Jobs of the Future, Harnessing Earth Observation, & Gaming Tech Advances

0:00How do companies take the magic that happened when we all got up at 5 a .m. and watched SpaceX catch a massive multi -story rocket with chopsticks? Terabytes and terabytes come down from orbit every single day soon to be probably petabytes. We're talking about job creation for a whole class of folks that don't necessarily need a degree to participate. All the technology exists today to have that experience in an amazing intuitive way and yet it doesn't exist. What is the next generation water treatment engineer look like? It's someone that knows their way around the robot. In a matter of days, we'll say goodbye to 2024 and start 2025.

0:45It's hard to believe. It's been 25 years since Y2K, 21 years since Facebook was founded and even nearly 10 years since OpenAI was brought to life. So, if it feels like things are moving quickly, you're not alone. That's why every year we ask our partners who are meeting every day with the people building our future, but they think is in store for the following year. Last year, we predicted. A new age of maritime exploration, programming medicines final frontier. AI -proof schemes that never end. Democritizing miracle drugs. And on deck this year, we'll be exploring. Infrastructure independence and hypersenters.

1:23Super staffing for healthcare. Regulation will become code. And throughout this four -part series, you'll hear from all over A16Z, including American Dynamism, Healthcare, Fintech, Games, and more. However, if you'd like to see the full list of 50 big ideas, head on over to A16Z .com slash big ideas. As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the company's discussed in this podcast.

2:03For more details including a link to our investments, please see A16Z .com slash Disclosures. [♪ OUTRO MUSIC PLAYING [♪ OUTRO MUSIC [♪ Today, we focus on the increasingly interesting intersection of hardware and software. Up first. We're seeing a renaissance in technical disciplines that cross the hardware software chasm. The robots are coming. Someone will have to build, train, and service them. That was Aaron Price -Ray, a general partner on the American Dinoism team. And here's Aaron's big idea. In the 2000s and 2010s, if you weren't coding, it seemed like you'd get left behind. The number of computer science majors exploded while degree programs like mechanical engineering and electrical engineering shrunk on a relative basis.

2:52Now we're beginning to see a crucial shift amid the push to reshore manufacturing the mass retirement of skilled workers across unsexy industries like water treatment, commercial HVAC and oil and gas, and the rise of autonomy across defense, enterprise, and consumer applications. People are building physical things again. It's really exciting to see And that's going to require this full stack skill set of people who can cross the hardware software chasm. So I think we've really seen over the last two decades a mass migration of engineers to the software and computer industry. And what I think we're going to see is huge demand for engineers in areas like electrical engineering, mechanical engineering, controls engineering are going to be in really high demand over the coming year as industries from defense to industrials, manufacturing, even things like HVAC and water treatment are looking for people that are really ready to wrestle with and bring AI software into these really complex hardware contexts.

3:59Over the last few decades, we have seen a lot of people migrate to software and now maybe we're seeing a shift. Can you speak to the macro trends that are really underpinning that? I think the last 20 to 25 years has really been the software is eating the world, not to steal our own tagline, but it's really true. Most of the growth in the economy came from the software industry. So with first the rise of software as a service and then more recently, the kind of explosion of AI, the skillsets that have really been in demand have been software focused. But with the kind of very recent crossing of the chasm from software to hardware, there's huge demand for engineers that can both speak software and speak hardware.

4:42Yeah. And as we do feel this pivot back, are you seeing that in the data when it comes to the degrees that people are getting? Are people no longer getting software engineering degrees at the same clip and maybe choosing to take a mechanical engineering degree, for example? We're not seeing that necessarily yet in degree programs, but we're seeing that in the demand in companies. And so I think that's going to filter out into what people end up studying in school. So the highest demand jobs in our portfolio today other than perhaps AI engineers are people who have full stack hardware and software experience whether it's mechanical, electrical, etc.

