1 00:00:00,080 --> 00:00:02,360 Welcome back, everyone today on the Details of Carlson Show. 2 00:00:02,360 --> 00:00:05,800 We have some breaking news. Google just officially agreed to 3 00:00:05,800 --> 00:00:09,720 buy a company called Wiz. Wiz is a cyber security company, 4 00:00:09,720 --> 00:00:12,480 specifically, it is a cloud security company. 5 00:00:12,880 --> 00:00:17,080 And this deal is massive, a $32 billion deal. 6 00:00:17,080 --> 00:00:19,800 In this episode, we're going to be looking at all the specifics. 7 00:00:20,200 --> 00:00:22,360 Why is Google paying this much for this company? 8 00:00:22,720 --> 00:00:24,600 How much revenue does Wiz already do? 9 00:00:24,600 --> 00:00:27,560 How fast is it growing? Is this a good deal for Google? 10 00:00:27,880 --> 00:00:31,280 How does it fit into the broader picture of Google and what is 11 00:00:31,280 --> 00:00:32,880 their aim here? So we're going to be going over 12 00:00:32,880 --> 00:00:34,760 all of it, all the specifics of this. 13 00:00:34,760 --> 00:00:36,200 We also have a lot of other news to get into. 14 00:00:36,280 --> 00:00:40,200 For example, Zoox, the Amazon owned robotaxi, is officially 15 00:00:40,200 --> 00:00:42,640 being tested in California and we have the story of someone 16 00:00:42,640 --> 00:00:45,040 that took a ride on Zoox. So we'll be looking at that 17 00:00:45,040 --> 00:00:46,480 experience. We also have a little bit of 18 00:00:46,480 --> 00:00:49,440 controversy to get into Mark Rober, one of the most popular 19 00:00:49,440 --> 00:00:51,920 Youtubers. The platform released a video 20 00:00:51,920 --> 00:00:54,680 recently that was somewhat critical of Tesla. 21 00:00:54,680 --> 00:00:59,160 It compared Teslas autopilot system to Lidar and it 22 00:00:59,160 --> 00:01:01,160 highlighted the differences in technology. 23 00:01:01,760 --> 00:01:04,720 Now this video had many flaws with the portrayal of it. 24 00:01:04,920 --> 00:01:07,680 It tested autopilot instead of full self driving. 25 00:01:07,960 --> 00:01:10,520 There were different takes. It didn't really add up right 26 00:01:10,880 --> 00:01:14,160 and it's received a ton of backlash online. 27 00:01:14,400 --> 00:01:17,040 People are really hating on Mark Rober, saying that his 28 00:01:17,040 --> 00:01:20,280 reputation is done, his channel is destroyed, it's all over 29 00:01:20,560 --> 00:01:23,520 because he went after Tesla in a very bad way. 30 00:01:24,040 --> 00:01:26,640 Now, we're going to be looking at this video with a critical 31 00:01:26,640 --> 00:01:30,360 lens and Mark Roeber's response, because he recently gave an 32 00:01:30,360 --> 00:01:33,160 official response to this explaining his perspective in 33 00:01:33,160 --> 00:01:34,880 greater detail. So we're going to be looking at 34 00:01:34,880 --> 00:01:37,280 that as well. Now we also have news that 35 00:01:37,280 --> 00:01:40,680 Costco is pressuring Chinese suppliers to push prices down on 36 00:01:40,680 --> 00:01:43,360 the tariffs, and we have news that Netflix is getting further 37 00:01:43,360 --> 00:01:44,920 price increases from Wall Street. 38 00:01:45,120 --> 00:01:47,680 More bullish sentiment on the backs of their new price 39 00:01:47,680 --> 00:01:50,680 increases So we have a jam packed episode to get into Let's 40 00:01:50,680 --> 00:01:52,920 go ahead and get started now we start today off with the 41 00:01:52,920 --> 00:01:56,480 breaking news that has decided to acquire a company called Wiz 42 00:01:56,800 --> 00:01:59,760 and the price they're paying that they've agreed upon is $32 43 00:01:59,760 --> 00:02:02,080 billion. Now investors are a little bit 44 00:02:02,080 --> 00:02:06,360 cautious right now the stock is down 2.6% that's more than the 45 00:02:06,360 --> 00:02:08,440 broader indices including the QQQ. 46 00:02:08,759 --> 00:02:11,360 So investors are taking a step back assessing this deal. 47 00:02:11,680 --> 00:02:14,720 But if we first start off by looking at the mechanics of the 48 00:02:14,720 --> 00:02:16,960 deal and what Google says they're trying to get out of it, 49 00:02:17,240 --> 00:02:19,640 we can do that before looking at the financing. 50 00:02:19,960 --> 00:02:23,840 For example, Google released this blog post explaining their 51 00:02:24,040 --> 00:02:26,440 sitting behind the deal. They're trying to sell the deal 52 00:02:26,440 --> 00:02:27,720 to investors. They say. 53 00:02:27,720 --> 00:02:30,920 As we see in the news every day, cyber security risks continue to 54 00:02:30,920 --> 00:02:34,440 accelerate with the number and severity of breaches continuing 55 00:02:34,440 --> 00:02:37,040 to grow. Meanwhile, as more organizations 56 00:02:37,040 --> 00:02:40,560 go digital, most deployments are now multi cloud or hybrid, 57 00:02:40,800 --> 00:02:42,880 introducing complex management challenges. 58 00:02:43,320 --> 00:02:47,040 At the same time, software and AI platforms are becoming deeply 59 00:02:47,040 --> 00:02:50,080 embedded across products and operations, bringing new and 60 00:02:50,080 --> 00:02:52,880 evolving risk for private enterprises, governments and 61 00:02:52,880 --> 00:02:54,760 other public sector organizations. 62 00:02:55,360 --> 00:02:58,800 So they're they're setting the framework for how big of a 63 00:02:58,800 --> 00:03:02,600 complex and technical challenge security's becoming. 64 00:03:03,320 --> 00:03:06,080 Traditional approaches to cybersecurity struggle to keep 65 00:03:06,080 --> 00:03:09,600 up with the evolving landscape. Organizations with modern IT 66 00:03:09,600 --> 00:03:12,360 environments need a cybersecurity solution that 67 00:03:12,360 --> 00:03:15,800 spans multiple clouds as well as hybrid and on premise 68 00:03:15,800 --> 00:03:19,600 environments that can protect against threats to and from AI 69 00:03:19,600 --> 00:03:22,600 models, that can use AI to extend defenses. 70 00:03:22,880 --> 00:03:25,440 And they can fully integrate software development and 71 00:03:25,440 --> 00:03:28,120 operations into the security portfolio. 72 00:03:28,280 --> 00:03:31,120 Now that is a technical mouthful, but overall, they're 73 00:03:31,120 --> 00:03:35,120 just saying that cybersecurity. Becoming a bigger issue and with 74 00:03:35,120 --> 00:03:37,960 artificial intelligence, the ways that hackers can gain 75 00:03:37,960 --> 00:03:41,320 access and controls to different systems is becoming far more 76 00:03:41,320 --> 00:03:43,520 sophisticated. So they need far more 77 00:03:43,520 --> 00:03:46,080 sophisticated defenses against these attacks. 78 00:03:46,480 --> 00:03:49,720 So AI has all these benefits of enhancing technology, 79 00:03:50,000 --> 00:03:52,840 accomplishing all these great things, but it's also a tool 80 00:03:52,840 --> 00:03:55,000 that's going to be heavily leveraged by hackers. 81 00:03:55,400 --> 00:03:59,080 So this problem is growing. I agree with the premise of it. 82 00:03:59,480 --> 00:04:02,040 What are Google and cloud security solutions today? 83 00:04:02,800 --> 00:04:06,640 Now, this is where it gets a little dicey because if Google 84 00:04:06,640 --> 00:04:09,960 says we need to buy this cybersecurity company because we 85 00:04:09,960 --> 00:04:12,480 have no cybersecurity, that's a problem. 86 00:04:12,560 --> 00:04:15,920 It does naturally raise the question Google, if you're 87 00:04:15,920 --> 00:04:19,760 buying a cybersecurity company, what systems do you already have 88 00:04:19,760 --> 00:04:21,600 in place? Is our data safe with you 89 00:04:21,600 --> 00:04:23,680 already? Will they try to explain how? 90 00:04:23,680 --> 00:04:26,680 This is quite a bit different than just basic Google Cloud 91 00:04:26,680 --> 00:04:29,480 security, they say. Today we help customers detect 92 00:04:29,480 --> 00:04:33,360 and respond to attackers through both SAS based services and 93 00:04:33,360 --> 00:04:36,280 cybersecurity consulting that enable Google to be part of 94 00:04:36,280 --> 00:04:39,120 customer security teams. This includes services like 95 00:04:39,120 --> 00:04:41,960 Google Threat Intelligence, which delivers detailed, timely 96 00:04:41,960 --> 00:04:43,400 and actionable threat intelligence. 97 00:04:43,680 --> 00:04:46,200 Google Security Operations, which allows customers to 98 00:04:46,200 --> 00:04:49,120 collect telemetry data, applied high threat intelligence and 99 00:04:49,120 --> 00:04:53,720 identify high priority threats, and Mandiant Consulting, which 100 00:04:53,720 --> 00:04:57,480 provides frontline expertise and deep understanding of global 101 00:04:57,480 --> 00:05:00,240 attacker behavior. So it seems like Google. 102 00:05:00,240 --> 00:05:04,040 Already has a pretty robust security system from what 103 00:05:04,040 --> 00:05:07,360 they're defining here, but now they go on to explain how Whiz 104 00:05:07,360 --> 00:05:10,680 is different and it adds and even broadens their security 105 00:05:10,680 --> 00:05:12,640 profile. What does Whiz do? 106 00:05:12,960 --> 00:05:16,080 Whiz is different from the services we offer today. 107 00:05:16,400 --> 00:05:19,520 It delivers a seamless cloud security platform that connects 108 00:05:19,520 --> 00:05:22,920 to all major clouds and code environments to help prevent 109 00:05:22,920 --> 00:05:25,200 incidents from happening in the first place. 