Welcome to the third part of our New Year series, “WTF happened in 2024?”
In it, we’ve been making the case that the burst of technological innovation currently unfolding is unlike anything we’ve seen since at least the 1960s. It began in 2024, is accelerating into 2025, and is already beginning to transform our lives and the economy.
Part 1 is here. Part 2 is here. Today, we’ll get into the two most imminently impactful frontiers, starting with a specific area of artificial intelligence (AI).
Frontier 4: Physical AI—robots that learn
There’s a long-running joke that AI can easily beat the world’s best chess player but can’t fold a crumpled t-shirt. It’s funny because it’s true. Simple physical tasks have been incredibly hard for robots to master.
Startup Physical Intelligence is one of many companies using AI to solve this problem. Its “AI brain” allows robots to perform almost any task.
In November, it showed off its robot performing a wide range of household chores, from folding laundry to cleaning up a messy table. It’s The Jetsons Rosey the Robot in real life.
We’re on the cusp of a future where you can simply tell a robot what you want done, and it’ll figure out how to do it—even if it's never done that task before.
This is already taking shape in Amazon warehouses. Meet “Digit,” a two-legged robot that can “see” and handle objects like a human, thanks to new AI upgrades:
Source: Scott Hansen on Medium
Amazon’s robots can now identify and store inventory 75% faster. How many billions of dollars is that worth?
Robots have been in factories for decades. But they were mostly one-trick ponies. They’d endlessly repeat the same task based on preprogrammed rules in carefully controlled settings.
AI changes this because it lets robots learn new things. Soon, the same robot that unloads trucks in the morning could help assemble products in the afternoon and organize inventory at night. We’re moving from single-purpose machines to versatile helpers that can understand and follow instructions.
Imagine a handful of people overseeing thousands of robots running a factory. Now, imagine if America were full of these factories. We could produce 1,000X more stuff for a fraction of today’s cost. When THAT happens (it’s already started), it could create trillions of dollars in wealth.
All kinds of weird and wonderful new robots are already here. Monks in Wyoming are using robots to carve intricate Gothic details in their new monastery in days instead of weeks. And in Tyson Foods’ new meat plants, robots process 30% more chicken with 250 fewer human workers.
It’s no exaggeration to say that self-learning robots can reinvent American manufacturing. This will be one of the biggest investment opportunities in the next decade. And it’s only the start.
Physical AI is sweeping across industries, transforming long-established ways of doing things.
Self-driving cars: Tesla’s self-driving tech used to be like a student memorizing a massive rulebook. Yellow light, slow down. Spot a cyclist? Give them space. It memorized 300,000+ rules, which made the system brittle.
Tesla threw out the rulebook and replaced all that human code with an AI system. Instead of following rules, the car now makes decisions based on what it sees.
Tesla’s self-driving tech improved 100X in 2024, measured by how often humans needed to take over the wheel:
Source: Freda Duan on X
Robot surgeons: Researchers at Johns Hopkins University and Stanford created a robot surgeon that works 30% faster than human surgeons while maintaining precision. The robot learned to handle surgical needles, lift and manipulate tissue carefully, sew stitches, and perform new surgeries all by simply watching videos.
In The Matrix, Neo learns kung fu by “downloading” it into his brain. That’s now real for robots.
A decade from now, the best neuro, plastic, and orthopedic surgeons might all be the same robot. Notice the thread: All these robots are ditching preprogrammed rules to instead learn with AI.
Bionic limbs: Startup Atom Limbs is building AI-powered bionic arms that read electrical signals from your body. We’ve talked about Noland Arbaugh, who is paralyzed from the neck down. Neuralink’s brain chip lets him control a computer with his mind. Soon, he’ll be able to control bionic body parts with his mind.
Eventually, we could create complete exoskeletons that allow paralyzed people to move around freely.
AI robots don’t just learn… they can teach! We’ve known exactly how to give all kids a world-class education since 1984. It comes down to personal attention. Give almost any kid a one-on-one tutor tuned into their strengths and learning style, and they’ll excel. But we couldn't afford to give every child their own one-on-one teacher. Until now.
Khanmigo is an AI tutor built by Khan Academy and OpenAI. It tailors lessons to each student’s unique needs. It’s already being used in 266 schools across America, including 20,000 kids in Indiana.
For $15/student/year, kids get unlimited access to a tutor that never tires, never loses patience, and constantly learns how to teach each child better. Khanmigo is the first AI tool I’m excited for my kids to try.
Picture a third grader. He’s a visual learner who loves Star Wars and struggles with math. His AI tutor can design lessons to explain multiplication through lightsaber battles. It's like having a teacher who has known your child since kindergarten and understands exactly how they learn best.
Think back to your own schooling. Remember that one amazing teacher who believed in you, who explained things in a way that just clicked? Now imagine every student having that experience, every day, in every subject.
Traditional schooling with rigid schedules and standardized tests is a curiosity killer. I hated school but rediscovered the joy of learning when I was free to learn my own way. AI tutors ensure our children never lose that spark.
They let us realize the dream of “no kid left behind” AND allow every child to soar as high as their curiosity can take them. Slower learners will get the one-on-one help they need. And if your kid’s a genius, AI will help her explore Newtonian physics in third grade.
A world-class, personally tailored education for every kid, regardless of zip code. What a time to be a parent!
A hedge fund manager I know uses AI to homeschool his three kids. He told ChatGPT about their strengths and weaknesses, the values he wanted to instill in them, and what textbooks they owned. ChatGPT drew up full weekly learning schedules and even graded their work. None of this was possible even a year ago.