5:20And what we're finding is that actually those companies are having to go outside of traditional tech feeder schools in order to find that talent. So we're actually seeing an interesting rise of schools like Georgia Tech, Colorado School of Minds, University of Michigan. Some of these really hardcore engineering programs are really coming into talent pipelines for some of our top -tier tech companies in the portfolio, which is really interesting. So interesting. And let's actually touch on that specifically. This idea of us needing all of these new kinds of engineers, some of them previously existed, but there seems to be a gap.

5:53And there's this question of who's going to train these people. Is it the four -year degree program? Is it something different? There's definitely a spectrum and I would frankly really credit Elon Musk both from the SpaceX and Tesla perspective with a lot for really training up engineers that have fluency and hardware and software. As more companies that are building physical things grow, companies like Skydo and Andral and others are really taking on that mantle and training a new generation of full stack engineers that are really comfortable and fluent across hardware and software. I do think the university systems or some sort of education system has to catch up.

6:30I expect that schools like Stanford and MIT have great engineering departments outside of computer science programs. I'm hopeful that those programs will continue to grow as the demand in the market continues to grow. And then I also think it's not just engineers with four -year degrees that are going to be valuable. We're talking about job creation for a whole class of folks that don't necessarily need a degree to participate in this sort of reshoring AI or autonomy driven hardware economy. So technicians who will help service and test robots on the manufacturing floor, that is a well paid, secure job of the future, I think.

7:09Another example that we're really excited about is robotic tele -operation. So you have someone remotely operating a robot in an environment where maybe it's dangerous or hard to get to or just really difficult to staff humans. It's really difficult doing robot teleoperation. It's a valuable skill set I expect that there'll be an entire kind of class of jobs related to that arising over the next few years and again, that's an example of something you don't need a four -year degree to get really good at robot tele up, but it's a very valuable skill if you do it. Yeah, and there's no current university degree that would also say that, right?

7:43Are there any other jobs, new jobs that stand out that maybe we don't even see quite yet? But I think that when you look at, for example, the recent results that came out about the TSMC factory in Arizona, the Governor Katie Hobbs has introduced a big apprenticeship program where they're helping to train new semiconductor manufacturing employees alongside folks who have come over from TMC. So with kind of the rollout of the chips act, I expect as chip manufacturing comes back to the US, that is the entire class of jobs that we just have literally never had here. Maybe we did for five years in the 60s right at the beginning of the industry and I expect reshoring we'll see a lot of those coming back.

8:22I think another example more in the industrial sector is you have lots of industries that hired people when they all modernized roughly in the 80s. So there's a large class of it's oil and gas, it's water treatment, it's chemical engineering and HVAC. There's a class of these heavy industries that introduce a lot of new equipment and new ways of operating in the late 80s, hire a whole bunch of people to work on it, and then essentially never really had to hire anyone else. There are great jobs, there's low turnover, they're well paid, and now we're seeing kind of mass retirement across some of these heavy industries, and companies really looking to incorporate more autonomous kind of control systems in the way they manage some of these processes.

9:10but there's no one to operate them. So what is the next generation water treatment engineer look like? It's someone that knows their way around a robot, a control system, a PCB board. They're gonna have to know their way around sensor data and they're gonna have to be able to understand how all of that integrates together to be able to troubleshoot when things go wrong. So huge opportunities in some of these industries where we're just seeing massive labor gaps over the coming, I don't know, three to five years. Wow, and that's pretty soon actually. Yes, it's happening now. Yeah, and so that sounds like an incoming shortage.

9:45Are there any other shortages that we think about the supply and demand? Maybe not so much of completely new jobs, but existing jobs. The thing that really stands out in our portfolio, especially when you look across industries like aerospace, defense, robotics, it's this notion of a full stack engineer. And I don't mean a full stack software engineer. I'm talking about a full stack hardware engineer. So someone that can write some code, they can write some firmware, they can fiddle around with electronics, maybe design a really simple PCB board with components, figure out how it fits in a mechanical system, sort of troubleshoot when things go wrong.

10:29There are just very few people who have that kind of end -to -end skill set. And many of these industries are still relatively early on their robotics or autonomy journey. So there's still a lot of iteration to go around things aren't fixed in time. So the biggest demand that we're seeing in our portfolio is that fluency across multiple different domains that includes hardware or software. So it's not necessarily that you need to be the literal world's best electrical engineer and have a PhD in electrical engineering. It's more that you're flexible and comfortable and familiar moving across different parts of the stack.

