Welcome back, everyone today on the Details of Carlson Show.
We have some breaking news. Google just officially agreed to
buy a company called Wiz. Wiz is a cyber security company,
specifically, it is a cloud security company.
And this deal is massive, a $32 billion deal.
In this episode, we're going to be looking at all the specifics.
Why is Google paying this much for this company?
How much revenue does Wiz already do?
How fast is it growing? Is this a good deal for Google?
How does it fit into the broader picture of Google and what is
their aim here? So we're going to be going over
all of it, all the specifics of this.
We also have a lot of other news to get into.
For example, Zoox, the Amazon owned robotaxi, is officially
being tested in California and we have the story of someone
that took a ride on Zoox. So we'll be looking at that
experience. We also have a little bit of
controversy to get into Mark Rober, one of the most popular
Youtubers. The platform released a video
recently that was somewhat critical of Tesla.
It compared Teslas autopilot system to Lidar and it
highlighted the differences in technology.
Now this video had many flaws with the portrayal of it.
It tested autopilot instead of full self driving.
There were different takes. It didn't really add up right
and it's received a ton of backlash online.
People are really hating on Mark Rober, saying that his
reputation is done, his channel is destroyed, it's all over
because he went after Tesla in a very bad way.
Now, we're going to be looking at this video with a critical
lens and Mark Roeber's response, because he recently gave an
official response to this explaining his perspective in
greater detail. So we're going to be looking at
that as well. Now we also have news that
Costco is pressuring Chinese suppliers to push prices down on
the tariffs, and we have news that Netflix is getting further
price increases from Wall Street.
More bullish sentiment on the backs of their new price
increases So we have a jam packed episode to get into Let's
go ahead and get started now we start today off with the
breaking news that has decided to acquire a company called Wiz
and the price they're paying that they've agreed upon is $32
billion. Now investors are a little bit
cautious right now the stock is down 2.6% that's more than the
broader indices including the QQQ.
So investors are taking a step back assessing this deal.
But if we first start off by looking at the mechanics of the
deal and what Google says they're trying to get out of it,
we can do that before looking at the financing.
For example, Google released this blog post explaining their
sitting behind the deal. They're trying to sell the deal
to investors. They say.
As we see in the news every day, cyber security risks continue to
accelerate with the number and severity of breaches continuing
to grow. Meanwhile, as more organizations
go digital, most deployments are now multi cloud or hybrid,
introducing complex management challenges.
At the same time, software and AI platforms are becoming deeply
embedded across products and operations, bringing new and
evolving risk for private enterprises, governments and
other public sector organizations.
So they're they're setting the framework for how big of a
complex and technical challenge security's becoming.
Traditional approaches to cybersecurity struggle to keep
up with the evolving landscape. Organizations with modern IT
environments need a cybersecurity solution that
spans multiple clouds as well as hybrid and on premise
environments that can protect against threats to and from AI
models, that can use AI to extend defenses.
And they can fully integrate software development and
operations into the security portfolio.
Now that is a technical mouthful, but overall, they're
just saying that cybersecurity. Becoming a bigger issue and with
artificial intelligence, the ways that hackers can gain
access and controls to different systems is becoming far more
sophisticated. So they need far more
sophisticated defenses against these attacks.
So AI has all these benefits of enhancing technology,
accomplishing all these great things, but it's also a tool
that's going to be heavily leveraged by hackers.
So this problem is growing. I agree with the premise of it.
What are Google and cloud security solutions today?
Now, this is where it gets a little dicey because if Google
says we need to buy this cybersecurity company because we
have no cybersecurity, that's a problem.
It does naturally raise the question Google, if you're
buying a cybersecurity company, what systems do you already have
in place? Is our data safe with you
already? Will they try to explain how?
This is quite a bit different than just basic Google Cloud
security, they say. Today we help customers detect
and respond to attackers through both SAS based services and
cybersecurity consulting that enable Google to be part of
customer security teams. This includes services like
Google Threat Intelligence, which delivers detailed, timely
and actionable threat intelligence.
Google Security Operations, which allows customers to
collect telemetry data, applied high threat intelligence and
identify high priority threats, and Mandiant Consulting, which
provides frontline expertise and deep understanding of global
attacker behavior. So it seems like Google.
Already has a pretty robust security system from what
they're defining here, but now they go on to explain how Whiz
is different and it adds and even broadens their security
profile. What does Whiz do?
Whiz is different from the services we offer today.
It delivers a seamless cloud security platform that connects
to all major clouds and code environments to help prevent
incidents from happening in the first place.
Wiz's solution rapidly scans the customer's environment,
constructing a comprehensive graph of code, cloud resources,
services, and applications, along with the connections
between them. It identifies potential attack
paths, prioritizes the most critical risks based on their
impact, and empowers enterprise developers to secure
applications before deployment. It also helps security teams
collaborate with developers to remediate risks in code or
detect and block ongoing attacks.