110 00:05:25,640 --> 00:05:28,520 Wiz's solution rapidly scans the customer's environment, 111 00:05:28,760 --> 00:05:32,880 constructing a comprehensive graph of code, cloud resources, 112 00:05:32,880 --> 00:05:35,800 services, and applications, along with the connections 113 00:05:35,800 --> 00:05:38,320 between them. It identifies potential attack 114 00:05:38,320 --> 00:05:41,080 paths, prioritizes the most critical risks based on their 115 00:05:41,080 --> 00:05:44,120 impact, and empowers enterprise developers to secure 116 00:05:44,120 --> 00:05:47,200 applications before deployment. It also helps security teams 117 00:05:47,200 --> 00:05:50,360 collaborate with developers to remediate risks in code or 118 00:05:50,360 --> 00:05:52,200 detect and block ongoing attacks. 119 00:05:52,680 --> 00:05:55,280 In other words, it gives start-ups, enterprises, 120 00:05:55,280 --> 00:05:58,000 governments, and public sector organizations the ability to 121 00:05:58,000 --> 00:06:00,280 protect themselves comprehensively. 122 00:06:00,600 --> 00:06:03,560 Wiz is an innovative leader creating new categories of 123 00:06:03,560 --> 00:06:07,320 cybersecurity solutions in the last 12 months, including code 124 00:06:07,320 --> 00:06:10,960 to cloud security, cloud native runtime defense, further 125 00:06:10,960 --> 00:06:14,280 strengthening its impact if you do a cloud market breakdown. 126 00:06:14,320 --> 00:06:18,000 Google's currently in 3rd place behind Microsoft Azure and in 127 00:06:18,000 --> 00:06:22,480 first place with Amazon AWS. Amazon already owns the majority 128 00:06:22,480 --> 00:06:25,040 of customers. Most businesses and startups are 129 00:06:25,040 --> 00:06:28,760 using Amazon's AWS, and Amazon tries to lock in those 130 00:06:28,760 --> 00:06:31,000 customers. They try to keep them on AWS. 131 00:06:31,360 --> 00:06:32,760 They try to solve their every need. 132 00:06:32,760 --> 00:06:34,960 They try to offer unlimited tapped growth. 133 00:06:35,280 --> 00:06:38,280 They try to keep them just using their platform like any company 134 00:06:38,280 --> 00:06:40,200 would. Google's trying to make it 135 00:06:40,200 --> 00:06:44,240 easier for those customers to also use Google so that they can 136 00:06:44,240 --> 00:06:46,960 take some of the revenue from Amazon so that they can compete 137 00:06:46,960 --> 00:06:51,000 with Amazon AWS better. And by offering services that 138 00:06:51,000 --> 00:06:55,120 make it more secure to use multi cloud, they have a higher 139 00:06:55,120 --> 00:07:00,560 potential of taking revenue from Amazon and Oracle and Microsoft 140 00:07:00,560 --> 00:07:03,680 and every other competitor. That is the intention behind 141 00:07:03,680 --> 00:07:07,080 this acquisition, not only just to get the revenue of Wiz. 142 00:07:07,080 --> 00:07:09,840 A lot of people are just looking at the price to sales of Wiz and 143 00:07:09,840 --> 00:07:12,680 the revenue that this company generates, but there's other 144 00:07:12,680 --> 00:07:15,320 impacts of this. They're trying to make the route 145 00:07:15,400 --> 00:07:19,120 easier to get customers from other cloud partners to have 146 00:07:19,120 --> 00:07:21,040 them use a more multi cloud model. 147 00:07:21,080 --> 00:07:24,280 And Wiz is a company that specializes in making your data 148 00:07:24,280 --> 00:07:27,520 secure across multi cloud. So there are specific 149 00:07:27,520 --> 00:07:30,080 motivations for Google to purchase this company beyond 150 00:07:30,080 --> 00:07:32,640 just getting the revenue of Wiz and having another great 151 00:07:32,640 --> 00:07:34,680 product. They want to make it so they can 152 00:07:34,680 --> 00:07:36,680 take customers from other cloud companies. 153 00:07:36,880 --> 00:07:38,720 They almost spell it out right here. 154 00:07:38,720 --> 00:07:41,560 We are aiming to provide customers with better security 155 00:07:41,560 --> 00:07:45,040 for enterprise systems and a lower cost of maintaining a 156 00:07:45,080 --> 00:07:49,160 strong security posture across their on premise and multi cloud 157 00:07:49,160 --> 00:07:51,400 environments. They're trying to bring down the 158 00:07:51,400 --> 00:07:54,040 cost of multi cloud. So that's Google's take on this. 159 00:07:54,040 --> 00:07:56,560 Deal they believe it's more of an integration and overall 160 00:07:56,560 --> 00:07:59,560 enhancing their services, allowing them to do more multi 161 00:07:59,560 --> 00:08:02,840 cloud deals and when people are looking for partnerships, they 162 00:08:02,840 --> 00:08:06,120 may now choose Google because they have this Wiz integration. 163 00:08:06,560 --> 00:08:09,520 So there's more to this deal than just the price to sales. 164 00:08:09,760 --> 00:08:12,000 When we just look at the price to sales or the cost they're 165 00:08:12,000 --> 00:08:14,800 paying for Wiz, it does look pretty pricey. 166 00:08:15,200 --> 00:08:19,680 For example, just last summer, so not even a year ago, Google 167 00:08:19,680 --> 00:08:22,600 was trying to buy Wiz for $23 billion. 168 00:08:23,080 --> 00:08:26,640 Now that was the offer, 23 billion didn't close. 169 00:08:27,040 --> 00:08:29,280 Wiz got some cold feet. They said that they were going 170 00:08:29,280 --> 00:08:30,640 to go public. They thought that it wouldn't 171 00:08:30,640 --> 00:08:32,799 pass regulators. They didn't think it was enough 172 00:08:32,799 --> 00:08:34,640 money. For whatever reason, they held 173 00:08:34,640 --> 00:08:36,080 out. And for Wiz, that was the right 174 00:08:36,080 --> 00:08:38,440 thing to do. Because I got $9 billion more 175 00:08:38,679 --> 00:08:42,400 not even a year later. So this deal is going up in 176 00:08:42,400 --> 00:08:47,280 price like crazy, adding on 50% more cost roughly in less than a 177 00:08:47,280 --> 00:08:49,080 year. That's an incredible 178 00:08:49,280 --> 00:08:52,360 appreciation of value for this cybersecurity company. 179 00:08:52,800 --> 00:08:56,760 But also over the past year. Whiz grew by double, so the 180 00:08:56,760 --> 00:08:59,120 revenue is doubling in a single year. 181 00:08:59,480 --> 00:09:02,720 Now Whiz's revenue, if we look up the revenue of other 182 00:09:02,760 --> 00:09:05,800 comparable companies, Whiz is expecting to do around a billion 183 00:09:05,800 --> 00:09:08,320 dollars per year. If we compare that to a company 184 00:09:08,320 --> 00:09:10,960 like Crowdstrike, we can do a little bit of a comparison. 185 00:09:11,320 --> 00:09:14,840 Crowdstrike, over the trailing 12 months did around $4 billion. 186 00:09:15,280 --> 00:09:18,880 So Wiz is going to be roughly 1/4 the size of Crowdstrike, 187 00:09:19,160 --> 00:09:21,480 growing quite a bit faster than Crowdstrike. 188 00:09:21,880 --> 00:09:26,480 Crowdstrike's worth $90 billion. Wiz is being valued at 32, So 189 00:09:26,480 --> 00:09:28,120 Wiz. Is getting a premium over 190 00:09:28,120 --> 00:09:31,680 Crowdstrike, but it's growing faster and it's being integrated 191 00:09:31,680 --> 00:09:34,720 into Google Cloud. It does look expensive, but this 192 00:09:34,720 --> 00:09:37,400 deal doesn't look unreasonable as a Google. 193 00:09:37,400 --> 00:09:40,600 Shareholder I want Google Cloud to be highly competitive. 194 00:09:40,600 --> 00:09:43,640 I want it to have the latest and greatest security measures, and 195 00:09:43,640 --> 00:09:46,240 Google's in a situation where they can afford this. 196 00:09:46,240 --> 00:09:49,600 If we look at Google today, they have options for their cash. 197 00:09:50,000 --> 00:09:53,880 If we look at how much cash they have right now, Google has a lot 198 00:09:53,880 --> 00:09:56,360 of money to burn. They're currently sitting at, In 199 00:09:56,360 --> 00:09:57,680 fact, let's go ahead and zoom in here. 200 00:09:57,920 --> 00:10:00,720 Just the past five years of their balance sheet, their cash 201 00:10:00,720 --> 00:10:05,440 balance went from $142 billion down to 95 billion, and most of 202 00:10:05,440 --> 00:10:06,800 that is through buybacks and dividends. 203 00:10:07,160 --> 00:10:09,560 So they've been distributing billions and billions of dollars 204 00:10:09,560 --> 00:10:12,560 to investors every single year through buybacks and dividends. 205 00:10:12,840 --> 00:10:15,680 In fact, we can see those buybacks and dividends in the 206 00:10:15,680 --> 00:10:19,720 return of capital chart. Last year they returned $70 207 00:10:19,720 --> 00:10:23,720 billion back to investors. Now $62 billion of that was 208 00:10:23,720 --> 00:10:27,680 through buybacks and $7.36 billion of that was through 209 00:10:27,680 --> 00:10:32,440 dividends, but $70 billion just last year, just in 2024. 210 00:10:33,040 --> 00:10:36,080 So they are spending a tremendous amount of money on 211 00:10:36,080 --> 00:10:39,320 buybacks and dividends, but they're still today left with 212 00:10:39,320 --> 00:10:42,760 $95 billion in cash, $10 billion in debt. 213 00:10:42,960 --> 00:10:46,680 That leaves them with a net cash position of $85 billion, meaning 214 00:10:46,680 --> 00:10:50,120 that with this $85 billion, Google can easily pay for this. 215 00:10:50,120 --> 00:10:52,560 Deal in all cash and that's exactly what they're doing. 216 00:10:52,600 --> 00:10:56,640 And between the two options of simply doing more buybacks and 217 00:10:56,640 --> 00:11:00,000 just bumping up their buyback number, returning a bit more to 218 00:11:00,000 --> 00:11:03,320 shareholders or doing a strategic acquisition to greatly 219 00:11:03,320 --> 00:11:06,560 enhance the ability to sell their cloud services, which is 220 00:11:06,560 --> 00:11:09,440 their fastest growing portion of their business, I would choose 221 00:11:09,440 --> 00:11:11,440 this route. I think strategically it's a 222 00:11:11,440 --> 00:11:14,360 better option for Google even despite the high price. 