The AI Rabbit That Stole the Show

Another Consumer Electronics Show has come and gone.

And as we predicted, AI took up a good chunk of the limelight.

What we didn’t predict is that a little device called Rabbit R1 would steal the show.

(Maybe Chinese astrologers saw this coming a mile away. Year of the Fire Rabbit, after all.)

It’s not immediately obvious why people are so excited about this device.

Couldn’t this be done on a smartphone? Are we really ready for yet another gadget? Who really wants another device to carry around all the time?

All valid points.

But, despite nobody knowing anything about this startup 10 days ago…

They’ve already sold out four batches of 10,000 units. (They claim to have expected to sell only 500.)

And here’s the secret…

Rabbit is exciting because it combines several elements of what we’re calling AI 2.0 – or the second wave of AI – into one small device.

Here, we’ll dive into these elements… and reveal a BIG takeaway nobody’s talking about.

OK… What is it?

The Rabbit R1 is a small, smart computer you can carry around, like a smartphone but focused on AI (Artificial Intelligence).

It is what would happen if Siri, ChatGPT, Plaid (data security), and the Internet had a baby.

What sets it apart from other AI systems is, instead of using Large Language Models (LLMs)...

It uses what’s called a Large Action Model (LAM) – action being the operative word.

The operating system (OS) of Rabbit R1 is designed to understand and respond to commands given in everyday language, just like how you talk to Siri or Alexa.

But, with a twist…

Rabbit R1 can interact with websites and apps and can learn from personal data without sending it to the internet, keeping it private.

Rabbit makes a compelling argument about a future where we don't rely on traditional apps on our phones or computers.

Instead, we might use more natural ways to interact with technology.

Although the Rabbit might not be “it,” they’re right on the money.

These are trends we’ve been tracking closely. They have to do with some of the companies we’re vetting for our Paradigm Mastermind Group portfolio. Much more on that soon.

Back to the Rabbit…

In short, it’s a small, AI-powered device that's really good at understanding spoken commands and can do some unique things with websites and personal data, all while keeping it private.

Here’s why it’s a good indicator of where AI 2.0 is headed.

AI Agents

In the past ten years, the best solo entrepreneurs used a virtual assistant.

In the next ten years, the best solo entrepreneurs will use AI assistants.

AI assistants will allow individuals access to tools that automate tasks that, 50 years ago, would’ve taken small armies to complete.

This will have the added benefit of making smaller entities – and solopreneurs – more competitive in the marketplace. It will also allow traditionally non-creative industries to take more creative risks.

All good things.

Rabbit is a great example of how this will work.

Rabbit uses this “AI agent” technology to learn how your apps work and then uses them for you.

The AI agents will also learn from interactions with you to provide more personalized responses and improve their understanding over time.

On a more personal level…

How many times have you missed an event in your area because you didn’t know it was happening? What about job opportunities? Side-hustles? Meetups? That car you want at the price you want it?

These are all things too complex to track on our own but could be tracked by your future AI assistant.

Rather than sifting through a jumble of apps, Rabbit does it for you. All you have to do is tell it what to do.

That leads us to the next big wave…

TalkTech Revolution

Watch out thumbs. What we’re calling “TalkTech” is coming for your lunch.

The Rabbit R1's ability to be controlled only by voice is also where we think the puck is headed.

Siri and Alexa were primitive examples of TalkTech – “AI 1.0.”

There are obvious benefits to this new wave of technology.

For starters, it’s far more accessible and convenient, as it doesn't require the user to use their hands or eyes. This makes them useful for people with physical disabilities, or when someone's hands are occupied (like driving).

As an added benefit, it can also reduce the amount of time we sit at a desk or are staring down at a screen.

Also, TalkTech will be able to integrate with smart devices, allowing users to control their environment through voice commands.

This will undoubtedly change the way we use technology.

Consider apps.

A World Without Apps

People started talking about the “death of apps” a decade ago. And they never stopped.

They were wrong.

Instead, apps grew bigger. They moved from the mobile phone to cars, TVs, and home devices.

TalkTech doesn't literally "get rid of apps" in the traditional sense.

Instead, it shifts the way we interact with them.

TalkTech like Rabbit can integrate multiple services and functionalities.

This integration means you might not need separate apps for each task; a single voice command can trigger actions across different services.

One second-order effect:

The app industry might need to rethink how they make money from apps. With less screen time, traditional ads might become less effective, leading to new monetization strategies.

The Big Takeaway

Now, here’s where most people get stuck.

Why couldn’t they just do this on a smartphone?

It’s a great question.

While special hardware made for AI (Artificial Intelligence) is not showing a GREAT reason to exclude itself from smartphones (apart from maybe privacy concerns, but even Rabbit doesn’t solve that completely)...

Some venture capitalists are betting it will become really valuable in a few years.

This is because the AI systems that operate locally (right on your device, rather than over the internet) are expected to get much better.

The improvement of local AI systems could lead to an interesting new dynamic:

1.] More competition and creativity in the hardware space.

2.] Decentralization of AI processing.

When these local AI systems become more powerful and smarter than the ones we use today, the hardware designed specifically for AI will become much more important and useful.

And, no less…

Improved local AI could shift this processing to individual devices, potentially reducing reliance on centralized cloud services.

In the long term, this trend could make hardware and cloud monopolies less valuable.

In fact, I think that’s the big takeaway of the Rabbit R1’s sudden popularity.

Companies that quickly adapt to and excel in local AI processing might rise to prominence, potentially challenging the positions of current market leaders.

As always, we’re on the lookout for new opportunities.