A Surprise AI Winner

It’s Spent A Decade Preparing For The AI Revolution

A Technology Pioneer That Is Down In The Dumps… For Now

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Zbigniew Brzezinski figured he’d just let his wife sleep.

After all, she’d be dead in less than half an hour.

She didn’t deserve to spend her last 30 minutes terrified of the extinction-level nuclear event that was about to wipe out America.

It was about 3 am on November 9, 1979, and Brzezinski, national security advisor to President Jimmy Carter, had just gotten off the phone with an aide bringing the one piece of news no one wanted to hear during the U.S.-Soviet Cold War: “2,000 nuclear ballistic missiles inbound from the Soviet Union.”

Missile bases across the nation were already on alert, and 10 jet interceptors across the U.S. and Canada were aloft within minutes. It was the massive strike America had been prepping for since the end of World War II – all-out nuclear war with Russia.

Brzezinski wasn’t ready. Nobody was. He had just six minutes to confirm the attack, report it to the president, and then watch the world burn.

The intel seemed pretty cut and dry. Alarms were blazing everywhere – NORAD, the U.S. Army’s Fort Ritchie, and multiple other defense locations. After ticking quietly along underground for decades, the Semi-Automatic Ground Environment Air Defense System (SAGE) had finally detected a live threat.

Or… had it?

First built in the late 1950s and stretching across North America, SAGE was a 27-unit network of concrete bunkers and sci-fi-looking, 250-ton computerized brains, tended mostly by lackadaisical grunts. The computers were designed to track radar signals, spot and respond to possible air attacks – alerting authorities, and, in some cases, even deploying weapons without any input. In many ways, the SAGE threat-detection network functioned like the internet before the internet – and so far, it had done its job pretty damn well.

Sixty seconds before protocol dictated that Brzezinski dial President Carter, the national security advisor’s phone rang again.

False alarm.

Human error – of the most humiliating kind.

Somewhere in the heart of a bunker in Colorado, a distracted lieutenant colonel had popped a tape of war-game exercises into the wrong console. The massive computerized brain of SAGE read the film as a real attack – and set the wheels of nuclear war in motion for a heart-stopping five minutes.

Brzezinski’s wife slept through the whole thing… but the next morning brought nuclear-level fallout. The near-disaster made the front page of The New York Times, and the already-shaky U.S.-Soviet relationship deteriorated, with Soviet leader Leonid Brezhnev berating Jimmy Carter for putting the world in “tremendous danger.”

Over the next several months, at least three more false alarms triggered the SAGE system, ultimately leading to its phaseout in the mid-’80s (though the giant computerized bunkers remained, and provided many a backdrop for cheesy sci-fi films).

Somewhere in a basement lab at MIT, a weak-chinned little genius named J.C.R. Licklider was shaking his head and saying, “I told you so.”

Licklider (Lick, as he preferred to be called) was a psychologist by training, with a deep interest in how humans and machines interacted. He was also a brilliant futurist who designed or predicted much of the modern internet, information technology, and even artificial intelligence, 50 years ahead of his time… starting with the fateful moment he first descended into the bunkers at SAGE back in the late ’50s.

At the time, SAGE top brass were transitioning from analog to digital computing and they brought Lick on board to study what they called “human factors” in programming. From the minute he sat down at one of SAGE’s flickering green consoles (a first in computing history; up till now, output had all been punch cards) he was hooked: the age-old romance of a man glued to a screen.

He also had some major concerns – and he wasn’t shy about sharing them…

Artificial Intelligence, Real Stupidity

In Lick’s view as a psychologist, SAGE was designed backwards. Its primary brain was a computer, and it required a lot of low-level human nursemaids to help operate it. It was easy for error to creep in when the humans involved were grunts, rather than thinkers (like the absent-minded colonel sticking a tape in the wrong slot).

But erasing the human element wouldn’t help matters. Lick felt that a fully-automated system, without people – a pure artificial intelligence (“AI”) – would be even more terrifying. SAGE already had whispers of this technology, and it frequently malfunctioned: it had a fully-automated fleet of ground-to-air missiles that were prone to pop up and deploy by accident. (An engineer’s report on the problem, Inadvertent Erection Of the IM-99A, in his own words, “raised a few eyebrows.”)

Lick’s thought for AI was that humans and computers should partner in “symbiosis,” but with humans in the lead. He loved the massive, distributed network model SAGE offered… but he felt that the primary brains involved should be human. Smart humans, the ones he referred to as the thinkers, not the grunts. Lick explained:

Men will set the goals, formulate the hypotheses, determine the criteria, and perform the evaluations. Computing machines will do the routinizable work that must be done to prepare the way for insights and decisions in technical and scientific thinking.” 

In 1957, with all these ideas percolating in his head, Lick sat down and wrote out a blueprint based on an improved version of SAGE – a “thinking machine” that would allow computers all over the country to talk to one another.

But the main minds involved would be human, not robotic, and they’d use the network infrastructure for creative collaboration, which he called “The Library Of The Future” or “The Intergalactic Network.” 

Inspired by SAGE’s far-flung web of command centers, this network would allow users to work simultaneously from different monitors connected to a central brain. He dubbed this bandwidth-saving concept “time sharing” (nothing to do with your pushy uncle in the Poconos).

If you think this sounds a bit like the modern internet, you’d be correct: Lick kept refining these ideas over the course of his career and was eventually a seminal figure in designing ARPANET, the proto-internet used by the U.S. Department Of Defense. Today, he’s often called “the father of the internet.”

Turns out, he’s the father of software as a service (“SaaS”) too. When the brass at SAGE showed little interest in updating their systems based on his recommendations, Lick took his ideas on sharing computer bandwidth to his next place of employment, MIT. There his team launched the influential time-sharing software MULTICs and eventually spawned a whole industry of shared intra-office networks and storage software.

Today, the time-sharing industry is going strong, a $400 billion market that’s expected to more than double by 2030. These days, it’s primarily hosted on the cloud and known as SaaS, as people tap into infinite storage space without needing to host large amounts of data on their home computers… but it’s directly descended from Lick’s work at SAGE and his blueprint for creating “a truly SAGE” system.

In this issue, we are recommending one of the foremost time-sharing companies in the world. Interestingly, it’s a business that’s being unfairly beaten down over fears that AI can do its suite of automated tasks faster and better and cheaper.

But that’s where Licklider’s original work comes back into play…

The naysayers are overlooking a crucial human element at the heart of this company – a dynamic customer profiling database, curated by people, that can’t be replicated or ousted by a machine. This company, like the original Intergalactic Network envisioned by Lick, is built around human thinkers – and the robot infrastructure around the outside is just there to help.

Luckily for us, the market (which is run by machines or less-than-stellar human brains) hasn’t cottoned on to this distinction yet – which gets us in at an attractive price point…

A Greatly Misunderstood Business

This month’s The Big Secret On Wall Street looks at a stock that is down in the dumps on the perception that it is an AI loser. There is a lot of hype behind AI, and many of the investment darlings are likely to end up disappointing, as did many of the companies 25 years ago during the dot-com boom. That said, the proliferation of AI technology is very real. And just like in the dot-com era, there will be winners and there will be losers. 

Despite years of steady growth and a market-leading position in its industry, investors have abandoned this stock now because they believe the business is fading – it is being viewed almost like an Old Economy company, even though it is actually a technological pioneer – particularly when it comes to AI. This company is poised to flip that narrative, likely sending the stock higher as investors ultimately realize it is actually an AI winner.