In other words, it gives start-ups, enterprises,
governments, and public sector organizations the ability to
protect themselves comprehensively.
Wiz is an innovative leader creating new categories of
cybersecurity solutions in the last 12 months, including code
to cloud security, cloud native runtime defense, further
strengthening its impact if you do a cloud market breakdown.
Google's currently in 3rd place behind Microsoft Azure and in
first place with Amazon AWS. Amazon already owns the majority
of customers. Most businesses and startups are
using Amazon's AWS, and Amazon tries to lock in those
customers. They try to keep them on AWS.
They try to solve their every need.
They try to offer unlimited tapped growth.
They try to keep them just using their platform like any company
would. Google's trying to make it
easier for those customers to also use Google so that they can
take some of the revenue from Amazon so that they can compete
with Amazon AWS better. And by offering services that
make it more secure to use multi cloud, they have a higher
potential of taking revenue from Amazon and Oracle and Microsoft
and every other competitor. That is the intention behind
this acquisition, not only just to get the revenue of Wiz.
A lot of people are just looking at the price to sales of Wiz and
the revenue that this company generates, but there's other
impacts of this. They're trying to make the route
easier to get customers from other cloud partners to have
them use a more multi cloud model.
And Wiz is a company that specializes in making your data
secure across multi cloud. So there are specific
motivations for Google to purchase this company beyond
just getting the revenue of Wiz and having another great
product. They want to make it so they can
take customers from other cloud companies.
They almost spell it out right here.
We are aiming to provide customers with better security
for enterprise systems and a lower cost of maintaining a
strong security posture across their on premise and multi cloud
environments. They're trying to bring down the
cost of multi cloud. So that's Google's take on this.
Deal they believe it's more of an integration and overall
enhancing their services, allowing them to do more multi
cloud deals and when people are looking for partnerships, they
may now choose Google because they have this Wiz integration.
So there's more to this deal than just the price to sales.
When we just look at the price to sales or the cost they're
paying for Wiz, it does look pretty pricey.
For example, just last summer, so not even a year ago, Google
was trying to buy Wiz for $23 billion.
Now that was the offer, 23 billion didn't close.
Wiz got some cold feet. They said that they were going
to go public. They thought that it wouldn't
pass regulators. They didn't think it was enough
money. For whatever reason, they held
out. And for Wiz, that was the right
thing to do. Because I got $9 billion more
not even a year later. So this deal is going up in
price like crazy, adding on 50% more cost roughly in less than a
year. That's an incredible
appreciation of value for this cybersecurity company.
But also over the past year. Whiz grew by double, so the
revenue is doubling in a single year.
Now Whiz's revenue, if we look up the revenue of other
comparable companies, Whiz is expecting to do around a billion
dollars per year. If we compare that to a company
like Crowdstrike, we can do a little bit of a comparison.
Crowdstrike, over the trailing 12 months did around $4 billion.
So Wiz is going to be roughly 1/4 the size of Crowdstrike,
growing quite a bit faster than Crowdstrike.
Crowdstrike's worth $90 billion. Wiz is being valued at 32, So
Wiz. Is getting a premium over
Crowdstrike, but it's growing faster and it's being integrated
into Google Cloud. It does look expensive, but this
deal doesn't look unreasonable as a Google.
Shareholder I want Google Cloud to be highly competitive.
I want it to have the latest and greatest security measures, and
Google's in a situation where they can afford this.
If we look at Google today, they have options for their cash.
If we look at how much cash they have right now, Google has a lot
of money to burn. They're currently sitting at, In
fact, let's go ahead and zoom in here.
Just the past five years of their balance sheet, their cash
balance went from $142 billion down to 95 billion, and most of
that is through buybacks and dividends.
So they've been distributing billions and billions of dollars
to investors every single year through buybacks and dividends.
In fact, we can see those buybacks and dividends in the
return of capital chart. Last year they returned $70
billion back to investors. Now $62 billion of that was
through buybacks and $7.36 billion of that was through
dividends, but $70 billion just last year, just in 2024.
So they are spending a tremendous amount of money on
buybacks and dividends, but they're still today left with
$95 billion in cash, $10 billion in debt.
That leaves them with a net cash position of $85 billion, meaning
that with this $85 billion, Google can easily pay for this.
Deal in all cash and that's exactly what they're doing.
And between the two options of simply doing more buybacks and
just bumping up their buyback number, returning a bit more to
shareholders or doing a strategic acquisition to greatly
enhance the ability to sell their cloud services, which is
their fastest growing portion of their business, I would choose
this route. I think strategically it's a
better option for Google even despite the high price.