223 00:11:14,360 --> 00:11:17,520 So when I look at the options of Google to use their giant cash 224 00:11:17,520 --> 00:11:20,680 balance, they can either sit at here and earn interest that has 225 00:11:20,680 --> 00:11:24,080 very low prospective returns. I'd rather just do that in my 226 00:11:24,080 --> 00:11:26,960 savings account rather than invest in Google and have them 227 00:11:26,960 --> 00:11:29,080 do that. I need Google to find better 228 00:11:29,080 --> 00:11:31,560 ways to use their cash than sit there and earn interest. 229 00:11:32,080 --> 00:11:35,160 The other option is buybacks. If Google instead chose to do 230 00:11:35,160 --> 00:11:38,480 $32 billion worth of buybacks based on the current market cap, 231 00:11:38,760 --> 00:11:41,400 that's around 1.6% of the market cap. 232 00:11:41,760 --> 00:11:43,960 So they could buy back a bit of their market cap. 233 00:11:44,400 --> 00:11:47,520 That would increase the stock price by around 1.6%. 234 00:11:47,520 --> 00:11:49,880 If you're going to do that in pure mathematical standpoint, 235 00:11:50,280 --> 00:11:52,840 that'd be good. But overall, that doesn't have 236 00:11:52,840 --> 00:11:55,120 the longest long term implications. 237 00:11:55,520 --> 00:11:58,400 Just punching up buybacks a little bit does help out the 238 00:11:58,400 --> 00:12:01,440 shareholder in the short term, but this acquisition has the 239 00:12:01,440 --> 00:12:05,080 possibility to be a very big intrinsic value creation over 240 00:12:05,080 --> 00:12:07,480 the long term. So again, looking and 241 00:12:07,480 --> 00:12:09,640 considering the different options that Google has, 242 00:12:10,000 --> 00:12:13,520 enhancing buybacks, holding cash or doing strategic acquisitions. 243 00:12:13,920 --> 00:12:15,160 This is one that I can get behind. 244 00:12:15,200 --> 00:12:18,360 This is an expensive deal, but not every deal that's expensive 245 00:12:18,360 --> 00:12:22,000 is automatically a bad deal. Now, with Google stock down 3% 246 00:12:22,000 --> 00:12:24,960 today, investors are just a bit nervous about this. 247 00:12:25,000 --> 00:12:27,760 And this is exactly what you can expect with a company that's 248 00:12:27,760 --> 00:12:30,960 already facing some challenges with questions around search and 249 00:12:31,200 --> 00:12:34,360 the durability of the Moat, questions about the large CapEx 250 00:12:34,360 --> 00:12:37,640 spend they're already doing. Then you throw in an acquisition 251 00:12:37,640 --> 00:12:39,600 and becomes a little bit of a muddled story. 252 00:12:39,960 --> 00:12:42,920 So it makes sense to me that investors are trading this down. 253 00:12:43,400 --> 00:12:46,080 It's typically the case the company doing the large 254 00:12:46,080 --> 00:12:48,120 acquisition trades down a little bit. 255 00:12:48,600 --> 00:12:51,800 That's normal. But just keep in mind Google has 256 00:12:51,800 --> 00:12:55,000 some excellent properties. They're still generating a ton 257 00:12:55,000 --> 00:12:56,840 of cash. This is a company getting 258 00:12:56,840 --> 00:13:00,760 cheaper by the day. It trades at an 18 Ford PE ratio 259 00:13:01,160 --> 00:13:05,040 on 2026's earnings. That trades at a 16 even looking 260 00:13:05,040 --> 00:13:07,920 at the free cash flow and adjusting for stock based comp. 261 00:13:08,240 --> 00:13:11,360 With the impacts of all the CapEx they're doing, is that a 262 00:13:11,360 --> 00:13:13,640 2.6? That's still not crazy 263 00:13:13,640 --> 00:13:16,480 expensive, even looking at it in the most unfavorable light 264 00:13:16,480 --> 00:13:18,680 possible. So as a Google shareholder, the 265 00:13:18,680 --> 00:13:20,640 way that it's trading right now makes sense. 266 00:13:20,640 --> 00:13:23,280 I'm not going to complain about that, but I still think this one 267 00:13:23,280 --> 00:13:25,720 is a decent long term bet. Now moving on from that news, I 268 00:13:25,720 --> 00:13:28,440 want to talk a little bit about the general market sentiment 269 00:13:28,440 --> 00:13:30,320 today. The markets down yet again. 270 00:13:30,560 --> 00:13:32,240 We're going through a little bit of a correction. 271 00:13:32,240 --> 00:13:35,680 In fact, the markets corrected at record speeds, going down 10% 272 00:13:35,960 --> 00:13:39,520 in only 16 days. That's a very quick correction 273 00:13:39,520 --> 00:13:41,200 and it looks like it could head into a bear market. 274 00:13:41,200 --> 00:13:44,760 Maybe we'll go down 20% with the uncertainty regarding trade 275 00:13:44,760 --> 00:13:47,840 policy and all the different concerns going on. 276 00:13:48,040 --> 00:13:51,120 Combine that with high valuations, we have a nice setup 277 00:13:51,120 --> 00:13:53,720 for the market. Trading down just today, My 278 00:13:53,720 --> 00:13:57,000 Portfolio, the passive income portfolio is down. 279 00:13:57,360 --> 00:13:59,840 Let's take a look. It's down $11,000. 280 00:13:59,960 --> 00:14:01,440 We can take a look at the story fund here. 281 00:14:01,440 --> 00:14:05,080 My secondary portfolio, this one's down $6000. 282 00:14:05,480 --> 00:14:09,360 So we're down around $17,000 on the day between the two 283 00:14:09,360 --> 00:14:12,120 portfolios. Yesterday, these two portfolios 284 00:14:12,120 --> 00:14:16,800 were up around 17 to $20,000. So we're having swings daily in 285 00:14:16,800 --> 00:14:20,640 this portfolio between the two of them of around $20,000. 286 00:14:21,040 --> 00:14:23,880 One of the interesting things I I looked at, just looking at the 287 00:14:23,880 --> 00:14:26,800 portfolio's volatility at trading around the stocks 288 00:14:26,800 --> 00:14:29,920 getting priced differently, is that the entire first year that 289 00:14:29,920 --> 00:14:32,720 I was investing, my whole first year starting off with this 290 00:14:32,720 --> 00:14:35,840 portfolio was building it to $20,000. 291 00:14:36,360 --> 00:14:39,440 And now in a single day I'm having those type of swings. 292 00:14:39,720 --> 00:14:41,600 And that is an incredible situation to be in. 293 00:14:41,880 --> 00:14:44,600 At some point, what you started out with your portfolio 294 00:14:44,600 --> 00:14:47,640 contributing the entire year, building it up, getting it to 295 00:14:47,640 --> 00:14:52,120 10,000 or 20,000 or $50,000, whatever it may be, is going to 296 00:14:52,120 --> 00:14:55,760 be daily swings of that same portfolio in the next 10 to 20 297 00:14:55,760 --> 00:14:58,360 years. It'll become a tiny part of your 298 00:14:58,360 --> 00:15:00,880 portfolio. So overall, I don't have 299 00:15:00,880 --> 00:15:03,400 anything big to share today. I just wanted to point out if 300 00:15:03,400 --> 00:15:06,400 you keep building your portfolio, if you don't let the 301 00:15:06,400 --> 00:15:10,360 market dictate your sentiment, if you keep buying, especially 302 00:15:10,360 --> 00:15:12,800 on red days and buy into great companies. 303 00:15:13,160 --> 00:15:16,280 Buy a diversified portfolio full of high quality companies. 304 00:15:16,720 --> 00:15:18,640 If you don't want to pick them out yourselves, just buy a great 305 00:15:18,640 --> 00:15:22,640 ETF that's already diversified and continue to contribute over 306 00:15:22,640 --> 00:15:25,640 and over and over again. Especially contribute on days 307 00:15:25,640 --> 00:15:27,680 like today. Especially contribute when the 308 00:15:27,680 --> 00:15:30,960 market is telling you not to, when investors are becoming 309 00:15:30,960 --> 00:15:33,880 bearish, when everybody's when everybody's scared, that's the 310 00:15:33,880 --> 00:15:36,880 time to buy more. Keep pushing, keep depositing, 311 00:15:37,160 --> 00:15:39,920 keep building it, and you'll have a massive portfolio 312 00:15:39,920 --> 00:15:41,960 overtime. Now let's go to move on to some 313 00:15:41,960 --> 00:15:43,640 news. The first bit of news we get to 314 00:15:43,680 --> 00:15:47,160 highlights that even though we often talk about Tesla and Waymo 315 00:15:47,560 --> 00:15:50,960 as kind of the only two factors in the ride and robotaxi 316 00:15:50,960 --> 00:15:53,600 business, they're not necessarily the only two 317 00:15:53,600 --> 00:15:55,280 companies that are involved in this business. 318 00:15:55,280 --> 00:15:57,480 In fact, there's a lot of companies now looking at 319 00:15:57,760 --> 00:16:00,320 robotaxis. Amazon is one of them with the 320 00:16:00,320 --> 00:16:04,360 company they own called Zoox. Now, if you look at a Zoox, this 321 00:16:04,360 --> 00:16:07,520 is what it looks like. They're a bit funny looking. 322 00:16:07,520 --> 00:16:11,520 In fact, it's compared to in this article is like a 323 00:16:11,520 --> 00:16:13,840 Disneyland ride. Feels like you're getting onto 324 00:16:13,840 --> 00:16:16,840 something different, unique it it just looks different than any 325 00:16:16,840 --> 00:16:20,160 other vehicle I've ever seen. It's almost symmetrical front 326 00:16:20,160 --> 00:16:22,000 and back, which is different than vehicles. 327 00:16:22,520 --> 00:16:26,440 The the tires stick out beyond the the bumpers of the vehicle. 328 00:16:26,760 --> 00:16:29,120 That's also different. And then you have giant. 329 00:16:29,360 --> 00:16:32,520 Those are lighter sensors at the top corners of each part of the 330 00:16:32,520 --> 00:16:34,960 vehicle and then you have cameras before that. 331 00:16:34,960 --> 00:16:37,840 So they're also going with the route of using Lidar in 332 00:16:37,840 --> 00:16:40,280 combination of camera all around the vehicle. 333 00:16:40,640 --> 00:16:43,840 Inside you have like a boot seat that face each other so as 334 00:16:43,840 --> 00:16:45,640 passengers you can actually face each other. 335 00:16:46,120 --> 00:16:48,800 And this is being rolled out now into different cities. 336 00:16:49,080 --> 00:16:52,240 Zoox is now being tested on the streets of San Francisco. 337 00:16:52,600 --> 00:16:54,000 And one person shares their story. 