The Reality of A.I. and Its Future

Artificial Intelligence has captured our imaginations in science fiction stories for decades, but as it inches toward becoming a reality, experts such as Elon Musk and Bill Gates warn of potential dangers. Find out how the concepts of AI are already being applied by major companies today, and where some fear it could lead.

Somewhat less technical but just as futuristic, Elon Musk's proposed Hyperloop project is on its way to becoming a reality. Many laughed at the idea of transporting passengers at 800 mph, but the project is progressing, with a test track already under construction.

A full transcript follows the video.

Sean O'Reilly: The machines are coming for us! All that and more on this tech edition of Industry Focus.

Greetings Fools! I am Sean O'Reilly, here with the one and only Nathan Hamilton. How are you today, sir?

Nathan Hamilton: I'm doing well. We're going to talk some robots, artificial intelligence -- good topics!

O'Reilly: This isn't our first time talking about it.

Hamilton: It is not.

O'Reilly: What that means for our listeners is we really like talking about this, and we think it's important for the future.

Hamilton: We like to speculate on what artificial intelligence will be.

O'Reilly: You didn't watch "The Terminator" last night, did you? Is that why we're doing this?

Hamilton: No, I did not.

O'Reilly: Which one did you watch?

Hamilton: I'm just interested in tech.

O'Reilly: Was it "Judgment Day?"

Hamilton: No!

O'Reilly: Very good. Well, if you're just joining us, we are joining you from Fool Headquarters in Alexandria, Virginia. Before we dive into the reality of artificial intelligence today, and what the one and only Elon Musk has to say about that, we have a little bit of trivia to share with everybody, that we like to start the show off with. Nathan?

Hamilton: We were running trivia on some of our recent podcasts here, but I figure this is a good segue into our topic. Our trivia question of the day is, you've likely heard of computer engineers saying "debugging" a program or a system. How was this term originated?

O'Reilly: I am totally going to get this wrong.

Hamilton: Yes. We have three options.

A. A moth was stuck in the relay of an early computer, and it impeded operation.

B. Thomas Edison coined the term, referring to a technical error, back in the 1800s.

Or C. Both.

O'Reilly: One of my little tricks for taking tests in high school was, if one of the options in a multi-choice question is "both," you pick that, so I'm going to go with C. Both.

Hamilton: You're correct!

O'Reilly: Darn right. This is why I passed high school!

Hamilton: Exactly! It's not the A-C-D-C, down the list sort of thing?

O'Reilly: No. If you're given the option, you've got to go with that. Give me the history here.

Hamilton: Actually there's a little bit of conflict as to who really coined the term, but some actually point it back to Thomas Edison. It was in relation to aeronautics. He was referring to a technical error, and just called it a "bug."

What happened in the mid-1900s, when computers were being developed, a moth actually fell into this huge computer system, and the relays back then -- the transistors and so forth -- they were exposed. A moth fell into it, impeded the operation, and they took the bug out and forever then it became "debugging" the system.

O'Reilly: Good lord.

Hamilton: Yes.

O'Reilly: Is it possible that if and when AI takes over, we could just drop a moth in something, and then we'll be good? Is that a failsafe?

Hamilton: I think we're more technologically advanced now than we were back in the '50s.

O'Reilly: Darn. Oh, well. Okay, so just give a little bit more background here. What is the AI reality today? We hear all these stories about Stephen Hawking and Elon Musk. Elon actually said, "It could be like awakening the demon," referring to Armageddon and Satan or something.

Bill Gates came out and said, "This could be bad. I don't know why more people aren't concerned about this."

Hamilton: Sure.

O'Reilly: What's going on today?

Hamilton: I think you just have to look at, how much of a reality is artificial intelligence at this point? If you look at how a human brain works, and how it functions, and what sort of emotions or social context there is to it, we're not at the point where artificial intelligence is a reality today.

You have to look at it. Computers can do incredibly complex tasks. We use them every day, big data crunching, all this; providing us insights that we couldn't have even had five years ago or ten years ago, decades ago.

But, with all these complex tasks, it can't even do the simplest things that an infant could do. For example, you're sitting in a chair right now. If I were sitting on the floor and I asked a computer to tell us what we have in common, it could never come up with the answer, "both of us are sitting," but a two-year-old could likely do that.

Really, when you look at what artificial intelligence is, it's not at the level where they say computers become evil, or they're thinking for themselves, or they're creating intelligence.

O'Reilly: "I can't do that, Nathan."

Hamilton: Yes! It's not at that point yet. Where it will be in the future, sure, we can speculate. Elon Musk, I can't remember the exact date, or if he had mentioned a date, but I remember a few months back on Twitter he came back and said, "Okay, AI could be evil, and I'm concerned about it." He's actually donated money to certain foundations, to ensure that it takes the right path.

