Contrary Research Rundown #112
How one residential battery company plans to save the US electric grid, plus new memos on Hippocratic AI and Patreon.
Research Rundown
Energy abundance has always been inextricably linked with human prosperity, and that remains true today. A 2022 graph that compared the GDP per capita of all the countries on Earth against their per capita energy consumption shows a very strong correlation: there are no countries with high energy consumption that are poor, and there are no countries with low energy consumption that are rich.
The good news is that energy production costs are quickly decreasing, particularly because of the extremely rapid decline in the cost of renewable energy sources like solar and wind. But energy consumption is not growing apace, held back by the fact that the price of electricity in the US, adjusted for inflation, has barely changed over the last twenty years.
The reason? Although generating electricity has gotten a lot cheaper, transmitting that energy from the place where it was generated (a power plant, wind farm, offshore solar farm, etc.) to where it’s needed (your house or office) has gotten more expensive. The cost of delivering electricity increased significantly in the 2010s, despite cheaper generation costs from renewables and natural gas, because of the grid.
The US electrical grid — which is actually made up of four independent grids — is a marvel of engineering. However, as Base Power CEO Zach Dell noted in a just-released podcast episode of Contrary Research Radio, “it’s very old, and it’s not sized for modern demand.” Compounding this problem is the fact that energy supply is increasingly coming from renewable sources with outputs that vary throughout the day, creating additional load on the grid.
So, although the cost of generating energy is collapsing, supply is becoming increasingly volatile. Meanwhile, energy demand is set to surge. As Zach Dell pointed out on our podcast, if the grid is struggling today, it’s definitely “not sized for where modern power demand is going.”
EV adoption is going to be one driver of the rapid increase in energy demand. EVs accounted for 7.5% of all vehicles sold in the US in 2023, but that number is expected to rise to 29% by 2030. Another driver will be the increased energy demand of AI data centers. The power they consume will double by 2026, by which point data centers globally will consume the same amount of energy as the country of Japan.
The electric grid is not prepared for this increased power demand and an increasingly volatile supply of energy from renewables. It was built to balance a stable supply of electricity to meet a predictable demand. As a result, customers are already suffering higher prices and more outages — problems that will only worsen if nothing changes.
The average length of electricity outage per customer increased from about 210 to over 400 minutes per year between 2013 and 2021. Texas faces a particularly acute distribution problem, as its grid relies heavily on renewables. After a historic winter storm in 2021, more than 4.5 million homes, approximately a quarter of all residences, were without power for several days. Texas utility operators allowed the price of electricity to go up to $9 per kilowatt-hour, resulting in electricity bills of thousands of dollars for many Texans.
This week, in combination with our podcast episode, we published a report on a company that is trying to solve this problem: Base Power, also known as Base, aims to relieve pressure on the grid by installing residential batteries at scale. Placing batteries next to homes solves both the supply volatility and demand volatility problems of the grid by allowing homes to store energy when demand and prices are low, and discharge when demand and prices are high, reducing stress on the transmission lines. Read more about Base Power in our full company breakdown below.
Hippocratic AI is on a mission to build the first safety-focused LLM designed for healthcare. They aim to address the US healthcare worker shortage safely and securely by augmenting, not replacing, human healthcare workers. To learn more, read our full memo here and check out some open roles below:
Product Implementation Architect (Healthcare Integrations) - Palo Alto, CA
Conversational AI Prompt Engineer - Palo Alto, CA
Patreon is a platform for digital content creators with loyal fanbases. By offering a membership platform that enables creators to monetize their work directly via subscriptions from their audience, Patreon allows creators to focus on their creativity without worrying about unpredictable ad revenue or platform policies. To learn more, read our full memo here and check out some open roles below:
Senior Data Scientist (Discovery & Recommendations) - San Francisco or New York
Staff Product Designer (Podcasting) - San Francisco or New York
Check out some standout roles from this week.