11:09You're able to unblock yourself and you're really able to try things and implement things yourself as All of these companies are figuring out what the next generation of hardware systems looks like Fascinating and as we think about closing that gap right producing more of these people who are full stack in the hardware sense What do you think is needed? And let me preface by giving the example of, we saw this wave of software engineers over the last few decades. And that was pulled by the market in many senses. You had these large companies, like the FAN companies, providing a lot of really impressive benefits for these people to come in.

11:44And it became the kind of job that everyone wanted for a period. Do we need the same kind of, you could say, marketing are there other effects that you think need to influence the larger system? I think a lot of it will be market -driven. It's also about capitalizing on this sort of romantic desire to build stuff that I think is in the air right now. So how do companies take the magic that happened when we all got up at 5 a .m. and watched SpaceX, catch a massive multi -story rocket with chopsticks in the air. That's so cool. And I think the companies that can figure out how to translate that feeling into pulling people who might otherwise go down a safer route of, oh, I'm an ML researcher, so I'm go get a really big paycheck at one of these research labs.

12:49I'm a smart person and I'm going to go code a chatbot. I think it's up to these companies that are building in these hard and gritty spaces where it is harder because having to worry about hardware is harder than dealing with software alone. But if they can pull that talent and inspire people to really get into the guts of what does it mean to deploy a model on a physical system and what is the complexity and challenge in that? I think it's like capturing the lightning in a bottle that exists in the moment right now and turning that into early movement from the pure software or pure AI industries.

13:25We're already seeing this with larger robotics labs that have gotten well funded over the last 12 months or so. They're managing to pull really incredible talent. I think the companies like Andral, and Waymo, and Skydeo, and others are pulling incredible talent still. And that's going to hopefully translate into more and more 18 -year -olds being inspired to take a mechanical engineering class or build a robot rather than just study pure software like they maybe have been for the last decade. Only since you just mentioned the kind of 18 -year -olds who would be starting their skill journey from scratch, do you also think that the folks who are older who have maybe gone through their career already partially?

14:08Is there a role for them to play in the reskilling and entering the workforce maybe for a second time? Yeah, for sure. I think I see the rise of autonomy and the benefit that's going to bring to the labor market in terms of manufacturing jobs in the United States, in terms of high -skilled technical work replacing low -skilled labor. A huge job market opportunities. Like, how to manage that training process and training pipeline. I think it's going to take a lot of different forms, whether it's apprenticeship programs, tele -operation, outposts. I think we're going to see a whole bunch of different things emerge.

14:46But for people who are curious and like to build and are highly technical, even if that doesn't mean that they've gotten a college degree, electricians, for example, like there's a huge shortage of electricians in places like Texas and Georgia, etc. I think I was talking to someone from Microsoft recently who said that as they were standing up, some of their new data center work in Georgia, they employed at one time, one third of the registered electricians state, which is crazy. A third. So there's just a huge derth in some of these skilled trades that are going to become really important as the AI in autonomy expands across the United States.

15:28Absolutely. And even in your big idea, you cover so much ground, all kinds of jobs, all kinds of industries, whether it's mining or energy, or things like autonomous vehicles. Everything physical that we interact with, or even everything physical that affects our life that we don't even know about, is going to be impacted by autonomy over the next decade. And that's a lot of jobs to fill. Is there any particular area within that that you think is especially important to get right? I think that it's really important that we figure out how to build things again in the United States at scale in production.

16:08And I don't think that's going to happen with the way sort of labor economics work globally. If a huge part of the way we manufacture in the future is not driven by autonomy And it's kind of a chicken and egg problem like we need the robots To build the factories and we need the factories to build the robots because right now all the components for robotic arms Everything that might go into an autonomous factory is all coming from Shenzhen So how do we start bootstrapping this supply chain native to the United States or the US and our allies so that we're less fundamentally, existentially reliant on another power?