Harvard’s most popular class, Computer Science 50, now uses an AI teaching assistant. Students using the AI tutor learned more than twice as much in less time.
Austin’s AI-focused Alpha School gives us a glimpse of how we can combine AI with regular schools to achieve outstanding results. Using AI has helped kids who were two years behind in school catch up in under six months.
And remember, this is the worst AI tutoring will ever be. The revolution in human potential is just beginning.
5: The final frontier
Starship is the largest and most powerful rocket ever built. It’s 100 feet taller than the Statue of Liberty, weighs 11 million pounds, and is powered by 33 raptor engines. Just one of these engines produces twice the thrust of an entire Boeing 747.
In 2024, SpaceX caught this monster rocket with a pair of giant mechanical arms as it fell from the sky. Full-grown men look like ants walking on these arms:
Source: Marcus House on X
Every 2.3 days in 2024, a SpaceX rocket blasted off somewhere in America. This year, it’ll complete more missions than NASA’s Space Shuttle program did in its entire 30-year history.
Imagine if every time you flew, the airline had to build a new plane. That’s how space travel used to work. Every rocket flew once, then crashed into the ocean. SpaceX changed the game with reusable rockets.
In 2000, putting a pound of cargo into orbit cost at least $30,000. Today, SpaceX routinely does it for $1,200—a 96% cost reduction!
Source: Shyam Sankar on X
Elon Musk’s goal is to slash costs by another 99% to nearly $10/kg. I wouldn’t bet against him.
The plunge in the cost of space transit has opened a whole new space industry. First up: space-based drug factories. California startup Varda plans to make lifesaving pills in these 3-foot-wide space capsules:
Source: Bloomberg
Varda’s automated lab mixes chemicals in the microgravity of space, creating medicines impossible to make on Earth. When the crystals are ready, they are packed into a heat-shield capsule and dropped from space.
Varda launched the world’s first space drug factory in June. Its capsule hitched a ride on a SpaceX rocket, made crystals of an antiviral drug while in orbit, and then parachuted back to Earth.
In February, America touched down on the moon after a 52-year hiatus. A spacecraft built and flown by Texas-based Intuitive Machines landed near the moon's south pole. This marked the first-ever lunar landing by a private company. Why didn’t we hear about this in the news?
Another startup, Reflect Orbital, is building satellites with giant mirrors to reflect sunlight at specific points on Earth, creating "on-demand daylight" for solar farms. If it works, this innovation could literally turn night into day in specific locations.
Don’t forget about SpaceX’s Starlink. It has built the world’s largest satellite network. Its 7,000 satellites beam down high-speed internet to the most remote corners of Earth. Starlink will make $10 billion in revenue from selling broadband this year.
Starlink recently inked a deal with T-Mobile, which means internet will be available almost anywhere. Lost in Death Valley? Middle of the Pacific? No problem. Simply plug in a Starlink dish and point it at the sky.
Nothing signals “physical innovation is back” like the resurgence in space travel. When NASA retired its Space Shuttle program in 2011, America lost its ability to go to space. We had to hitch a ride on Russian rockets to send astronauts to the International Space Station.
SpaceX singlehandedly revived the final frontier. Look at this chart showing the number of objects launched into space. It’s going vertical, and that’s without 2024’s record haul:
As my friend Matt Ridley correctly predicted in The Rational Optimist book back in 2010, entrepreneurs—not government agencies—now dominate space. SpaceX is so far ahead, I doubt the US government will build a rocket ever again. SpaceX is the new NASA.
There’s a video making the rounds online of a dad and son watching SpaceX rockets land side by side. The boy’s voice cracks with excitement when he spots the second rocket. Watch it and you’ll hear a child realizing humans can do “impossible” things.
Source: Elon Musk on X
How can you watch giant rockets descend from the sky, balanced on a pillar of fire, landing gracefully on their “tripods,” and not be inspired?
Each successful launch shows our kids the future isn’t something that happens to you. It’s something you build. That kid watching rockets land might grow up to design the spaceships that take us to Mars.
SpaceX launches = the new father-son bonding trip.
Space isn’t just a place we visit anymore. It’s becoming a place where we work, travel, and manufacture. One day, future generations may live there.
Space is also one of the fastest-growing, most exciting industries. SpaceX is the world’s most valuable private company, worth $350 billion.
The final frontier is open for business.
What should you do about all this?
For the past three weeks, I’ve covered the five areas where I believe big innovations will be clustered in 2025 and beyond. I hope I’ve given you a clear picture, and something to think about and look forward to.
Next week, I’ll conclude this series by answering some practical questions. What should we, the humans impacted by all this, do with this information? How should we invest, plan our careers, our lives, and our family’s future?
Lastly, an important announcement: Fellow ROS founder Dan Steinhart and I are looking at planning the first ROS meetup in an East Coast city in early spring. Want to come? Where do you prefer to meet—Boston, NYC, or DC? Toronto’s a possibility, too.
Let us know at members@rationaloptimistsociety.com.
Lastly, thanks for all the responses to our recent mailbag issues. Many of you had the same idea: Could we form ROS groups based in certain areas that meet regularly? Great idea; we’re looking into it. More soon.
Onward and upward!
PS: Hey, you don’t need to wait until the end of the week for great news. Follow us on X for regular updates.
Writer: Stephen McBride: https://x.com/DisruptionHedge
Editor: Dan Steinhart: https://x.com/dan_steinhart
Rational Optimist Society: https://x.com/RationalOptSoc
Check out the latest episode of the Rational Optimist Podcast here.
Missed Part 1 of this series? Read it here.
Missed Part 2? Read it here.