So when I look at the options of Google to use their giant cash
balance, they can either sit at here and earn interest that has
very low prospective returns. I'd rather just do that in my
savings account rather than invest in Google and have them
do that. I need Google to find better
ways to use their cash than sit there and earn interest.
The other option is buybacks. If Google instead chose to do
$32 billion worth of buybacks based on the current market cap,
that's around 1.6% of the market cap.
So they could buy back a bit of their market cap.
That would increase the stock price by around 1.6%.
If you're going to do that in pure mathematical standpoint,
that'd be good. But overall, that doesn't have
the longest long term implications.
Just punching up buybacks a little bit does help out the
shareholder in the short term, but this acquisition has the
possibility to be a very big intrinsic value creation over
the long term. So again, looking and
considering the different options that Google has,
enhancing buybacks, holding cash or doing strategic acquisitions.
This is one that I can get behind.
This is an expensive deal, but not every deal that's expensive
is automatically a bad deal. Now, with Google stock down 3%
today, investors are just a bit nervous about this.
And this is exactly what you can expect with a company that's
already facing some challenges with questions around search and
the durability of the Moat, questions about the large CapEx
spend they're already doing. Then you throw in an acquisition
and becomes a little bit of a muddled story.
So it makes sense to me that investors are trading this down.
It's typically the case the company doing the large
acquisition trades down a little bit.
That's normal. But just keep in mind Google has
some excellent properties. They're still generating a ton
of cash. This is a company getting
cheaper by the day. It trades at an 18 Ford PE ratio
on 2026's earnings. That trades at a 16 even looking
at the free cash flow and adjusting for stock based comp.
With the impacts of all the CapEx they're doing, is that a
2.6? That's still not crazy
expensive, even looking at it in the most unfavorable light
possible. So as a Google shareholder, the
way that it's trading right now makes sense.
I'm not going to complain about that, but I still think this one
is a decent long term bet. Now moving on from that news, I
want to talk a little bit about the general market sentiment
today. The markets down yet again.
We're going through a little bit of a correction.
In fact, the markets corrected at record speeds, going down 10%
in only 16 days. That's a very quick correction
and it looks like it could head into a bear market.
Maybe we'll go down 20% with the uncertainty regarding trade
policy and all the different concerns going on.
Combine that with high valuations, we have a nice setup
for the market. Trading down just today, My
Portfolio, the passive income portfolio is down.
Let's take a look. It's down $11,000.
We can take a look at the story fund here.
My secondary portfolio, this one's down $6000.
So we're down around $17,000 on the day between the two
portfolios. Yesterday, these two portfolios
were up around 17 to $20,000. So we're having swings daily in
this portfolio between the two of them of around $20,000.
One of the interesting things I I looked at, just looking at the
portfolio's volatility at trading around the stocks
getting priced differently, is that the entire first year that
I was investing, my whole first year starting off with this
portfolio was building it to $20,000.
And now in a single day I'm having those type of swings.
And that is an incredible situation to be in.
At some point, what you started out with your portfolio
contributing the entire year, building it up, getting it to
10,000 or 20,000 or $50,000, whatever it may be, is going to
be daily swings of that same portfolio in the next 10 to 20
years. It'll become a tiny part of your
portfolio. So overall, I don't have
anything big to share today. I just wanted to point out if
you keep building your portfolio, if you don't let the
market dictate your sentiment, if you keep buying, especially
on red days and buy into great companies.
Buy a diversified portfolio full of high quality companies.
If you don't want to pick them out yourselves, just buy a great
ETF that's already diversified and continue to contribute over
and over and over again. Especially contribute on days
like today. Especially contribute when the
market is telling you not to, when investors are becoming
bearish, when everybody's when everybody's scared, that's the
time to buy more. Keep pushing, keep depositing,
keep building it, and you'll have a massive portfolio
overtime. Now let's go to move on to some
news. The first bit of news we get to
highlights that even though we often talk about Tesla and Waymo
as kind of the only two factors in the ride and robotaxi
business, they're not necessarily the only two
companies that are involved in this business.
In fact, there's a lot of companies now looking at
robotaxis. Amazon is one of them with the
company they own called Zoox. Now, if you look at a Zoox, this
is what it looks like. They're a bit funny looking.
In fact, it's compared to in this article is like a
Disneyland ride. Feels like you're getting onto
something different, unique it it just looks different than any
other vehicle I've ever seen. It's almost symmetrical front
and back, which is different than vehicles.
The the tires stick out beyond the the bumpers of the vehicle.
That's also different. And then you have giant.
Those are lighter sensors at the top corners of each part of the
vehicle and then you have cameras before that.
So they're also going with the route of using Lidar in
combination of camera all around the vehicle.
Inside you have like a boot seat that face each other so as
passengers you can actually face each other.
And this is being rolled out now into different cities.
Zoox is now being tested on the streets of San Francisco.
And one person shares their story.