16:51But we have to start somewhere and I think it's going to take people who really want to build and get stuck in and don't mind the hairy complexity of having to deal with AI that doesn't quite work and hardware that doesn't quite work and supply chains that aren't quite ready, but are willing to just tackle that problem vertically, head on to do it. Absolutely. And this was a big idea for 2025. So as we prepare to start that journey, what are you looking out for? What are you thinking about? What do you hope to see? I hope to see more founders and teams that are willing and ready to tackle this problem head on vertically.

17:32So they're not outsourcing their hardware. They're not outsourcing their supply chain, but they're really recognizing that in order to build something new here in the US, they have to figure out all of those things and have to develop skill sets across all of those categories and become kind of generalists. I think something Elon Musk has done really well, not to just be an Elon shill on here, but it's something he's done really well to really own the kind of end -to -end supply chain for birthing something into the world. And I think we need more of that in founding teams. We hope to see many more founding teams in 2025 crossing that hardware software chasm.

18:13One frontier with a flurry of activity is space with. The number of Earth observation satellites doubled in the last five years from 500 to over 1 ,000. There's more data than ever downlinked to the Earth and it is easier than ever to access imagery, although still far too difficult. That was. Millen, I'm an engineering fellow on the American Diodamism team. Millen thinks there's an opportunity in 2025 to harness all this Earth observation data. My big idea is really around building verticalized Earth observation tools. There's been a lot of work over the last decade or so to actually get a lot of Earth observation sensors and set up the infrastructure to send pixels down to Earth from space, which is really a remarkable task.

18:53For 2025, I'm really excited to see entrepreneurs build verticalized solutions that go into different industries and actually solve customer problems. There has been a boom in Earth observation satellites going up, what's really driving that growth? I think first off is launch costs and access to space. In decades previously, it was very, very difficult and expensive to send satellites up to orbit. These days, it's honestly getting as easy as a bus service with things like SpaceX's transporter launch service. So the cost per kilogram of satellites getting to orbit has really, really come down.

19:25Also, architecturally, satellites have changed a lot in the last few decades. They're no longer sort of school bus sized, $100 million per unit satellites. They've come down to the sizes of a loaf of bread. And so with that, you get a lot of proliferated sensors. You get a lot of coverage over the earth and costs have really remarkably come down. And then I think the last thing I would point to is communications infrastructure. There's been a lot of work to set up ground stations. and to actually have satellites communicate with each other in space to have a more efficient way to send pixels down to their Earth.

19:57And so as we think about those economics, and if the economics have come down so much on getting the satellite up there, how does that ultimately ladder to the applications that can be built and the economics around that? To me, it's a really exciting positive flywheel here. The more satellites you have up there, the more pixels that are collected of the Earth's surface every single day, they become more products that you can actually build and more use cases that you can unlock. Price is sort of come down and that allows and unlocks entrepreneurs to really cheaply solve problems for the entire earth at once.

20:26Since we're talking about economics, maybe you can give listeners a sense of what those are, like how much does it cost for us to get this data, process it, or for real -end applications to be made. So the unfortunate answer is that it depends a little bit. Broadly, there's actually a huge amount of freely open data, So, NASA's Landsat Program provides free open data for the entire Earth. The European Space Agency has Sentinel, which also provides free data. And then there's a lot of commercial companies as well who provide medium resolution. The prices range in the sort of dollar to $5 per kilometer squared.

21:00And so that's really not too expensive. And then it tends to be more expensive as you go into the high resolution, 30 and 10 centimeters per pixel. But those are typically for more specialized use cases. And I think it's not very well known that even could be this cheap. And there's a whole suite of archive data that goes back years and years from these companies who have collected data from orbit every single day for years and years. That's a gold mine waiting to be really leveraged. And we've seen different private entities, public entities, governments, universities really pour in resources to get a lot of this data.