Sprig | San Francisco, CA - Senior Backend Engineer, Senior Platform Engineer, Staff Product Designer
Sentry | San Francisco or Toronto - Senior Support Engineer (Codecov), Senior Software Engineer (Game Developer Experience), Engineering Manager (SRE), Senior Machine Learning Engineer (Platform), Senior Software Engineer (Developer Infrastructure)
Ramp | New York, Remote, Miami, San Francisco - Senior Product Designer, Senior Designer-Engineer (Design System), Senior Motion Designer (Brand)
Moment | New York, NY - Software Engineer (Data & Market Connectivity - Backend), Software Engineer (Full Stack / Front End, Senior), Software Engineer (Trading - Backend, Multiple Levels)
SpaceX completed the sixth launch of its Starship vehicle but canceled a booster catch attempt before the rocket and spacecraft landed in the Indian Ocean. During the flight, officials had hoped to catch the booster but determined it would not meet safety standards for a secure landing.
Cerebras is now the fastest LLM inference processor. The company announced that it performs molecular dynamics simulations 700 times faster than Frontier, the world’s fastest supercomputer. This advancement will allow scientists to complete in a single day what previously required two years of GPU-based supercomputer simulations.
Perplexity introduced a shopping feature that allows paid US users to receive personalized shopping recommendations directly in search results and place orders without needing to visit a retailer’s website.
Microsoft’s AI digital assistant, Copilot, has raised concerns among Microsoft's employees and executives about its ability to deliver on its ambitions of being the product that will “fundamentally transform our relationship with technology.” According to an October 2024 survey by Gartner, just four out of 123 IT leaders said Copilot provided significant value to their companies.
Amazon announced an additional $4 billion investment in Anthropic, bringing Amazon’s total investment in the company to $8 billion while designating AWS as Anthropic primary cloud and training partner for deploying AI models using Trainium and Inferentia chips.
The Pentagon, the largest US government agency, has failed its annual audit for the seventh consecutive year, unable to fully account for its $824 billion budget. Officials anticipate achieving a clean audit by 2028.
The DOJ is pushing Google to spin off Chrome’s browser business to prevent the company from dominating the search engine market. If the judge agrees with the DOJ, Chrome could sell for as much as $20 billion. The DOJ also intends to recommend to a federal judge that Google be subject to antitrust regulations concerning its AI and Android mobile operating system.
Canva hired former Zoom CFO Kelly Steckelberg as its new CFO, a move seen as preparing for a potential IPO. Steckelberg’s experience in leading Zoom through its IPO and guiding the company’s financial strategy during its growth could position her well to help Canva navigate a similar transition.
OpenAI’s ChatGPT-4 outperformed doctors in diagnosing medical conditions, achieving an average accuracy of 90%. In comparison, doctors using GPT-4 scored an average of 76%, while those without access to the technology scored 74%.
The European Union (EU) is planning to require Chinese companies to transfer intellectual property for clean technologies and set up production facilities in Europe as a condition for accessing EU subsidies. This measure, intended to reduce the EU's dependency on Chinese tech and protect European industry, would initially focus on green sectors like batteries but may expand to other areas.
Despite US export bans on advanced chips aimed at limiting China's tech capabilities, ByteDance and Alibaba have begun expanding their California offices, potentially in an effort to attract talent from American generative AI competitors.
Perplexity Finance now provides live transcripts and key highlights of earnings calls. The offering started with NVIDIA’s earnings report, and Perplexity plans to expand its coverage to include all major stocks in the future.
AI companies, including OpenAI, Google, and Anthropic, are facing challenges in advancing their AI models. Each company’s recent efforts – OpenAI’s Orion model, Google’s Gemini, and Anthropic’s Claude 3.5 Opus – have encountered technical hurdles and delays that stem from difficulties in sourcing high-quality training data and the high costs of training advanced models.
The New York Times has accused OpenAI of accidentally erasing crucial data related to a copyright dispute, hampering efforts to track how Times articles may have been used to train OpenAI’s models.
At Contrary Research, we’re building the best starting place to understand private tech companies. We can't do it alone, nor would we want to. We focus on bringing together a variety of different perspectives.
That's why we're opening applications for our Research Fellowship. In the past, we've worked with software engineers, product managers, investors, and more. If you're interested in researching and writing about tech companies, apply here!