338 00:16:54,000 --> 00:16:56,960 They say as we rode through the streets of San Francisco and our 339 00:16:56,960 --> 00:17:00,200 company's autonomous vehicle, we talked through all the back end 340 00:17:00,200 --> 00:17:02,920 things required to launch a robo taxi service later this year. 341 00:17:03,240 --> 00:17:06,119 Quote right now, tiny, small, medium, large. 342 00:17:06,440 --> 00:17:09,040 The chief executive told me about her strategy of scaling 343 00:17:09,200 --> 00:17:10,680 Zoox. We're still putting the 344 00:17:10,680 --> 00:17:13,240 foundation in place and making sure that everything that we 345 00:17:13,240 --> 00:17:15,280 said we're going to do, we're doing. 346 00:17:15,640 --> 00:17:17,880 Her approach is rooted in sweating the small. 347 00:17:17,880 --> 00:17:20,440 Stuff it's a belief at. At odds with Silicon Valley's 348 00:17:20,440 --> 00:17:23,839 mantra of move fast and break things, and born in the fact 349 00:17:23,839 --> 00:17:27,839 that execution is key to making robotaxis work and small stuff 350 00:17:27,839 --> 00:17:31,000 really isn't so small. The biggest problem that could 351 00:17:31,000 --> 00:17:34,720 occur with robotaxis, the thing that could kill years of 352 00:17:34,720 --> 00:17:39,200 progress in this category, is having a tragic accident, one 353 00:17:39,200 --> 00:17:42,120 that was completely avoidable that a human would have avoided. 354 00:17:42,520 --> 00:17:46,280 If a robotaxi service has that type of event happen, it will 355 00:17:46,280 --> 00:17:49,800 set them back years. So the approach here is to move 356 00:17:49,800 --> 00:17:52,800 slow and not break things. And I think they're taking the 357 00:17:52,800 --> 00:17:54,880 right approach. Now, they narrate this a little 358 00:17:54,880 --> 00:17:57,600 bit, and I don't necessarily agree with their narration here, 359 00:17:57,600 --> 00:18:00,840 but they say this is in striking contrast to the go quick, go 360 00:18:00,840 --> 00:18:03,680 bold approach taken by Elon Musk and others who have heralded 361 00:18:03,880 --> 00:18:06,240 heralded the coming age of robot cars. 362 00:18:07,160 --> 00:18:11,320 They say that Tesla's being fast with their approach go quick and 363 00:18:11,320 --> 00:18:13,520 go bold. But right now they're they're 364 00:18:13,520 --> 00:18:16,280 not even on the the road really testing to the same extent other 365 00:18:16,280 --> 00:18:18,560 robotaxi companies are. So I don't think they're 366 00:18:18,560 --> 00:18:20,600 necessarily going fast with robotaxis. 367 00:18:21,160 --> 00:18:24,600 The Tesla CEO for years has said that electric car makers was on 368 00:18:24,880 --> 00:18:27,560 the precipice of deploying driverless vehicles. 369 00:18:27,920 --> 00:18:31,360 He once suggested he would have 1,000,000 robotaxis deployed by 370 00:18:31,360 --> 00:18:35,000 2020. I'm sorry Tesla investors, it's 371 00:18:35,000 --> 00:18:38,120 just reality. Elon Musk, as you know, as you 372 00:18:38,120 --> 00:18:40,800 know, I'm not pointing this out to Tesla investors for the first 373 00:18:40,800 --> 00:18:43,040 time, but he over promises things a lot. 374 00:18:43,040 --> 00:18:45,160 It's something he does. It's just part of the package of 375 00:18:45,160 --> 00:18:47,800 Elon. He he will say something's going 376 00:18:47,800 --> 00:18:49,840 to happen and he always gives like a two year timeline. 377 00:18:50,040 --> 00:18:51,720 Sometimes it takes 5 to 10 years. 378 00:18:51,760 --> 00:18:55,360 Now, they point out that right now, the leader currently right 379 00:18:55,360 --> 00:18:59,360 now, and I'm not saying overall, I'm not saying maybe in the next 380 00:18:59,360 --> 00:19:02,840 5 or 10 years, but the robo taxi company that's currently in the 381 00:19:02,840 --> 00:19:06,000 lead with the most cars accepting the most paid rides is 382 00:19:06,000 --> 00:19:08,800 Google's Waymo. They have long ago embraced the 383 00:19:08,800 --> 00:19:12,320 boring side of fleet management and it's way ahead in the race, 384 00:19:12,320 --> 00:19:15,680 having already deployed robo taxis in San Francisco, Los 385 00:19:15,680 --> 00:19:18,120 Angeles and elsewhere. And they're expanding in 386 00:19:18,120 --> 00:19:21,040 multiple cities right now. And Zoox and Tesla are competing 387 00:19:21,040 --> 00:19:23,960 to be second place in getting robo taxis officially deployed. 388 00:19:24,040 --> 00:19:27,000 Like Waymo, Zoox has built a call center like operation that 389 00:19:27,000 --> 00:19:29,960 monitors its vehicles in real time and can remotely help 390 00:19:29,960 --> 00:19:33,120 vehicles deal with situations. There are also operations to 391 00:19:33,120 --> 00:19:34,800 keep the vehicles clean and maintained. 392 00:19:34,880 --> 00:19:37,240 Now Zoox is close to deploying its taxis. 393 00:19:37,400 --> 00:19:40,080 For the public initially with free rides to select 394 00:19:40,080 --> 00:19:43,520 participants this year as part of an early rider program in Las 395 00:19:43,520 --> 00:19:47,040 Vegas in San Francisco that will be followed later this year by 396 00:19:47,040 --> 00:19:50,600 paid services 1st in Las Vegas. One of the fun things about 397 00:19:50,600 --> 00:19:53,160 owning stocks like Google and Amazon, which I'm a shareholder 398 00:19:53,160 --> 00:19:57,080 in both of them, is that for Google, Waymo is not some 399 00:19:57,080 --> 00:20:00,520 significant part of the story. Nobody's really investing in 400 00:20:00,520 --> 00:20:03,400 Google specifically for Waymo because it's such a small part 401 00:20:03,400 --> 00:20:04,920 of the revenue in the overall story. 402 00:20:05,200 --> 00:20:08,080 Google has so many incredible properties with YouTube and 403 00:20:08,080 --> 00:20:11,480 Android and cloud and search and all the things that they have 404 00:20:11,480 --> 00:20:14,680 Gmail and so on. Waymo is just a small portion, 405 00:20:15,040 --> 00:20:16,440 but it's a nice little thing to have. 406 00:20:16,440 --> 00:20:19,440 Maybe Waymo turns out to be a highly profitable, great part of 407 00:20:19,440 --> 00:20:20,920 the company. That's really valuable. 408 00:20:21,240 --> 00:20:24,640 The same thing for Amazon. With Amazon, Zoox isn't some big 409 00:20:24,640 --> 00:20:26,520 line item. It's not a big deal for the 410 00:20:26,520 --> 00:20:28,320 company. But it's a nice thing to have 411 00:20:28,320 --> 00:20:30,600 because it may grow. Maybe they figure out the big 412 00:20:30,600 --> 00:20:33,000 problems here. They scale fast with Amazon's 413 00:20:33,160 --> 00:20:36,480 wallet and they become a very competitive force in robotaxi. 414 00:20:36,560 --> 00:20:40,720 So both Zooks and Waymo are not necessary for Amazon or Google 415 00:20:40,720 --> 00:20:43,120 to succeed, but they're just nice things to have. 416 00:20:43,120 --> 00:20:45,880 Another part of the story that I think adds a little bit more 417 00:20:45,880 --> 00:20:47,800 potential upside. Now moving on, we get to a bit 418 00:20:47,800 --> 00:20:51,040 of controversy that the YouTube Mark Rober, he's the former NASA 419 00:20:51,040 --> 00:20:53,280 engineer. He's the one of the glitter bomb 420 00:20:53,280 --> 00:20:55,640 fame. It was the glitter bomb for 421 00:20:55,640 --> 00:20:57,920 porch pirates. An awesome video series. 422 00:20:58,280 --> 00:21:01,400 He's a really likable YouTuber. Like he just does fun light 423 00:21:01,400 --> 00:21:03,840 hearted things. He teaches engineering in a fun 424 00:21:03,840 --> 00:21:06,000 and insightful way, especially for kids to learn. 425 00:21:06,360 --> 00:21:09,440 So far he's been great at avoiding controversy, but he 426 00:21:09,440 --> 00:21:12,040 dipped his toes into a bit of controversy when he went after 427 00:21:12,040 --> 00:21:14,480 Tesla and I should have warned him. 428 00:21:14,760 --> 00:21:17,040 I could have given Mark Rober a warning. 429 00:21:17,640 --> 00:21:20,400 If you criticize Tesla, you have to have your ducks in a row 430 00:21:20,480 --> 00:21:23,520 because Tesla investors will stop at no ends to destroy your 431 00:21:23,520 --> 00:21:25,880 reputation if you get on their bad side. 432 00:21:26,200 --> 00:21:28,680 So I could have sent them a warning that there's some clear 433 00:21:28,680 --> 00:21:30,920 problems with his videos. They're going to be under heavy 434 00:21:30,920 --> 00:21:33,680 scrutiny and people are not going to react well to this. 435 00:21:33,800 --> 00:21:36,840 Now, in Mark Roeber's video, he had multiple different tests. 436 00:21:36,840 --> 00:21:41,080 He put both Tesla's autopilot system against a lighter system. 437 00:21:41,320 --> 00:21:44,840 He tested it against rain and fog and bright lights, and he 438 00:21:44,840 --> 00:21:47,840 drove through a cartoonishly painted wall to see if Tesla 439 00:21:47,840 --> 00:21:50,280 could identify it and Lidar could identify it. 440 00:21:50,640 --> 00:21:53,800 And again, most of these tests showed that Tesla was good on a 441 00:21:53,800 --> 00:21:57,320 lot of them, but the cameras fail on multiple of them where 442 00:21:57,320 --> 00:21:59,880 LIDAR succeeds. Now, the big problems that he 443 00:21:59,880 --> 00:22:01,680 had with this video were on multiple parts. 444 00:22:01,840 --> 00:22:04,680 One of them was he compared autopilot to Lidar. 445 00:22:05,160 --> 00:22:08,840 Now Autopilot is old technology that's not the latest and 446 00:22:08,840 --> 00:22:11,760 greatest from Tesla. Autopilot's more like auto 447 00:22:11,760 --> 00:22:14,400 steering on a freeway. It's kind of like assisted 448 00:22:14,400 --> 00:22:16,920 driving, right? It's just something so you can 449 00:22:16,920 --> 00:22:18,720 take over and kind of steer a little bit. 450 00:22:18,720 --> 00:22:22,000 It's like what dumb cars have. Tesla has full self driving. 