21:32But speaking of the applications that in some cases do already exist, what are some of those? There have been some really, really exciting applications so far. I think agriculture is one of the ones that is sort of most talked about. Farmers across the world are really using Earth observation data to monitor their crops, predict crop yields, understand ways that they need to irrigate or fertilize their crops to really produce better outputs here. So I think that's really, really exciting, especially as we face food shortages across the world. Other applications include defense, governments across the world use it to monitor things like troop movements, ships and ports, and fleets of their equipment across the world.

22:09Energy use as well. There's a lot of interesting work that can be done in forecasting clouds, and large -scale grids, and looking at how much solar production will happen on any given day, planning of utility solar farms, like looking at land and where you can actually place utility solar farms. Obviously, this is your big idea for 2025. Why do you think this maybe has been under -explored to date Earth -off -Servation in particular? I think it's really, really difficult. And I think that it's not so easy to work with the data. Companies are making it a lot easier these days. It's sort of a new thing that you can even go on to a website and buy an image through a portal.

22:44You still only be able to talk to a salesperson to be able to do that. There's a lot of open -source work. There's a lot of companies chewing off different parts of the puzzle. The main thing in my eyes that I'm looking forward in the next year to two years is entrepreneurs actually going into specific industries and really taking solutions vertically. So in one sense, if you take something like SpaceX and they have Starlink and they're the ones who create the satellite, put it up there and then also sell the data that people can use. Are you basically saying that you expect to see more of that specific solutions for, let's say, like you said, agriculture or energy instead of one company putting the satellite up there and then other companies in the middle, distributing that data, processing it, etc.

23:25It has traditionally been hard for incumbents and natural satellite manufacturers to go into industries like agriculture and really get granular in terms of solving problems. Just an example of that would be like automating any sort of farming equipment. It's hard for an existing earth observation player to go really, really vertical all the way straight from orbit to the farm. And right now that's traditionally stopped somewhere around providing analytics or insights, but I'm looking for in the future to actually provide automation. And maybe we can drive a lot of that farm equipment, for instance, or actually irrigate fields directly through a closed loop Earth observation.

24:03Maybe a follow -up there is we've obviously seen a bunch of machine learning and AI tools come up in this last few years. Does that change the game in terms of being able to parse data process that makes sense of it for these verticalized players, for example, or how does that really reshape the ecosystem? Certainly, yeah. I mean, terabytes and terabytes come down from orbit every single day, soon to be probably petabytes. And we don't have enough humans on the earth to actually look at all those images. So we really need advanced techniques here. And I think there's been some exciting progress here, the really famous example a couple of years ago where a company actually found the Chinese spy balloon through training their model with AI prediction of exactly what the balloon might look like.

24:45And they were able to sort through pictures of the entire US, take in like over days and days and actually track down the source of the spy balloon for the first time. So we really can't do that with humans and I think new use cases like this will be unlocked every year. And as we think about the roadblocks or the challenges that may be on the road to us, really this earth observation economy, you could say, proliferating. What are those? One of the most pressing is how difficult it is to work with the data, I think right now, Typically, it still requires specialized knowledge of orbits and different types of sensors and how they are calibrated and correlated.

25:21And I think it's not so easy to apply techniques from one Earth observation constellation to another right now. We almost might need some sort of middleware here where we can abstract away the nuances of each Earth observation constellation and make datasets that are really sensor agnostic for non -space engineer's to use. changing this from a very specialized climate scientist, GIS scientist, to any sort of ML engineer can start to use these techniques. What about regulation? I mean, I think about maybe regulation mostly impacting the satellites that go up there, but maybe you could give us a wider perspective of is regulation hindering us at all, whether it is to get the satellites up there or utilize the data, proliferate it, etc.

26:00Yeah, there's been a lot of exciting regulation changes recently. I think most famously NOAA agency lowered the restriction for the maximum commercial resolution from 30 centimeters per pixel to 10 centimeters per pixel very recently. So this kind of unlocks a lot more higher resolution products and there's a whole suite of applications that you can start to target. On the imagery sort of side, I think that there's been a lot of conversation about licensing and different data sort of rights. Right now there's a lot of complex contracts where customers will buy exclusivity and they'll be 24 hours where nobody else can access the image.