They say as we rode through the streets of San Francisco and our
company's autonomous vehicle, we talked through all the back end
things required to launch a robo taxi service later this year.
Quote right now, tiny, small, medium, large.
The chief executive told me about her strategy of scaling
Zoox. We're still putting the
foundation in place and making sure that everything that we
said we're going to do, we're doing.
Her approach is rooted in sweating the small.
Stuff it's a belief at. At odds with Silicon Valley's
mantra of move fast and break things, and born in the fact
that execution is key to making robotaxis work and small stuff
really isn't so small. The biggest problem that could
occur with robotaxis, the thing that could kill years of
progress in this category, is having a tragic accident, one
that was completely avoidable that a human would have avoided.
If a robotaxi service has that type of event happen, it will
set them back years. So the approach here is to move
slow and not break things. And I think they're taking the
right approach. Now, they narrate this a little
bit, and I don't necessarily agree with their narration here,
but they say this is in striking contrast to the go quick, go
bold approach taken by Elon Musk and others who have heralded
heralded the coming age of robot cars.
They say that Tesla's being fast with their approach go quick and
go bold. But right now they're they're
not even on the the road really testing to the same extent other
robotaxi companies are. So I don't think they're
necessarily going fast with robotaxis.
The Tesla CEO for years has said that electric car makers was on
the precipice of deploying driverless vehicles.
He once suggested he would have 1,000,000 robotaxis deployed by
2020. I'm sorry Tesla investors, it's
just reality. Elon Musk, as you know, as you
know, I'm not pointing this out to Tesla investors for the first
time, but he over promises things a lot.
It's something he does. It's just part of the package of
Elon. He he will say something's going
to happen and he always gives like a two year timeline.
Sometimes it takes 5 to 10 years.
Now, they point out that right now, the leader currently right
now, and I'm not saying overall, I'm not saying maybe in the next
5 or 10 years, but the robo taxi company that's currently in the
lead with the most cars accepting the most paid rides is
Google's Waymo. They have long ago embraced the
boring side of fleet management and it's way ahead in the race,
having already deployed robo taxis in San Francisco, Los
Angeles and elsewhere. And they're expanding in
multiple cities right now. And Zoox and Tesla are competing
to be second place in getting robo taxis officially deployed.
Like Waymo, Zoox has built a call center like operation that
monitors its vehicles in real time and can remotely help
vehicles deal with situations. There are also operations to
keep the vehicles clean and maintained.
Now Zoox is close to deploying its taxis.
For the public initially with free rides to select
participants this year as part of an early rider program in Las
Vegas in San Francisco that will be followed later this year by
paid services 1st in Las Vegas. One of the fun things about
owning stocks like Google and Amazon, which I'm a shareholder
in both of them, is that for Google, Waymo is not some
significant part of the story. Nobody's really investing in
Google specifically for Waymo because it's such a small part
of the revenue in the overall story.
Google has so many incredible properties with YouTube and
Android and cloud and search and all the things that they have
Gmail and so on. Waymo is just a small portion,
but it's a nice little thing to have.
Maybe Waymo turns out to be a highly profitable, great part of
the company. That's really valuable.
The same thing for Amazon. With Amazon, Zoox isn't some big
line item. It's not a big deal for the
company. But it's a nice thing to have
because it may grow. Maybe they figure out the big
problems here. They scale fast with Amazon's
wallet and they become a very competitive force in robotaxi.
So both Zooks and Waymo are not necessary for Amazon or Google
to succeed, but they're just nice things to have.
Another part of the story that I think adds a little bit more
potential upside. Now moving on, we get to a bit
of controversy that the YouTube Mark Rober, he's the former NASA
engineer. He's the one of the glitter bomb
fame. It was the glitter bomb for
porch pirates. An awesome video series.
He's a really likable YouTuber. Like he just does fun light
hearted things. He teaches engineering in a fun
and insightful way, especially for kids to learn.
So far he's been great at avoiding controversy, but he
dipped his toes into a bit of controversy when he went after
Tesla and I should have warned him.
I could have given Mark Rober a warning.
If you criticize Tesla, you have to have your ducks in a row
because Tesla investors will stop at no ends to destroy your
reputation if you get on their bad side.
So I could have sent them a warning that there's some clear
problems with his videos. They're going to be under heavy
scrutiny and people are not going to react well to this.
Now, in Mark Roeber's video, he had multiple different tests.
He put both Tesla's autopilot system against a lighter system.
He tested it against rain and fog and bright lights, and he
drove through a cartoonishly painted wall to see if Tesla
could identify it and Lidar could identify it.
And again, most of these tests showed that Tesla was good on a
lot of them, but the cameras fail on multiple of them where
LIDAR succeeds. Now, the big problems that he
had with this video were on multiple parts.
One of them was he compared autopilot to Lidar.
