as Javier Milei wins presidential primary.” Cointelegraph.
[13] Rajashekhar, P. 2023. “Walmart and Wing Team Up To Provide the Convenience of Drone Delivery.” Walmart.
[14] Walmart. 2023. “Quick Facts.” https://corporate.walmart.com/about/united-states. Rajashekhar, P. 2023. “Walmart and Wing Team Up To Provide the Convenience of Drone Delivery.” Walmart.
[15] Palmer, A. et al. 2023. “Amazon drones make 100th delivery, lagging far behind Alphabet’s Wing and Walmart partner Zipline.” CNBC.
[16] Rajashekhar, P. 2023. “Walmart and Wing Team Up To Provide the Convenience of Drone Delivery.” Walmart.
[17] ARK Investment Management. 2023. “Autonomous Logistics—Big Ideas 2023.”
[18] Miranda, L. 2023. “When Delivery Costs More Than the Food You Ordered.” Washington Post.