451 00:22:22,360 --> 00:22:24,200 That's their their more advanced system. 452 00:22:24,200 --> 00:22:26,520 That's the latest and greatest. That's what's being trained on 453 00:22:26,520 --> 00:22:28,920 artificial intelligence. So a lot of people are confused 454 00:22:28,920 --> 00:22:33,240 of why did he compare older technology to the newest Lidar 455 00:22:33,240 --> 00:22:37,080 tech that in and of itself created at least the perception 456 00:22:37,160 --> 00:22:39,920 of intentional bias. O that was one problem. 457 00:22:40,400 --> 00:22:43,760 Another problem was that Mark Rober seems to have a good 458 00:22:43,760 --> 00:22:45,720 relationship with these Lidar folks. 459 00:22:46,200 --> 00:22:49,120 He has one in the car. You can see the the LIDAR badge 460 00:22:49,120 --> 00:22:51,560 on them. They helped him out with testing 461 00:22:51,560 --> 00:22:53,760 and he thanked them for letting him borrow the car. 462 00:22:54,200 --> 00:22:57,120 And a lot of people even assume that he was sponsored by the 463 00:22:57,120 --> 00:22:58,880 LIDAR group for making the video. 464 00:22:59,200 --> 00:23:02,280 Like they paid him to make the video to present themselves in 465 00:23:02,280 --> 00:23:04,800 better light compared to their competition, which was Tesla. 466 00:23:05,320 --> 00:23:08,360 So this created another perception of a very bad bias. 467 00:23:08,440 --> 00:23:13,240 So that was the problem #2 Now another issue, a third one, was 468 00:23:13,240 --> 00:23:17,400 that he did multiple takes, and he revealed this on Twitter. 469 00:23:17,560 --> 00:23:20,240 Incidentally. People kind of sniffed it out by 470 00:23:20,240 --> 00:23:22,520 looking at the dash and showing that he was going to different 471 00:23:22,520 --> 00:23:24,320 speeds. So this also creates a 472 00:23:24,320 --> 00:23:27,600 perception of being dishonest. You know, he has multiple takes 473 00:23:27,600 --> 00:23:30,080 and he's only sharing one. Did the other take show 474 00:23:30,080 --> 00:23:32,720 something better for Tesla? Is he only showing the takes 475 00:23:32,720 --> 00:23:35,120 that are bad for Tesla? Now, with all these questionable 476 00:23:35,120 --> 00:23:38,680 things going on in the video, you can just imagine how Tesla 477 00:23:38,680 --> 00:23:41,440 fans and Tesla investors are reacting to this online, 478 00:23:41,680 --> 00:23:44,640 especially on X. They did not like this video and 479 00:23:44,640 --> 00:23:46,680 they made that very apparent to Mark Rover. 480 00:23:46,920 --> 00:23:49,800 Many of them saying that his entire career should end today, 481 00:23:49,840 --> 00:23:52,440 that he has no legitimacy. They compare him to other 482 00:23:52,440 --> 00:23:54,720 sellouts to other people. And so on and so forth. 483 00:23:54,720 --> 00:23:56,400 You get the idea. Now I agree with. 484 00:23:56,520 --> 00:23:58,920 Tesla investors that there are very questionable things 485 00:23:58,920 --> 00:24:01,520 happening in this video. It does have a strong perception 486 00:24:01,520 --> 00:24:03,560 of bias. I think that does exist. 487 00:24:03,840 --> 00:24:05,440 So this should go under scrutiny. 488 00:24:05,480 --> 00:24:09,120 Mark Robert does have questions to answer, but I also agree that 489 00:24:09,120 --> 00:24:10,720 we should get his side of the story. 490 00:24:10,720 --> 00:24:13,040 At least have him explain himself as the creator of the 491 00:24:13,040 --> 00:24:16,760 video before jumping to ultimate conclusions and trying to tear 492 00:24:16,760 --> 00:24:19,720 his career apart. Tesla investors in many part do 493 00:24:19,720 --> 00:24:22,840 the exact same type of cancel culture thing that they're huge 494 00:24:22,840 --> 00:24:26,080 critics of. One person makes one video that 495 00:24:26,080 --> 00:24:29,720 has perceptions of bias and they instantly jump to trying to 496 00:24:29,720 --> 00:24:32,880 censor, control and destroy his entire career. 497 00:24:33,200 --> 00:24:35,800 And I don't think that's right, at least not without having him 498 00:24:35,800 --> 00:24:38,920 explain himself. Now with this controversy, he 499 00:24:38,920 --> 00:24:41,960 did go on to explain, at least from his perspective, his 500 00:24:41,960 --> 00:24:44,280 initial response. This is Mark Rober on the Philip 501 00:24:44,280 --> 00:24:47,840 Defranco show, where he asks him about every single one of these 502 00:24:47,840 --> 00:24:50,560 questions and you get Mark's unfiltered response. 503 00:24:51,320 --> 00:24:53,920 I'm just gonna kind of go through the bullet points of 504 00:24:54,920 --> 00:24:57,480 accusations and questions regarding the video. 505 00:24:58,400 --> 00:25:00,720 And like we talked about beforehand, if there are things 506 00:25:00,720 --> 00:25:03,600 that feels like people would think that we're missed or 507 00:25:03,600 --> 00:25:06,320 weren't covered or come out as we're recording today's video, 508 00:25:06,760 --> 00:25:08,120 you you said you're open up to follow-ups. 509 00:25:08,240 --> 00:25:09,720 Yeah, sure, totally all. Right. 510 00:25:09,720 --> 00:25:13,200 So first one is less of an accusation, a more question, and 511 00:25:13,200 --> 00:25:17,080 that was was there any reason you opted to test Autopilot on 512 00:25:17,080 --> 00:25:18,920 the Tesla instead of full self driving? 513 00:25:18,920 --> 00:25:21,920 My understanding with full self driving is that you have to 514 00:25:21,920 --> 00:25:27,240 enter an address for it to work and as opposed to just being 515 00:25:27,240 --> 00:25:30,480 able to engage it. And this is what Tesla's called 516 00:25:30,480 --> 00:25:33,280 autopilot. And even Googling it, seeing 517 00:25:33,280 --> 00:25:36,520 what they determine, they determine as autopilot. 518 00:25:37,320 --> 00:25:40,680 And my understanding is that the, the, the sensor is not 519 00:25:40,680 --> 00:25:43,000 different whether it's full stuff driving or autopilot, 520 00:25:43,640 --> 00:25:46,360 knowing if that's a wall or not that that doesn't change. 521 00:25:46,360 --> 00:25:50,840 So I think I could, I mean, I'd be happy to rerun the experiment 522 00:25:50,840 --> 00:25:54,840 in full self driving. I'm pretty confident it wouldn't 523 00:25:55,040 --> 00:25:57,240 be a different result. So to me it was a distinction 524 00:25:57,240 --> 00:25:58,560 without a difference. And the. 525 00:25:59,120 --> 00:26:02,920 OK, that's his first answer and I have to say that is the the 526 00:26:02,920 --> 00:26:04,640 worst answer. Out of all the ones that he 527 00:26:04,640 --> 00:26:08,280 answers, this one is the worst one because why would he not use 528 00:26:08,280 --> 00:26:11,800 full self driving? Even if it's true that they are 529 00:26:11,800 --> 00:26:13,760 the same, A distinction without a difference. 530 00:26:14,040 --> 00:26:16,760 This is going to be a point of potential bias and criticism 531 00:26:16,760 --> 00:26:19,200 from Tesla fans. They're going to point out 532 00:26:19,200 --> 00:26:21,400 accurately so that full self driving is different than 533 00:26:21,400 --> 00:26:23,800 autopilot. And even though he says the the 534 00:26:23,800 --> 00:26:27,960 sensors are the same, that it's the same technology, the sensors 535 00:26:27,960 --> 00:26:31,320 and hardware may be the same, but the system interpreting the 536 00:26:31,320 --> 00:26:34,480 sensors, the full self driving system, the intelligence behind 537 00:26:34,480 --> 00:26:36,600 it is different. I also think this was a weak 538 00:26:36,600 --> 00:26:39,800 answer because he says that he didn't use full self driving 539 00:26:39,800 --> 00:26:41,760 because you had to enter in an address. 540 00:26:42,280 --> 00:26:45,520 Just enter in an address behind the wall somewhere down the 541 00:26:45,520 --> 00:26:47,160 road. Doesn't matter what the address 542 00:26:47,160 --> 00:26:49,800 is just somewhere behind that the wall that you created. 543 00:26:50,120 --> 00:26:52,520 Mark Rober is smart enough to know he could have just entered 544 00:26:52,520 --> 00:26:55,640 in some address on the other side of that wall. 545 00:26:56,080 --> 00:26:59,360 So out of all the answers he gives, I actually think this is 546 00:26:59,360 --> 00:27:01,280 the weakest one. He's off to a weak start here, 547 00:27:01,560 --> 00:27:02,880 but I think his answers get better. 548 00:27:02,880 --> 00:27:04,840 A. Clip that you posted on Twitter 549 00:27:04,840 --> 00:27:07,080 where you said here's like the here's the raw footage. 550 00:27:07,360 --> 00:27:10,880 Can you explain what it is that we're seeing and what you're 551 00:27:10,880 --> 00:27:13,400 what you're trying to explain is happening in that you said not 552 00:27:13,400 --> 00:27:17,000 sure why it disengages 17 frames before hitting the wall, but my 553 00:27:17,000 --> 00:27:18,800 feet weren't touching the brake or gas. 554 00:27:18,800 --> 00:27:22,120 So I think people were saying that I was manually just drove 555 00:27:22,120 --> 00:27:26,720 it through because 17 frings by the way, is like less than 1/2 556 00:27:26,720 --> 00:27:30,360 of a second before it hits the wall again, my high pop. 557 00:27:30,560 --> 00:27:32,320 I don't know why it would disengage. 558 00:27:32,440 --> 00:27:34,040 I was not pulling on the steering wheel. 