Now Autopilot is old technology that's not the latest and
greatest from Tesla. Autopilot's more like auto
steering on a freeway. It's kind of like assisted
driving, right? It's just something so you can
take over and kind of steer a little bit.
It's like what dumb cars have. Tesla has full self driving.
That's their their more advanced system.
That's the latest and greatest. That's what's being trained on
artificial intelligence. So a lot of people are confused
of why did he compare older technology to the newest Lidar
tech that in and of itself created at least the perception
of intentional bias. O that was one problem.
Another problem was that Mark Rober seems to have a good
relationship with these Lidar folks.
He has one in the car. You can see the the LIDAR badge
on them. They helped him out with testing
and he thanked them for letting him borrow the car.
And a lot of people even assume that he was sponsored by the
LIDAR group for making the video.
Like they paid him to make the video to present themselves in
better light compared to their competition, which was Tesla.
So this created another perception of a very bad bias.
So that was the problem #2 Now another issue, a third one, was
that he did multiple takes, and he revealed this on Twitter.
Incidentally. People kind of sniffed it out by
looking at the dash and showing that he was going to different
speeds. So this also creates a
perception of being dishonest. You know, he has multiple takes
and he's only sharing one. Did the other take show
something better for Tesla? Is he only showing the takes
that are bad for Tesla? Now, with all these questionable
things going on in the video, you can just imagine how Tesla
fans and Tesla investors are reacting to this online,
especially on X. They did not like this video and
they made that very apparent to Mark Rover.
Many of them saying that his entire career should end today,
that he has no legitimacy. They compare him to other
sellouts to other people. And so on and so forth.
You get the idea. Now I agree with.
Tesla investors that there are very questionable things
happening in this video. It does have a strong perception
of bias. I think that does exist.
So this should go under scrutiny.
Mark Robert does have questions to answer, but I also agree that
we should get his side of the story.
At least have him explain himself as the creator of the
video before jumping to ultimate conclusions and trying to tear
his career apart. Tesla investors in many part do
the exact same type of cancel culture thing that they're huge
critics of. One person makes one video that
has perceptions of bias and they instantly jump to trying to
censor, control and destroy his entire career.
And I don't think that's right, at least not without having him
explain himself. Now with this controversy, he
did go on to explain, at least from his perspective, his
initial response. This is Mark Rober on the Philip
Defranco show, where he asks him about every single one of these
questions and you get Mark's unfiltered response.
I'm just gonna kind of go through the bullet points of
accusations and questions regarding the video.
And like we talked about beforehand, if there are things
that feels like people would think that we're missed or
weren't covered or come out as we're recording today's video,
you you said you're open up to follow-ups.
Yeah, sure, totally all. Right.
So first one is less of an accusation, a more question, and
that was was there any reason you opted to test Autopilot on
the Tesla instead of full self driving?
My understanding with full self driving is that you have to
enter an address for it to work and as opposed to just being
able to engage it. And this is what Tesla's called
autopilot. And even Googling it, seeing
what they determine, they determine as autopilot.
And my understanding is that the, the, the sensor is not
different whether it's full stuff driving or autopilot,
knowing if that's a wall or not that that doesn't change.
So I think I could, I mean, I'd be happy to rerun the experiment
in full self driving. I'm pretty confident it wouldn't
be a different result. So to me it was a distinction
without a difference. And the.
OK, that's his first answer and I have to say that is the the
worst answer. Out of all the ones that he
answers, this one is the worst one because why would he not use
full self driving? Even if it's true that they are
the same, A distinction without a difference.
This is going to be a point of potential bias and criticism
from Tesla fans. They're going to point out
accurately so that full self driving is different than
autopilot. And even though he says the the
sensors are the same, that it's the same technology, the sensors
and hardware may be the same, but the system interpreting the
sensors, the full self driving system, the intelligence behind
it is different. I also think this was a weak
answer because he says that he didn't use full self driving
because you had to enter in an address.
Just enter in an address behind the wall somewhere down the
road. Doesn't matter what the address
is just somewhere behind that the wall that you created.
Mark Rober is smart enough to know he could have just entered
in some address on the other side of that wall.
So out of all the answers he gives, I actually think this is
the weakest one. He's off to a weak start here,
but I think his answers get better.
A. Clip that you posted on Twitter
where you said here's like the here's the raw footage.
Can you explain what it is that we're seeing and what you're
what you're trying to explain is happening in that you said not
sure why it disengages 17 frames before hitting the wall, but my
feet weren't touching the brake or gas.
So I think people were saying that I was manually just drove
it through because 17 frings by the way, is like less than 1/2
of a second before it hits the wall again, my high pop.
I don't know why it would disengage.
I was not pulling on the steering wheel.