O'Reilly: If I'm not mistaken, his former business partner in PayPal, Peter Thiel, he's a bit tech investor who's actually possibly one of the most successful Silicon Valley investors out there. He's a billionaire, doing this.

He said he actually took a stake in an AI company -- it wasn't a huge thing. It was $10 million or something, but he just wanted to know what was going on. That's why he did it!

Hamilton: I think it's interesting stuff. Taking stakes in companies ... Google (GOOG 9.79%) (GOOGL 10.06%) is pretty much the preeminent AI investor, you could say. They've acquired a bunch of different robotics companies and so forth.

O'Reilly: Is Google AI? Or is it a crude ... something? I'm talking about the search engine.

Hamilton: Yes. There's predictive technologies, and you have to look at why it makes sense for Google to acquire all these -- really, when it comes down to it -- algorithm-driven or data analytics sort of companies.

The more data they can get, and the better they can use that data or leverage the data to be more predictive in what we're searching for, the more utility the search engine has.

O'Reilly: Is AI today odds-based? You know what I mean?

Hamilton: In terms of weighting a decision?

O'Reilly: Yes. This kind of leads to where AI is popping up today, with hedge funds and Bridgewater Associates, and everything. If you know that the odds on every Tuesday of Google going up a fraction of a percent is 55%, just because of history or solar flares or whatever ... is it just odds-based?

Hamilton: There probably is some sort of odds-based relationship in the actual algorithms, but I'm sure there's far more complex statistical analysis. I can't imagine Bridgewater -- you mentioned them -- they're in the news ...

O'Reilly: Why did they hire those guys?

Hamilton: Well, they're not the first hedge fund to do so. This has been a trend that's been happening for decades. Bridgewater, the largest hedge fund by assets under management, recently made some news because they hired some engineers from IBM (IBM -1.42%) that created the Watson system, which we know beat the guy on "Jeopardy!" Big deal in terms of what people think could eventually be artificial intelligence.

You have to look at it. They're hedge funds. It makes sense for them to hire some of these people. If you look at finance as a whole, it is very quantitatively driven -- or it lends itself well to being quantitatively driven.

O'Reilly: I don't know if they're trying to give Renaissance Technologies a run for their money? That company's crazy to me. They've got like 90 PhDs on staff, and that's it.

Hamilton: Exactly. They hire engineers and PhDs, not finance professionals. They're not going to take you because you went to Harvard and got an MBA. They're going to take the guys from MIT. If you look at the founders of Renaissance, they're actually former IBM guys as well.

O'Reilly: Right.

Hamilton: But there are other places that artificial intelligence is popping up. We mentioned Google. Predictive capabilities help them target better ads. Driverless cars help them determine a rationale for ... say you're in a driverless car and a squirrel hops in the middle of the road, and a baby hops in the middle of the road.

In that scenario, how does a computer determine, "Maybe I should go forward for the squirrel, and if there's a baby I should steer out of the way." These are rational decisions that have to be made by computers. How do you program that into a computer?

O'Reilly: Very carefully.

Hamilton: Exactly. That's something to be determined in the future, and very much a question mark. Google made news recently as well because one of their companies, DeepMind Technology I believe it is ...

O'Reilly: Do they have a stake in it, or is it just a subsidiary?

Hamilton: They acquired the company. Essentially, the company created artificial intelligence for a video game that can beat any human. I think it was some Atari game.

O'Reilly: It cannot beat me at GoldenEye. I'm at 64. I promise you!

Hamilton: But I'm sure it can eventually!

It's really interesting, some of the ways that these companies are investing. Google obviously the big one in there, but it gets at a bigger trend in tech, and this has been going on for 20, 30, 40, 50 years.

Software is essentially eating the world. Some people that follow tech have probably heard this before, but look back at email pretty much making the Postal Service worthless.

O'Reilly: At least for letters.

Hamilton: Yes. You look at Uber more recently. Their software platform is becoming very significant competition for taxis, and at a lower cost.

O'Reilly: I don't know, does Uber tell drivers where to hang out?

Hamilton: I think they drive around wherever they want, but I'm sure the drivers have some sort of insights.

O'Reilly: Because I just notice, every time I'm in -- we live in the Metro D.C. area, so the odds of picking somebody up are pretty good anywhere -- but pretty much a car is three-four minutes away, all the time. I'm just like, "Why is this always happening?"

Hamilton: This is getting off topic, but a lot of people complain about their surge pricing. The purpose of surge pricing, you can see the intent where it was there, and it's actually to bring more drivers on the road.

Essentially, it's an incentive to the drivers. They're going to get a higher rate at more busy times. Sometimes it goes south.

O'Reilly: This is Economics 101, people.

Hamilton: Exactly!