559 00:27:34,040 --> 00:27:38,680 And by the way, even if I did disengage it, it's it's less 560 00:27:38,680 --> 00:27:42,000 than 1/2 a second before you go off the the outcome would not be 561 00:27:42,000 --> 00:27:44,720 different. My guess is maybe the sensors, 562 00:27:44,720 --> 00:27:48,800 the ultrasonic sensors which I think are on the bumper, they 563 00:27:48,800 --> 00:27:52,280 probably just disengage if they sense that something big is 564 00:27:52,280 --> 00:27:55,840 there and it just stops being in the self driving mode or 565 00:27:55,840 --> 00:27:57,280 autopilot, whatever you want to call it. 566 00:27:58,760 --> 00:28:01,360 So this is another answer that highlights something here. 567 00:28:01,680 --> 00:28:04,920 He says that the reason it wasn't engaged on impact was it 568 00:28:04,920 --> 00:28:08,480 automatically unlocked. It automatically disabled 569 00:28:08,480 --> 00:28:10,680 Autopilot right before it crashed into the wall. 570 00:28:11,000 --> 00:28:14,280 And this is something that other people have criticized Tesla for 571 00:28:14,640 --> 00:28:17,880 the fact that they might potentially disable Autopilot or 572 00:28:17,880 --> 00:28:20,080 full self driving right before impact. 573 00:28:20,080 --> 00:28:23,160 So they can say during an accident that full Self Driving 574 00:28:23,160 --> 00:28:25,800 wasn't active during the accident, even though it was 575 00:28:26,040 --> 00:28:27,800 until a second before the accident. 576 00:28:28,320 --> 00:28:30,880 So what he's highlighting here may actually be a bigger issue 577 00:28:30,880 --> 00:28:34,560 for Tesla if it's found out that they're automatically disabling 578 00:28:34,600 --> 00:28:37,800 Autopilot or Full Self Driving right before impact. 579 00:28:38,080 --> 00:28:40,640 That might be something else that he can look at, but I think 580 00:28:40,640 --> 00:28:43,160 he's being truthful here. He's saying that it was engaged 581 00:28:43,160 --> 00:28:45,720 and automatically disabled within half a second before 582 00:28:45,720 --> 00:28:48,360 impact. So that's all I'm saying is like 583 00:28:48,640 --> 00:28:51,160 some people clipped right after and said, look, it's not on 584 00:28:51,160 --> 00:28:53,880 autopilot. And I was like, I don't know, 585 00:28:53,880 --> 00:28:56,520 like I'm just here. Like, I don't have a horse in 586 00:28:56,520 --> 00:28:57,840 this race either, by the way, right? 587 00:28:57,840 --> 00:28:59,720 I just wanted to go. I love my Tesla. 588 00:28:59,720 --> 00:29:01,880 I'll probably get a new one when they come out. 589 00:29:03,560 --> 00:29:05,680 He says that he doesn't have a horse in this race. 590 00:29:06,120 --> 00:29:08,720 For a lot of people, that's very difficult to believe. 591 00:29:08,760 --> 00:29:11,120 You know, these these people that are competitors to Tesla, 592 00:29:11,680 --> 00:29:13,640 they they look like they're sponsoring the video. 593 00:29:13,640 --> 00:29:16,360 So when he says he doesn't have a horse in this race right now, 594 00:29:16,360 --> 00:29:18,680 that doesn't look, that doesn't look truthful. 595 00:29:19,360 --> 00:29:22,280 I'm just here to look at the data and I think I struck like a 596 00:29:22,560 --> 00:29:25,720 political nerve or something. And the video was about LIDAR 597 00:29:26,000 --> 00:29:29,520 like and all the cool ways Lidar's used. 598 00:29:29,520 --> 00:29:33,120 So I, I felt like this was a, a fun test to run and papers have 599 00:29:33,120 --> 00:29:35,760 been run on it. Like can you fool a self driving 600 00:29:35,760 --> 00:29:37,080 car with the Wiley Coyote? Right? 601 00:29:37,080 --> 00:29:39,880 Like papers have been written on this, so it's like, well, I 602 00:29:39,880 --> 00:29:42,480 should just run the test and that's what it was. 603 00:29:42,720 --> 00:29:46,640 Regarding the the raw clip and what's in the video, there been 604 00:29:46,640 --> 00:29:49,720 people that say that it looks like you may have had multiple 605 00:29:49,720 --> 00:29:53,160 takes or possibly gone through the wall multiple times. 606 00:29:53,560 --> 00:29:55,760 Where there are multiple takes, what can? 607 00:29:55,760 --> 00:29:56,440 You. Give. 608 00:29:56,440 --> 00:29:58,880 Any insight there? I mean, this is like what you 609 00:29:58,880 --> 00:30:01,360 put in NVIDIA. So we the first day we went out 610 00:30:01,360 --> 00:30:03,200 there, I think you can even see it. 611 00:30:03,200 --> 00:30:06,400 There was a we didn't have like the Styrofoam wall. 612 00:30:06,400 --> 00:30:10,160 It was just like a, a vinyl sheet and it was clear. 613 00:30:10,160 --> 00:30:13,720 If you just drive up with it, you know, you can see the Tesla 614 00:30:13,720 --> 00:30:16,600 tells you the math of what it what it's what it's looking at. 615 00:30:16,600 --> 00:30:20,560 And if you drive up to this wall with the road, it doesn't 616 00:30:20,560 --> 00:30:22,520 register anything. It doesn't register a cone. 617 00:30:22,520 --> 00:30:26,160 It's so like, whatever the brain, the math that it's doing 618 00:30:26,160 --> 00:30:30,560 in the computer, it doesn't register when you paint a road 619 00:30:30,560 --> 00:30:33,240 that something's there, like even if you just drive up to it. 620 00:30:33,640 --> 00:30:36,800 So anyways, we, we, yeah, we did a take. 621 00:30:36,920 --> 00:30:39,720 It went right through. I think that was the one that 622 00:30:39,720 --> 00:30:42,640 maybe was at 40 miles an hour or something. 623 00:30:42,920 --> 00:30:46,160 But it was just like, instead of cutting through it like which 624 00:30:46,160 --> 00:30:49,000 would visually look cool, it just kind of tore the side and 625 00:30:49,000 --> 00:30:52,160 like a little flap came came up. So it was like, that was a very 626 00:30:52,160 --> 00:30:54,240 interesting finding that it actually worked. 627 00:30:54,320 --> 00:30:56,560 And by the way, I'm happy to give you the raw footage of that 628 00:30:56,560 --> 00:30:58,880 take too. So you'll see it going through 629 00:30:58,880 --> 00:31:00,360 the wall, but it's more of a flap. 630 00:31:00,360 --> 00:31:03,840 And then we're like holy crud. So that take he just showed is 631 00:31:03,840 --> 00:31:06,880 different than the one he posted on his main YouTube channel and 632 00:31:06,880 --> 00:31:09,200 he's just explaining here. This is a youtubers perspective. 633 00:31:09,280 --> 00:31:10,880 This is you know what youtubers do. 634 00:31:11,080 --> 00:31:13,520 They do multiple takes of stuff and they usually use the best 635 00:31:13,520 --> 00:31:15,600 one. I'll do it in my video if I 636 00:31:15,600 --> 00:31:18,640 botch a take, if I say something way wrong, it doesn't come out 637 00:31:18,640 --> 00:31:20,440 right. I'll re record it and do it 638 00:31:20,440 --> 00:31:21,960 again so it's better for the viewer. 639 00:31:22,200 --> 00:31:25,080 And he's doing the same thing. He recorded one of them where he 640 00:31:25,080 --> 00:31:27,800 had the same result. He drove through the wall the 641 00:31:27,800 --> 00:31:31,080 Tesla system, didn't it? It didn't interpret the wall as 642 00:31:31,080 --> 00:31:33,840 being a wall, but it wasn't. It didn't look as cool. 643 00:31:33,920 --> 00:31:37,640 It didn't have the same effect as having the carved out zigzag 644 00:31:37,640 --> 00:31:39,360 structure that he burst through the wall with. 645 00:31:39,560 --> 00:31:42,480 So he did another take to make it look visually more cool. 646 00:31:43,040 --> 00:31:45,680 That's well within the bounds of normal Youtubing. 647 00:31:45,720 --> 00:31:48,680 Now, if the results had been different, if in one take Tesla 648 00:31:48,680 --> 00:31:51,960 successfully stopped and another Tesla went through the wall and 649 00:31:51,960 --> 00:31:55,080 he only used the one that made Tesla look bad, that would be 650 00:31:55,080 --> 00:31:57,480 bias. But what he's doing here is not 651 00:31:57,480 --> 00:32:00,000 bias, because both takes Tesla went through the wall. 652 00:32:00,320 --> 00:32:03,840 And all of this, aside from the point, is not even a problem for 653 00:32:03,840 --> 00:32:06,640 Tesla. This is an unnatural occurrence. 654 00:32:06,640 --> 00:32:08,880 This is something you don't encounter while driving. 655 00:32:09,120 --> 00:32:11,600 Having a fake wall that looks like a continuous Rd. is 656 00:32:11,600 --> 00:32:13,280 something that humans would drive right through. 657 00:32:13,560 --> 00:32:15,440 That's not something you encounter in normal road 658 00:32:15,440 --> 00:32:18,080 conditions. So Tesla investors are upset 659 00:32:18,600 --> 00:32:22,000 that the Tesla cameras don't interpret a fake wall as being 660 00:32:22,000 --> 00:32:23,880 there. That's not even a problem for 661 00:32:23,880 --> 00:32:27,080 Tesla normal drivers. Humans would drive right past 662 00:32:27,080 --> 00:32:30,000 that wall in many cases. So this is not something Tesla 663 00:32:30,000 --> 00:32:31,640 investor should even be concerned about. 664 00:32:32,160 --> 00:32:35,640 But regardless, this is well within the normal bounds of a 665 00:32:35,640 --> 00:32:39,120 YouTube to do multiple takes and use the one that looks the most 666 00:32:39,120 --> 00:32:40,760 exciting. As long as he didn't 667 00:32:40,760 --> 00:32:44,120 intentionally bias the data, I don't see any problem with this. 668 00:32:44,360 --> 00:32:47,120 And he released both takes. I can't believe that really 669 00:32:47,120 --> 00:32:49,560 worked. And then I don't know, like 3 670 00:32:49,560 --> 00:32:52,840 weeks later we went back out when when schedule permitted 671 00:32:53,040 --> 00:32:56,800 this time with like a Styrofoam wall 'cause I thought it'd be 672 00:32:56,800 --> 00:32:59,440 funny if it's like, well now that it goes through the walls, 673 00:32:59,440 --> 00:33:02,000 we should have like a fun cut out as it goes through so. 674 00:33:02,240 --> 00:33:05,680 So the second take was not an attempt to bias the data, it was 675 00:33:05,680 --> 00:33:07,640 only to make it look a little bit more funny. 