And by the way, even if I did disengage it, it's it's less
than 1/2 a second before you go off the the outcome would not be
different. My guess is maybe the sensors,
the ultrasonic sensors which I think are on the bumper, they
probably just disengage if they sense that something big is
there and it just stops being in the self driving mode or
autopilot, whatever you want to call it.
So this is another answer that highlights something here.
He says that the reason it wasn't engaged on impact was it
automatically unlocked. It automatically disabled
Autopilot right before it crashed into the wall.
And this is something that other people have criticized Tesla for
the fact that they might potentially disable Autopilot or
full self driving right before impact.
So they can say during an accident that full Self Driving
wasn't active during the accident, even though it was
until a second before the accident.
So what he's highlighting here may actually be a bigger issue
for Tesla if it's found out that they're automatically disabling
Autopilot or Full Self Driving right before impact.
That might be something else that he can look at, but I think
he's being truthful here. He's saying that it was engaged
and automatically disabled within half a second before
impact. So that's all I'm saying is like
some people clipped right after and said, look, it's not on
autopilot. And I was like, I don't know,
like I'm just here. Like, I don't have a horse in
this race either, by the way, right?
I just wanted to go. I love my Tesla.
I'll probably get a new one when they come out.
He says that he doesn't have a horse in this race.
For a lot of people, that's very difficult to believe.
You know, these these people that are competitors to Tesla,
they they look like they're sponsoring the video.
So when he says he doesn't have a horse in this race right now,
that doesn't look, that doesn't look truthful.
I'm just here to look at the data and I think I struck like a
political nerve or something. And the video was about LIDAR
like and all the cool ways Lidar's used.
So I, I felt like this was a, a fun test to run and papers have
been run on it. Like can you fool a self driving
car with the Wiley Coyote? Right?
Like papers have been written on this, so it's like, well, I
should just run the test and that's what it was.
Regarding the the raw clip and what's in the video, there been
people that say that it looks like you may have had multiple
takes or possibly gone through the wall multiple times.
Where there are multiple takes, what can?
You. Give.
Any insight there? I mean, this is like what you
put in NVIDIA. So we the first day we went out
there, I think you can even see it.
There was a we didn't have like the Styrofoam wall.
It was just like a, a vinyl sheet and it was clear.
If you just drive up with it, you know, you can see the Tesla
tells you the math of what it what it's what it's looking at.
And if you drive up to this wall with the road, it doesn't
register anything. It doesn't register a cone.
It's so like, whatever the brain, the math that it's doing
in the computer, it doesn't register when you paint a road
that something's there, like even if you just drive up to it.
So anyways, we, we, yeah, we did a take.
It went right through. I think that was the one that
maybe was at 40 miles an hour or something.
But it was just like, instead of cutting through it like which
would visually look cool, it just kind of tore the side and
like a little flap came came up. So it was like, that was a very
interesting finding that it actually worked.
And by the way, I'm happy to give you the raw footage of that
take too. So you'll see it going through
the wall, but it's more of a flap.
And then we're like holy crud. So that take he just showed is
different than the one he posted on his main YouTube channel and
he's just explaining here. This is a youtubers perspective.
This is you know what youtubers do.
They do multiple takes of stuff and they usually use the best
one. I'll do it in my video if I
botch a take, if I say something way wrong, it doesn't come out
right. I'll re record it and do it
again so it's better for the viewer.
And he's doing the same thing. He recorded one of them where he
had the same result. He drove through the wall the
Tesla system, didn't it? It didn't interpret the wall as
being a wall, but it wasn't. It didn't look as cool.
It didn't have the same effect as having the carved out zigzag
structure that he burst through the wall with.
So he did another take to make it look visually more cool.
That's well within the bounds of normal Youtubing.
Now, if the results had been different, if in one take Tesla
successfully stopped and another Tesla went through the wall and
he only used the one that made Tesla look bad, that would be
bias. But what he's doing here is not
bias, because both takes Tesla went through the wall.
And all of this, aside from the point, is not even a problem for
Tesla. This is an unnatural occurrence.
This is something you don't encounter while driving.
Having a fake wall that looks like a continuous Rd. is
something that humans would drive right through.
That's not something you encounter in normal road
conditions. So Tesla investors are upset
that the Tesla cameras don't interpret a fake wall as being
there. That's not even a problem for
Tesla normal drivers. Humans would drive right past
that wall in many cases. So this is not something Tesla
investor should even be concerned about.
But regardless, this is well within the normal bounds of a
YouTube to do multiple takes and use the one that looks the most
exciting. As long as he didn't
intentionally bias the data, I don't see any problem with this.
And he released both takes. I can't believe that really
worked. And then I don't know, like 3
weeks later we went back out when when schedule permitted
this time with like a Styrofoam wall 'cause I thought it'd be
funny if it's like, well now that it goes through the walls,
we should have like a fun cut out as it goes through so.
So the second take was not an attempt to bias the data, it was
only to make it look a little bit more funny.