O'Reilly: It's not that controversial.

Hamilton: You flash money in front of people, they'll do work for you.

O'Reilly: Jeez! Before we move on here, I just wanted to share -- it's really funny that we're talking about this -- I was reading an article yesterday that Elon Musk tweeted about. He just said, "It's a great article about AI. It's a little bit long, but it's very cool and possibly funny."

It wasn't so much that they're worried about Skynet taking over and making a Terminator and then sending a Terminator back in time to destroy the leader of the revolution, or anything like that.

It's such that once something becomes artificially intelligent, it can exponentially increase its intelligence beyond what a human can do, not only will it be beyond us and we won't be able to predict it, but it will probably have a job.

The robot with artificial intelligence, in this article that was posited, was a robot with a hand designed to write cards for a greeting card company. It was like, "We love our customers, da, da, da, da, da."

Eventually, in order to complete that task and do it the best it possibly could, humans were an impediment. We use the resources on planet Earth, and it needs to make more of these robotic hands to keep writing cards.

Hamilton: Sure.

O'Reilly: It eventually just takes over the solar system to do this, and it made the Earth into solar cells to keep powering it to write these stupid cards, and that's the end of the Universe.

Hamilton: So they're going to rewrite Terminator into a card-writing based plot?

O'Reilly: It's not Skynet, it's Hallmark! Very cool.

Moving on to other Elon Musk news -- I think we probably should have called this Elon Musk Day, not AI Day. Anyway, what's going on?

Hamilton: They're intertwined. There was news recently as well on Hyperloop becoming a reality.

O'Reilly: Would you ride this?

Hamilton: I don't know, it looks pretty cool -- 800 miles per hour in a tube?

O'Reilly: I agree.

Hamilton: For some of the listeners that aren't familiar with it, Hyperloop is essentially his grand idea that he proposed back in, I believe it was, 2013.

O'Reilly: Everybody laughed then, by the way.

Hamilton: Yes. Essentially it's an above-ground, tube-based transportation system. The closest I can come in terms of visualizing it is, you know when you're at the drive-through at the bank and you put the canister in there?

O'Reilly: Yes. You're putting humans in the canister. It's a vacuum.

Hamilton: That's exactly what the Hyperloop is. The end goal is to transport individuals at up to 800 miles per hour. It's a great idea.

O'Reilly: I don't know if I would scream, or just read a magazine. I don't know which ...

Hamilton: You know what? Here's how Hyperloop is becoming more of a reality, and why it matters for what you just mentioned there. They're building a five-mile test track.

O'Reilly: In Texas.

Hamilton: Yes. What they're going to be doing are testing the logistics of it. How do we design the pods? How do we design the seats? How do you actually get people onboard? What's the experience actually like? You have to think about it, at 800 miles per hour, it could be ...

O'Reilly: I just did the math. A ride on that track would take about 37.5 seconds.

Hamilton: Well, here's the caveat as part of the test. A five-mile track is not enough to get up to 800 miles per hour.

O'Reilly: I was going to say.

Hamilton: They're not going to be testing at that speed.

O'Reilly: It sounds good until you have to stop!

Hamilton: Yes. They're not testing the speed. It's more the logistics of it, the practical aspects of, how do we actually make this a full-fledged transportation system?

O'Reilly: Practical technology, yes. I also wonder what it would do -- because they're talking about doing this in California, but eventually there's going to be an earthquake. What happens with a vacuum tube where you're going super-fast, and when an earthquake shifts that tube a couple of inches? All I'm saying is, we should probably build it in Ohio!

Hamilton: I don't know if the profit incentive is there in Ohio.

O'Reilly: Oh, come on. Everybody goes from Cleveland and Cincinnati through Columbus.

Hamilton: It really is crazy. To talk a little bit about Mr. Musk, if you take into account what the guy is doing; he's trying to make the first mass-produced electric car, he's essentially trying to supplant NASA ...

O'Reilly: Make a reusable rocket, which is actually a big deal, and he's doing well at it so far.

Hamilton: Yes. Driverless cars, and now he wants to create essentially the new transcontinental railroad.

O'Reilly: And he made it open source because he's too busy.

Hamilton: Yes. These are all huge ambitions, so it's pretty interesting. For tech, and anyone that follows it, I think it'll be a pretty interesting 20-30 years, going forward.

O'Reilly: This show is not an endorsement to buy shares in his companies, but he's a smart guy!

Hamilton: It's not. But he's a smart guy. He seems to have some grand ambitions. With Tesla (TSLA -1.45%) at least, he's showing some proof that he can get it done; also with PayPal.

O'Reilly: We should make a road trip to the Gigafactory when it opens.

Hamilton: Yes, that would be very cool.

O'Reilly: Road trip in a Tesla! Just kidding! Anyway, very cool.

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