676 00:33:07,760 --> 00:33:10,880 Regarding Luminar, there have been a lot of people asking what 677 00:33:10,880 --> 00:33:13,120 kind of role they played, right. The description of the video 678 00:33:13,120 --> 00:33:15,640 says they provided the provided the car for testing. 679 00:33:15,640 --> 00:33:17,160 Did they have any say in the edit? 680 00:33:17,160 --> 00:33:20,160 Did they have any? Luminar is the lidar company 681 00:33:20,160 --> 00:33:22,240 that worked with Mark Robor on this video. 682 00:33:22,560 --> 00:33:25,040 So a lot of people are saying he was sponsored. 683 00:33:25,040 --> 00:33:27,840 He got paid to bump up their stock to promote their product 684 00:33:27,840 --> 00:33:29,040 and make Tesla look. Bad. 685 00:33:29,520 --> 00:33:31,520 No edit. They didn't see the edit. 686 00:33:31,520 --> 00:33:33,160 Yeah, I really want to clear this. 687 00:33:33,160 --> 00:33:36,240 Luminar gave us no money. They had no say in the edit. 688 00:33:36,400 --> 00:33:40,800 They did not approach us. They were just a car technology. 689 00:33:40,800 --> 00:33:43,520 I know that used Lidar. So I reached out to them and 690 00:33:43,520 --> 00:33:45,560 say, hey, will you let us borrow some cars? 691 00:33:46,600 --> 00:33:48,120 And then they let us use the cars. 692 00:33:48,120 --> 00:33:51,320 So we didn't pay them to come. They did not pay us. 693 00:33:51,560 --> 00:33:54,280 They had no say. And we didn't know what happened 694 00:33:54,280 --> 00:33:56,360 either, by the way. And we told them, look, if your 695 00:33:56,360 --> 00:33:59,120 LIDAR fails one of these, it goes in the video. 696 00:33:59,560 --> 00:34:01,800 And if Tesla would have passed all of them, by the way, that 697 00:34:01,800 --> 00:34:04,280 would have gone in the video. Like, I'm very agnostic. 698 00:34:04,440 --> 00:34:06,320 I really just wanted to see what would happen. 699 00:34:06,600 --> 00:34:09,280 This is the biggest point, and I think I think the best point you 700 00:34:09,280 --> 00:34:12,679 can illustrate is the lack of financial incentive to have one 701 00:34:12,679 --> 00:34:14,000 party look better than the other. 702 00:34:14,560 --> 00:34:20,639 And I, I guess on that, do you or anyone close to you, once 703 00:34:20,639 --> 00:34:23,040 again, it's like based off of these accusations, do you or 704 00:34:23,040 --> 00:34:25,400 anyone close to you have any Luminar stock? 705 00:34:25,600 --> 00:34:29,800 I do not own any Luminar stock, or I do not know of anyone close 706 00:34:29,800 --> 00:34:31,480 to me who owns any Luminar stock. 707 00:34:31,520 --> 00:34:35,159 Absolutely. And I know you said you you love 708 00:34:35,159 --> 00:34:37,120 Tesla. Just to confirm, do you have any 709 00:34:37,679 --> 00:34:42,280 options or puts on Tesla? I have no options on Tesla. 710 00:34:42,280 --> 00:34:46,520 I have no puts on Tesla. I am just there's no financial 711 00:34:46,520 --> 00:34:51,120 anything in here at all at all. 100% I'll go into court of law. 712 00:34:51,520 --> 00:34:55,639 OK, well. Besides data an interesting 713 00:34:55,639 --> 00:34:58,000 like, it's an interesting test that's like the history of my 714 00:34:58,000 --> 00:35:01,080 channel like and just whatever the data shows is what I'll put 715 00:35:01,080 --> 00:35:02,480 up. Because I will say, yeah, I 716 00:35:02,480 --> 00:35:04,280 mean, regarding you saying this in the court of law, I mean, 717 00:35:04,280 --> 00:35:06,320 there have been a lot of people that granted it's the Internet, 718 00:35:06,320 --> 00:35:09,680 granted it's YouTube videos. I've seen some folks like I 719 00:35:09,720 --> 00:35:13,000 think it was Meet Kevin saying that there's a possibility of a 720 00:35:13,000 --> 00:35:15,880 lawsuit. Are do you have any concerns 721 00:35:15,920 --> 00:35:18,680 over that based off of the video or anything like that? 722 00:35:19,000 --> 00:35:22,560 No, because it's like, I mean, anyone can sue in America. 723 00:35:22,560 --> 00:35:25,880 So I guess, but I think we could get it dismissed pretty quickly 724 00:35:25,880 --> 00:35:28,960 because it's like, I just have nothing to hide and I have no 725 00:35:28,960 --> 00:35:31,320 ulterior motive here. No one's paying me. 726 00:35:31,320 --> 00:35:34,120 I have no stock. I have no shorting I will get 727 00:35:34,320 --> 00:35:37,440 I'm I'm planning on getting another Tesla in like I don't 728 00:35:37,440 --> 00:35:40,360 even have politically. Apparently it's a political 729 00:35:40,360 --> 00:35:41,760 issue. Like I politically already have 730 00:35:41,760 --> 00:35:43,800 a horse in this race. The interesting thing about 731 00:35:43,800 --> 00:35:46,760 being a content creator and creating videos and and 732 00:35:46,760 --> 00:35:49,360 publishing stuff live for hundreds of thousands or 733 00:35:49,360 --> 00:35:52,680 millions of people to look at is you never quite know how it's 734 00:35:52,680 --> 00:35:55,240 going to be received. There's always creative risk to 735 00:35:55,240 --> 00:35:57,960 every single time you hit the publish button, every time you 736 00:35:57,960 --> 00:36:00,560 put a video live. You never quite know what's 737 00:36:00,560 --> 00:36:02,600 going to happen. In this case, I think there's 738 00:36:02,600 --> 00:36:05,320 some things that Mark Rober didn't expect this to be such a 739 00:36:05,320 --> 00:36:09,880 hotly debated, a tainted subject by politics and all the events 740 00:36:09,880 --> 00:36:11,920 happening today. And I think Mark Rober got a 741 00:36:11,920 --> 00:36:14,480 little wrapped into this unknowingly by publishing this 742 00:36:14,480 --> 00:36:16,600 video. Now, to me, he doesn't come 743 00:36:16,600 --> 00:36:20,280 across as someone that has the goal of trying to destroy Tesla 744 00:36:20,280 --> 00:36:22,920 and sticking it to Elon Musk. I don't think that's his aim 745 00:36:22,920 --> 00:36:24,680 with this video. The fact that he has no 746 00:36:24,680 --> 00:36:27,400 financial incentive to do so. There is no money being 747 00:36:27,400 --> 00:36:30,720 transferred here at all is a pretty big indication that he 748 00:36:30,720 --> 00:36:34,840 has very little motivation to take the stock price down, which 749 00:36:34,840 --> 00:36:36,600 is the accusation a lot of people are making. 750 00:36:37,120 --> 00:36:39,440 Furthermore, another thing he mentions, which I think is a 751 00:36:39,440 --> 00:36:42,720 very relevant point, but it's one that's missed in this 752 00:36:42,720 --> 00:36:46,640 interview often, is that he mentions the process of creating 753 00:36:46,640 --> 00:36:50,400 this video and the thought process behind doing it was over 754 00:36:50,400 --> 00:36:53,960 a year in advance. So all the political stuff 755 00:36:53,960 --> 00:36:57,240 that's unravelled over the past six months weren't even part of 756 00:36:57,240 --> 00:36:59,360 the equation when he first thought about creating this 757 00:36:59,360 --> 00:37:01,840 video. And I, I realize now we planned 758 00:37:01,840 --> 00:37:04,440 these videos a year in advance. So the idea that this was like 759 00:37:04,440 --> 00:37:08,240 time because of political stuff, like a year and a half ago, this 760 00:37:08,240 --> 00:37:09,920 was on our docket. We've been marching towards 761 00:37:09,920 --> 00:37:13,720 releasing this. So I plan on upgrading my Tesla 762 00:37:13,720 --> 00:37:17,960 in like 6 months. So I don't I'm just, I'm just 763 00:37:17,960 --> 00:37:21,360 here for the data and I don't think it means they're self 764 00:37:21,360 --> 00:37:25,120 driving or is terrible as in it like it's going to get better. 765 00:37:25,520 --> 00:37:28,560 Like, but yeah, this what happened happened and if you 766 00:37:28,560 --> 00:37:32,240 could easily recreate and anyone what happened happened and 767 00:37:32,240 --> 00:37:35,920 anyone with a Tesla can easily recreate exactly what I did so. 768 00:37:36,160 --> 00:37:39,000 After looking at Mark Roeber's response, I still believe that 769 00:37:39,000 --> 00:37:41,640 there's some criticisms for the video, specifically that he 770 00:37:41,640 --> 00:37:43,760 could have used full self driving that would have been 771 00:37:43,760 --> 00:37:46,400 better than autopilot. I think a better side by side 772 00:37:46,400 --> 00:37:48,960 comparison. But he did clarify most of the 773 00:37:48,960 --> 00:37:51,360 major points and I believe most of the major concerns 774 00:37:51,480 --> 00:37:55,160 specifically that he wasn't sponsored by the Lidar company, 775 00:37:55,400 --> 00:37:58,280 that they weren't paying him to intentionally make Tesla look 776 00:37:58,280 --> 00:38:01,200 bad and their company look good. That he wasn't trying to take 777 00:38:01,200 --> 00:38:04,800 down Tesla stock or bump up their Luminar stock. 778 00:38:05,360 --> 00:38:08,560 This wasn't some financial shenanigan that Mark Rober was 779 00:38:08,560 --> 00:38:11,880 trying to poll. He says quite openly and with 780 00:38:11,880 --> 00:38:15,240 conviction he has no financial ties to any of these companies 781 00:38:15,240 --> 00:38:17,080 involved, and he just cares about the data. 782 00:38:17,480 --> 00:38:19,160 So if you argue that the data could have been done 783 00:38:19,160 --> 00:38:21,640 differently, he'll probably respond to those criticisms. 