Regarding Luminar, there have been a lot of people asking what
kind of role they played, right. The description of the video
says they provided the provided the car for testing.
Did they have any say in the edit?
Did they have any? Luminar is the lidar company
that worked with Mark Robor on this video.
So a lot of people are saying he was sponsored.
He got paid to bump up their stock to promote their product
and make Tesla look. Bad.
No edit. They didn't see the edit.
Yeah, I really want to clear this.
Luminar gave us no money. They had no say in the edit.
They did not approach us. They were just a car technology.
I know that used Lidar. So I reached out to them and
say, hey, will you let us borrow some cars?
And then they let us use the cars.
So we didn't pay them to come. They did not pay us.
They had no say. And we didn't know what happened
either, by the way. And we told them, look, if your
LIDAR fails one of these, it goes in the video.
And if Tesla would have passed all of them, by the way, that
would have gone in the video. Like, I'm very agnostic.
I really just wanted to see what would happen.
This is the biggest point, and I think I think the best point you
can illustrate is the lack of financial incentive to have one
party look better than the other.
And I, I guess on that, do you or anyone close to you, once
again, it's like based off of these accusations, do you or
anyone close to you have any Luminar stock?
I do not own any Luminar stock, or I do not know of anyone close
to me who owns any Luminar stock.
Absolutely. And I know you said you you love
Tesla. Just to confirm, do you have any
options or puts on Tesla? I have no options on Tesla.
I have no puts on Tesla. I am just there's no financial
anything in here at all at all. 100% I'll go into court of law.
OK, well. Besides data an interesting
like, it's an interesting test that's like the history of my
channel like and just whatever the data shows is what I'll put
up. Because I will say, yeah, I
mean, regarding you saying this in the court of law, I mean,
there have been a lot of people that granted it's the Internet,
granted it's YouTube videos. I've seen some folks like I
think it was Meet Kevin saying that there's a possibility of a
lawsuit. Are do you have any concerns
over that based off of the video or anything like that?
No, because it's like, I mean, anyone can sue in America.
So I guess, but I think we could get it dismissed pretty quickly
because it's like, I just have nothing to hide and I have no
ulterior motive here. No one's paying me.
I have no stock. I have no shorting I will get
I'm I'm planning on getting another Tesla in like I don't
even have politically. Apparently it's a political
issue. Like I politically already have
a horse in this race. The interesting thing about
being a content creator and creating videos and and
publishing stuff live for hundreds of thousands or
millions of people to look at is you never quite know how it's
going to be received. There's always creative risk to
every single time you hit the publish button, every time you
put a video live. You never quite know what's
going to happen. In this case, I think there's
some things that Mark Rober didn't expect this to be such a
hotly debated, a tainted subject by politics and all the events
happening today. And I think Mark Rober got a
little wrapped into this unknowingly by publishing this
video. Now, to me, he doesn't come
across as someone that has the goal of trying to destroy Tesla
and sticking it to Elon Musk. I don't think that's his aim
with this video. The fact that he has no
financial incentive to do so. There is no money being
transferred here at all is a pretty big indication that he
has very little motivation to take the stock price down, which
is the accusation a lot of people are making.
Furthermore, another thing he mentions, which I think is a
very relevant point, but it's one that's missed in this
interview often, is that he mentions the process of creating
this video and the thought process behind doing it was over
a year in advance. So all the political stuff
that's unravelled over the past six months weren't even part of
the equation when he first thought about creating this
video. And I, I realize now we planned
these videos a year in advance. So the idea that this was like
time because of political stuff, like a year and a half ago, this
was on our docket. We've been marching towards
releasing this. So I plan on upgrading my Tesla
in like 6 months. So I don't I'm just, I'm just
here for the data and I don't think it means they're self
driving or is terrible as in it like it's going to get better.
Like, but yeah, this what happened happened and if you
could easily recreate and anyone what happened happened and
anyone with a Tesla can easily recreate exactly what I did so.
After looking at Mark Roeber's response, I still believe that
there's some criticisms for the video, specifically that he
could have used full self driving that would have been
better than autopilot. I think a better side by side
comparison. But he did clarify most of the
major points and I believe most of the major concerns
specifically that he wasn't sponsored by the Lidar company,
that they weren't paying him to intentionally make Tesla look
bad and their company look good. That he wasn't trying to take
down Tesla stock or bump up their Luminar stock.
This wasn't some financial shenanigan that Mark Rober was
trying to poll. He says quite openly and with
conviction he has no financial ties to any of these companies
involved, and he just cares about the data.
So if you argue that the data could have been done
differently, he'll probably respond to those criticisms.
But in terms of him having some hidden nefarious incentive to
kill Tesla stock or take it to Elon Musk, I don't personally
believe that exists. And I certainly don't agree with
many of my peers in the creator industry that are actively
trying to destroy Mark Rober's career to de platform him, to
try to tell people to sue him into the ground because he
portrayed a company you like unfavorably.