784 00:38:22,080 --> 00:38:25,080 But in terms of him having some hidden nefarious incentive to 785 00:38:25,120 --> 00:38:29,360 kill Tesla stock or take it to Elon Musk, I don't personally 786 00:38:29,360 --> 00:38:31,720 believe that exists. And I certainly don't agree with 787 00:38:31,720 --> 00:38:34,520 many of my peers in the creator industry that are actively 788 00:38:34,520 --> 00:38:38,320 trying to destroy Mark Rober's career to de platform him, to 789 00:38:38,320 --> 00:38:41,480 try to tell people to sue him into the ground because he 790 00:38:41,480 --> 00:38:43,640 portrayed a company you like unfavorably. 791 00:38:44,040 --> 00:38:45,760 That's not the route we should take with this. 792 00:38:46,040 --> 00:38:48,760 He explained himself quite fully that he has no financial 793 00:38:48,760 --> 00:38:50,680 incentive, that he has no dog in this fight. 794 00:38:51,200 --> 00:38:53,360 He's not sponsored by the companies, he's not invested in 795 00:38:53,360 --> 00:38:55,560 them. So actively trying to destroy 796 00:38:55,560 --> 00:38:58,240 everything he's built and saying that he's lost all credibility, 797 00:38:58,520 --> 00:39:01,440 I think is a huge overstep. So overall, I think there's 798 00:39:01,440 --> 00:39:03,600 things he could have done better in the video compared against 799 00:39:03,600 --> 00:39:05,400 full Self Driving. And I'm sure there's going to be 800 00:39:05,400 --> 00:39:06,920 many people that remake the video. 801 00:39:07,400 --> 00:39:11,000 But right now, I think Mark Rober, I think he's fine. 802 00:39:11,120 --> 00:39:14,320 I think he should be given a little bit more leeway than what 803 00:39:14,320 --> 00:39:16,200 many Tesla fans are trying to give them. 804 00:39:16,280 --> 00:39:18,840 Now, moving on, we get to the headline here that Costco is 805 00:39:18,960 --> 00:39:23,240 pressuring suppliers in mainland China to cut prices following 806 00:39:23,240 --> 00:39:26,760 tariff raises. Now, instead of arguing about 807 00:39:26,760 --> 00:39:29,760 tariffs and whether they're good or bad, whether the policy 808 00:39:29,760 --> 00:39:32,560 overall is good or bad. I want to talk about Costco. 809 00:39:33,080 --> 00:39:36,760 Because Costco has some unique ways to deal with price hikes, 810 00:39:37,080 --> 00:39:39,800 to deal with pressuring suppliers that other companies 811 00:39:39,800 --> 00:39:42,440 don't have. For example, in this report from 812 00:39:42,440 --> 00:39:45,080 the Financial Times, I mentioned that many large retailers are 813 00:39:45,080 --> 00:39:49,160 also trying to pressure China to lower their prices on specific 814 00:39:49,160 --> 00:39:51,760 items they're supplying. And this is, again, response to 815 00:39:51,760 --> 00:39:53,920 the tariffs. But the interesting dynamic here 816 00:39:53,920 --> 00:39:56,280 is not that these companies are trying to get lower prices. 817 00:39:56,360 --> 00:39:58,880 Of course they are. The interesting dynamic is that 818 00:39:58,880 --> 00:40:02,960 Costco in particular is the one best positioned by far to 819 00:40:02,960 --> 00:40:05,360 pressure prices down from China suppliers. 820 00:40:05,720 --> 00:40:07,240 And there's a specific reason why. 821 00:40:07,320 --> 00:40:10,320 So when we look at total revenue and we rank Amazon in the top, 822 00:40:10,360 --> 00:40:12,280 then we have Walmart, then we have Costco. 823 00:40:12,560 --> 00:40:15,040 You may come to the conclusion that Amazon is the best 824 00:40:15,040 --> 00:40:18,480 position, Walmart is next best, and then Costco in dealing with 825 00:40:18,480 --> 00:40:21,680 Chinese prices and putting pressure on Chinese suppliers. 826 00:40:22,200 --> 00:40:26,080 That's not the case. Costco is still by far the best 827 00:40:26,080 --> 00:40:30,200 position to pressure Chinese suppliers down in price to make 828 00:40:30,200 --> 00:40:32,440 it so that they take more of the brunt of the burden. 829 00:40:32,880 --> 00:40:36,480 And the reason why is the amount of skews these companies sell 830 00:40:36,760 --> 00:40:39,760 the SKUs. For example, the average Costco 831 00:40:39,760 --> 00:40:44,840 warehouse has around 4000 SKUs in their warehouse. 832 00:40:44,840 --> 00:40:47,360 SKUs are unique items being sold. 833 00:40:47,760 --> 00:40:50,880 So when you go to Costco, there's not that many items. 834 00:40:51,280 --> 00:40:53,280 There's 3 to 4000 in each warehouse. 835 00:40:53,600 --> 00:40:56,560 Now that sounds like a lot, but again, for a gigantic warehouse, 836 00:40:56,560 --> 00:40:58,000 that's just a lot of the same items. 837 00:40:58,360 --> 00:41:01,120 So you'll see Costco pallets and they'll just be many of the same 838 00:41:01,120 --> 00:41:03,440 items over and over again. You'll see rows of them. 839 00:41:03,840 --> 00:41:05,520 They won't have that wide of a selection. 840 00:41:05,640 --> 00:41:08,000 They'll just have a pretty good selection and a lot of those 841 00:41:08,000 --> 00:41:11,520 same items. So Costco's revenue is split up 842 00:41:11,520 --> 00:41:14,400 between only three to 4000 unique items. 843 00:41:14,840 --> 00:41:18,600 All this revenue almost $300 billion split between 4000 844 00:41:18,600 --> 00:41:21,000 items. Comparing this to Walmart, in an 845 00:41:21,000 --> 00:41:27,240 average Walmart location they will have 140,000 SKU's. 846 00:41:27,400 --> 00:41:31,560 Walmart has around double the revenue, but orders of magnitude 847 00:41:31,600 --> 00:41:35,920 more products they sell, meaning that Walmart doesn't buy as much 848 00:41:35,920 --> 00:41:39,120 of anything as Costco does. For every single item that 849 00:41:39,120 --> 00:41:42,720 Costco buys, every single item that they get supplied, they are 850 00:41:42,720 --> 00:41:45,960 a way bigger buyer than Walmart. They buy more of it. 851 00:41:45,960 --> 00:41:47,280 They buy it in bigger quantities. 852 00:41:47,440 --> 00:41:49,160 They are what's considered a whale. 853 00:41:49,200 --> 00:41:52,280 When you get an item into a Costco location, you know you're 854 00:41:52,280 --> 00:41:56,040 going to sell a ton of that item because you're only competing 855 00:41:56,280 --> 00:42:00,840 with 3000 to 4000 other items. Whereas if you get an item in a 856 00:42:00,840 --> 00:42:04,240 Walmart, you're competing with 140,000 other items. 857 00:42:04,680 --> 00:42:09,160 So Costco sells more per item by a large extent, making it so 858 00:42:09,160 --> 00:42:11,800 that suppliers have huge preference to get in their 859 00:42:11,800 --> 00:42:13,880 locations. And that's part of the reason 860 00:42:13,880 --> 00:42:15,800 that Costco can keep prices so low. 861 00:42:16,040 --> 00:42:18,800 The volume they buy of a single item is so great. 862 00:42:19,200 --> 00:42:22,760 Then if you look at other online stores like Amazon, it goes to 863 00:42:22,760 --> 00:42:25,480 millions. Amazon has millions and millions 864 00:42:25,480 --> 00:42:29,160 of unique items, so Amazon can't flex its muscle. 865 00:42:29,480 --> 00:42:33,960 They can't twist the wrist of suppliers in any single item the 866 00:42:33,960 --> 00:42:36,880 same way that Costco can. This dynamic of Costco being 867 00:42:36,880 --> 00:42:39,520 considered a big whale because they buy such huge bulk 868 00:42:39,520 --> 00:42:42,320 quantities of such few items is not a new dynamic. 869 00:42:42,400 --> 00:42:45,040 Costco uses that immense purchasing power to pressure 870 00:42:45,040 --> 00:42:47,960 suppliers to lower prices. Otherwise, they'll reroute their 871 00:42:47,960 --> 00:42:50,120 supply chain and go to different suppliers in different 872 00:42:50,120 --> 00:42:53,640 countries, and Costco uses that savings that they get from 873 00:42:53,640 --> 00:42:55,920 pressuring the suppliers. To share back with their 874 00:42:55,920 --> 00:42:58,200 customers. That's the scale economies 875 00:42:58,200 --> 00:43:00,360 shared. So Costco's business model 876 00:43:00,360 --> 00:43:04,280 allows it to navigate these type of tricky situations even better 877 00:43:04,280 --> 00:43:06,920 than companies like Amazon. And companies like Walmart, 878 00:43:07,200 --> 00:43:10,840 their specific business setup is more prepared to deal with this. 879 00:43:11,160 --> 00:43:13,560 And it's a nuance that a lot of people won't get when looking at 880 00:43:13,560 --> 00:43:16,440 the retail segment. It's another valuable trait of 881 00:43:16,440 --> 00:43:18,360 Costco. Now, finally, we get to upgrade 882 00:43:18,360 --> 00:43:21,120 news for one of my key stocks. Netflix shares are on the rise 883 00:43:21,120 --> 00:43:24,800 as Moffett Nathanson has finally turned bullish on the stock. 884 00:43:25,200 --> 00:43:27,400 Now, this is a investment analyst group that's been 885 00:43:27,400 --> 00:43:30,080 skeptical of Netflix in the past, reasonably so. 886 00:43:30,480 --> 00:43:33,240 They saw a lot of risk in the stock and now they just see it 887 00:43:33,240 --> 00:43:36,760 as being the winner. They said in no uncertain terms, 888 00:43:37,000 --> 00:43:39,560 Netflix won the streaming war, Case closed. 889 00:43:39,560 --> 00:43:42,080 They changed their neutral rating on the stock to a Buy and 890 00:43:42,080 --> 00:43:45,560 increased their 12 month price target on the stock from 8:50 891 00:43:45,880 --> 00:43:49,720 all the way to $1100 per share. So now we have more and more 892 00:43:49,720 --> 00:43:51,400 analysts becoming bullish on sentiment. 893 00:43:51,680 --> 00:43:53,760 The stock looks like it's in really good shape right now. 894 00:43:54,320 --> 00:43:56,960 I think it's only a matter of time until this one's back above 895 00:43:57,080 --> 00:43:59,600 $1000 per share, but we'll have to wait and see. 896 00:44:00,040 --> 00:44:01,920 That's all for this episode. Hope you enjoyed. 897 00:44:02,120 --> 00:44:02,880 See you in the next one.