That's not the route we should take with this.
He explained himself quite fully that he has no financial
incentive, that he has no dog in this fight.
He's not sponsored by the companies, he's not invested in
them. So actively trying to destroy
everything he's built and saying that he's lost all credibility,
I think is a huge overstep. So overall, I think there's
things he could have done better in the video compared against
full Self Driving. And I'm sure there's going to be
many people that remake the video.
But right now, I think Mark Rober, I think he's fine.
I think he should be given a little bit more leeway than what
many Tesla fans are trying to give them.
Now, moving on, we get to the headline here that Costco is
pressuring suppliers in mainland China to cut prices following
tariff raises. Now, instead of arguing about
tariffs and whether they're good or bad, whether the policy
overall is good or bad. I want to talk about Costco.
Because Costco has some unique ways to deal with price hikes,
to deal with pressuring suppliers that other companies
don't have. For example, in this report from
the Financial Times, I mentioned that many large retailers are
also trying to pressure China to lower their prices on specific
items they're supplying. And this is, again, response to
the tariffs. But the interesting dynamic here
is not that these companies are trying to get lower prices.
Of course they are. The interesting dynamic is that
Costco in particular is the one best positioned by far to
pressure prices down from China suppliers.
And there's a specific reason why.
So when we look at total revenue and we rank Amazon in the top,
then we have Walmart, then we have Costco.
You may come to the conclusion that Amazon is the best
position, Walmart is next best, and then Costco in dealing with
Chinese prices and putting pressure on Chinese suppliers.
That's not the case. Costco is still by far the best
position to pressure Chinese suppliers down in price to make
it so that they take more of the brunt of the burden.
And the reason why is the amount of skews these companies sell
the SKUs. For example, the average Costco
warehouse has around 4000 SKUs in their warehouse.
SKUs are unique items being sold.
So when you go to Costco, there's not that many items.
There's 3 to 4000 in each warehouse.
Now that sounds like a lot, but again, for a gigantic warehouse,
that's just a lot of the same items.
So you'll see Costco pallets and they'll just be many of the same
items over and over again. You'll see rows of them.
They won't have that wide of a selection.
They'll just have a pretty good selection and a lot of those
same items. So Costco's revenue is split up
between only three to 4000 unique items.
All this revenue almost $300 billion split between 4000
items. Comparing this to Walmart, in an
average Walmart location they will have 140,000 SKU's.
Walmart has around double the revenue, but orders of magnitude
more products they sell, meaning that Walmart doesn't buy as much
of anything as Costco does. For every single item that
Costco buys, every single item that they get supplied, they are
a way bigger buyer than Walmart. They buy more of it.
They buy it in bigger quantities.
They are what's considered a whale.
When you get an item into a Costco location, you know you're
going to sell a ton of that item because you're only competing
with 3000 to 4000 other items. Whereas if you get an item in a
Walmart, you're competing with 140,000 other items.
So Costco sells more per item by a large extent, making it so
that suppliers have huge preference to get in their
locations. And that's part of the reason
that Costco can keep prices so low.
The volume they buy of a single item is so great.
Then if you look at other online stores like Amazon, it goes to
millions. Amazon has millions and millions
of unique items, so Amazon can't flex its muscle.
They can't twist the wrist of suppliers in any single item the
same way that Costco can. This dynamic of Costco being
considered a big whale because they buy such huge bulk
quantities of such few items is not a new dynamic.
Costco uses that immense purchasing power to pressure
suppliers to lower prices. Otherwise, they'll reroute their
supply chain and go to different suppliers in different
countries, and Costco uses that savings that they get from
pressuring the suppliers. To share back with their
customers. That's the scale economies
shared. So Costco's business model
allows it to navigate these type of tricky situations even better
than companies like Amazon. And companies like Walmart,
their specific business setup is more prepared to deal with this.
And it's a nuance that a lot of people won't get when looking at
the retail segment. It's another valuable trait of
Costco. Now, finally, we get to upgrade
news for one of my key stocks. Netflix shares are on the rise
as Moffett Nathanson has finally turned bullish on the stock.
Now, this is a investment analyst group that's been
skeptical of Netflix in the past, reasonably so.
They saw a lot of risk in the stock and now they just see it
as being the winner. They said in no uncertain terms,
Netflix won the streaming war, Case closed.
They changed their neutral rating on the stock to a Buy and
increased their 12 month price target on the stock from 8:50
all the way to $1100 per share. So now we have more and more
analysts becoming bullish on sentiment.
The stock looks like it's in really good shape right now.
I think it's only a matter of time until this one's back above
$1000 per share, but we'll have to wait and see.
That's all for this episode. Hope you enjoyed.
See you in the next one.